HR Technology Conference 2007 – A Recap
Leighanne Levensaler and I just finished a week at the HR Technology show in Chicago. This conference represents one of the biggest meetings of HR technologists and HR software vendors each year. As always, this conference was an opportunity for most of the HR and learning technology providers to announce new products and offerings.
Here are some of our major findings after two days of in-depth meetings.
Talent Management is the Rage, But Different for Each Organization
There is no more discussion about the words Talent Management vs. Human Capital Management – everyone has adopted the talent management term. In fact, there is widespread consensus that every company needs a talent management strategy.
As our research has shown, however, the actual implementation of talent management varies widely from company to company. In the Vice-President of HR talent management panel, the five attendees actually discussed very different definitions about what the term means. Liviu Dedes from Aramark talked about the need to provide scalable and consistent processes across many different organizations and talent pools. Valerie Norvell from Luxottica expressed the need to create dramatically different behaviors among their sunglass retailers to meet the needs of different brands. Andy Ortiz from HealthNet mentioned the need to improve workforce performance and skills across the organization. And Mary Ruiz from Yahoo mentioned that talent management forms the basis of capital value in our economy.
Talent management means different things to different organizations. As you define your strategy and select your systems, it is important to tie this solution to your own unique business challenges. Our research tells us that talent management is a specific strategy for each organization which drives high performance, agility, and engagement in the workforce. For more details, please read our High Impact Talent Management® research.
Talent Management Suites are Really Here.
There is no question that there is new software “category” in HR called talent management suites. Every major HR systems vendor now offers a suite of some kind, including some combination of recruiting, performance management, competency management, compensation, succession planning, career planning, and learning management. The financial community is also fueling this: Authoria, CornerstoneOnDemand, GeoLearning, SuccessFactors and Workstream have all recently received major rounds of venture funding. One of the financial analysts we spoke with told us “we have plenty of money to invest in this space, help us figure out who the winners will be.”
Our principal analyst, Leighanne Levensaler, presented her breakthrough new findings on the market for talent management suites, showing the complexity and immaturity of this market. As you will see from the notes in this posting, almost every company in this market now has a performance management system – but how integrated are all these modules? We’re not quite there yet. For an executive overview of this research, please click here. The final report will be available in November, and you can purchase it now at a discount.
One of the things we’re seeing in the software market is an increased focus on real integration and improvement of user interfaces. While the suite market is still very new, and most organizations cannot adopt an entire suite, vendors are moving beyond the simple “four packages from the same vendor” toward a truly integrated solution which uses a common user experience.
We met with the executives from Workstream, who launched their next-generation talent management 2.0 product with much fanfare. The product looks fantastic, and in fact the dashboard interface is so sexy and appealing to business people that many people crowded around the Workstream booth just to see how it worked. We believe that Workstream has done an amazing job of integrating the products from four acquisitions into a seamless product set. While there is still much work to do behind the scenes, we believe Workstream will pick up speed and gain market momentum in the next 12 months.
The topic of competencies came up a lot in our meetings. As strong advocates of competency management as a foundational process for talent management, we found ourselves very well aligned with the thinking of many companies. In particular we had several in-depth meetings with SHL Group, one of the largest (but not well know in the US) talent management solution providers in the world. SHL, a $155M company, provides a deep research-based solution for psychographic and skills-based competency assessment. Such competency assessment, built upon many years of behavioral research and the company’s well-developed competency model, can be used for many high-value talent management problems:
• Assessing candidates for hire
• Assessing skills during restructuring, mergers, and acquisitions
• Assessing high-potential managers for leadership positions
• Assessing highly skilled professionals for succession planning.
The value of solutions like SHL Group and Vangent (a similar company which has just entered the US market with excellent solutions) is tremendous: huge increases in the quality of hire, rapid assessment of candidates for organizational transitions, and tremendous efficiency improvements in hiring.
While these companies (SHL Group and Vangent) tend to compete with Taleo, Kenexa, and other software providers, in many ways they are complimentary – by focusing intensely on providing world-class assessment solutions, they greatly increase the value of any talent management system.
We had an excellent meeting with Rudy Karsan, the CEO of Kenexa. Kenexa, a company which most talent management solution providers emulate, thinks about talent management the way we do – as a business solution, not an HR solution. Rather than focus on increasing speed and reducing cost, Kenexa’s solutions (software, content, and consulting) focuses heavily on improving the quality of hire and quality of management – focusing on helping people “hire the best” and “retain them.”
