Looking Ahead: Key Trends Shaping the HCM Vendor Landscape

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Looking Ahead: Key Trends Shaping the HCM Vendor Landscape

Jim HolincheckVP – HCM [email protected] 26, 2007

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© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

HCM Software Hype Cycle

Warehouse Labor Management Systems

Technology Trigger

Peak ofInflated

Expectations

Trough of Disillusionment Slope of Enlightenment Plateau of

Productivity

time

visibility

Years to mainstream adoption:

less than 2 years 2 to 5 years 5 to 10 years more than 10 yearsobsoletebefore plateau

As of August 2007

HRMS

Employee Self-Service (HCM)

E-Recruitment

Compensation Management (Compensation Professional)

Manager Self-Service (HCM)

Workforce Analytics

Time and Labor Management

Employee Performance Management

Succession Management

Compensation Management (Line Managers)

Talent Management Application Suites

Workforce PlanningWorkforce Decision Support

Comprehensive Human Resources BPO

Payroll Outsourcing Benefits Administration Outsourcing

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Key Issues

• What are the trends happening right now than will impact the future direction of HCM software?

• What is the future direction of HCM software?

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Key Issues


• What is the future direction of HCM software?

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What are the Key Strategic HCM Drivers Today and Tomorrow?

Attract/Retain Talent• Key C-Level Executive

Issue• Focus required on

Key/Critical Talent• What attracts talent may not

be the same things that retain talent

Develop Next Gen Leaders• Identify HiPos and

Readiness• Define Appropriate

Development Plans• Understand risks and craft

retention strategies

Pay for Performance• Link individual Goals to

Corporate Goals• Spend Scarce

Compensation Dollars Wisely

• Encourage desired actions and behaviors

Link HCM to Bus Results• Understand

correlation/causality of HR initiatives and business metrics

• Proactively plan for future workforce needs based on business drivers

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Workforce and HR Challenges Grow in Complexity

Workforce Demographics• Aging Workforce• Generational Differences in the

Workforce• Globalization of Work

Workforce Challenges• Employee Engagement• Leveraging Contingent Labor• Dealing with Change• Increasing Technology

Sophistication

HR Challenges• Credibility• Business Acumen

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Reporting/Analytics

Portal/Self-Service

Personnel, payrolland benefits

Integrated Core HRMS

E-Learning

SuccessionManagement

ContingentWorkforce

Management

CompensationManagement

PerformanceManagement

E-Recruitment

Time andAttendance

LaborScheduling

On Premise Hosted/SaaS

Single-ProcessOutsourcing

MultiprocessBPO

Human Capital Management Systems Landscape

TalentManagement

WorkforceManagement

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Key Issues


• What is the future direction of HCM software

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The Future of HCM Applications

Automate Enable Partner

Key Enablers

ProductFocus

Personnel Admin Benefits Admin Payroll Applicant

Tracking

E-Recruitment Performance Mgt. E-Learning Compensation Mgt. Succession Mgt.

Decision Support Planning Talent Process

Management Collaboration Non-Routine

Self-Service End User

Reporting

SaaS Competency Mgt. Business

Intelligence/ Dashboards

BPO

SOA/Web 2.0 Integrated TM

Apps Social Software Analysis/

Forecasting Tools

2011 Type B Type AType C

2007 Type AType C Type B

A=Early adopter, B=Mainstream,C= Late adopter

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Evolving Approaches to Developing and Delivering Software

Services: The New Delivery Model

Growth of Granularity in Software:

• Driven by demand for more granular business processes and increased enterprise agility.

• Enabled by Service-Oriented Architecture, Business Process Management, composite applications, reuse, metadata, etc.

Shifts to

Well-Defined, Atomic Functional Components and Processes

ApplicationMonoliths

OpaqueBoxes

Next – Event-Driven Architecture: Events and services

State held in storage

Long-chained business processes

Software as Service Subscription model Remote delivery

Business Services JIT/Pay per use Business-process-focused

Software as Product License model Customization required

Managed by Service Provider: Customer buys access to application.

Services Provisioned by Service Provider: Customer buys a service with no awareness of application.

Managed by Customer: Customer buys application.

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Web 2.0 Defining CharacteristicsTechnology

• Principles: WOA, data-driven, syndicated content, rich semantics, mashable, rich client, build by example

• Aspects: Architecture & Platforms

Community

• Principles: Participation, collaboration, social, transparent

• Aspects: People, Interaction, Data

Business

• Principles: Long-tail, continuous innovation, collaborative offerings, open business models

• Aspects: "Ecosystem," process, value models

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Inverting Worldviews — How Do You See the World?

• People's behaviors are artifacts of the transactional process they participate in

Or

• Transactions are artifacts of ways people add unique value

Business Goals

Transform Transform New RulesNew Rules

EffectivenessEffectiveness(Non-routine)(Non-routine)

Productivity and Productivity and CostCost

Operations and Operations and Hygiene Hygiene

Enterprise Transactional Systems

Social Process Support

Personal Tools

Sustaining Investments

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What Role Does Technology Play in Business Transformations Like P&G's?

