IDC MarketScape: Worldwide Performance Management in Integrated Talent Management 2012 Vendor Analysis

Transcription

1 COMPETITIVE ANALYSIS IDC MarketScape: Worldwide Performance Management in Integrated Talent Management 2012 Vendor Analysis Lisa Rowan IDC OPINION Global Headquarters: 5 Speen Street Framingham, MA USA P F This IDC study represents a vendor assessment of the performance management capabilities offered as part of an integrated talent management solution through the IDC MarketScape model. This research is a quantitative and qualitative assessment of the characteristics that explain a vendor's success in the marketplace and help anticipate the vendor's ascendancy. The evaluation is based on a comprehensive and rigorous framework that assesses vendors relative to the criteria and one another and highlights the factors expected to be the most influential to success in the market, both short and long term. Key findings include: The year was dominated by acquisitions and market consolidation, leaving fewer pure-play talent management vendors than a year ago. There were large, highprofile acquisitions, such as SAP's acquisition of SuccessFactors and Oracle's acquisition of Taleo, and best-of-suite actions, such as SuccessFactors' acquisition of Plateau. Some acquisitions reflected building out of a full functional portfolio, while others demonstrated the desire to focus on an end-to-end HCM solution that bundles talent with core. Regardless of the reason, it is universally apparent that talent represents the hottest submarket in HCM. While recruiting is seen as the most important talent function according to IDC's recent survey of 512 HR executives, performance management was a close second. Overall, all of the functions were shown to be important to respondents. This escalating level of importance is driving greater demand for integration among the talent functions and in turn is leading to greater interest in solutions that are part of an integrated suite from a single vendor. The vendors serving the market for performance management as part of an integrated talent management suite have advanced their offerings in features and functions through both organic development and acquisition. Through buyer research, IDC sees that buyers are generally pleased with the depth of their vendor offerings. However, buyers generally would like better integration with core HR and more meaningful reporting and analytics. From IDC's perspective, the majority of vendors could do more to socialize the flow of employee feedback. Filing Information: June 2012, IDC #235598, Volume: 1 HR, Talent and Learning Strategies and Services: Competitive Analysis

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3 IN THIS STUDY This IDC study represents a vendor assessment of performance management capabilities offered as part of an integrated talent management solution through the IDC MarketScape model. This assessment discusses both quantitative and qualitative characteristics that explain a vendor's success in this emerging market. This MarketScape examines the performance management capabilities of a variety of vendors that participate in the integrated talent management market. The vendors' performance management offerings covered in this analysis were analyzed on their full suite in IDC MarketScape: Worldwide Integrated Talent Management 2011 Vendor Analysis (IDC #234365,April 2012). The evaluation is based on a comprehensive and rigorous framework that assesses vendors relative to the criteria and one another and highlights the factors expected to be the most influential to success in the market, both short and long term. This study is made up of two sections. The first part is a definition of what characteristics IDC believes lead to success in the integrated talent management market. These characteristics are based on buyer and vendor surveys and key analyst observations of best practices. The second part of this study is a visual presentation of multiple vendors into a single bubble chart format. This format concisely displays the observed and quantified scores of the reviewed vendors. The document concludes with IDC's essential guidance to support continued growth and improvement of these vendors' offerings. Vendor information, including versions covered and ownership, is as of December 31, Methodology IDC MarketScape criteria selection, weightings, and vendor scores represent wellresearched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. IDC analysts base individual vendor scores, and ultimately vendor positions, on the IDC MarketScape, detailed surveys and interviews with the vendors, publicly available information, and end-user experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior, and capability. IDC conducted an end-user survey of 512 HR executives of firms with 500 employees or more that completed in December Included in the survey were specific questions about vendors covered in this analysis. Questions included satisfaction with a variety of factors for each talent module. Questions included but were not limited to 2012 IDC #

