Will the Affordability Care Act be a Catalyst for HCM Analytics?

PPACA_2HR leaders on the fence about investing in an analytics platform may now have the  justification needed for moving forward, courtesy of the US Federal Government and its impending Patient Protection and Affordable Care Act (PPACA), which goes into effect on January 1, 2014.  With complex requirements and potentially significant financial consequences, the PPACA will require many employers to move beyond standard tracking and reporting platforms to more advanced, real-time decision support tools to proactively manage the many aspects of this complex legislation.

Fundamentally, the PPACA is about reducing the number of uninsured Americans  (numbered at more than 50 million in 2010) while attempting to address the affordability and quality of that healthcare coverage overall.  State-level health insurance exchanges (HIX) are being formed to make available the minimum requirements across benefit coverage and cost-sharing standards, while employers grapple with tradeoffs in health benefit plan designs and premium costs vs. the federal tax credits and subsidies available to low- and middle-income workers.

For employers, the requirements of the PPACA quickly get complicated with look-back and ongoing calculations of hours worked and future hours, benefits eligibility vs. enrollment, premiums to wages ratios, and evidentiary reporting to government agencies.  Non-compliance with this still-being-clarified legislation can lead  to significant penalties for employers, not to mention the many downstream impacts on employee relations and employer brand.

For some organizations, calculating and paying the penalty will be the quickest route to compliance while others will want to weigh various workforce modeling scenarios to determine their best approach (provide coverage as intended, reduce worker hours for a percentage of employees, etc.).  Leading payroll and workforce management platforms such as ADP, Ceridian and Kronos are actively enhancing their software to deliver the calculations and reporting required by the ACA, often including the ability to anticipate when benefits eligibility will be triggered based on future labor schedules.

Across the many mandates of the PPACA, (employer mandates, healthcare tax credits and individual mandates), behaviors at work will change that will affect the costs – both direct and hidden – of compliance choices.  Shifting workers to part-time will result in increased unemployment claims; additional part-time staff may be hired to fill the gaps of the reduced workforce; turnover may be adversely affected; workforce tax credit eligibility can be affected and additional training and ramp-up time needs to be factored in.  As they evaluate the direct costs of their compliance alternatives such as benefits premiums, labor expenses and penalties, employers must also take into account these and other indirect or hidden costs associated with their choices.

Getting to a clear understanding of the direct and indirect costs requires complex analysis and modeling, a prime use case for an analytics platform.

One of the players in this market is Equifax,  which recently augmented its Equifax Workforce Solutions division with the acquisition of analytics technology provider eThority in 2011.  Leveraging the eThority platform, Equifax is introducing a new solution called the “Affordable Care Act Impact Analysis and Management” tool to help employers model and monitor the impacts of PPACA on their business. The tool enables employers to see costs (including labor, benefit premiums and potential fines) at group or detail levels based on different modeling scenarios. It also highlights the associated costs resulting from anticipated new hires and increased unemployment claims that can offset savings from those initial scenarios, a level of analysis that many traditional payroll and workforce software providers are not offering.  Equifax can also leverage the data reported to them by thousands of employers across the country, representing tens of millions of workers, to report on labor and payroll trends across regions, industry and other segments, further augmenting the modeling scenario evaluations.  As desired, Equifax also provides additional consulting services including evaluation of new assumptions as well as overall program management and audit support.

The modeling platform is interactive, adapting to changes in law and assumptions. Delivered via subscription or available on premises, employers can access data beyond their own workforce data to make better, more informed choices with regard to how they will achieve compliance with PPACA mandates.

Investing in an analytics platform can bring more than just workforce insight and modeling capabilities: it can be a powerful tool in managing risk and compliance across the entire enterprise.  In the case of the Affordable Care Act, it may be the only tool that will effectively support employers in their daily need to monitor and manage the complexities of this legislation.  The requirements of PPACA actually begin before January 2014, with employers needing to make decisions and communicate benefit options, costs and coverage to employees during the Fall Open Enrollment schedule. Employers should be evaluating their options now, and the availability of new tools like the Equifax ACA Impact Analysis and Management solution are timely additions to the market.

Event Report: One Year Later, Ceridian Dayforce HCM Delivering on its Vision

Last year’s acquisition of Dayforce heralded Ceridian’s pivot from a payroll service bureau to an HCM vendor focused on technology and innovation. One year later, Ceridian demonstrates strong customer adoption of its new platform and continued HCM process transformation to enable HR organizations to create a more effective workforce.

