Looking Ahead: Key Trends Shaping the HCM Vendor Landscape
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Looking Ahead: Key Trends Shaping the HCM Vendor Landscape

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  • Placeholder for text of Conclusions, SPAs and others (substitute your own text) No source line is necessary unless the source is something other than Gartner Research
  • Strategic Planning Assumption: Through 2005, users will have no choice but to manage a mixed portfolio of applications and services supporting talent management (0.9 probability).
  • Strategic Planning Assumption: By 2007, Type-A business-to-business sales organizations will begin adopting third-generation sales analytics (0.7 probability).
  • Business agility requires the ability to address all kinds of business problems at a much higher level of granularity than has been possible in the past. Most business applications are monolithic, meaning their logic is not externally accessible in modular form. Service-oriented architectures (SOAs) enable the reuse of logic and data in multiple contexts, exposing access to smaller components or services and supporting needs unanticipated by the original creator. By 2011, mainstream enterprises will combine the client/server SOA with an event-driven architecture. Events are based on notification — decoupled communication that is more scalable and flexible than the coupled interactions of monolithic or SOA architectures. The business model by which software (and increasingly hardware) is delivered is also evolving in three key areas — who manages the application, where and how it is delivered and how it is paid for. The software can be managed by the customer, by the software developer or by another external service provider. The software can be delivered on-site or remotely (network-based) and as a perpetual license, both off the shelf or modified, or as a renewable service. The software can be paid for one time or over time, and it can be visible or invisible, as in the case of a business process provider. Action Item: Drive increased business agility through underlying advances in software architecture and delivery models. Key Issue: What are the most disruptive trends and the most significant opportunities arising from emerging information technology? Strategic Planning Assumption: By 2011, mainstream enterprises will be combining the client/server SOA with an event-driven architecture (0.7 probability).
  • Strategic Planning Assumptions: By year-end 2007, 30% of large companies will have some form of Web-2.0-enabled business initiative under way (0.8 probability). Through 2008, the majority of Global 1000 companies will adopt technology-related aspects of Web 2.0, but fail to adopt the social and participatory community dimensions, and the result will be minimal business impact (0.6 probability). By year-end 2009, 70% of periodically published corporate information will be offered in a standard syndication format, such as RSS or ATOM (0.8 probability). Technology Aspects: WOA (e.g., IFaP, REST, POX, WS*, modular, embeddable, distributable), Data-Driven (e.g., XML, BPEL), Syndication of content (RSS/ATOM), Rich Semantics (eRDF, RDFa, microformats, Semantic Web, Semantic Reconciliation, Metadata), Mashable Applications (Remix and scripting, PHP, JavaScript), Build by example (show source, cloning), Rich Client (just fast enough just in time, Ajax, Offline Ajax, Flex, Microsoft, etc.), Persistent Web (Caching, streaming, managed client, "Web on client") Web Platforms: Capabilities-based ecosystem, expose content/logic/interface/model via WS*, POX, REST, remix model for composite applications, software as a service (tech aspect), RSS. Community Aspects: People: Blogs/podcasts, wikis, personal mashups. Interaction: Open-source development, social networks, community ratings, collective intelligence, Community service and support, collaborative content creation. Data: Tagging, "folksonomies," user-created content, data about users. Business Aspects: Ecosystem: Delivering business process as a service to be remixed (the business side of mashup), viral marketing, syndication. Process Models: Customer/community dependencies, business of remix, information replaces relationships as key ingredient. Value Models: Pricing models (usage, subscription, derivative/commission, revenue sharing), micropayments, advertising models (impression, intent, conversion).
  • The traditional IT world view comes from the notions of process automation and data manipulation. It has evolved to be primarily focused on transactional business process platforms. The transactional world view (represented by the four orderly colored boxes connected by arrows, above) treats most of what people do as artifacts of the transactional process they are participating in. The alternate world view has been emerging since early experiments at the University of Illinois in the 1970s (Plato project), but as the Internet exploded and the number of "digital natives" has grown exponentially (digital natives are people who've grown up with easy Internet access and easy to use Web technologies), network effects have occurred so the original intent of the World Wide Web (of knowledge) has morphed to include YouTube, Facebook, MySpace, Second Life, millions of communities and ad hoc social groups and other social phenomena. The thorny problem with dealing with the world view where transactions are artifacts of the ways people add unique value (and a major focus for IT is in support of social processes) is that it requires a different mind set, a different skill set and a different tool set to be successful. And those, in turn, require a different set of management attitudes. This is no longer just about building out an enterprise network and giving everyone tightly managed e-mail systems. Indeed, traditional e-mail may be an artifact of a transactional view of the world and it may be replaced by more intimate, more personal and more persistent ways of communicating and collaborating (e.g., blogs, RSS and Atom feeds, and subscriptions to various tag configurations). Action Item: Evaluate whether your organization has the management perspective, mind set, skill set and tool set necessary to diagnose, proscribe and support social processes, particularly around non-routine activities. Strategic Imperative: The two world views are equally valid; an IT strategy that's overly focused on one over the other will typically be suboptimal.