4 depth and completeness of solution, appropriateness of delivery model, comfort with upgrade release schedules, integration, and customer service. SITUATION OVERVIEW IDC defines talent management as those functions that serve to attract, develop, reward, and retain the workforce. Made up of a variety of functions, talent management includes the areas of recruiting and staffing, learning and development, performance management, compensation management, and career and succession planning, all supported by a base of competency management and assessment (see Figure 1). IDC depicts talent management as a continuous circle to represent the interdependency of the various functions. This MarketScape focuses on the market for solutions and services comprising the performance management function shown in Figure 1 that serves as part of the integrated talent management market. While talent management is still a young market, it is beginning to mature, with greater market penetration. It is a market that has gained and continues to gain a lot of attention and is of interest to both buyers and suppliers. Subsequent sections of this document offer definitions and the characteristics IDC identifies as important for success in this market. FIGURE 1 Talent Management Value Cycle Source: IDC, # IDC

5 Background The market for talent management has evolved from one that largely focused on a single function, such as recruiting, to a more mature one that considers the many facets of talent. Both senior line management and HR executives are considering how talent strategies might affect business outcomes such as improved customer satisfaction. To answer such a question, one needs to think about all facets of talent. Improving customer satisfaction may entail choosing the right job candidates from a "success profile" formed from assessing those doing the job well today. It may mean that key skills are lacking and need to be improved, or it may mean sharpening retention strategies for high performers. The market for performance management solutions is nascent when compared with the markets for recruiting and learning, and we have just recently begun to enjoy the benefits of formal linking of performance management with the other talent management functions. While there are standalone systems from vendors that offer only performance management, this MarketScape looks at performance management from vendors offering a broader suite. There is a market for standalone solutions, but IDC's research points to greater buyer interest in integrated talent. Figure 2 shows the results of IDC's December 2011 survey of 512 HR executives, where IDC asked the respondents to indicate the importance of various talent functions to their organization on a scale of 1 to 5. While there are some differences with recruiting indicated as most important with performance management a close second all functions rated well over 3.0, meaning that importance is being placed across the gamut of talent. FIGURE 2 Importance Level of Talent Functions Q. How important are the following talent functions to your organization on a scale of 1 to 5, where 1 is not at all important and 5 is very important. n = 512 Source: IDC's Survey of HR Executives, IDC #

6 Overview of Performance Management in the Integrated Talent Management Market The business imperative to tie talent strategies to business objectives and outcomes has created a market category for integrated talent management solutions. Providers come to this market from a variety of backgrounds some from learning and development, some from recruiting, some from the broader HR systems market, and some from compensation and performance each looking to meet the end-to-end talent management need. Most but not all of the integrated talent management vendors offer their own performance management module. Performance management applications are designed to automate the aggregation and delivery of information pertinent to the linking of job roles and the mission and goals of the organization. More specifically, the system allows users to automate the performance review process by using mechanisms such as training and key performance indicators (KPIs) to constantly track and monitor the progress of an individual employee, work team, and division. Key features include: Assessment of individual and organizational skill gaps that impede performance and job advancement, as in ability testing Continuous reviews and establishing milestones 360-degree evaluation and real-time feedback Performance appraisal automation Competency assessment and management Goal setting and tracking Employee surveys Alignment of workforce objectives to corporate objectives Development and career planning Fast tracks for top performers Succession planning Each of the talent functions is important in its own right, but bringing them together provides even greater value to each and in total. The potential benefits are too numerous to cover, but as examples, consider the integration of performance with other talent functions and the resulting use cases: Work with compensation to set and monitor salaries and incentives that are performance based 4 # IDC

7 With career and succession to help identify the path for the individual and identify future leaders With recruiting to provide it with an initial talent profile with which to seek the right candidates From and with recruiting to determine a quality of hire metric that is truly performance based IDC MarketScape Vendor Inclusion Criteria This MarketScape looks at performance management in the context of the talent management suite and so criteria for inclusion is the same as it was for the integrated talent management MarketScape published in IDC MarketScape: Worldwide Integrated Talent Management 2011 Vendor Analysis (IDC #234365, April 2012). The criteria for inclusion of vendors in this MarketScape analysis are as follows: For inclusion, vendors must have solutions for a minimum of four of the five major talent management functions of recruiting, learning, performance management, career and succession planning, and compensation in general release as of December 31, Vendors must have a minimum of 750,000 employees/users live on a combination of two or more of the major talent management functions of recruiting, learning, performance management, career and succession planning, and compensation. Solutions analyzed were reviewed as they were in general availability as of December Demonstration Scenarios All participating vendors presented the same demonstration scenarios for their solutions. These included: Employee experience Manager experience Feedback formal, informal, and within and external to the system Succession Goal setting Integration show how performance links to learning Market Strategies This section includes an introduction of market-specific weightings definitions and weightings tables IDC #

