Another thing was starting to happen around the same time.  As Oracle and SAP consolidated its hold in the broader Business Applications space, innovation, primarily delivered via software-as-a-service, was starting to become mainstream in HCM.  Demand for talent management applications (I say applications because at that point few vendors had suites) delivered via SaaS was starting to grow rapidly on the edges of core HRMS implementations now dominated by Oracle and SAP (at least for the large enterprise market).  Though Oracle and SAP saw customer interest rise in talent management solutions, they struggled to keep up.  They delivered new functionality, but it was difficult for their installed base to absorb because they needed to upgrade to take advantage of it.  Most customers were conditioned to upgrade infrequently because, in many cases, the projects were large and expensive.  This created a window of opportunity for SaaS vendors like SuccessFactors to grow and prosper.  So, in one sense, this acquisition has the feel of if you cannot beat them, join them.  On the other hand, it is much more.

It is a cliche to say that the pace of change is accelerating.  However, I think it is fair to say that the forces driving change in technology are at the strongest I have seen in my career.  If you think about Cloud Computing, Social, Mobile, and Analytics (including “Big Data”),they are all conspiring to drive a generational shift in computing.  Viewed from this perspective, this acquisition takes on a different light.  SAP is arming itself not only to defend its hard-earned turf, but also to stake its claim to what comes next.  Acquiring SuccessFactors does not solves all of SAP’s cloud challenges nor does it provide it all the arms it will need to win.  However, it is a first step.

So, everything feels different this time too.  We are at the beginning of another era.  The battle is just being joined. Some of the players, like Oracle and SAP, are the same.  New combatants like Salesforce.com, NetSuite, and Workday have emerged to take up the challenge for enterprise application suite supremacy.  However, others will continue to innovate around the edges, especially in HCM.  Some of those will have high growth and the cycle of consolidation will repeat.  Again.  It is the nature of enterprise application software markets.

Posted from Diigo. The rest of my favorite links are here.

Business Situation:  In a slow growth economy, there are limited funds for merit increases and bonuses.  To the extent there are funds are available, organizations want to use those funds to encourage engagement and retention of high performers (and those with high potential).

Practice: “Bottom Up” Calibration – Today many organizations use “top down” calibration to make sure that performance ratings fit a specific distribution.  The idea is to promote fairness and to limit “grade inflation”.  Because performance is frequently linked to pay (especially variable pay), the intent also is to make sure that there is a differential in rewards for high performers versus low performers.  However, frequently the people making the final calibration decisions may be somewhat removed from actually observing each individual’s performance.  In addition, the exercise can be de-motivating to strong contributors who, because of the desired distribution, just miss out from the next higher ratings category.  All of these issues (and more) bring questions about the fairness of the exercise to employees.

“Bottom up” calibration approaches the issue differently.  The main premise is that co-workers (or people working on the same team) know who the best performers are, so why not ask them for their opinion?  Let them vote on the top performers and use voting distribution as the ratings distribution.  There are opportunities for abuse if groups of employees try to game the system, however, managers can do a “sanity check” (and make sure there are consequences for collusion).  By gaining the input of the employees in the ratings process, it helps overcome many of the fairness concerns.  In addition, the feedback can be more meaningful to employees because it is recognition by peers.

Example

There are good examples in sports of bottom up calibration.  For example, voting for the Pro Bowl in the National Football League (NFL).  Players around the league at the end of the season vote for which players they think were the best at their position during the season.  The players with the highest votes from each conference are named the starters for the Pro Bowl game.  Though not everyone who is voted as a starter plays for various reasons, it is an honor for the players selected.  In addition, it impacts the compensation for players (many contracts have clauses that pays them a bonus for being selected to the Pro Bowl).

Do you use calibration in your organization?  Have you looked at doing “bottom up” calibration?  If you have, what results have you achieved?

Business Situation:  In a slow growth economy, it is difficult to get approval to hire new employees.  However, there is a strong desire by CEOs to grow the business and innovate.  How can HR help the organization with conflicting goals of controlling costs, yet innovate and return to growth?

Practice: Crowdsourcing – This is not a new idea.  It is explored in great detail in books like “Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business” “Wikinomics: How Mass Collaboration Changes Everything”, and “The Wisdom of Crowds”.  However, it is not a practice that is in the typical talent management toolkit of most HR/Recruiting organizations.  Crowdsourcing allows you to leverage talent that is not part of your organization to achieve your objectives.

Examples

TopCoder – Here is a description from their site:

Our business brings clients into the TopCoder community to get their work done in a new way. These projects range across the full spectrum of software and digital work. They engage our community in a range of disciplines: creative design, software engineering, and analytics. These projects are focused on innovating and implementing new products, releases, and features. At the core of this work is competition – each task is completed by members competing with each other to be the best at that task.