 

Last month I attended Ceridian’s annual analyst forum, where members of the executive team shared their vision and strategies for the future. Ceridian HCM CEO David Ossip put an interesting spin on the role of HR in the future when he stated,

The value of HR isn’t in becoming a strategic partner. The goal of HR should be to help the company create the most effective workforce.”

This sentiment reflects the pragmatism of a team committed to innovation with tangible value; a focus on the processes, tools and information needed to create and maximize the value of the workforce.  Below are the highlights I took away from this most recent analyst briefing.

  • Ceridian continues its pivot from an HRO service provider to SaaS technology provider. With the advent of cloud services and the ability to centralize the skills and knowledge needed for optimized compliance and support, it only makes sense that businesses would look to the cloud for specialized support of processes such as Payroll and global HR. With Dayforce HCM, Ceridian is helping its customers move from former “lift and shift’” HR Outsourcing (HRO) deals to the advanced benefits of software in the cloud coupled with centralized specialization and compliance support. The platform itself includes capabilities for messaging, analytics, workforce activities, mobile access via native iOS and Android support, and other foundational items necessary for comprehensive HCM support, with collaboration advances underway as described further below.
  • Accelerating customer momentum validates the data-fueled platform. Available in the US and Canada, momentum is strong, with over 700 clients live on the Dayforce platform (of more than 1000 total clients), with roughly 30-50 clients going live each month. Approximately 15% of the live Dayforce HCM clients are those that have migrated from core Ceridian applications. One of the key benefits touted by the Dayforce clients is their ability to view and act on data BEFORE the time is worked, before payroll is processed, tackling potential problems before they happen. Other benefits include the ability to see fully burdened costs before the time is actually worked, and soon, to manage the rolling eligibility requirements of the PPACA (Patient Protection and Affordable Care Act), all through a real-time engine designed to support compliance and information needs proactively, not reactively. Batch processes or after-the-fact alerts will eventually become the purview of “legacy” vendors unable to keep pace with the demands for instant data analysis and decision support.
  • The unified, end-to-end HCM platform is emerging, but still a year or more away. Today the Dayforce HCM platform delivers core HR, Payroll, Workforce Management (Time & Labor, Absence, Leave Management) and Benefits functionality, targeted primarily to North American operations. Expanded global HR support is on the roadmap, but for global payroll, clients can immediately tap into payroll services across almost 60 countries via Ceridian’s international payroll solutions (IPS). Through this managed services offering, consolidated payroll results across global and local payroll providers can be fed back from the IPS aggregator to Dayforce payroll for global reporting.Support for more strategic talent management processes will begin with the launch of Dayforce Recruiting, targeted for Fall 2013. Ceridian today has a standalone recruiting offering, but that solution will be sunsetted as the next generation recruiting offering from Dayforce becomes available. The initial Dayforce recruiting solution will support managing the candidate’s status and progression through the recruiting lifecycle. (However, I also expect to see some innovations in scheduling and onboarding from this development team that demonstrates at every opportunity the advantages of a unified platform and real-time rules processing.) In 2012, the analyst community was advised that advanced compensation and performance management was slated for 2013, but recruiting has now taken top priority for the Dayforce HCM team. As a result, these and other investments in strategic talent management will be pushed out to 2014. There are no current plans for delivery of a learning offering (LMS) and we can expect partner solutions to fill this gap for the next few years.
  • The experiential platform takes center stage over transactional systems. The Dayforce HCM team introduced Engage, its new social platform due later this year that will become the new front-end User Interface (UI) for its applications. Ceridian clearly understands that social enablement is more than just conversations, it’s about getting real work done. In fact, collaboration is viewed as such a fundamental component to today’s workforce processes that Engage will be included in all Dayforce HCM offerings at no additional cost. Clients not yet ready for such collaboration in their core workforce can simply turn it off, accessing it in the future as desired.Continued investment will be needed before it achieves competitor status in this space, as the current focus is largely engagement via activity streams, but the initial offering of Engage will be a good first step toward both augmenting and transforming traditional work processes through social collaboration. While I agree with David Ossip that the “mobile” hype is giving way to broader considerations of “accessibility,” I do not agree that “social” is giving way to “activity streams.” The term “social” often has a conversational, non-work-related connotation; however the idea of purposeful social – social collaboration that is contextual and event-support driven – is an entirely intuitive and evolutionary approach to getting work done. Activity stream integration is important (and the initial Engage offering will include single sign-on (SSO) to facilitate this with Salesforce Chatter and Microsoft Yammer), but collaboration should also happen at the transaction itself; at the point of need.  It’s too early to know the depth of social support planned by the Dayforce team or how it will integrate more deeply with broader social enterprise networking tools.
  • Contextual content will increase in prominence. This is a continuing and interesting play for Ceridian: their EAP (employee assistance program) services via LifeWorks, acquired by Ceridian 1998. Usually we think about EAP services as a pool of resources available for employees to call when needed, or as a repository of research and information available through onsite and internet access. This market is transitioning, however, from SaaS-based solutions to a focus on more contextual content delivered to the end users (a push rather than a pull model). Ceridian has a vision to evolve its LifeWorks offering by embedding EAP content into talent-related events in the Dayforce platform, ensuring context-relevant information at the time of need. Such a move will begin to move Ceridian into the knowledge enablement space of vendors like Infor Enwisen and Peoplefluent (formerly Authoria), but they’ll have a network of EAP counselors driving much of that content development behind their offering. Ceridian’s social platform and context engine requires additional development to achieve its full potential. Regardless, it is good to hear that team thinking about enabling transactions with contextual content as they build out the future Dayforce HCM talent management offerings.
  • Continuing core investments demonstrate customer commitment. Mindful of not disenfranchising its core customer base, Ceridian continues to invest in its current applications and other service lines including international payroll, pay cards, tax filing and others. It should also be noted that Ceridian not requiring a forced migration to the Dayforce platform, allowing clients to move as appropriate for their needs.