8 The integrated talent management market exhibits the characteristics laid out in Tables 1 and 2, which suppliers must take into consideration when crafting a future strategy and in leveraging existing capabilities to best advantage. Factors for future strategy are found in Table 1, with factors for leveraging existing capabilities in Table 2. The weightings for the various criteria are a bit different than those in the end-to-end talent MarketScape (see IDC MarketScape: Worldwide Integrated Talent Management 2012 Vendor Analysis, IDC #234365, April 2012) to put additional emphasis on the performance management offering itself. IDC believes that in addition to the criteria for success having varying weights, the aggregate criteria (offering, go to market, and business) should also be weighted. Table 3 shows the relative weights used in this analysis. These too have been modified slightly from the end-to-end talent MarketScape (see IDC MarketScape: Worldwide Integrated Talent Management 2012 Vendor Analysis, IDC #234365, April 2012). Greater emphasis is placed on the product offering, reflecting the importance of the currently delivered solution and plans for the solution. TABLE 1 Key Strategy Measures for Success f or Performance Management in Integrated Talent Management Vendors Strategies Criteria Offering strategy Functionality or offering road map Criteria for Success Strategies reflect the current development of offerings that will be relevant and attractive to customers over the next three to five years. A successful solution offers an easy-to-use experience for the employee, the manager, and the HR/talent professional and is fully integrated on a single database and underlying architecture with the vendor's other talent functions. Success is further demonstrated by the depth of capability of the offering, which can be and is supported as a standalone offering. Subcriteria Weighting 4.00 Delivery model Excellence is marked by plans to support emerging architectures such as SOA Cost management Portfolio strategy New release strategy Globalization (other offering strategies) Superior service calls for ways by which the vendor can help clients justify expenditures, including ROI models, and provide clear paths by which the client can lower costs. A true portfolio strategy ensures that the client makes the most effective use of the technology for business transformation, so this focuses on services offered in support of talent transformation. This explores the extensibility of the offering and ease of upgrades. It also explores client options for accepting, rejecting, or deferring options. Talent management is moving to a global scale. Excellence is determined by existing presence and plans for global reach to serve both North America based multinationals and foreign-headquartered firms Offering strategy total # IDC

9 TABLE 1 Key Strategy Measures for Success f or Performance Management in Integrated Talent Management Vendors Strategies Criteria Go-to-market strategy Pricing model Sales/distribution channel strategy Marketing strategy Customer service strategy Go-to-market strategy total Business strategy Growth strategy Innovation/R&D pace and productivity Financial/funding model Employee strategy Business strategy total Criteria for Success Strategies include those that maximize the connection between the offering and customers, including choosing to target customer segments that offer the greatest opportunity over the next three to five years. Superior planning for future pricing alignment with market direction and pricing plans that will encourage adoption of full suite are integral to success, especially in a troubled economy. Buyers in different vertical industries and of various client sizes are interested in investment in talent management solutions that service their unique needs. Excellence is demonstrated by plans to serve new markets such as SMB for enterprise suppliers or enterprise for SMB suppliers, or specific industries. Successful firms have an eye toward and well-articulated plans for how they will grow the firm in the future through either acquisition or unique competitive positioning. Whatever the current client retention rate is today, superior firms have a wellarticulated plan for lowering client churn. To be successful, vendors need to have strategies to grow the business that is aligned with market trends and future opportunities over the next three to five years. Success is based on viability and specificity of strategic plans for growth over the next three to five years. Strength is demonstrated by strategic plans for attaining or retaining functional superiority over competition. The release schedule for the next months reflects understanding of market need. Buyers should and do concern themselves with vendor viability. Success requires vendors to have a viable funding strategy for the next three to five years, along with good revenue per employee and plans to improve upon it. It is important that a company involved in offering talent management solutions have a clearly articulated plan for developing and retaining its own talent. Subcriteria Weighting Source: IDC, IDC #