We believe that customers should be able to focus on what they want to build and create, not on measuring how many hours someone spent on a task. We believe engineers and designers should be free to chose when and if they work on a project or task, and be rewarded based on the quality of the results they produce. Empowering individuals to make their own decisions generates the most value for all parties.

When customers and members are brought together in a community and a market based approach is used to getting work done, there is no limit to what they can accomplish.

TopCoder has more than 300,000 people in the community.  That talent pool is significantly broader than one employer could build on its own. LendingTree uses it as a virtual software factory on an ongoing bases to supplement its own website development efforts, for example.

InnoCentive – InnoCentive also provides a platform for what it calls “challenge driven innovation”.  In that sense, it is similar to TopCoder, but is used for a broader problem set.  Here is an example from its website:

Roche’s challenge was to find a means of better measuring the quality and amount of a clinical specimen as it is passed through one of its automated chemistry analyzers. Both Roche and its partners had been wrestling with the challenge for fifteen years. So the company devised a test. It posted the challenge on InnoCentive.com, and through the power of crowdsourcing, exposed the challenge to a diverse, global, and open network of problem solvers. Within two months of posting the challenge, nearly 1,000 unique solvers from around the globe had signed on to the project, and a total of 113 proposals were submitted to Roche.

The result? Roche solved a challenge that had been plaguing it for fifteen years in sixty days. And interestingly, the submitted proposals replicated the entire history of Roche’s research and development program into this particular challenge. In other words, all of the solutions Roche had tried over a fifteen-year period had come in.

Think about that for a minute from a talent perspective.  Roche was able to find nearly 1,000 people for two months to work on its business challenge.  The prize for the winning solution was $20,000.  That was a pretty cost-effective source of talent.

Of course, crowdsourcing is not appropriate for every talent need.  However, HR needs to get outside of the box that says that talent is limited to just employees or contractors.

How many sourcing professionals in your HR/recruiting organization are leading the charge in working with these kinds of solutions (especially if you are not hiring anyone right now)?

We do not do this enough when thinking about business applications, and HR applications in particular. We focus on things like the Performance Appraisal process and how we can improve it. That is good thing, but a better thing would be to focus on the outcomes we would like to achieve with performance appraisals and work our way to processes and applications that support achieving those outcomes. We might find it does not include doing performance appraisals at all because it does not support the desired outcomes.

Have you looked at your HCM practices, processes, and applications from a "back to front" perspective? If so, what have your found?

Posted from Diigo. The rest of my favorite links are here.

Posted from Diigo. The rest of my favorite links are here.

Posted from Diigo. The rest of my favorite links are here.

They also had Jack Welch (@jack_welch), former CEO of General Electric, as a keynote speaker.  PCA Chairman (and Bedford Funding CEO) Charles Jones interviewed Welch.  The interview covered a wide range of topics (see the Twitterstream at #GCC2010 to see more details).  Welch is definitely a strong advocate for HR’s role in leadership development.  GE’s goal during his tenure was to be able replace someone in a key position within 24 hours.  To do this requires a significant investment in readiness and having adequate bench strength (it also explains why GE has been a furtile ground to find executive talent).  There were many great one-liners, but it was an analogy that resonated with me the most.  It was around the importance of HR vs. Finance. My apologies in advance to my colleagues that focus on the Finance organization, but the example he used was a professional baseball team.  Whose advice should the President of baseball operations (substitute our favorite sport) trust in making a decision on making an offer to a player: the CFO or the Director of Player Personnel?  Who is going to know best how to allocate that budget to achieve the best results?  It is pretty obvious in this context, but given that people-related costs are anywhere from 20-70% of total costs in most organizations, it makes sense that CEOs should view HR leaders as vital to their success.  However, good Directors of Player Personnel bring a lot of player performance data to the table to help the organization make good decisions.  HR leaders that do not bring something to the discussion will likely not be heard.

I also enjoyed the other keynote session, a panel discussion with Elaine Orler from Talent Function, Brad Smart from Smart & Associates (best known for TopGrading, a practice developed and used at GE), Kim Seals from Mercer, and Gerry Crispin from CareerXroads.  Again, you can check out the Twitterstream for more details on the discussion, but to me the most interesting part of the discussion was around performance vs. potential.  Kim was of the opinion that you promote based on potential (assuming at least adequate performance), but reward based on performance.  Gerry has the viewpoint that performance is more important.  High performers should be given the opportunity to show potential in new roles if it aligns with their career aspirations (assuming at least adequate potential for the new role).  I am not sure there is one right answer.  To me, a lot of the answer depends on how well your organization can judge performance and potential and your promotion track record.  Examining your own data around this will be illuminating.  It may also highlight changes you need to make to make in how you do performance appraisals and talent reviews.  From a technology perspective, remember garbage in = garbage out.  I can have the best succession planning process and best technology supporting it, but if I am not looking at the right attributes of performance and potential, it is all for naught.

