Human capital management (HCM) is front and center among enterprise applications following a series of acquisitions by software giants SAP (SuccessFactors), Oracle (Taleo) IBM (Kenexa) and Salesforce (Rypple), purchases designed to boost the cloud-based HCM capabilities of these companies. Meanwhile, cloud HCM player Workday recently completed a highly successful IPO, with the stock gaining 74 percent in its first day and earning the company some $675 million.
Part of the reason for this frenzy of activity is the volume of HCM sales. According to International Data Corporation (IDC), worldwide revenue for HCM reached $7.5 billion in 2011. IDC projects this sector will reach $11 billion by 2016. IDC analyst Lisa Rowan said large enterprises want to use HCM to attain a global view into their workforces and gain the ability to do more with current resources.
According to Rowan, the top five vendors in HCM at the end of 2011 were SAP, Oracle, Kronos, Taleo and SuccessFactors.
Over the course of two articles, we will look at what the various vendors are offering as well as the various trends that are emerging. First, let’s define HCM.
What is HCM?
Rowan said HCM software automates business processes that cover the entire span of an employee's relationship with a corporation (as opposed to the department or group to which the employee belongs), as well as management of other human resources used by the enterprise (e.g., contingent labor, contractors, and consultants). Increasingly, this can include human resources employed by suppliers and customers. Core HR functions such as personnel records, benefits administration and compensation are central to an HCM applications suite.
“These functions are increasingly being delivered as employee self-service or manager self-service to automate record keeping and updating as well as consolidated reporting,” said Rowan. “Globalization, flexible work rules, job mobility, and the strategic importance of people assets have forced organizations to transform their human resources systems into a more real-time, personalized, and operational intelligence business function that goes beyond the traditional view of aggregating personnel data.”
In addition, core HR functions are being supplemented by extensions that form the basis of a new generation of HCM applications frameworks. These extensions can be categorized into four segments: recruiting, incentive management, performance management and workforce management. These four segments, in whole or in part, can also be grouped under the talent management heading.
Here's a look at Oracle, SAP and Salesforce.com, three of the four vendors that made HCM acquisitions in the past year:
Oracle Taleo Cloud Service
Oracle is clearly enamored with Taleo, a company it purchased earlier this year for $1.9 billion. The combination of Taleo’s cloud recruiting, talent management and analytics with Oracle’s suite of core HR systems is intended to create a one-stop-shop for businesses to manage the full spectrum of HR in the cloud.
Oracle's end goal appears to be employing Taleo as a cloud-based front end for performance management, with Oracle products for engagement and retention, compensation, talent review and core HR on the back end. It plans to further improve Oracle Taleo Cloud Service by integrating it with Oracle Fusion HCM and Oracle’s PeopleSoft HCM, adding more social collaboration functionality, and using Oracle Business Analytics to uncover Talent Intelligence from Taleo’s Big Data.
Taleo already offers what it calls Talent Intelligence, a unified suite of talent capabilities including social, Big Data and mobile functionality. The company claims over 5,000 enterprises worldwide, managing 15 percent of U.S. hires and processing up to 74 million transactions per day. Its talent management suite encompasses performance and goal management, succession planning, compensation management, and learning and development.
Oracle is adding to that by bringing talent and core HR together in the cloud. Some of the benefits to this combination include alerting employees to internal advancement opportunities and identifying candidates who are not quite qualified for a job and nudging them to use Taleo’s learning system to reach the next level. In addition, employees can model their own career paths and find out what it will take to arrive there.
Other just-announced features include allowing employees to select a mentor, helping managers locate the right team member for an international assignment and finding an eligible employee for a new position. The whole idea is to motivate the employee to participate in his/her own career development. This all sits on top of a mobile development framework known as Oracle Fusion Tap that provides a single interface that can be used to access all Taleo or Oracle applications.
One final development merits a mention. Last month Oracle purchased SelectMinds. As a provider of cloud-based social talent sourcing and corporate alumni management, SelectMinds empowers recruiters, hiring managers and employees to distribute job opportunities and access referrals, which are the top source of hires.
“Recruiting candidates through employee referrals is widely acknowledged as the most effective method to find talent through trusted contacts,” said Thomas Kurian, executive vice president, Oracle Development. “By adding SelectMinds to Oracle’s Talent Management Cloud, Oracle can help customers with a complete talent management solution, enabling streamlined recruiting practices, more quality referrals, faster employee on-boarding and better performance.”
SAP SuccessFactors Business Execution (BizX) Suite
SAP characterizes SuccessFactors, which it bought for $3.4 billion late last year, as the leading cloud based HCM solution.
“Only SuccessFactors’ SaaS-based talent solutions, plus core HR, collaboration and workforce analytics, gives you everything you need to produce measure and continuously improve business results through people,” said Folia Grace, vice president of Product Marketing, SAP Cloud.
The principal product is the BizX Suite. Grace said it can be used by small businesses as well as large enterprises. Modules in the BizX Suite include: compensation, employee central, jam (social business collaboration), learning, performance and goals, recruiting, succession/development, workforce analytics and workforce planning.
SuccessFactors is updated every quarter. In a recent release SuccessFactors added Touchbase, a mobile feature intended to modernize the one-to-one meeting and enable an on-the-go workforce to "touch base" on issues and items from anywhere with a synchronized, mutual list of items. Another recent addition is a Who's In the Meeting mobile feature that provides one-click access for all meeting attendees to see Employee Profiles or LinkedIn profiles of other meeting attendees. The employee review process also has been updated with more social and mobile learning capabilities.
“SAP and SuccessFactors are working closely together to create the best cloud portfolio in the market,” said Grace.
With its Rypple acquisition, Salesforce.com is providing a product known as Work.com which will be generally available this quarter. “Work.com builds upon the Rypple social performance management application, which was acquired earlier this year,” said Nick Stein, director Marketing and Communications, Salesforce Work.com.
The key features are:
- Align -- Align around the core mission and objectives of your company and your team with social goals, feedback, and coaching
- Motivate -- Motivate with real-time recognition and rewards
- Perform -- Fast, relevant performance reviews and calibration
Addressing the "motivate" piece, Stein said Work.com offers social rewards, allowing companies to tie recognition to points that can be redeemed for gift cards at partner Amazon.com.
Work.com will also be integrated into Sales Cloud, Service Cloud and Chatter, so sales and service professionals can manage performance from inside those Salesforce applications. Stein said HCM applications are now being designed to support business processes rather than HR processes. That's why the focus is on building performance into business applications rather than expecting people to log into separate HR systems to manage performance.
“Do you want something that only HR will use or something designed for everyone in the business to use?” said Stein. “Companies can no longer afford to set goals and provide feedback and recognition to their people only once a year."
Drew Robb is a freelance writer specializing in technology and engineering. Currently living in California, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).