10 TABLE 2 Key Capabilities Measures for Success f or Performance Management in Integrated Talent Management Vendors Capabilities Criteria Criteria for Success Subcriteria Weighting Offering capabilities Functionality/offering delivered Delivery model appropriateness and execution Cost competitiveness Portfolio benefits delivered Scalability Integration (other offering capabilities) Offering capabilities total Go-to-market capabilities Pricing model options and alignment Sales/distribution channel structure, capabilities The ideal solution offers an easy-to-use experience for the employee, the manager, and the HR/talent professional and is fully integrated on a single database and underlying architecture with the vendor's other talent functions. Success is further demonstrated by the depth of capability of the offering, which can be and is supported as a standalone offering. Buyers are given flexibility in delivery to meet their culture and needs with options including software as a service and hosting both on- and off-premise and behind the firewall. The hosting site is well protected and has disaster recovery plans well articulated. Pricing must reflect volume discounts in terms of number of both modules and employees served and must be competitive with the market. This speaks to the depth of capability offered by each module in the suite. Each separate function could and does stand alone and has been sold as a best-ofbreed module on its own merits. This explores vendors' support of multitenancy and the ability to affordably scale to support many clients. It also explores client experience in both response times and uptime availability. It is important that all talent functions be fully integrated for buyers to realize the benefits of seamless process flow and data exchange. Minimally, modules flow from one to another without reinitiation or additional authentication. Ideally, all modules share a common database and architecture and are developed on the same platform. Also important is strong linkage to the HR system of record. Capabilities include those that maximize the connection between the offerings and customers, such as delivery, partnerships, pricing, marketing, sales, and service. Options include flexible arrangements such that the client can choose to be billed up front, monthly, quarterly, or yearly. Implementation fees are reasonable as work required is important to market success. No one vendor can meet all of its customers' needs. Excellence is shown by having the right partners and a strong system that engages partners at the right time. Excellence is also shown by having a strong partner ecosystem. The right partners for talent management include firms that have strong consulting expertise in upfront talent strategy, strong technical skills around talent system implementation, or strong expertise in a particular talent area or that have demonstrated the ability to market talent management technology as part of a larger talent consulting engagement # IDC

11 TABLE 2 Key Capabilities Measures for Success f or Performance Management in Integrated Talent Management Vendors Capabilities Criteria Marketing Customer service Go-to-market capabilities total Business capabilities Growth strategy execution Innovation/R&D pace and productivity Criteria for Success It is important to have a clear view of the ideal client. Successful vendors offer solutions that are geared toward well-defined target market(s). The message to the target audience needs to be concise and appropriate for each of the target markets. Customer service excellence is marked by high client satisfaction and retention and a good ratio of client services staff to clients. Financial, employee, partner, and R&D management (among others) are in agreement with current market opportunities. Market momentum and growth are shown through acquisition of new clients. This will be measured by market growth in integrated talent management. Success requires that sufficient new development is taking place to stay ahead of or in line with competition. Technology in use should be open and not proprietary. Subcriteria Weighting Financial/funding management Excellence is marked by strong cash flow and financial acumen and restraint Employee management Using what one sells (other business capabilities) Business capabilities total Strength in managing talent is a key factor for firms in the talent management market. Success is in part demonstrated by a high employee retention rate. Using what one sells is a strong indicator of a well-run business. Excellence can be demonstrated through the degree to which solutions offered are used internally Source: IDC, IDC #

