Forrester Wave Human Resource Management Systems Q1 2012 1

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<ul><li> 1. January 25, 2012The Forrester Wave: HumanResource Management Systems,Q1 2012by Paul D. Hamermanfor Business Process ProfessionalsMaking Leaders Successful Every Day</li></ul><p> 2. For Business Process Professionals January 25, 2012 The Forrester Wave: Human Resource Management Systems, Q1 2012 Workday Leads, Followed By Oracle PeopleSoft, Oracle EBS, And SAP by Paul D. Hamerman with Connie Moore and Emily Fowler-CornfeldExecuti v e S u mma ryForresters 69-criteria evaluation of human resource management system (HRMS) vendors found thatWorkday, Oracle PeopleSoft, Oracle E-Business Suite (EBS), and SAP lead the pack; each has its ownunique strengths. Workdays strong core HR functionality and advanced SaaS technology platformplay well against perennial Leaders Oracle and SAP, which offer breadth and global reach with a moretraditional on-premises or hosted deployment approach. Oracles new Fusion HCM solution is a StrongPerformer in its first release; we expect it to gain breadth and maturity in subsequent releases. Severalother HRMS vendors have, like Workday, embraced SaaS as the deployment model of choice; SaaS-onlyvendors ADP, Ceridian, and Ultimate Software are Strong Performers. Ultimate shows solid functionaldepth and breadth and is a good choice for US-based companies of all sizes. ADP and Ceridian haveembarked on complete HRMS makeovers, with ADP Vantage and Ceridian InView coming to market instages in 2011 and 2012. Lawson Software, an Infor affiliate, is another Strong Performer and is movingto transition core HR functionality to its newer talent management platform.tabl e o f Co n te n ts NOT E S &amp; RE S OU R CE S 2 HRMS Products Improve Talent Support AsIn August 2011, Forrester evaluated solutions SaaS Gains Momentumfrom nine HRMS vendors: Automatic Data 5 HRMS Evaluation Overview Processing (ADP), Ceridian, Infor-Lawson,Oracle E-Business Suite, Oracle Fusion, Oracle 7 HRMS Vendors Offer Product Depth And APeopleSoft, SAP, Ultimate Software, and Commitment To InnovationWorkday. In addition, Forrester contacted 5310 Vendor Profilesuser companies to assess customer satisfaction12 Supplemental Materialwith the various HRMS products.Related Research Documents Manage Master Data About Your PeopleOctober 26, 2011 The Forrester Wave: Talent Management, Q22011May 23, 2011 HRM Solutions: Traditional Models Clash WithNext-Generation Processes And TechnologySeptember 24, 2010 2012 Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRankings, and Total EconomicImpact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective owners. Reproduction or sharing of thiscontent in any form without prior written permission is strictly prohibited. To purchase reprints of this document, please email For additional reproduction and usage information, see Forresters Citation Policy located at Information isbased on best available resources. Opinions reflect judgment at the time and are subject to change. 3. 2 The Forrester Wave: Human Resource Management Systems, Q1 2012For Business Process ProfessionalsHRMs Products Improve Talent Support As SaaS Gains MomentumHRMS applications consist of a broad set of business process and analytical capabilities spanning theemployee life cycle: hiring and onboarding, personnel and benefits administration, compensation,payroll, compliance, performance management, succession planning, and career development.The HRMS Provides Essential Process And Information SupportThe HRMS is a foundational application suite used by companies of all sizes and in all industries.The need for an HRMS is driven by several fundamental and potentially mission-critical businessneeds, including: Managing personnel costs. The cost of labor is among the largest operating cost categories, accounting for approximately 26% of US companys total revenues on average.1 Organizations use the HRMS to plan and budget salaries and positions, maintain consistent compensation and promotion practices, control hiring, and manage layoffs. Operating efficient business processes. The HRMS supports a myriad of HR business processes, including personnel actions, employee record maintenance, employee pay, and benefits management. These activities have traditionally been labor-intensive and paper- based. Efficiency gains come from making these transactions directly accessible to employees and managers via web-based functions within the HRMS, eliminating the need for paper and clerical intermediaries. Complying with regulations and managing legal exposure. Another important reason to invest in an HRMS is compliance and risk management. Numerous compliance laws and risks exist that are related to equitable pay, overtime, time off, hiring practices, employee conduct, and working conditions. The HRMS, as the system of record for employees, helps to meet compliance obligations and manage risks. Increasing the value of human