P&G's transformed innovation strategy enabled it to more than double its market capitalization

• Moved from research and develop to connect and develop- Internal research no longer sufficient for growth. New goal: 50% of innovations

from outside (CEO Lafley)- Outsiders (firms and individuals) willing to sell and buy ideas- Exploit the 200 times as many researchers outside P&G

• This is not outsourcing innovation: collaborate and leverage internal skills

• Proprietary networks and technology entrepreneurs- Content mining through face-to-face trade fairs- Co-create with top suppliers' 50,000 engineers leveraged by P&G's 7500

• Open networks: NineSigma, InnoCentive, YourEncore, yet2.com• Internal idea exchanges • Web community-based market research

IT is a great enabler

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Non-Routine Behaviors — Five Key Words

Business Goals

Transform Transform New RulesNew Rules

EffectivenessEffectiveness(Non-routine)(Non-routine)

Productivity and Productivity and CostCost

Operations and Operations and Hygiene Hygiene

Enterprise Transactional Systems

Social Process Support

Personal Tools

Sustaining Investments

Behavior Category

Example Technology's Role — Augment, not Automate

Discover Threats and opportunities

Simulation, communications, search, predictive analytics, BI, modeling tools (Excel), surveys…

Innovate New processes, products, services, segments …

Automatic contextual search, agents, professional communities…

Team Find the right people, brainstorm, norm, bond, orchestrate, …

Social software, expertise location, social network analysis, brainstorming, idea tracking, informal project management, …

Lead Execute change plan, manage unstructured process

Web conferencing, group project management, employee performance management

Learn From experience E-learning suites, …

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Corporate Challenges• Goldcorp $575,000 prize offer

- Exposed all geological information.- Thousands contributed, including students, consultants, soldiers, physicists and

mathematicians.- Fifty five new targets, 80% provided significant yield: billions of dollars of gold identified. - Market capitalization grew more than twenty times.

• Prizes not new in commerce- 1714 Longitude solution prize (£20,000 about $5 million today). Newton thought the

answer lay in astronomy. Harrison(a joiner) won with a clock.

- 1919 Orteig prize for New York to Paris nonstop flight ($25,000) won in 1927.

- 2002 Ansari X Prize — SpaceShipOne.

• X Prize Foundation: Revolution through competition

• DARPA Urban Challenge:- $2 million, $1 million and $500,000 prizes

Image © 2005, TMAustin

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A Model for Workforce Analytics

DecisionSupport

ExecutiveReporting

OperationalReporting

AdministrativeReporting

Roles

HR Analytics Professionals

Executives

Line Managers

HR Professionals

TypesWorkforce Decisions• Interventions• Opportunities• Planning

Workforce in Contextof Business (e.g., Balanced Scorecard)

Workforce-Specific (e.g., headcount)

Application-Specific• Regulatory Reports• Ad-Hoc Reports• Inquiry

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Proactive Workforce Planning Highlights Emerging Issues

Source: Vemo

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Reaching the Promise: Integrating Talent Management and Workforce Analytics

EO = Expected OutliersUO = Unexpected OutliersTD = Targeted DevelopmentTR = Targeted Retention

Case Example: Improving Sales Leadership Performance at a Pharmaceutical Company Approach

• Correlated behaviors with sales performance.• Identified seven differentiating behaviors.• Develop profile for top performers.• Determined ROI.Results• Top performers contributed 25%-50% more than

others.• Found correlation between a few key behaviors

and high performance.• 5% improvement in key behaviors translated into

$40 million increase in sales.Actions• Modified interviewing process and tools to hire

sales leaders with strength in critical behaviors.• Changed promotion criteria.• Integrated critical behaviors with assessment

process.• Revised training and development program.• Job descriptions rewritten for all sales positions.• Used communication and accountability to

facilitate development.

EO

TR

TD

UO

Source: viaPeople

360-Degree Feedback Behavior Ratings

3210-1-2-3

Sales Contribution

2,000,000

1,000,000

0

-1,000,000

UO EO

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Making an Impact on the Bottom LineCase Example: Improving Controllable Contribution at a Retailer

Approach• Created a conceptual linkage model between

employee experience (tenure), employee perceptions, employee behavior, and business outcomes

• Tested the model to see which variables were correlated to higher CC

• Determined the impact of changes in variables on CC• Defined actions to take to make improvements in

variableResults• Aggressive case: 1 standard deviation improvement in

variables would lead to a $210 million improvement in CC

• Worthy case: ¼ standard deviation improvement would lead to a $50 million improvement

Actions• Managers target workgroup engagement behaviors to

ensure high employee engagement• Identify optimal level of store manager time in position• Assess competitiveness of total pay vs. market

Employee

Experience

Employee

Perceptions

Employee

Behavior

Business

Outcomes

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Recommendations

“Skate to where the puck will be” – Wayne Gretzky