12 TABLE 3 Aggregate Criteria Weighting for Performance Management in Integrated Talent Management Market Weighting Strategy Capabilities Offering Go to market Business Subtotal Source: IDC, 2012 FUTURE OUTLOOK IDC MarketScape Performance Management in Integrated Talent Management Market Vendor Assessment The IDC vendor assessment for the performance management in integrated talent management market represents IDC's opinion on which vendors are well positioned today through current capabilities and which are best positioned to gain market share over the next few years. Positioning in the upper right of the grid indicates that vendors are well positioned to gain market share. For the purposes of discussion, IDC divided potential key strategy measures for success into two primary categories: capabilities and strategy. IDC's most critical criteria for positioning on the y-axis and x-axis are as follows: Positioning on the y-axis reflects the vendor's current capabilities and menu of services and how well aligned it is to customer needs. The capabilities category focuses on the capabilities of the company and product today, here, and now. Under this category, IDC analysts look at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis or strategy axis indicates how well the vendor's future strategy aligns with what customers will require in three to five years. The strategy category focuses on high-level strategic decisions and underlying assumptions about offerings, customer segments, business, and go-to-market plans for the future, in this case defined as the next three to five years. Under this category, 10 # IDC

13 analysts look at whether or not a supplier's strategies in various areas are aligned with customer requirements (and spending) over a defined future time period. Figure 3 shows each vendor's position in the vendor assessment chart. The number of client employees in organizations using the performance management module is indicated by the size of the bubble, and a (+), (-), or () icon indicates whether or not the vendor is growing faster, slower, or even with overall market growth. FIGURE 3 IDC MarketScape Performance Management Capabilities in Integrated Talent Management Vendor Assessment Source: IDC, IDC #

14 Market Analysis Consolidation Continues and Differentiation Coming from Four Pillars Current capabilities are very close among the vendors covered as indicated by the clustering on the y-axis. The vendors covered in this analysis come from varied backgrounds. Some come to the talent management market from a recruiting perspective, others from a learning management market, and others from the overall HRIS or ERP market. There are also those vendors that began their market entry with performance management. All vendors are beginning to set themselves apart by exploring more linkages with mobile, social, and analytics, with social performance management in particular an area that offered differentiation across the field. The field for performance management itself has grown smaller in recent years because of much market consolidation. Market Strengths and Weaknesses In terms of current capabilities, the areas of greatest strength across the field remain the quality of the existing offering, integration of performance with learning and development, and goal setting and goal management. Strategic plans for the next year indicate vendors plan to further deepen their capabilities in mobile and social enablement and are looking to expand globally. Turning to weaknesses in the solutions currently being offered, clients are looking for more in the way of mobile and social capabilities. From IDC's perspective, more progress can be made in offering more informal "anywhere" social feedback. While some do social feedback well, the majority have room for improvement. Vendor Summary Analysis This section briefly explains the key observations that resulted in a vendor's position in the vendor assessment graph. While each vendor was evaluated against each of the strategy and capability characteristics (refer back to Tables 1 and 2), the descriptions here provide a brief excerpt of the findings that represent the vendor's score. A number of scores are taken directly from the mean of clients' responses to IDC's December 2011 survey of 512 HR executives. It is worth noting that because of the maturity of the market and the various vendor offerings, there are no vendors in the contender or the participant categories all are Major Players or Leaders. Vendors are listed in alphabetical order by their name/ownership in place as of December 31, ADP Automatic Data Processing Inc. (ADP), with about $10 billion in revenue and approximately 570,000 clients, is one of the world's largest providers of business outsourcing solutions. Leveraging over 60 years of experience, ADP offers a wide 12 # IDC

