At least for HR, right? I mean, unless it was installed in the 90’s, how many new organizations are going up on core HR, portal, benefits, payroll, talent, recruiting, compensation and the others? Specialist applications have really penetrated the markets beginning with major recruiting solutions like Taleo, Vurv and Kenexa (RecruitSoft, RecruitMax and Brassring) up to a decade ago. The reality is that Oracle and SAP know the industry is changing and delivery of applications won’t always stay with them. If fact, there was no greater statement of admission than their support and development of the SOA technologies.
What’s interesting is the these best of breed applications are spreading out so far that it’s arguable they are no longer best of breed. You have companies like Kenexa and Vurv who produce products across the entire talent management suite, plug the whole thing into a portal and deliver an analytics engine with it. Really the only thing they are missing is core HR. So while they are not ERP, they are potentially diluting the specialist expertise they had 5 years ago when they only focused on 1 or 2 things.
I’d like to take a few seconds to argue that the functional ERP modules are about to make a comeback. While there may be some admission that they will lose HR market share to point solutions, they are fighting back with programming dollars with every spare resource they have. Talent is being taken seriously, and with the lynchpin of integration, the ERP’s have a great value proposition to sell. For example, a performance score is fed to a merit increase which goes right to payroll and the general ledger. Can any group of point solutions make that process flow as well as an ERP? I talk highly of a lot of technologies, and I like to pretend that everything works the way they should, but the truth is that no group of point solutions can make the above example work the way an ERP can.
What’s even better, the ERP’s seem to be taking design and usability seriously as well. This was really what the point solutions built their success on. ERP’s were so unsatisfying in their user interface capabilities that point solutions effectively moved in on the basis of slightly better functionality and much better UI. In a few years, this may no longer be true as ERP’s close the gap on functionality and greatly improve UI as they focus on their own portal presentations.
I’m a big proponent of the point solutions. But I’m also waiting for Fusion.
6 responses to “HRIT: I Thought ERP Was Dead”
This comment was mailed to me from Softscape:
With reference to the article above, you made a comment that best of breed vendors are lacking HRMS so they are not ERP’s. I’d say the market is chaning. Softscape have a developed HCM portfolio and now have transactional capability too – HRMS, Time and Exp, Finan etc. This is going to be the trend over the next fewe years i bet. Thanks Nick.
Right on. Consider that Oracle is working hard to move towards a realistic Fusion of products, and they have the resources to do not only that but they already have best of breed on core, self service and many strategic applications. Now, think about the point solution companies that focus on the strategic apps (recruiting, development, compensation, etc.) and their acquisitions — but they DON’T have the resources to truly have an integrated offering. They have smoke and mirrors and are struggling to keep customers satisfied.
CedarCrestone HCM survey shows a definite move from point solutions back to the ERP vendors.
The one place that the ERP vendors don’t have nailed right now is analytics. Point vendors in that arena will have a hay day — for a while at least. But once organizations prove value with analytics from the point solutions, they will move back to the ERP vendors for that application as well.
I agree with you on this DD. Some TM vendors are up in the rare air of quasi-ERP and will get hammered from both sides. The race is between ERP vendor’s ability to deliver good UI and speed to iterate (underrated IMHO as a key value driver) and the whole IT ecosystem’s ability to provide integration infrastructure that is usable, portable, and cheap.
Should be an interesting race.
Also, and this should always, always be noted: this business is more about service than software code. Change management and training are expensive and never ending, even with very simple applications. If you serve really well, your code and actual featureset can live in a much wider groove.
Lexy: I’m not sure if I should agree or not with your last statement about analytics. On one hand, SAP BW (Business Warehouse) and PeopleSoft EPM (Enterprise Performance Management) are hands down the best analytics ENGINES on the market. They’ll pretty handily beat Cognos or Business Objects when we’re talking about OLAP and data warehouse type analytics.
On the other hand, How many HRIT organizations actually get to install SAP BW or PS EPM? To do that, most organizations will need the ERP suite (Finance and at least one other component) to justify sending the dollars on the data warehouse. I agree if you’re saying that the ERP’s don’t have the domain expertise and don’t tend to package the same valuable analytics with their delivered capabilities.
I know I am dating myself, but your comment about services reminds me of the mid-80s. IBM, Data General, Digital Equipment, HP, Wang, etc. etc. all had “office automation” offerings dating from the late 70s. By the mid-80s all of their products looked alike. What differentiated them, however, was their services. HP’s product was not the best, but its service offering (training, onsite consulting, telephone support, and online Q&A, etc.) was so good and so personable that the product became successful. (Reminds me that the current ERP vendors ought to unbundle software maintenance into different priced support offerings, but that’s another topic).
Back to your comment on change management and training — “CedarCrestone HCM survey says” — organizations are spending AT LEAST 10% of their implementation budget on CM. And personally, I don’t think that is enough, especially when going through the big changes — i.e. to direct access self service. Vendors and consultants alike did such a disservice to customers in saying “self service needs no training” — not true. Training on the process change as well as the software is mandatory — especially for our managers.
And, I agree on the UI — see our latest survey on that topic. And thanks for the thought about time to iterate. Of course the integration infrastructure is a significant HARD DOLLAR cost savings.
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