  • As publicly discussed in the March 2006 issue of "Harvard Business Review," Procter and Gamble (P&G) has radically transformed its innovation process, effectively more than doubling its market cap to over $200 billion dollars. It realized: its globally networked internal model (designed in the late 1980s) could no longer sustain the growth it needed to stay on top of its business if it relied on internal processes; for every researcher inside P&G, there were at least 200 well qualified researchers outside P&G; innovation was increasingly being done at small and midsize entrepreneurial companies; those firms (and individuals) were eager to license and sell their intellectual property; universities and government labs were seeking industry partnerships, and all were hungry for ways to monetize their research. It also realized the Internet had opened up access to talent markets throughout the world. And a few forward-looking companies, like IBM and Eli Lilly, were beginning to experiment with the new concept of open innovation, leveraging one another's (even competitors') innovation assets — products, intellectual property and people. Technology was not the driver in this business transformation. It was, however, an essential ingredient to many of the elements in its new enterprise-without-walls collaborative innovation strategy.
  • Even if we automated all the routine processes in the organization, there would still be a place left for people. It's the non-routine things that would be left over for all of us to do. What technology can help us to is augment peoples' ability to perform non-routine activities. By doing so, we make people more effective. We have come up with five key words that characterize most non-routine activities that people engage in, activities that are underserved by IT today. (That need not be the case. The issue is one of a lack of understanding and focus.) For example, we believe that IT organizations need to better understand how to help employees (and ecosystem members) better discover opportunities and threats. Detecting a previously unrecognized opportunity is not something that can be algorithmically defined. But we can help people detect a previously unrecognized opportunity by providing them with predictive analytics, research tools (such as surveys) and higher level programs (such as competitive intelligence). The issue is helping people accomplish the goal (discovering, for example, major new market opportunities); not just pushing tools at them. Similarly, while there might be tools to automate the process of managing an innovation budget (which fall into the productivity and operations columns), there are also processes and concepts (like InnoCentive's program for offering "outsiders" the chance to take on an important internal project, one of the mechanisms that P&G invested in). This isn't about the tools, it's about focusing in on the behaviors (such as innovating) and helping the enterprise come up with a strategy for maximizing effectiveness while exploiting — where appropriate — – technologies that aide in that process. Similarly, teaming, leading and learning are key behaviors in creating competitive advantage — and they can't be automated, but technologies (such as social computing and informal project management) can help people perform better). Strategic Imperative: The primary contribution of IT to the enterprise's long-term competitive advantage will come from initiatives that augment people's ability to perform non-deterministic activities, such as discovery, innovation, teaming, leading and learning.
  • The Goldcorp story, as related in the book "Wikinomics" by Don Tapscott, shares some major similarities to P&G. The CEO of this mining firm decided the company needed to break with tradition and question some of its fundamental assumptions. He decided to make all of the (proprietary) geological information about its property public, offering a reward for the best estimates and methods for finding new gold deposits on the lands. Alerted over the Internet, thousands of people from all walks of life attacked the problem — students, consultants, soldiers, physicists, mathematicians and others responded. In the end, respondents identified 55 new targets, more than 80% of which yielded substantial quantities of gold. Goldcorp's $575,000 investment yielded billions of dollars worth of gold. The mining industry is traditionally secretive (as was P&G). By exploiting modern communications and exposing its data to the world, Goldcorp "cashed in." In October 2006, Netflix issued an open challenge, offering sums from $50,000 (annual progress award) to $1,000,000 to the first entity to submit a method that would increase the accuracy of its movie recommendation service (Cinematch) by 10% or more. It will be interesting to watch what happens there. (Prizes aren't new to the Internet era. Indeed, the Internet makes it possible to involve very large numbers of people very quickly, short-circuiting the process and amplifying turns over time.) Strategic Imperative: Leave no assumption untested. Open innovation and similar projects to demonstrate that speed can be more important than secrecy and "we is smarter than me."