15 range of human resource, payroll, tax, and benefits administration solutions from a single source as well as talent management. ADP first entered the large market for talent management in recruiting through its 2006 acquisition of VirtualEdge. ADP further extended its talent management reach by acquiring Workscape in ADP now offers all talent functions including learning management through a recent source code acquisition. ADP goes to market by employer size, with major accounts having fewer than 1,000 employees and national accounts having more than 1,000 employees. This analysis considers the talent solutions that postdate the Workscape acquisition that are largely focused on national accounts. ADP is a Major Player in this analysis. ADP offers good manager and employee experiences and a highly visual and intuitive succession planning capability. According to clients, ADP could improve reporting. ADP should also be offering more social feedback to employees as journaling within the application alone will become limiting. ADP is publicly traded on Nasdaq: ADP. Cornerstone OnDemand Cornerstone OnDemand was founded in 1999 and launched its initial public offering in March The company's roots are in learning management, and Cornerstone OnDemand has since built out other talent management components organically, now offering all functions. Historically, the Cornerstone OnDemand portfolio was targeted at large enterprises, but the company also rolled out a Business Edition geared to the midmarket. Cornerstone OnDemand has recently acquired New Zealand based Sonar6, which it will now turn to for its SMB market efforts. Cornerstone OnDemand also offers pro bono software and services to nonprofits through its foundation, and it has recently rolled out a solution for volunteer management. Cornerstone OnDemand is a Leader in this analysis. Strengths include very high scores from clients in customer service, depth of capability of individual modules, cost appropriateness, and timeliness of releases. In particular, Cornerstone OnDemand does a very good job with goal setting. According to customer feedback, room for improvement could come from better integration with core HR systems. Cornerstone OnDemand is publicly traded on Nasdaq: CSOD. Halogen Software Ontario-based Halogen Software was founded in 2001 and introduced performance management related functionality as its initial entrée into talent management, and it now offers solutions for all functions. Halogen tailors its go-to-market offerings to vertical industries, having begun with healthcare. Other vertical solutions include professional services, financial services, education, the public sector, the hospitality sector, and the manufacturing sector. Halogen largely targets the midmarket comprising firms with ,000 employees. Halogen has expanded beyond the North American market, with offices in the United Kingdom and Australia. Halogen is a Major Player in this analysis. Halogen's strengths include a verticalized go-to-market strategy, integration of the talent functions through all organic 2012 IDC #

16 development, and very strong client satisfaction. Halogen reports that very soon it will be offering more social feedback for employees, but this was not available by the cutoff date for this analysis. Halogen is privately held. Kenexa Kenexa is a diverse talent management provider with systems, services, and content covering compensation, assessments, and competencies (the latter largely through the acquisition of Salary.com) as well as employee surveys, assessment, recruitment, onboarding, performance management, learning, leadership development, and recruitment process outsourcing (RPO). Kenexa was founded in 1987 and has grown its offerings both organically and through a number of acquisitions. Kenexa's acquisition of Massachusetts-based Salary.com in October 2010 brought with it competency data, compensation data/surveys, compensation analytics tools, surveys, and job/career-related consumer-driven businesses. Recently in February 2012, Kenexa acquired OutStart, a Boston-based vendor of learning management suite solution provider. By doing so, Kenexa abandoned its prior learning management solution designed on source code it had previously acquired. Kenexa is a Major Player in this analysis, with strengths in global reach, a strong consulting practice, and a large R&D organization that takes advantage of offshore resources. High scores were garnered in depth of capability and cost-effectiveness from Kenexa's clients. Kenexa should look to incorporate more social feedback to employees as journaling within the application alone will become limiting. Kenexa is publicly traded on Nasdaq: KNXA. Lawson Software (Infor) In April 2011, Infor acquired Lawson Software. Infor is the third-largest provider of enterprise applications and services. Lawson offers integrated ERP systems in support of manufacturing, finance, and human resources processes primarily targeted to midmarket buyers. Having always offered HR capabilities, Lawson has in recent years focused on building out talent management capabilities from the ground up to augment core HR. Late in 2010, Lawson acquired California-based Enwisen to further its HR portal capabilities, introduce HR shared services solutions, and strengthen its total compensation and onboarding functionality. Lawson goes to market by key industries that are run as focused business units. It continues to have particular success in human capital management in the public sector and in the manufacturing and healthcare sectors. Lawson is a Major Player in this analysis. Strengths include integration to the core HR system, well-done user experiences, and good customer service marks from clients. Lawson should look to incorporate more social feedback to employees as journaling within the application alone will become limiting. Infor is privately held. 14 # IDC