capital. Organizations with a strong HR function will focus on performance, employee development, and reward programs to achieve better retention and higher workforce productivity. A comprehensive HRMS, often supplemented by best-of- breed talent management solutions like learning management systems and recruiting systems, supports these human capital initiatives.HRMS Footprints Gain In-Depth Talent, Analytics, And Global CapabilitiesAlthough the overall breadth of HRMS application suites has not evolved significantly over the pastseveral years, their depth of functionality has improved in several areas (see Figure 1): Talent management. Comprehensive HRMS applications continue to add more depth to their process functionality in talent management. Progress can be clearly seen in several talent areas,January 25, 2012 2012, Forrester Research, Inc. Reproduction Prohibited 4. The Forrester Wave: Human Resource Management Systems, Q1 20123For Business Process Professionals especially performance management, goals and competency frameworks, performance-based compensation, and, most recently, succession planning. We find that most companies prefer to use best-of-breed talent solutions to supplement the HRMS, but the increasing quality of talent management components within HRMS suites will make it more difficult to justify separate, specialized vendor solutions for these processes. Recruitment and learning capabilities with HRMS suites, however, continue to lag further behind best-of-breed solutions.2 Global and localized capabilities. Enterprise resource planning (ERP) titans Oracle and SAP continue to lead in supporting the most languages, local compliance requirements, and global capabilities (e.g., data and currency formats), but this is a significant area of investment for other vendors. Workday has good capabilities in this area as well. Customers are increasingly calling upon HRMS vendors to support a multinational workforce, and the global and localized capabilities also support vendor efforts to expand sales and distribution beyond their home markets. Embedded analytics. The lack of user-friendly reporting and analytical capabilities has been a frustrating shortcoming of HRMS solutions over the years. Improvements are evident in several solutions, where the best capabilities provide embedded analytical information displayed within the context of the application rather than having to use specialized reporting tools to extract the information. Embedded analytic content is evident in most of the solutions evaluated and is more prominent in the newer products, including Oracle Fusion, Workday, and ADP Vantage HCMs new talent management component.3 Organizational charting. Hierarchical reporting structures are important in the HR context to define organizational reporting relationships and approval processes, as well as for succession planning. Historically, HRMS vendors have typically relied upon third-party plug-ins for graphical organizational charting.4 Most of the HRMS suites evaluated now include graphical organizational charting within their core solutions; some, like Oracle Fusion and Workday, use it extensively as a navigation paradigm for accessing process functions and employee profiles. 2012, Forrester Research, Inc. Reproduction Prohibited January 25, 2012 5. 4 The Forrester Wave: Human Resource Management Systems, Q1 2012For Business Process ProfessionalsFigure 1 HRMS Application Footprint User experienceExtended Contingent interactionsEmployeeManagerContent andReporting processes processes worker communicationsand analysisprocesses Performance and talent development processes TalentmanagementGoal andEmployeeSuccession competency Learning Career processes performance planningmanagement advancement managementCompensation processes Staffing and recruiting processesExecutive andWorkforceApplicant New hireSalary Merit and Requisitionsnoncashplanningtrackingonboardingstructuresbonuscompensation Workforce management processes Transactional processes TimeTimePaid time-offcapture interpretationprogramsTransactional HRMS processes Employee recordsBenefits Position HRand personnelPayroll administration managementcompliance actions57565 Source: Forrester Research, Inc.The HRMS Market Has A Moderate Growth Rate, But SaaS Is Growing FasterHRMS application suites are the largest segment of the $9.5 billion market for HRM software andaccount for half of its total revenue ($4.7 billion).5 The growth rate in this segment is 8.2%, which ishealthy but is substantially less than the faster-growing best-of-breed talent management segment,which has a 16.5% growth rate.Although on-premises, licensed software is the traditional deployment model for HRMSapplications, SaaS revenue is growing at a 15% rate, nearly twice as fast as the HRM applicationmarket as a whole. Key drivers of SaaS HRMS adoption include faster implementation times andautomatic software upgrades and updates. Improvements in software configuration flexibility