The Bottom Line

As I indicated in my write-up last year, Dayforce HCM is positioned to perform well in a market ready for process transformation.  It has delivered a large amount of functionality in the single year since the acquisition, and net-new customer uptake validates its market readiness. Strong leadership, an unwavering commitment to customer success for new and install base clients, and innovative approaches to traditional processes make Ceridian a viable and disruptive force to watch in the HCM market.

IBM Connect 2013 First Take: Will Watson be the future of HCM?

The messages at this morning’s IBM Connect keynote event were clear: The future is “Social” and the new language of business is “Analytics”. Welcome to the future.

All morning these messages were evangelized and demonstrated, from IBM executives and their demo teams, to clients like Bosch, Caterpillar and Regeneron Pharmaceuticals, and even from a Hollywood star-slash-collaborative film development entrepreneur.  Each spoke on the transformational role that collaborative, social engagement is having in our business and personal lives, changing how we work, play, create, engage and in some cases even how we’re paid or rewarded for our efforts.

For me, one of the most intriguing aspects of the keynote came at the end, when Mike Rhodin, SVP IBM Software Solutions Group, spoke to the future and the intersection of social, analytics and people processes.  He spoke of cognitive systems like IBM’s Watson and its ability to filter through the terabytes of data created every day to see patterns, unlock the real truth about business, employees and customers, and to weave intelligence into every aspect of the fabric of a business.

Watson meets HCMFor example, Rhodin asked that we imagine a central “employee center” for global organizations – one which becomes a trusted career advisor from pre-hire through advanced roles in the organization through the continuous analysis of formal, informal, social and other inputs (structured and unstructured) to present a highly personalized, dynamic and guided  path for each individual. Not the static, pre-defined career paths of the past, but truly intelligent, contextual and adaptive guidance to the individual all throughout their career with a company.

Long term future vision?  Not as far off as might be imagined.  Today, Watson is being used in select healthcare use cases such as analyzing patient records and myriad information sources to surface recommended treatment protocols.  Applying similarly deep and broad analysis across the ‘big data’ of the enterprise, with a lens on employee success and value creation for the organization, makes complete sense.  Only big data analytics will be able to effectively interpret all the signals an enterprise may receive around its employees and drive meaningful insights and decision support – for managers and the employees alike.  Embedded cognitive systems are the necessary next step as we evolve our talent technologies and processes from transactional systems to systems of engagement and, ultimately, transform them to the experiential systems necessary to thrive in the future of work.

Of course – the answer isn’t just pure analytical power.  Human engagement and analysis will still be needed.  Even in the Watson-recommended healthcare protocols referenced above, the physician and other caregivers use the results to inform and guide their actions; ultimately the healthcare provider makes the final decision.  Likewise, in the career management and other employeee-oriented engagement scenarios, the cognitive system-delivered paths will serve as guides to inform individuals; Watson won’t replace the person-to-person conversations and analysis that will ultimately drive the employee’s action.  What’s transformational, however, is the richness of information that will inform those individual actions, that can make recommendations based on previously hidden patterns and connections, all because of the capabilities of real-time analysis of vast quantities of seemingly disparate information.

