Mercer Enters the Talent Management Systems Market

After almost a year of study, Mercer, the largest provider of HR and compensation consulting services, has now entered the market for Talent Management Systems.

The company’s just released Human Capital Connect is a truly integrated offering of services, technology, support, training, and benchmarking data – all built around the Peopleclick Authoria software platform.

There are lots of things to talk about here, so let me discuss some of the most important topics for readers to understand.  (Research members can download our detailed bulletin on the offering here.)
Mercer Human Capital Connect
A Truly Integrated Offering

First, this offering is the first “truly integrated” solution for the design, implementation, rollout, and ongoing support of a talent management program.

Mercer’s took a total “value add” approach here, realizing that the challenge of talent management is not the problem of selecting and implementing software, but the entire problem of building business alignment, designing new processes, training managers how to use these processes, supporting their use of a new platform, developing a set of reports and tools to measure the processes, and then continuously refining this entire “business system” as the company’s needs change.

We do consider talent management a “business system,” not an “HR process,” by the way.  The more experienced companies now know that the implementation of a platform is only a small step in the eventual development of new, integrated processes for hiring, managing, developing, and paying people.  And this “business system,” as we describe it, must be continuously tweaked and adapted as the company’s needs change – in different geographies, different business units, and across different roles.

Mercer, as a $3.3 billion HR consulting, data, and services company, understands the strategic and integrated nature of this market.  This is not only a market for “software” – it is a market for vendors to help companies truly design, implement, and evolve this whole new “business system” for managing people.

As we describe in our bulletin, in this case Mercer is the primary client interface for this entire solution.   Mercer clients will gain access to up-front assessments, technology planning and implementation, and a series of proprietary “decision guides” and competency models which Mercer has built over the years to help line managers understand how to really manage people better.  One of Mercer’s biggest businesses is in the area of compensation strategy, design, and implementation.  This whole business area is very similar to “talent management” – Mercer has experience helping companies come up with a compensation strategy, build the models, implement the models, train managers how to use the models, and benchmark themselves against other companies.  They are planning on applying this precise end-to-end approach toward the areas of performance management, succession management, as well as compensation and incentives.

So Mercer clients are getting far more than a platform, the are truly buying a “partner” who can help them design and implement the entire process.  (Note, Mercer is not addressing or delivering any services in the area of talent acquisition, employee development, training, or informal learning at this time.)

Very Different from Other Offerings

It is also important to realize that that Mercer is making a major investment in this entire solution.  Rather than simply selling “services” around the platform (which is what nearly every other HR consulting firm does), Mercer has selected one platform – and is building a specific set of end-to-end services around it.   This offering is unique in quite a few ways:

First, Mercer has been sharing its internally developed competency models, compensation models, dashboards, reports, and decision guides with Authoria and PeopleClick for many months.   These will be embedded into the solution, making it far different than an “off-the-shelf” solution from Peopleclick Authoria.

Second, Mercer is also providing “single-vendor-support” for the platform.  Mercer Human Capital Connect customers will call Mercer for support and the global Mercer support and consulting organization will take responsibility for problem resolution and success.  Peopleclick Authoria will of course provision software and provide level 2 support behind the scenes, but customers will not have the problem of a consulting firm blaming the software vendor for bugs and the software vendor blaming the consulting firm for not delivering a complete implementation.

Third, Mercer is a truly global company.  If you are a global business and want to roll out a solution that touches employees in the Middle East, Asia, Europe, and the US, Mercer’s account teams can coordinate change management, training, technical service, and advisory support.  No other company can do that today – with the possible exception of IBM or perhaps Hewitt and Accenture – all of which support multiple platforms and have not yet added significant value add over and above implementation and process design.  And in most of these cases the client must sign multiple agreements:  one with the consulting firm and another with the software vendor.

The exception to this is a global outsourcing relationship:  IBM, Accenture, Hewitt, NorthgateArinso, Talent2, and other vendors do provide end-to-end talent management solutions on different technology platforms on an outsourcing basis.   But so far these companies have operated somewhat opportunistically (with the exception of NorthgateArinso who focuses very strategically on SAP), and they tend to craft each client solution based on the technologies that the client wants.

Fourth, Mercer is adding a significant amount of content to the platform.   Remember that a new enterprise software system is kind of like a new baby:  you have to feed it and train it to do what you want.  While most vendors have lots of relationships with training providers, assessment providers, and competency management providers, it is still up to you to select what content you need, purchase it seperately, make sure it integrates well into the platform, and then customize it to fit your business processes.  Mercer is taking the time and energy to do this for their clients:  their plan is to offer ready-made competency models, job profiles, compensation models, dashboards, user guides (“Decision Guides”), and even compensation benchmarking data.  Mercer plans to connect the Peopleclick Authoria platform to e-Prism, the company’s extensive proprietary compensation database, into the platform.

What this Means for the Market

To me this a sign that the talent management software market is growing up.  No longer a market of “tools” and “systems,” companies now realize that the ultimate value of their talent management solution is the broad blend of strategy, process design, software, training, support, and data to make the “business system” work.  This $4 billion software market is one of the hottest areas of enterprise software, and most big companies do now understand that a talent management system is something they need.

Mercer is making a bold move.  They are nearly 10X larger than the largest talent management software provider and more than 30X larger than the platform provider they have selected.  The investment they can make into this space is enormous:  if done well, they will rapidly build momentum and show other vendors how to evolve their business model to meet higher level business challenges.

The challenge for Mercer is to quickly understand this space, make sure the company can truly deliver on all these wonderful plans, and communicate their value proposition clearly to the right clients.  The company does not intend to compete for “software-only” RFPs, but in my mind there is no chance they can avoid it.  Every potential Mercer Human Capital Connect client is also potentially a client for SuccessFactors, Taleo, Cornerstone, Softscape, and any other of the 40 or more talent management software providers.

Our friends at Mercer tell us that in the first 48 hours of this announcement more than 25 of the company’s global clients have asked for in-depth briefings.  Let’s hope that Mercer can turn this strategy into rapid success.  Taking a total-solution approach is a good thing for everyone:  it creates more successful adoption, makes the market healthy, and helps other vendors more rapidly sell and refine their own solutions.

1 Response

  1. John Springet says:

    Josh, consultancies have NEVER been successful doing this. IBM tried it a decade ago with CRM and failed, a number of boutiques have tried to assemble “complete solutions” from disparate vendor solutions and failed, the examples go on and on.

    It’s ironic that as an expert in competencies, Mercer doesn’t understand enough about its own core competencies to realize this is way outside its ability to develop and execute. I have the utmost respect for you and your analysis, but if history is a guide, this one is an absolute dog that has almost no chance of long-term success.