Forrester s View: HR Market Overview and Trends PEHRS Webinar
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1 Forrester s View: HR Market Overview and Trends PEHRS Webinar Paul D. Hamerman Vice President and Principal Analyst Forrester Research, Inc. November 8, Forrester Research, Inc. Reproduction Prohibited
2 Changes in the workforce, global economy, and technology create challenges and opportunities for enterprises in strategic and core HR systems. 2
3 Agenda The HRM solution footprint Overview of the HRM technology market Ongoing market consolidation HR apps strategy and vendor selection guidance Work in progress 3
4 HRM Solutions Footprint How We See It Source: Forrester, September 2010 HRM Solutions: Traditional Models Clash With Next-Generation Processes And Technology 4
5 Agenda The HRM solution footprint Overview of the HRM technology market Ongoing market consolidation HR apps strategy and vendor selection guidance Conclusions and research in progress 5
6 Business, societal, and technology trends influence the management of human capital An unstable economy influences employment and retention practices. Businesses want more relevant talent and performance processes. Companies face the challenges of a changing workforce. Social media is a double-edge sword enables some HR processes, but raises compliance challenges. Vendors still trying to harness it. Mobile technology reinvents employee engagement and empowerment. SaaS becomes the HRM deployment method of choice for point solutions, and increasingly, for core HR systems. 6
7 Most organizations face the challenge of managing multiple systems of record for employee data How many systems of record for employee data do you have? A single global system of truth 27% Two to four systems 37% Five to 10 systems 15% More than 10 systems Don t know 19% 2% Base: 67 HR and IT professionals familiar with either their organizations MDM or HRM systems Source: August 2011 Global Employee Master Data Management Online Survey 7
8 The HRMS application is the dominant system of record for employee data What do you consider the official system of record for employee data? Human resources management system (HRMS) or ERP HR system 81% Payroll system or outsourced payroll vendor Master data management (MDM) hub 10% 5% Access management system 2% Identity management system 2% Data warehouse, data mart, or business intelligence environment 0% Homegrown system 0% Other 2% Base: 67 HR and IT professionals familiar with either their organizations MDM or HRM systems (percentages do not total 100 because of rounding) Source: August 2011 Global Employee Master Data Management Online Survey 8
9 Most organizations juggle many applications to manage HR processes Besides the core HR management system(s), how many systems are in place for HR processes like recruitment, performance management, compensation, benefits, and time and attendance? Four to seven 40% More than 10 Three or fewer Seven to 10 Don t know 21% 15% 13% 10% Base: 67 HR and IT professionals familiar with either their organizations MDM or HRM systems (percentages do not total 100 because of rounding) Source: August 2011 Global Employee Master Data Management Online Survey 9
10 Improving timeliness of HR processes is top of mind for ensuring trusted employee data How important are the following objectives to maintaining accurate, secure, and timely employee information globally? 5: Very important : Not at all important Improve the timeliness of HR processes like onboarding or termination to provide more useful employee information 42% Consolidate and rationalize core HR management systems 3% 12% 39% 43% 28% 31% Enable employees to directly access and update their personal information 3% 3% 19% 3% 40% 10% 9% 36% 34% 5% 5% 3% 16% 6% 2% Improve privacy, security, and compliance levels of sensitive employee data 45% 21% 22% 6% 18% 43% Create a cross-enterprise employee master to synchronize employee data across HR systems and processes 27% Reduce the number of best-of-breed HR process applications 27% 27% 25% 19% 10% 5% 24% 6% 10% 6% 25% 10% 6% 6% Base: 67 HR and IT professionals familiar with either their organizations MDM or HRM systems (percentages may not total 100 because of rounding) 5% 5% Source: August 2011 Global Employee Master Data Management Online Survey 10 5% 5% Modernize and standardize system interfaces to improve HR data quality Create a centralized employee data mart for integration and reporting Don t know
11 Effective Employee Data Management Requires Integration Around The Core October 2011 Manage Master Data About Your People 11
12 HRM applications implementation plans for 2011: 24% of enterprises are moving ahead 12
13 Seven Technology Trends Will Reshape Packaged Applications Flexibility And Value 13 June 2011 Innovative Technologies Will Drive Enterprise Applications And ERP To A Bright New Future
14 SaaS applications advance application ownership cost transparency and the software updating model 14 June 2011 Innovative Technologies Will Drive Enterprise Applications And ERP To A Bright New Future
15 SaaS is replacing licensing as the default deployment model in HRM applications September 2010 HRM Solutions: Traditional Models Clash With Next-Generation Processes And Technology 15
16 HRMS accounts for half of the market, but talent management has the highest growth 16 September 2010 HRM Solutions: Traditional Models Clash With Next-Generation Processes And Technology
17 Subscriptions as a percent of total product revenues: recruiting and talent management lead 17 September 2010 HRM Solutions: Traditional Models Clash With Next-Generation Processes And Technology
18 HRMS Forrester Wave: Learning and Talent Management, Q May 2011 The Forrester Wave : Talent Management, Q2 2011
19 HRMS Forrester Wave: multinational enterprises, Q (Update currently in progress) Source: October 28, 2008, The Forrester Wave : Human Resource Management Systems, Q
20 The changing enterprise HRMS landscape Next-generation ERP HRMS: Oracle Fusion (2011) SaaS providers shoe momentum: Workday, Ultimate Software Infor acquires Lawson, renewing commitment to HRM ADP and Ceridian remake their HR apps portfolios Hosted versions of on-premise systems offered by service providers: ADP (GlobalView), NorthgateArinso (euhreka), Infosys, Wipro, Titan Talent management vendors entering into core HRMS: Silkroad, Successfactors are building core HR capability, SumTotal acquired Accero 20