Many announcements are underway here at IBM Connect and the opportunities for the  HCM market are numerous; more to follow in upcoming days.  Meanwhile, let me know what you think about the idea of Watson and related systems and the opportunities for HCM.

Disruptive or Enabling? Social Technologies in Talent Management

Bring up the subject of social tools to business leaders, and many will still take the position that these technologies have little to no real value in supporting daily workplace initiatives. But whether these leaders are ready for it or not, today’s workers are bringing expectations for social and mobile technologies into the workplace. Ever-connected, accustomed to instant access to information and people, social and mobile technologies are simply the way we live and work today.

cloud3In a few weeks I’ll be publishing the first in a series of reports detailing both the disruptive and enabling effects of social technologies on talent management practices and technologies. The first of these reports provides a comprehensive look across nine primary categories of talent management, highlighting the evolution and transformations taking place as a result of social, mobile and cloud technologies.

Preliminary findings from this research have already been published in the latest edition of Workforce Solutions Review, a publication of the International Association for Human Resource Information Management (IHRIM).  In that issue, I discuss a few of the emerging realities within the future of talent management:

  • Talent sourcing and acquisition has gone social;
  • Goals, initiatives and tasks are more immediate and transparent;
  • Identifying top talent benefits from richer insights;
  • The “system of record” becomes a portable, holistic profile; and
  • Concepts in customer analysis are informing HCM analytics.

The article also looks to the future and notes that social and mobile experiences
are impacting more than just processes; they’re also impacting how software is being developed, delivered and consumed.

For an early glimpse into the findings from this body of research, download the full article here.

Ultimate Software Advances a People-Centric, Collaborative Platform

Last week I attended Ultimate’s User Conference, held in Las Vegas, to participate in their analyst events as well as to speak on the topics of employee engagement and talent management. Despite the many possible diversions, (“gamification” certainly has new – or is that old – meaning in Vegas), the content, customers and speakers were such that for 3 days I never left the Bellagio nor made it beyond the conference venue. But what happens in Vegas shouldn’t stay in Vegas when the news is impactful, and at Ultimate Connections 2012, where over 1100 people gathered to participate in more than 70 sessions, a lot happened.

Skip down to my POV if you’re familiar with Ultimate and the major announcements at Ultimate Connections. Otherwise please read on.

Background

If you’re not familiar with Ultimate Software, it is a leading provider of SaaS-based Human Capital Management solutions. In business since 1990, Ultimate serves more than 7 million employees across 2300 customers. The client list includes a veritable “Who’s Who” across a wide variety of industries with companies such as Callaway, Subway, Wente, Quicken, Major League Baseball, The Container Store, Jockey International, Adobe Systems and Google among the roster. Ultimate has demonstrated impressive growth, with 2011 revenues of $269M, up 18% from the previous year, and expected 23% growth to $330M in revenues for 2012.

In 2002 Ultimate pivoted from an on-premise solution to a SaaS model. That year it launched SaaS-based UltiPro, and became one of the first vendors to provide SaaS HCM during a time when many still questioned the viability of delivering HR and Payroll in the cloud. It continued selling on-premise licenses through 2009, and today has fewer than 300 customers still utilizing that platform.

Ultimate has two offerings depending upon employee size: UltiPro Enterprise for organizations with 1000 or more employees, and UltiPro Workplace (a somewhat scaled down version of Enterprise) for companies with 250-999 employees). Uptake of the SaaS products beyond HR and Payroll has been significant, with 60% or more of new customers including one or more talent modules in every deal.

Ultimate today provides payroll for US and Canada; it doesn’t have a truly global payroll solution – nor does it aspire to. Their strategy is to deliver global HR and compliance support through UltiPro while facilitating integrations for local payroll solutions where clients pay employees in countries outside of the US and Canada. Multinational employers are fully supported through this approach.