Ok, back to the change in my conference routine, instead of going to customer case study sessions (though I did have some good conversations at meals with customers), I went to sessions led by thought leaders I admire and who I rarely get to see present.  Gerry Crispin (@GerryCrispin) did a session on candidate experience that was very thought-provoking.  For those not familiar with Gerry, he does the most in-depth research on this topic of anyone I know.  For more than a decade, he has “mystery shopped” as a “candidate” at all of the Fortune’s 100 Best Companies to Work For. 

Near the beginning of his presentation, Gerry asked the audience a simple question: how do you define a candidate?  Needless to say, the audience definitions were all over the place.  I thought he had an interesting taxonomy for thinking about this in terms of customer experience.  In his view, a candidate was someone who has applied for a job (an applicant being someone who is a qualified candidate for a job).  Prior to applying for a job, the person was a prospect.  Gerry points out that experience needs to be different for prospects, candidates, and applicants (and new hires).  Once someone becomes at least a candidate, they have affirmatively expressed interest in your organization.  If they are treated poorly through the rest of their experience, there can be repercussions not only for your employment brand, but also your customer brand because in many cases candidates/applicants may also be customers and/or influence other customers.  That taxonomy also got me thinking about the parallels with Customer Relationship Management.  Many large employers already have people responsible for just candidate sourcing this is akin to the role of Marketing in CRM.  Marketing is responsible for generating leads that turn into qualified prospects.  Sourcers are responsible for finding prospects and converting them into candidates (I am simplifying here a little to make the analogy, but stay with me).  Sales is responsible for taking qualified prospects and converting them into paying customers.  Recruiters are responsible for determining qualified candidates (applicants) and facilitating the process to hire the best one.  So far so good, there is nothing terribly new in this line of thought.  What I had not thought about previously was the third pillar of CRM, Customer Service.  In the CRM context, Customer Service helps ensure a customer is happy (based on customer satisfaction, net promoter scores, etc.) as well as to find additional cross-sell and up-sell opportunities (in some cases).  It was not so much finding the analog for recruiting (or more broadly talent management for the new hire), but that it made start to think about why we do not have a group responsible for candidate (and applicant) service.  If organizations really want to take the candidate experience seriously, it needs to do more than just design a candidate-friendly, employer brand reinforcing, self-service web site.  Why shouldn’t a candidate/applicant be able to interact with your organization in a variety of channels as they go through the process.  Yes, it can be more expensive to provide this level of service, but for many organizations, especially with the viral nature of social media, it may be more expensive in the long run not to offer a high level of service.

I also attended a session conducted by Dr. John Sullivan and his associate Master Burnett (@masterburnett).  Dr. Sullivan is always provocative and expresses a strong point of view.  His topic was the important of contingent labor on workforce planning.  He cited a study of 200 companies where they looked at the workforce-related spend and found that only about 36% of the spend was on regular employees, the rest was for various forms on contingent labor.  That is an eye popping statistic and should give any HR leader heartburn.  It means that the vast majority of HR leaders have ignored how their organizations recruit, manage, develop, and separate from a significant part of its workforce.  In fact, it is even worse than that.  If organizations are actively managing it all, it is driven by procurement whose role it is to help negotiate contracts and manage vendors.  This is one of Dr. Sullivan’s arguments for why Workforce Planning is so important.  Organizations need to make intelligent decisions about where they source the most appropriate talent based not just on cost, but on agility (the ability to scale up and scale down the workforce), speed (how fast are the capabilities needed if we do not have them internally) and how long the capabilities are required (for example, is it just for a project or is there an ongoing need).  We have published a number of research notes on Workforce Planning and Analysis this year, but we still find a relatively small number of clients focused on either contingent workforce management or workforce planning.  This should be a wake up call to HR leaders and the IT organizations that support them.

Fusion HCM Applications

Much of what I said last year at OpenWorld still holds true in terms of scope of Fusion HCM.  The one notable addition is Workforce Predictions.  As the name suggests, it is analytics that uses HCM data to predict things like retention and performance.  It leverages Oracle’s technology, Crystal Ball, to do the modeling and forecasting. 

Contrary to some reports on Twitter, Fusion HCM applications are multi-tenant.  There are some aspects of Oracle Fusion Middleware (OFM) that are not yet multi-tenant, but those elements are primarily related to business intelligence and data warehousing and really do not impact the actual HCM transactional applications themselves.