  • Key Issue: What are the different types of workforce analytics?
  • Key Issue: How are organizations adopting workforce analytics? Talent management is one of the hot areas in the HR world today. However, many organizations are investing in new technology without a good idea of how it can impact the business. In this case example, the company used talent management technology along with workforce analytics to drastically affect business results (a 5% improvement translated into a $40 million increase in sales). This organization focused on its sales leadership team. It conducted a 360-degree assessment of the sales leaders and then used statistical tools to do a correlation analysis to see which sales leader behaviors correlated with high performance (as measured by sales contribution). Only a few competencies had a high correlation. Based on these results, this company changed how it managed the employee life cycle for sale leaders. First, it started to hire from the outside (it had previously only promoted from within) and used behavioral interviewing to identify successful sales leaders to hire. It changed promotion criteria, updated the assessment process, revised training and development programs, and updated job descriptions so that all its talent management efforts throughout the employee life cycle were aligned with the key behaviors.

Looking Ahead: Key Trends Shaping the HCM Vendor Landscape Looking Ahead: Key Trends Shaping the HCM Vendor Landscape Presentation Transcript

  • Looking Ahead: Key Trends Shaping the HCM Vendor Landscape Jim Holincheck VP – HCM Applications [email_address] September 26, 2007
  • HCM Software Hype Cycle Warehouse Labor Management Systems Technology Trigger Peak of Inflated 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 years obsolete before 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 Planning Workforce Decision Support Comprehensive Human Resources BPO Payroll Outsourcing Benefits Administration Outsourcing
  • 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?
  • 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?
  • 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
  • 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
  • Human Capital Management Systems Landscape Reporting/Analytics Portal/Self-Service Personnel, payroll and benefits Integrated Core HRMS E-Learning Succession Management Contingent Workforce Management Compensation Management Performance Management E-Recruitment Time and Attendance Labor Scheduling On Premise Hosted/ SaaS Single-Process Outsourcing Multiprocess BPO Talent Management Workforce Management
  • 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
  • The Future of HCM Applications Automate Enable Partner Key Enablers Product Focus
    • 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 A Type C 2007 Type A Type C Type B A=Early adopter, B=Mainstream,C= Late adopter
  • 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
    • Next – Event-Driven Architecture:
    • Events and services
    • State held in storage
    • Long-chained business processes
    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. Application Monoliths Opaque Boxes
    • Software as Service
    • Subscription model
    • Remote delivery
    • Business Services
    • JIT/Pay per use
    • Business-process-focused
    • Software as Product
    • License model
    • Customization required
  • Web 2.0 Defining Characteristics
    • Technology
    • 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
  • 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 New Rules Effectiveness (Non-routine) Productivity and Cost Operations and Hygiene Enterprise Transactional Systems Social Process Support Personal Tools Sustaining Investments
  • 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
  • Non-Routine Behaviors — Five Key Words Business Goals Transform New Rules Effectiveness (Non-routine) Productivity and Cost Operations and 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 , …
  • 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
  • A Model for Workforce Analytics Decision Support Executive Reporting Operational Reporting Administrative Reporting Roles HR Analytics Professionals Executives Line Managers HR Professionals
    • Types
    • Workforce Decisions
    • Interventions
    • Opportunities
    • Planning
    • Workforce in Context
    • of Business
    • (e.g., Balanced Scorecard)
    • Workforce-Specific
    • (e.g., headcount)
    • Application-Specific
    • Regulatory Reports
    • Ad-Hoc Reports
    • Inquiry
  • Proactive Workforce Planning Highlights Emerging Issues Source: Vemo
  • Reaching the Promise: Integrating Talent Management and Workforce Analytics EO = Expected Outliers UO = Unexpected Outliers TD = Targeted Development TR = 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 3 2 1 0 -1 -2 -3 Sales Contribution 2,000,000 1,000,000 0 -1,000,000 UO EO
  • Making an Impact on the Bottom Line Case 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 variable
    • Results
    • 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
  • Recommendations
    • “ Skate to where the puck will be” – Wayne Gretzky