HR Systems Survey

Transcription

1 HR Systems Survey 18 th Annual Edition Innovation, Insights, and Strategy Conducted by Stacey Harris VP of Research & Analytics Erin Spencer Research Consultant

2 Information contained in this Survey analysis is compiled and analyzed by Sierra-Cedar as part of the organization s commitment to provide thought leadership on Human Resources technologies, trends, and the impact their adoption has on enterprise performance. Sierra-Cedar encourages customers, media, partners, analysts, and other readers to share the information found herein and to quote liberally from the Survey with appropriate credit provided to Sierra-Cedar. However, this report cannot be publicly posted in its entirety without explicit permission. Please credit all quotes and references from this publication as Sierra-Cedar HR Systems Survey White Paper, 18 th Annual Edition on first reference. All subsequent references should read Sierra-Cedar Survey White Paper. To participate in next year s research and receive an early copy of the Annual Survey White Paper, please submit your address here: To request a media interview, please us here: [email protected]. To download previous Annual White Papers or additional research based on this year s Survey, please access our Research site here: 2

3 Table of Contents Executive Summary HR Systems Survey Key Themes...2 Big Changes and Big Findings...5 Sierra-Cedar Human Capital Management Blueprint...8 Sierra-Cedar HR Systems Survey and HCM Blueprint...8 Starting Place, Administrative Applications...9 User Experience, HR Service Delivery Applications...9 Business-driven Applications, Workforce Management, and Talent Management...9 Foundational BI and Workplace Optimization No System is an Island, Connecting Enterprise Data and Workflows Key Practices and Outcomes Key Practices Quantified Organizations: Data-Driven Decision Making Introducing the Talent-Driven Organization HR Focus, Outcomes, and Impact...23 HR Systems Strategy and Culture...25 The Year of the Enterprise HR Systems Strategy...25 Elements of an Enterprise HR Systems Strategy...26 Enterprise HR Systems Spending...27 HR Technology Resourcing Strategies...28 The Value of Change Management...29 Overall Application Adoption by Size, Industry, and Region Adoption by Size...31 Adoption by Industry...32 Adoption by Region...33 Three-Year Application Outlook Total HCM Deployment Strategies...35 Implementations...38 Upgrades and Updates HR System Expenditures...42 Administrative Applications...44 Meaningful Foundations...44 Payroll Applications...44 Payroll Vendor and Solution Outlook...46 Core HR Management System Application...47 i

4 Core HRMS Vendor and Solution Outlook...48 Benefits Administration Applications...49 Service Delivery Applications...50 Service Delivery and Mobile...50 Shared Service Strategies, Changing the Service Delivery Conversation...50 Service Delivery Efficiencies and Outcomes...52 HR Help Desk Vendor and Solution Outlook...53 Workforce Management Applications...54 Going Beyond Compliance...54 The Changing Definition of a Workforce Management Suite...54 Workforce Management Buying Patterns...55 Breaking Free from the Time Clock...56 Workforce Management Suite Vendor and Solution Outlook...57 Talent Management Applications, Shaping a Strategy...58 Talent Management Buying Patterns...58 Talent Management Suite Vendor and Solution Outlook...59 Individual Talent Management Solutions and Vendor Outlook...61 Business Intelligence, HR Analytics, and Workforce Optimization...68 Breaking Through the Hype, The Realities of BI/HR Analytics...68 Business Intelligence and HR Analytics Solution Outlook...73 Data-Driven Organizations and HR Analytics The Total HR Systems Environment...76 Integrating the HR Experience...76 Total HCM Environment...78 Total Talent Environment...80 Voice of the Customer on Core HRMS and TM...81 Emerging Technologies and Innovations in HR Technology...86 Total Enterprise Cloud Movement...86 HR Going Mobile...87 Social Applications in HR...88 Going Beyond the Data, Future Walking Recommendations...93 Survey Methodology and Approach...94 The Depth and Breadth of the Research Survey Demographics...95 ii