Oracle plans to offer customers choice in licensing and delivery model for Fusion applications.  A customer could choose to buy a perpetual license and implement on-premise at one end of the spectrum or a SaaS deployment at the other end of the spectrum.  Oracle has been touting “like for like” pricing.  There will also be support for multiple countries (initially U.S., Canada, UK, China, Saudi Arabia, and UAE) which would have the corresponding up charges.  There is no published subscription pricing to compare against so it is not clear how it will compare to alternatives.  Some of the Fusion HCM modules are new.  These include Workforce Predictions, Talent Review, Network At Work, and Workforce Lifecycle Management.  These would not be “like for like” because they do not exist in PS, EBS, or J.D. Edwards.

By offering customers these licensing and delivery model choices, Oracle has created some complexity for itself in terms of delivering new functionality.  Oracle will have multiple code lines that it will “true up” on a periodic basis.  For the SaaS offering, Oracle plans to do quarterly updates that alternate between technology and functional updates (though initially some of the technology updates will likely include some functionality).  For on-premise, the update will be less frequent and timed to correspond at a minimum (though it could be more frequent) with the rollout of other major components of the full ERP suite.  So, a 2.0 version of Fusion apps would be the next on-premise release and would be expected in a 2 year timeframe and would “true up” the code line with the SaaS offering.  From a practical perspective, this truing up can be difficult to manage, but Oracle believes it has the code management tools in place to do it.

In my discussion with customers, it appears most are interested in a co-existence strategy.  They want to use Fusion Talent Management on top of their existing PS or EBS core HRMS applications.  A main reason why is that they feel like they will need to do less (or no) customization to support their unique business processes.  The embedded business process management (BPM) in OFM provides a very flexible and graphical way to define business processes.  There is at least one customer that is implementing Fusion core HRMS functionality, but it is not far enough along where they are ready to discuss its experience.

Though customer experience is very limited, many of Oracle’s consulting partners have been working with Oracle on various aspects of development and testing (as well as working on some of the EA implementations) of Fusion applications for several years.  Accenture, Cognizant, Deloitte, Infosys, PwC, and Wipro were on a panel where they described their involvement with Fusion applications.  Also, other consultancies like KBace are also working with EA (or potential EA) customers.

PeopleSoft HCM 9.1

Even with all of the excitement around Fusion, most of the PeopleSoft customers are focused on their upgrade decisions, especially those customers on 8.9 or earlier.  There are good examples of large, complex organizations that have made the move to 9.1.  I attended presentations by Boeing and of a Large Financial Services Company (which could have been American Express who was scheduled to be there) presented by IBM.  Boeing and the Large Financial Services company used the upgrade as an opportunity to reengineer global processes and to retire customizations so they decided to do a reimplementation as opposed to an in place upgrade.  This seems to be an interesting trend that I expect other relatively highly customized customers to adopt.

Probably the biggest news is that Oracle will now be doing annual updates called Feature Packs (FP) to correspond with PeopleTool updates.  They plan to have a 9.2 release in 2012 (scope has not been finalized) which will be a cumulative release (as well as new functionality not included in the FPs).  We have seen a lot of customer interest in the upgrade with some customers even looking to add on new modules.  More frequent delivery of capability will likely encourage others including 9.0 customers to move to 9.1.  Though some are predicting the imminent demise of investment in new functionality for PeopleSoft with Fusion imminent, I believe it is premature.

Oracle E-Business Suite HCM 12.1

Much like PeopleSoft 9.1, 12.1.x seems to be the “go to” release for EBS HCM customers.  I talked to a large, global conglomerate and a global financial services company about their upgrade experiences and they were relatively smooth.  The one gotcha both organizations reported was related to Internet Explorer (different issues depending on which IE release you were on).

One of the most interesting additions to EBS 12.1 was full multi-tenancy.  This has spurred some of the consultancies such as KBace and Caliber Point (Hexaware) to deliver SaaS offerings.   They are in the early stages, but I can see them as useful not only for new implementations, but for upgrades (upgrade HCM separately from Financials in a previously single instance environment).

Overall Observations

There were some things that I thought I would see, but did not.  With Oracle’s increasing emphasis on hardware, I thought we would hear more discussion of an appliance strategy, especially for Fusion applications (even with some remote management capability).  I also thought I would see demonstrations that went beyond the things that they have been showing for the past year.  Workforce Predictions is relatively new and the demo of Payroll Dashboard gave a glimpse into some of the rethinking that Oracle has done around the core HRMS apps (trying to streamline the tasks of professional users), but I was hoping to see more in the core HRMS applications.

As I reflect on my time at the conference, it definitely was a coming out party.  The Fusion apps team has worked for a very long time without being able to really talk in detail publicly about what they were doing and why.  OOW was the beginning of that conversation with customers and prospects.  The timing is important because the competitive threats have never been greater.  If the quality of Fusion HCM applications is high, I think Oracle will have a reason to be confident.