21 Agenda The HRM solution footprint Overview of the HRM technology market Ongoing market consolidation HR apps strategy and vendor selection guidance Work in progress 21
22 Vendors are consolidating around the four pillars of talent management Source: Forrester April 2010 The Four Pillars Of Talent Management 22
23 Market consolidation creates breadth and viability SuccessFactors acquires Plateau Systems Learning fills out the 4 Pillars for SuccessFactors by adding the leading enterprise learning vendor. Recent acquisitions also include CubeTree (social collaboration) and Inform (analytics) Infor Acquires Lawson Large ERP vendor fills a major hole with Lawson s core HRMS, talent management and employee interaction capabilities (Enwisen) Authoria and Peopleclick join forces to become Peoplefluent Authoria has talent management Peopleclick provides recruiting and compliance Lumesse, the former StepStone buys MrTed Lumesse adds recruiting depth with MrTed Now a complete talent management solution 23
24 Market consolidation (continued) Taleo gets learning management with Learn.com. Taleo acquired Learn.com after a partner relationship This acquisition gives Taleo capabilities in all four pillars Kenexa adds its fourth pillar with acquisition of Salary.com. Salary.com has compensation tools and content These features round out Kenexa s recruiting, assessment, performance, and learning capabilities SumTotal Systems fills out its offering by acquiring Softscape. The combination adds comprehensive talent management capabilities to SumTotal s core strength in learning management. Acquisition of GeoLearning adds SaaS learning SumTotal also gets core HR and time and attendance with Accero and Cybershift. 24
25 Agenda The HRM solution footprint Overview of the HRM technology market Ongoing market consolidation HR apps strategy and vendor selection guidance Work in progress 25
26 Best-of-breed solutions vs. comprehensive solutions HRM customers predominantly have mix of best-of-breed HRM solutions across various processes These best-of-breed HRM solutions, predominantly SaaS, are organized around the core HRMS solution, which is either SaaS or on-premise. Core HRMS vendors continue to play catch-up through internal development, especially of performance management, recruiting, and learning 26 January 2008 HR/HCM Applications 2008: Best-OfBreed Solutions Make A Comeback
27 General recommendations for clients Optimize your HR applications strategy by: Examining the six solution categories and prioritizing the importance to your organization. Having a clear plan for managing employee master data. This includes a core HR system of record for the enterprise, and Limiting the proliferation of best-of-breed add-ons. Selecting a deployment model that provides cost of ownership transparency. Embracing mobile and social technologies to build loyalty and innovate processes. 27
28 HR application strategy conceptual building blocks Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report 28
29 Five Stages for building your HRM applications strategy Source: December 19, 2008, Building Your HRM Applications Strategy Forrester report 29
30 Example: Strategic process capability assessment Reporting and Analysis HR Analytics and Mgt. Reporting Compliance Reporting Data Integration Talent Development Training Scheduling and Enrollment Organization Charts Surveys Talent Acquisition Delivery and Measurement Learning Program Design Candidate Experience Applicant Tracking New Hire On-Boarding Performance and Talent Management Employee Performance Succession Planning Career Management Goals Competencies Workforce Planning Compensation and Benefits Salary and Incentives Health and Welfare Programs Compensation Analysis and Equity Retirement Wellness Paid Time Off Core HRMS and Payroll Employee Records Position Mgt. & Personnel and Job Actions Descriptions 30 Payroll 2011 Forrester Research, Inc. Reproduction Prohibited HR Compliance Low Medium Absence Management High Timekeeping
31 Vendor selection process guidance Use a concise set of process-oriented requirements and evaluation criteria, then engage with the vendors on the recommended short list. The requirements should focus on key HR business process scenarios more than data. Scripted, process-based demonstrations is the key evaluation mechanism by which these vendors should be judged. High level selection criteria focus on more than cost and functionality. These should include flexibility, usability, vendor/product viability, industry knowledge, SaaS, technical architecture, and customer base/references. Cost analysis should focus on total ownership costs for 7 to 10 years. For on-premise systems, factor in hardware, upgrades, internal support staff, vendor support costs, and additional staff. SaaS is much simpler to estimate. The overall vendor selection process is described in the graphic below on the next slide, as well as in the new research document, Reinvent Your Applications Vendor Selection Process To Fit Cloud Deployment Models, January 26,
32 Application Vendor Selection Methodology Source: January 26, 2011, Reinvent Your Applications Vendor Selection Process To Fit Cloud Deployment Models 32
33 Agenda The HRM solution footprint Overview of the HRM technology market Ongoing market consolidation HR apps strategy and vendor selection guidance Work in progress 33
34 Work in progress Q Research: The Forrester Wave: HR Management Systems, Q (Due out in late Dec.) 2012 Trends in HRM, Finance, ERP Oracle Fusion Apps progress report Client engagements: HR apps portfolio strategy 7,500 person medical products manufacturer Benefits vendor selection 1,500 person financial services company Recruiting automation - $3b federal agency Product strategy roadmaps and advisory sessions with 3 HRMS vendors Events: Microsoft, SAP, SumTotal analyst events 34
35 Thank you Paul D. Hamerman Forrester Research, Inc. Reproduction Prohibited
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