17 Peoplefluent (Formerly Peopleclick Authoria) Authoria began as Foundation Technologies Inc. in It has evolved over the past decade to focus on talent management and has made a number of acquisitions in the areas of recruiting, performance management, and learning management. Authoria itself was acquired by a private investment firm, Bedford Funding, in September Authoria retooled its various talent offerings to be on a single integrated platform it refers to as 10x. On January 5, 2010, Bedford Funding announced the acquisition of Peopleclick, a best-of-breed provider of talent acquisition, vendor management, and compliance solutions, for $100 million and merged it with Authoria to form a new entity, Peopleclick Authoria. This analysis reflects Peopleclick Authoria postmerger. Bedford Funding Managing Partner Charles S. Jones was named CEO of the combined Peopleclick Authoria, which was rebranded as Peoplefluent in June Peoplefluent is a Major Player in this analysis, with strengths in the depth of capability of the performance module, a strong partnering track record including an agreement whereby Mercer resells Peoplefluent's performance management solution, and solid R&D resources. Peoplefluent offers good employee and manager user experiences. Peoplefluent's clients would like to see stronger integration to core HRIS. Peoplefluent is privately held. Saba Founded in 1997, Saba has a learning management background. Saba offers learning and talent-related products, the Saba Virtual Classroom and Saba Meeting Platform (formerly Saba Central), and a social enterprise platform called Saba People Cloud. Saba has a large installed base of marquee learning management clients to target for broadening reach with additional talent products. Saba currently offers learning and development, succession and career planning, and performance management and compensation. Saba does not offer a solution for external recruiting but has partnerships with Kronos and icims. Saba is a Major Player in this analysis. Saba has strong partnerships and organization to support it; it is IBM's chosen learning partner for learning-related opportunities. Saba also has strong global presence and good market momentum. Saba delivers its solutions primarily in the hosted/saas cloud model but can also provide on-premise perpetual licenses to select markets, with more new businesses opting for SaaS than on-premise. Saba has good social integration and had a good customer service score from clients. Saba is currently reconfiguring succession capabilities to incorporate HumanConcepts' visual capabilities, an acquisition made earlier in Saba is publicly traded on Nasdaq: SABA. SilkRoad SilkRoad was launched in 2005 and today provides a full talent management suite that includes offerings developed organically and also obtained through acquisition IDC #

18 The company entered the market with its flagship employee onboarding solution that is still the industry benchmark today. SilkRoad has since expanded its portfolio to include recruiting, onboarding, performance and learning management, HRMS, and a content management solution. The talent management suite is well integrated, and in 2010, SilkRoad released its HRMS solution to extend that integration to include core HR administration and reporting. SilkRoad Point, announced in late 2011, provides a collaboration and self-service HR platform that allows employees to share content and recognize and be recognized by their peers and provides an integration platform for all of the company's solutions. SilkRoad is a Major Player in this analysis, with high marks in customer service, technology, and cost-effectiveness from its clients. While user experiences are well done overall, the employee experience could show easier integration with learning and development. SilkRoad is privately held. SuccessFactors (a SAP Company as of February 2012) SuccessFactors was an early entrant into the realm of integrated talent management. Coming from neither a recruiting nor a learning legacy, SuccessFactors entered directly into the market for talent management with an initial offering in employee performance management and goal management. Subsequent offerings include recruiting, development, compensation, career/succession, business social networking, workforce planning, and predictive analytics. In April 2011, SuccessFactors added learning through the acquisition of Plateau (a Leader in IDC's 2011 analysis). In February 2012, SuccessFactors became part of SAP when the acquisition was completed. SuccessFactors will be a separate entity and be designated as a SAP company. SuccessFactors' CEO Lars Dalgaard has been tapped to lead SAP's cloud initiatives, and the SuccessFactors portfolio will be SAP's talent suite of choice moving forward. SuccessFactors is a Leader in this analysis, with strengths in market presence and positioning, continuous innovation in the category, and market momentum. SuccessFactors' demonstration of capabilities drew top marks. Clients of SuccessFactors would like more integration with core HR systems. SuccessFactors is now part of SAP. SumTotal SumTotal was initially the product of the merger of two former learning management giants, Docent and Click2Learn. As such, it has a long-established reputation as a leader in the learning management market. Like other vendors, its first nonlearning market offering was performance management garnered through acquisition. SumTotal subsequently added compensation. SumTotal was publicly traded until mid- 2009, when it was brought private by Vista Equity, owner of HR industry veteran Accero, formerly known as Cyborg. Vista Equity has continued to acquire in the sector. In late 2010, it purchased Massachusetts-based Softscape to bring it under the SumTotal umbrella. With the acquisition of Softscape, the company has competing solutions for some of the talent management functions, including 16 # IDC