Our discussions focused on many strategy issues, including the company’s 2006 acquisition of leading recruitment software provider BrassRing and its inevitable march into the talent management software market. While Kenexa’s total go-to-market strategy focuses on business-driven consulting and organizational design strategies, the company is now generating more than $100M in revenue through software and platforms, making it a very important player in the talent management systems market.
As Kenexa continues its global reach and expands its talent management solutions, we believe the company is likely to enter the important market for learning solutions. All our discussions with HR managers at the show confirmed our findings here – all talent management strategies are dependent upon strong strategies for competency management, learning, coaching, and employee development.
Vurv, a fast-growing and increasingly important player in the market for talent management suites, introduced Vurv Perform 4.0, highlighting the company’s new performance and succession planning system. Vurv now has an integrated suite with strong features for recruiting, compensation, performance management and succession planning (available in 2008). Through its acquisition strategy the company has completely transformed itself from Recruitmax to a provider of complete talent management software solutions. We have always been impressed with Vurv’s heavy focus on ease-of-use and the company’s integrated offering of 70,000 different content objects: competencies, job descriptions, behavioral indicators, interview questions, and coaching ideas – for use in recruiting and in performance management. Armed with a strong new Senior VP of Global Sales, we believe Vurv will also be growing rapidly in 2008. The company truly demonstrates its “Vurv” through its enthusiastic and positive approach to this confusing market.
We met personally with Larry Dunivan, Vice President of Products for Lawson, to discuss their newly announced strategic human capital management suite. Larry introduced us to two of Lawson’s new customers – Sitel and CommerceBank. Both customers were very pleased with Lawson’s collaborative approach to HCM software product development – one had switched from Oracle to Lawson and the other was going through a major expansion to HCM due to organizational growth.
Because Lawson is an ERP software provider (the company offers an HRMS and complete financial application, similar to Oracle, SAP, and Workday), the company’s HCM software can be totally integrated into its other applications. (See our research bulletin on Building an Integrated Talent Management Systems Architecture for more details on this issue.) The company’s performance at the “HCM Battle” against Oracle and Workday was excellent – almost all of the viewers rated Lawson far above Oracle in its ability to deliver an integrated HCM suite. While Lawson is not a fast-growing company, it has more than 4,000 existing customers who are now excellent prospects for the company’s integrated HCM suite.
I had the pleasure of flying to Chicago with two key Taleo employees from the product management organization. As we have written about earlier, Taleo’s newest product, Performance 2.0, takes a groundbreaking new approach to performance management, with a very user-centric “Facebook-like” user interface which avoids the typical screens of data entry fields, tabs, and pull down menus. While the product is not in general availability yet, we believe Taleo’s offering will “make waves” in the performance management market because it helps companies understand how these systems can truly move from “performance appraisal automation” systems to “employee management support” systems.I firmly believe that the performance management software market is going to change rapidly in the next few years, and quickly morph into a platform for all aspects of management – far beyond appraisals, 9-box grids, and development plans. Taleo sees the same potential in this segment.
One of the bigger eye-openers to me at this event was our meeting with Salary.com. This is a publicly traded company with very strong momentum (a market capitalization of $245M, on sales of about $30-35M, a very high multiple – almost 5-times higher than LMS companies, for example). While the company is most widely known for its large database of compensation data and its compensation analysis system (which is used by more than 7,000 organizations), the company also has built a talent management suite. Salary.com’s TalentManager® is designed to implement performance management and tightly link it to the company’s compensation management and analysis system. Such a system is very well positioned in the market for “pay-for-performance” solutions.In addition, Salary.com recently purchased ITG Competency Group, a well positioned company with one of the largest databases of skills and competencies in vertical and functional job areas. ITG is a small company with deep competency models which have been developed over many years. The combination means that Salary.com has the ability to build out a complete talent management system with world-class competency libraries included. ITG also works with every other software vendor and will continue to offer its content in partnership with other solution providers. Ultimately Salary.com is assembling an excellent software solution – we just believe the company needs to focus its marketing emphasis on driving higher awareness of these products.
Another interesting and important player in the talent management software market is StepStone. StepStone, a $175M public company, is one of Europe’s largest providers of job portals. In fact, in Europe the term “StepStone” has become a noun to signify a job website.