innewer products like Workdays also make this deployment model attractive to organizations of allsizes. Four of the nine vendor solutions that we evaluated in this Wave ADP, Ceridian, UltimateJanuary 25, 2012 2012, Forrester Research, Inc. Reproduction Prohibited 6. The Forrester Wave: Human Resource Management Systems, Q1 20125For Business Process ProfessionalsSoftware, and Workday offer SaaS as the only deployment method, and the remaining fivevendors have SaaS available as an option (in some cases via partners).The HRMS Vendor Landscape Consists Of Four Types Of Solution ProvidersThe vendors providing HRMS solutions fit into four main categories: ERP vendors. Many of the leading ERP software vendors offer an HRMS as an application component of their overall suites. Within this Forrester Wave evaluation, Infor-Lawson, Oracle, SAP, and Workday fall into this category.6 ERP HRMS solutions not evaluated in this Wave include Epicor Software, IFS, Microsoft Dynamics (AX and GP), Oracles JD Edwards, and Sage Software. Pure-play HRMS vendors. Several software vendors specialize in HRMS applications as their core competency. Of the vendors in this evaluation, Ultimate Software falls into this category. Pure-play HRMS vendors not evaluated in this Wave include High Line, HR Access, Meta4, and NuView Systems. HR/payroll outsourced service providers. Several providers of HRMS solutions offer outsourcing services related to payroll, benefits, and HR as their core business. Two of the leading payroll service providers, ADP and Ceridian, are included in this evaluation. NorthgateArinso is another HR service provider that offers its own HRMS solution functionality but was not evaluated in this Wave. Learning and talent management vendors. A few vendors historically associated with the realm of learning and talent management have recently begun to offer HRMS functionality (excluding payroll). These vendors, none of which was evaluated in this Wave, include SilkRoad Technology, SuccessFactors, and SumTotal Systems.7HRmS Evaluation OverviewTo assess the state of the HRMS market and see how the vendors stack up against each other,Forrester evaluated the strengths and weaknesses of nine top HRMS vendor solutions.Evaluation Criteria Focus On Functional Depth, Technology, And Solution StrategiesAfter examining past research, user needs assessments, and vendor and expert interviews, wedeveloped a comprehensive set of evaluation criteria. We evaluated vendors against 69 criteria,which we grouped into three high-level buckets: Current offering. Our current offering assessment evaluated the completeness of business process functionality across core transactional areas (including personnel, benefits, 2012, Forrester Research, Inc. Reproduction Prohibited January 25, 2012 7. 6 The Forrester Wave: Human Resource Management Systems, Q1 2012For Business Process Professionals compensation, payroll, compliance, and time and attendance) as well as strategic talent management processes (recruiting, performance, learning, succession planning, goals and competencies, and career advancement). We assessed employee and manager role capabilities, international capabilities, and customer experience characteristics related to upgrades, maintenance, and customer references. We also evaluated technology architecture characteristics such as flexibility, usability, and integration and deployment options related to SaaS and complementary outsourced services. Strategy. Our assessment of the vendors strategies factored in their business and technology vision, product road maps, market positioning (e.g., industries, geographies, and company size), cost and value factors, research and development investment, and strategic alliances. Market presence. Our assessment of market presence factored in overall financial viability, the installed base of customers (including the aggregate number of employee lives managed), and the number of sales and implementation resources at each vendor.Evaluated Vendors Serve Global Enterprises And The US MidmarketForrester included nine HRMS solutions from seven vendors in the assessment: ADP, Ceridian,Lawson Software (an Infor affiliate), Oracle E-Business Suite, Oracle Fusion HCM, OraclePeopleSoft, SAP, Ultimate Software, and Workday. The vendors invited to participate in thisForrester Wave evaluation met the following qualification criteria (see Figure 2):8 Core transactional capabilities. At a minimum, the HRMS has functionality that includes HR core transactional capabilities: personnel, benefits, US payroll, compensation, compliance, and self-service. A market presence that includes the US. The HRMS supports and has a market presence for US-based companies (including payroll) at a minimum. A focus on customers with more than 1,000 employees. The HRMS is primarily aimed at companies with 1,000 or more employees and crosses most industry sectors. Substantial vendor revenue and e...</p>


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