Over the years, Ultimate has displayed a refreshingly focused approach: it doesn’t want to dominate the world; it doesn’t endeavor to take on Oracle or SAP and become the next global ERP. Ultimate’s focus remains solidly on providing end-to-end people management systems for predominantly US- and Canadian-based organizations. It is not a payroll service bureau, yet 65% or more of its business comes from organizations leaving the service bureau solutions of ADP and Ceridian. As demonstrated over the years and at last week’s conference, this focus does not preclude technology advances and innovations: Ultimate continues to roll out new functionality including advanced analytics, and is incorporating disruptive technologies such as mobile and social into its offering.

Ultimate Connections Recap

The Connections conference itself was a three-day opportunity for Ultimate’s customers and partners to connect and share experiences and future directions. During the event, Ultimate maintained a steady drum beat on the interconnected themes of the Cloud Ecosystem, a single System of Record, and the importance of having a Person Centric focus.

Cloud Ecosystem

The challenge of operating within a cloud ecosystem for many clients, according to Chief Technology Officer Adam Rogers, is achieving complete “connectedness”; figuring how to connect all the components together. This is a burden Ultimate wants to address for its clients. In addition to continued investments in web services and single sign on to connect and access core system data, Rogers also introduced planned upgrades to their Managed Vendor Services (MVS) offering. The MVS offering is designed to ameliorate the many frustrations around client to vendor integrations (such as 1:1 integrations from cloud-based employer HCM solutions to on-premise and/or proprietary benefits carriers). The offering provides standardized integrations, managed by Ultimate and its partners, so that achieving ‘connectedness’ across the many technology platforms necessary to conduct business can be more effectively managed in the cloud. Eight thousand such integrations are managed through MVS today, and following upgrades in infrastructure and new approaches, this MVS service will expand to take on significantly greater integration tasks for Ultimate clients.

System of Record

With an increasingly vigorous talent management offering that spans talent acquisition, onboarding, performance and goal management, career development and succession planning, all delivered on the core HR/Payroll foundation, Ultimate has the necessary components to be the single, comprehensive System of Record for all workforce data.

Ultimate is leveraging this expanded system of record to deliver increasingly advanced analytics across the full people management spectrum. CTO Rogers spoke briefly of their predictive analytics capabilities becoming more developed in the near future as the employee record is augmented with the rich data resulting from talent management components. In fact, their 2012 roadmap is replete with new functionality that will drive greater insight into individuals across the enterprise.

Person Centric

In what was probably the most exciting news of the conference, Ultimate announced its partnership with Yammer, a leading provider of enterprise social networks, to bring enterprise collaboration into the Ultimate platform and advance its people-centric focus with new consumer-grade usability and functionality. The planned initial integration is surprisingly deep, extending the employee system of record with social attributes and enabling Ultimate to deliver what equates to early versions of Social Performance and Social Goal Management in addition to enabling real time employee collaboration.

Ultimate has some experience with social networking, as they’ve been using their UltiPro Ideas portal for several years now to interact with customers and drive new product direction. In fact, in 2011, just over 25% of the new features introduced were driven by this online client community. Until the Yammer announcement, however, there had been little evidence of commitment to social networking integration within the bulk of the UltiPro product lines.

The new Ultimate/Yammer integration is slated to launch in Spring 2012, and includes Yammer Activity Stream integration into the UltiPro Talent Gateway so that teams can follow social networking conversations without leaving the UltiPro framework. Company-wide announcements including job postings are also shared simultaneously with the Yammer feed, increasing transparency and accelerating information sharing across the enterprise. Another aspect of the bi-directional integration is the ability for employees to give “Praise” to one another, and to have this social feedback appear and become available for analysis on the employee’s profile within the UltiPro suite. It is with this feature that Ultimate begins to enter the Social Performance arena, as the social feedback can also be readily incorporated into the employee’s perforamnce review. Additionally, in an early demonstration of Social Goal Management, users will have the ability to tag accomplishments within Yammer and have those milestones captured within UltiPro’s goal management functionality.

In this image, the manager is able to view social conversations from Yammer collaboration directly embedded into the UltiPro Talent Gateway, as well as drill into feedback and praise that is now connected with individuals' profiles.

These social enhancements (viewing activity streams, providing praise), are also visible and actionable through the UltiPro Mobile iPad dashboard.

The Yammer integration is but one of many areas of investment aimed at answering the common end-user challenge of “what’s in it for me,” which gets to the heart of user engagement. Other user engagement and people-centric initiatives are similarly underway, including Ultimate’s focus on delivering a “responsive web design” – namely a targeted experience that auto-adjusts its layout/configuration based upon the device being used (different screen sizes, mobile or tablet). Engagement was the subject of a panel I spoke on at the Connections event, and the ability to connect to others and perform work tasks when/where/how the individual desires, including through social and mobile technologies, was a large aspect of that discussion.

