What the Splunk IPO Says about BigData in HR

Posted on April 21st, 2012.
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BigData is Big News.

Splunk, a company that uses BigData technology to analyze huge amounts of customer and transaction data, just went public with a valuation at 28X revenue ($3.2 billion).  This valuation trumps the hot companies in social networking: Jive trades at 20X revenue, Google trades at 5X revenue, and Facebook, well we’ll see.

Why the huge valuation?  Because BigData is BigBusiness.  I now live in the world of corporate talent management and HR, but in my prior life I was the director of data warehousing products for a database company. There is almost no limit to the value of deep data analysis in business. And with more than 8 Exabytes of data now captured in businesses today (expect to grow to 44 Exabytes in the next 6 years), we are all going to want to analyze more data faster.  (One Exabyte is equal to 140,000 X the data in the entire Library of Congress.)

I want to highlight a few key issues which affect you as a business leader, and talk a little about what BigData means to HR and talent management.

1.  Most businesses today have plenty of data with which to make decisions.

What they lack is fast, transparent systems which produce this data in real time. Hence the huge market for tools and services companies like Splunk. And there are dozens more right behind soon to go public.

I just delivered a keynote speech on Building Business Agility through People at our research conference, and I cited the fact that The Economist asked more than 500 CEO’s what would create agility in their company.  Of the top four items cited, one of the most important was “delivering transparent information about customers, products, and people to line management.”

This solution, delivering transparent information to your own managers, is one of the biggest competitive advantages you can build.

2. Outside of customer analytics and marketing analytics, internal talent analytics is one of the most exciting new opportunities in business.

We have been working with a special working group of top companies in the area of BigData for HR.  What these companies are doing is consolidating hundreds of data elements about their own people and then correlating them to customer retention, sales performance, safety, fraud, and many other measures.  And what they are finding is that BigData in HR is just as valuable as BigData about customers.

Let me give you an example.  A large retail bank found that “leakage” (theft) from many of its smaller branches was highly correlated to certain behaviors and people-related data in their company. In fact, there was a direct correlation between branch fraud and the age, location, and travel behaviors of branch managers.  Managers who visited branches more often reduced fraud.

This may seem like an obvious finding, but it gave the company a whole range of new strategies for hiring, development, and coaching of branch managers.

Another large organization, the Royal Bank of Scotland, has correlated its employee engagement measures in such detail that they can actually predict branch performance based on management behavior.

3.  Talent Analytics is still a brand new industry.

Customer analytics and marketing analytics have been around for years.  But talent analytics is new.  Human Resources teams have had “HR Analytics” teams for many years, but only now are they starting to rigorously correlate all this internal people-data to business data.

Our working group research identified a four-stage maturity model for talent analytics, and we found that fewer than 8% of all companies are even close to stage 4.  This means that most companies have barely started to tap into the huge reservoir of data they have about their employees.

Remember that in most businesses payroll is the largest expense item, and that small improvements in employee productivity drive enormous financial returns.

So if you put as much energy into optimizing your people decisions as you may be putting into the optimization of your product and marketing strategies, you will see a huge change.

4.  Tools to implement talent analytics are available today.

The best news of all is that this solution is not limited by tools.  Every major HR software vendor now offers an analytics platform which lets you expose, export, and analyze all the data you have about your people.  (This includes Oracle/Taleo, SAP/SuccessFactors, SumTotal, PeopleFluent, Saba, Mercer, ADP, Workday, Towers/Watson, and nearly every other major HR and talent management vendor – including SHL, which now exposes assessment data across millions of candidates and employees.)

What our research found is that the limitation is you. Only 6% of HR organizations feel that they have excellent analytic skills internally and most have not yet invested the time it takes to build a holistic analytics function. And our studies have shown that ultimately the talent analytics team should be part of the entire company-wide analytics function – because data about people, behaviors, customers, and products all relate to each other.

Think about this as the “rebirth” of the business intelligence and data warehousing industry.  Back in the 1980s when I was a product manager we thought it was pretty exciting.  Now, thanks to BigData tools and cloud computing, its even hotter than ever.

I will make the time to publish great examples and insights in this area – it’s a huge opportunity for business and HR leaders at all levels.

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Josh Bersin is Principal and Founder of Bersin by Deloitte, a leading research and advisory services firm in enterprise learning and talent management.

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