Earlier this year the company acquired ExecuTRACK, a complete HRMS and HCM system used widely by mid-market companies in the US and Europe. This summer the company rebranded the product StepStone ET Web Enterprise. The product is well known throughout the world, with customer such as Lufthansa, McDonald’s Deutschland, DHL, Cadbury Schweppes, Statoil, and others. The company has just set up their US sales and service organization in Austin, Texas and we expect them to start an aggressive push on the US market. StepStone’s system is discussed in detail in our Talent Management Suites research, available in November.
Workscape is a very interesting and increasingly important company in this market. Workscape’s core offering is a rich, enterprise-class compensation, benefits, and incentive system. The system is one of the most sophisticated and enterprise-class systems we have seen. In fact, IBM uses Workscape to manage compensation plans and budgets for more than 300,000 employees (imagine the complexity) – and the company also recently signed an agreement to provide compensation management for another similarly sized global consulting firm. Workscape introduced their performance management application, which gives the company one of the most integrated and configurable solutions for pay-for-performance on the market.
We spent a few hours with Authoria at the show as well. We have always considered Authoria one of the most knowledgeable and forward-thinking talent management systems vendors. The company developed their suite strategy years ago, and through the acquisition of highly capable companies, has developed an integrated solution for recruiting, performance management, salary and incentive compensation, and benefits communication. The Authoria 2007 platform, the company’s new integrated technology platform, is now becoming available.
Authoria had two particularly notable announcements at this conference. First, the company released a new version of its recruiting product. This new release focuses even heavier on helping organizations manage “quality of hire,” by taking advantage of an improved employee profile (“job model”) which integrates pre-hire questionnaires with resumes and other candidate information. As we discuss in our bulletin on selecting a talent management architecture, these types of “employee profile” extensions are critically important to understanding how to focus on hiring the “best” people, not just improving hiring speed or reducing hiring cost.
The second, and probably more interesting news, is that Authoria won the “Performance and Recruiting Shootout” – competing against HRSmart, SuccessFactors, and Vurv. Authoria’s well-developed recruiting application (a very mature system purchased from Hire.com) and the company’s elegant user interface stole the show. Our principal analyst Leighanne Levensaler, worked closely with Bill Kutik, show chairman, to develop this script. You can see this script demonstrated by other vendors at our IMPACT 2008: The Business of Talent™ conference in April. (www.bersin.com/impact) .
Let me make one mention of a company we all know well, IBM. As many of you know, I spent 10 years of my career at IBM and continue to have admiration for this amazing company. I spent several hours with Tim Ringo, IBM’s new Global Leader of Human Capital Management services. The company has clearly “woken up” to the market for talent management systems, processes, and business consulting. Tim has effectively convinced IBM that this market is real and transformational – and is now actively recruiting around the world to grow the consulting organization. I will not disclose any of IBM’s strategies (I am sure they will be visible to many of you), but suffice it to say that IBM has a unique ability to bring business and technology expertise, software, and an extensive internal experience in talent management to this market.
The LMS and Performance Management Systems Market
I had the privilege of giving an in-depth presentation on the market for LMS and performance management systems. Even though the session competed with one of the shootouts, we had more than 250 people in attendance. The LMS market continues to be big, evolving, and confusing to many companies. For more details on this presentation, you can view an online version of this presentation by going to our website.
We had many conversations with research clients at our reception, including Starwood, The Gap, Molex, ING Bank, OwensCorning, Wachovia, and many others. In general we found that most organizations are quite baffled by the wide range of options, multitude of possible technology strategies, and rapid changes in the HR systems market. To help organizations sort this out, we are publishing a separate research bulletin, “How to Build an Integrated Talent Management Systems Strategy” which highlights the important issues to consider.
One of the things which come up regularly with clients is the tension between IT and HR. In today’s rapidly changing HR Systems market, it is important for both teams to get on the same page and build a 3-5 year strategy for these systems, with contingency plans for various market changes. With the landscape changing as rapidly as it is today, it is impossible to predict where the market will go – so please read this bulletin if you are in the middle of this process.
While much of these comments discuss software and vendor services, this conference grew to over 1,000 paying attendants this year (biggest ever). This tells me that talent management and technology has moved to center stage. We will continue to focus our research in this area, giving our readers and research members the most business-oriented, pragmatic, and high value advice and services in the market.
PS: Remember to register for our WhatWorks® in Talent Management newsletter, which reaches more than 90,000 HR professionals around the world.