My Point of View:

The Human Capital Management (HCM) space is especially hot right now, with massive consolidation taking place across all types and sizes of vendors, and with an influx of innovative new vendors at the edges. The push is on to move processes to the cloud to capitalize on its many advantages for vendors and clients alike, while social technologies are emerging to augment and transform traditional people processes into ones which support the more natural ways work gets done in today’s highly connected environments.

The UltiPro solutions deliver solid capabilities across a unified platform spanning HR, Payroll and Talent Management in a pure SaaS-based offering. While today they may not achieve best-of-breed status within the talent management components, the trade-off between deep functionality and fully integrated solutions, according to studies by Constellation Research, is one that organizations are increasingly willing to make.

Ultimate’s addition of Yammer for social networking integration was a late but important move to bring collaboration into their suite and deliver a next generation solution to market. The performance and employee engagement processes will benefit from this integration immediately, with more to follow in subsequent releases. However in the area of Recruiting – the talent process where social media is most commonly adopted – there is still no real evidence of social integration, a gap their customers gave voice to frequently during the recent conference. Ultimate will need to overcome this deficit soon if it is to have a sustainable offering in this area.

The Yammer partnership is non-exclusive, which means that Ultimate customers utilizing other social networking technologies are not forced into using yet another collaboration tool. The integration between Ultimate and Yammer is quite deep, but Web Service APIs are also being developed to facilitate interoperability with other 3rd party social networking tools (although the resulting integration is not expected to be as rich as the co-developed work between Yammer and Ultimate). The availability of these web services also mitigates the risk of Yammer being acquired and Ultimate needing to find a replacement partner.

Was Ultimate’s approach to collaboration – partnership vs. natively embedded into the platform – the right one? Businesses are moving from transactional systems to systems of engagement, driven in large part by the rich user experience and intuitive designs of consumer technologies (Twitter, Facebook, Amazon, others). Can engagement and experiential systems be assembled through integrations – essentially through a connected network of networks – or must they be developed together with decision support, transaction support and social enablement all part of the DNA of the platform? Vendors are starting to take their stand on either side of the equation, and Ultimate and Yammer have taken the side of integration. It is a viable approach for these enterprise systems as long as the integration is well defined and supports collaboration and information sharing where it happens most naturally – in the context of getting work done.

For organizations (especially those in the mid-market) evaluating their HCM options, and which are ready to explore the opportunities of social collaboration, Ultimate should be on their shortlist.  I’ll continue to watch Ultimate with interest to see how the collaboration components continue to evolve, and to see if and how they leverage the newly available social data within their business intelligence framework for metrics and predictive analytics.

News Analysis: SAP and SuccessFactors Unveil Early Roadmap for HCM

This morning, SAP and SuccessFactors, an SAP company, issued a press release in which their unified Human Capital Management (HCM) product roadmap was unveiled.  The primary message is that SAP has adopted a hybrid strategy for HCM:  the SuccessFactors portfolio for Cloud HCM, and the current SAP ERP Human Capital Management portfolio for on premise. Details on this and other facets of the announcement are discussed below:

Employee Central becomes the HR System of Record for the cloud.

SuccessFactors Employee Central solution is the go-forward core human resources (HR) offering in the cloud. Backed by more than 25 years of experience from SAP in core HR, the solution is poised to grow exponentially as SAP will boldly invest in it. SAP will continue to offer the SAP® ERP Human Capital Management (SAP ERP HCM) solution on premise for core HR, now with regulatory support for 51 countries around the globe and an innovation road map of significant investments in functionality, user-experience, mobile and in-memory technology capabilities in the future.

My Point of View (POV):  Employee Central, used today by about 100 SuccessFactors customers, will be rapidly built out to meet the demands of a fully globalized core HR solution in the cloud.  A significant number of SAP resources will be redeployed to this effort.  It is important to note that an end-to-end cloud HCM offering is still elusive, however, as there is no immediate clarity on how payroll, benefits and workforce Management will be delivered in the cloud. According to David Ludlow, SAP’s Group Vice President of HR s Solutions, “These will all be considered as part of the acceleration within Employee Central. We need to look at what kind of re-use of the SAP payroll [and other] assets can have in the Cloud offering.” SAP will want to leverage the 51 payroll country solutions and 31 partner solutions existing today, but the “how” is still to be determined. The interim strategy is for SAP to deliver pre-packaged integrations between the SuccessFactors cloud offerings and the SAP HCM on premise offerings to bridge these gaps.