19 performance, succession, and learning. Subsequently, Accero has been brought under the SumTotal brand, and in July 2011, SumTotal acquired workforce and expense management vendor CyberShift. The strategy is to offer a full end-to-end HCM suite with learning from traditional SumTotal, other talent and core HR from Softscape, payroll from Accero, and workforce management from CyberShift. SumTotal is a Major Player in this analysis. SumTotal scored well with clients in customer service and reporting. SumTotal should look to improve the employee experience through better organization and allow for more social feedback. SumTotal is privately held. Taleo (Now Acquired by Oracle) Taleo, now part of Oracle, was founded in Taleo has staked a leadership claim in the talent acquisition systems and services market. As have other vendors in the market, Taleo broadened its reach into the talent management market initially with an organically developed performance suite. It then added compensation capabilities through its acquisition of Worldwide Compensation, a firm it had invested in and partnered with previously. In September 2010, Taleo completed filling out the five pillars of talent management by acquiring Florida-based Learn.com. Similar to its arrangement with Worldwide Compensation, Taleo had previously partnered with Learn.com. It's good that Learn.com does not have other offerings that compete with existing Taleo capabilities. Taleo has a good track record of integration, so synthesizing Learn.com into the fold is under way. Taleo has separate dedicated solutions in recruiting, performance management, and compensation focused on the unique needs of both large enterprise customers with 3,000+ employees and SMB customers with fewer than 3,000 employees. Taleo is a market Leader in this analysis, with strengths in depth of capability, a robust partner ecosystem, strong brand recognition, global reach, and a track record of innovative R&D. Taleo had good scores in functionality from its clients. Taleo leads in its ability to easily consume feedback from outside the system. Clients would like to see better integration with core HR. Oracle is publicly traded on Nasdaq: ORCL. "Other" Vendors Not covered in the detailed analysis presented here but of interest are a variety of other vendors offering talent management capabilities: ERP and HRIS vendors Meta4: A Spain-based ERP vendor with a full complement of HCM and talent functions Ultimate Software: Has continued to enhance talent management capabilities along with its HR and payroll solutions; will likely be covered in the 2013 study 2012 IDC #

20 Workday: A pure SaaS vendor, started by PeopleSoft founder Dave Duffield; has continued to extend its HCM portfolio to talent management and has become a major market force; will likely be covered in the 2013 study. Best-of-breed talent-focused providers (This list continues to shrink as mergers and acquisitions continue.) HRsmart: Offers a suite of talent management capabilities Technomedia-Hodes IQ: Offers a suite of talent management capabilities ESSENTIAL GUIDANCE This MarketScape finds that the field is getting smaller and the vendor offerings are becoming ever more comparable. Additionally: The year was dominated by acquisitions and market consolidation, leaving fewer pure-play talent management vendors than a year ago. There were large, highprofile acquisitions, such as SAP's acquisition of SuccessFactors and Oracle's acquisition of Taleo, and best-of-suite actions, such as SuccessFactors' acquisition of Plateau. Some acquisitions reflected building out of a full functional portfolio, while others demonstrated the desire to focus on an end-to-end HCM solution that bundles talent with core. Regardless of the reason, it is universally apparent that talent represents the hottest submarket in HCM. While recruiting is seen as the most important talent function according to IDC's recent survey of 512 HR executives, performance management was a close second. Overall, all of the functions were shown to be important to respondents. This escalating level of importance is driving greater demand for integration among the talent functions and in turn is leading to greater interest in solutions that are part of an integrated suite from a single vendor. The vendors serving the market for performance management as part of an integrated talent management suite have advanced their offerings in features and functions through both organic development and acquisition. Through buyer research, IDC sees that buyers are generally pleased with the depth of their vendor offerings. However, buyers generally would like better integration with core HR and more meaningful reporting and analytics. From IDC's perspective, the majority of vendors could do more to socialize the flow of employee feedback. LEARN MORE Related Research Worldwide Human Capital Management Applications Forecast: Market Continues Strong (IDC #235156, May 2012) 18 # IDC