Core SAP HR customers will continue to receive support and innovations across many areas,  but with so many SAP resources redeployed or co-assigned to the Employee Central and other SuccessFactors initiatives, the anticipated pace and volume of innovation will decline.  One previously announced advance that is set to continue:  running SAP ERP HCM on SAP HANA for improved processing speeds and analytical capabilities.  Additionally, a brief reference is made to mobile investments but without details. Today SAP has a mobile store, where many SAP-built mobile applications are available for download, including six across the SAP ERP HCM platform; how this will be leveraged and augmented moving forward is to be determined.

SuccessFactors is the go-to platform for Talent Management.

For talent management, SuccessFactors Performance Management, SuccessFactors Compensation Management, SuccessFactors Recruiting and SuccessFactors Learning Management with social learning from SuccessFactors Jam will be the go-forward solutions. Talent management components from SAP ERP HCM will be continued with selected innovations for the next decade.

My Point of View (POV):  With this announcement, the real future of SAP HCM is placed squarely on the shoulders of the SuccessFactors Cloud platform.  SuccessFactors talent management solutions will be positioned to all new HCM customers and to current SAP customers who have not yet invested in talent management.  Current customers of SAP Talent Management products will continue to receive support and “selected innovations” through 2022, but those seeking significant innovation in those areas will need to look to the cloud (and do so expecting a different user experience as well as integration requirements).  SAP will assist customers in migrations or cloud adoption with pre-delivered integration support and services (full details are planned for announcement in May, at SAP’s SAPPPHIRE Now conference).  As expected, and in alignment with this new strategy, development on SAP’s Career onDemand has ceased.

As with the limited data on mobile, the path to social HCM is incomplete: SuccessFactors Jam is the solution for social learning in the cloud, but broader leverage of this or other social networking tools such as SAP Streamwork remains unclear.

Business Intelligence and Big Data are Prioritized

Analytics will continue as an important focus area within both SAP ERP HCM and the SuccessFactors product portfolios, leveraging significant assets such as SuccessFactors Workforce Analytics, SuccessFactors Workforce Planning, the SAP HANA platform and solutions from the SAP BusinessObjects portfolio. People analytics will be revolutionized by putting SuccessFactors Workforce Analytics on SAP HANA. Together SAP and SuccessFactors can make unparalleled aggregate HR benchmark insights available in the cloud to hundreds of thousands of customers. The combination of SuccessFactors software and SAP HANA is one of the key priority areas for development of the BizX Suite, as it will help increase customer value by dramatically speeding existing processes, enabling access to large amounts of data in shorter periods of time and providing real-time access to information tailored to individual requirements.

My Point of View (POV):  Both SAP and SuccessFactors have significant business intelligence assets, some overlapping, and all of which can be bolstered by the SAP HANA platform.  Unfortunately the good work done to date on SAP’s Strategic Workforce Planning (the first HANA-enabled SAP HCM solution) has been stopped, and those efforts will shift instead to augmenting the SuccessFactors Workforce Planning solution. Customers can expect a hybrid BI model moving forward, accessing different capabilities through a combination of on premise and on demand offerings from a combination of SAP and SuccessFactors-led technologies.  Leveraging SAP HANA to improve performance and enable real time analytics within the SuccessFactors BizX suite makes complete sense, and aligns to SAP’s plans to run SAP ERP on HANA by the end of 2012.

Open Integration for All Customers

SuccessFactors will continue to support an open approach to connecting with third-party solution providers. Approximately fourteen percent of SuccessFactors customers currently run their systems side-by-side with SAP. In addition to providing enhanced value for joint customers, SAP and SuccessFactors will accelerate the development of integration solutions with third-party solution providers. For SAP customers, the two companies intend to deliver integration packages between the two offerings: Cloud-based talent, core HR, recruiting, learning and social solutions, and workforce planning and analytics solutions from SuccessFactors; and On-premise core HR from SAP.

My Point of View (POV):  Integration is a key focal point, not just for SAP and SuccessFactors, but also across an increasingly complex HCM landscape, and so accelerating offerings in this area is paramount.  The planned integration packs between SuccessFactors and SAP are obvious requirements.  In keeping with their fist comment about openness and interoperability, and in recognition of the complex HCM landscapes of most organizations today, SAP would be well served to productize these 3rd party connectors as well; ease of interoperability is really the secret sauce in software (and platform) as a service.

One approach SAP has used in the past to manage rapid implementation, migration and integration is through their Rapid Deployment Solutions  (RDS), which consist of pre-packaged software, services and content.  Today there are three RDS solutions for SAP HCM, and new RDS solutions should follow quickly in support of those customers using solutions spanning the SuccessFactors cloud portfolio and SAP on premise HCM products.

Bottom Line:

Acceleration has been the consistent theme of this acquisition, from the first day it was announced, to the “Day 1” customer letter from Lars, to the press release issued this morning.  Acceleration of SAP cloud offerings.  Acceleration of synergies between SAP and SuccessFactors technologies.  Acceleration of customer value. The strategy articulated today by SAP and SuccessFactors provides a clear and immediate path forward for HCM customers and prospects.

For SuccessFactors customers, it’s all upside,  with accelerated investment across the entire portfolio. Where gaps exist in the portfolio (such as the current lack of a  cloud based offering in global payroll or benefits), integrations will be fully supported by SAP.

For SAP customers, the communicated strategy presents a more complex result. To their advantage is SAP’s commitment to supporting both on premise and cloud HCM, offering customers choice between the two or a hybrid model;  a SAP-supported path to best of breed talent management from SuccessFactors; and improvements across in-memory processing and business intelligence (although some of this may be available only in the cloud). The obvious downsides include reduced pace and volume of innovation across the current  SAP on premise solutions and the fact that the clock has started ticking on SAP on premise talent management.

There are still many questions (pricing, depth/quality of the integration and RDS solutions, specifically which “targeted innovations” will find their way into the on premise offerings, to name a few).  As SAP writes at the end of today’s press release, “Execution is the Difference.”  SAP will need to execute quickly, especially in the area of integration, to ensure this is a winning strategy for all of its customers, not just customers of SuccessFactors.

Virtual Conference: Converging Workforce Intelligence with Social Analytics

Join me Thursday, March 1, at 11am eastern, as I present:People Insights 2.0: Opportunity at the Confluence of Workforce Intelligence and Social Analytics,” sponsored by HR.com and the Institute of Human Resources (IHR) Community for Social Media and Employee Communication.


Session Description:

The use of enterprise social networking platforms is on the rise as organizations look to these emerging tools to facilitate employee collaboration, knowledge sharing, increased engagement, improved productivity, and even to foster fundamental shifts in culture. As more and more employee interactions take place within these enterprise collaboration tools, new and interesting data emerges about employees, teams, projects, goals, content and other aspects of the enterprise.

This new data, gleaned through analysis of the activities within the collaboration platform, includes insights into how people work and collaborate, the type and quality of content that is contributed and leveraged in the community, the effectiveness of different communications, the degree to which individuals are perceived as leaders or followers, and much more. The emergence of this new data drives much richer insights into the workforce of the organization. It enables social intelligence infusion into traditional talent management processes, such as performance, calibration, succession and retention.

Combining social and workforce analysis enables People Insight 2.0.

In this session, we’ll look how organizations can leverage the opportunities of People Insight 2.0. We’ll cover the tools used and opportunities stemming from the analysis of network connections, community activity, sentiment analysis, employee reputation management, and others. We’ll also explore the ways by which this social data can increasingly be incorporated into workforce analytics and workforce planning platforms for a more holistic view of the workforce.

We’ll review use cases and provide practical tips for how you can immediately apply these new social workforce insights to your talent management initiatives, transforming your people processes for better business results.

Who Should Participate:

All HR Professionals; anyone responsible for internal enterprise social networking and collaboration (such as HRIT/IT leadership); anyone responsible for workforce analytics and/or workforce planning initiatives.

What You Will Learn:

  • How and why to augment your current workforce analytics with social data;
  • The tools and methodologies that are available to help you capture and understand the data in your social networking platforms;
  • Why the static employee profile is insufficient for the way we do business today; and
  • How your talent management processes must evolve to incorporate social workforce analysis.

This session is part of a Virtual Conference sponsored by HR.com and the Institute for Human Resources (IHR), the certification arm of HR.com. Register for this event to select the webcasts you’d like to attend, including the one above

(Note: You will be redirected to a login page for HR.com, a free social networking site for HR professionals. If you are not yet a member of HR.com, this link will enable you to register for free membership and then to register for this session.)
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