5 Table of Contents Figure 1: Top 5 HR Technology Initiatives...5 Figure 2: Business Process Improvement Initiatives...6 Figure 3: Changing HR Technology Initiatives...7 Figure 4: Sierra-Cedar HCM Application Blueprint...8 Figure 5: Chain Factors and Outcomes...11 Figure 6: Linking HR Technology to Outcomes...12 Figure 7: Linking HR Technology to Outcomes...15 Figure 8: Introducing the Data-Driven Organization...15 Figure 9: Lessons from Data-Driven Organizations that Support Performance...17 Figure 10: Lessons from Data-Driven Organizations: They Get the Basics Right...17 Figure 11: Lessons from Data-Driven Organizations: They Innovate with HR Technologies...17 Figure 12: Introducing the Talent-Driven Organization...19 Figure 13: Talent-Driven Organizations...19 Figure 14: Lessons from Talent-Driven Organizations: Strategies and Culture...21 Figure 15: Lessons from Talent-Driven Organizations: They Get the Basics Right...21 Figure 16: Lessons from Talent-Driven Organizations: They Innovate with HR Technologies...21 Figure 17: Talent-Driven Organizations Use More Metrics...22 Figure 18: Top Performers, Talent-Driven, and Data-Driven Organizations...23 Figure 19: Achieving Outcomes Requires Focus...23 Figure 20: Achieving Outcomes Talent...24 Figure 21: Achieving Outcomes HR...24 Figure 22: Achieving Outcomes Business...24 Figure 23: Percentage of Organizations with HR Systems Strategies...25 Figure 24: Enterprise HR Systems Strategy Aligns with Lower HR Tech Expenditures and Fewer HR Resources...26 Figure 25: 3-Year HR Technology Spending Trends Outlook...27 Figure 26: Tomorrow s HR is More Strategic and Analytical...28 Figure 27: Change Management Practices...29 Figure 28: Benefits of Change Management...30 Figure 29: Application Adoption Levels by Size...31 Figure 30: Application Adoption Levels by Industry...32 Figure 31: Application Adoption Levels by Region...33 Figure 32: Three-Year Adoption Outlook...34 Figure 33: Embedded Analytics Solutions...34 Figure 34: HCM Technology Deployment...35 Figure 35: HCM Deployments by Size...36 Figure 36: Multiple Pathways to an HR Tech Transformation...37 Figure 37: Plans For Replacing HR Technologies...38 Figure 38: Implementations Timelines Continue to Decrease...39 Figure 39: Modules Most Often Implemented with an HRMS...39 Figure 40: Implementation Resources, Who Does the Work?...40 Figure 41: Updates and Upgrades, Licensed HRMS Upgrade Average # of Months...41 Figure 42: Updates and Upgrades, SaaS HRMS Update Average # of Weeks...41 Figure 43: Total HR Technology Costs per Employees...42 Figure 44: HR Technology Costs Vary Little by Deployment...43 Figure 45: Implementation & Support Costs Vary Greatly...43 Figure 46: Payroll Deployment Models...44 Figure 47: Effectiveness of Global Payroll Solutions...45 Figure 48: Payroll Solutions Adoption by Size...46 Figure 49: HRMS Replacement Initiatives...47 Figure 50: HRMS Adoption By Size...48 Figure 51: Benefits Solutions Adoption By Size...49 iii

6 Figure 52: Shared Service Models...50 Figure 53: Shared Service Center Locations...51 Figure 54: Functions Included in HR Shared Services...51 Figure 55: Value of Service Delivery Technologies...52 Figure 56: Help Desk Adoption...53 Figure 57: Strategy for Selecting WFM Solutions...55 Figure 58: Workforce Management Technology Strategy Customers Want More Services...55 Figure 59: Workforce Management Goes Mobile & Wearable...56 Figure 60: Workforce Management Adoption By Size...57 Figure 61: Strategy for Selecting TM Solutions...59 Figure 62: Talent Management Suite Adoption By Size...60 Figure 63: Recruiting Applications Adoption By Size...61 Figure 64: Compensation Applications Adoption By Size...62 Figure 65: Learning Applications Adoption By Size...63 Figure 66: Ranking Learning Features...64 Figure 67: Performance Management Application By Size...64 Figure 68: Succession Management Applications By Size...65 Figure 69: Onboarding Solutions Adoption by Size...66 Figure 70: Ranking Onboarding Features...67 Figure 71: Moving to a Data-Driven HR Function...68 Figure 72: Business Intelligence/HR Analytics...69 Figure 73: Tools for Simple HR Analytics...70 Figure 74: Tools for Visualizing and Sharing Data...71 Figure 75: No Standard Tools for Complex BI Needs...71 Figure 76: Data Sources Integrated Into an HR Analytics by Deployment Method...72 Figure 77: HR BI/Analytics Solutions Adoption By Size...73 Figure 78: Most Use HR Analytics to Look BACKWARD...74 Figure 79: Some Use HR Analytics to Look FORWARD...75 Figure 80: Data-Driven Organizations Also Focus on the BUSINESS...75 Figure 81: Integration Strategies Matter...76 Figure 82: Self-Reported Data Privacy Process Maturity Levels...77 Figure 83: Total HCM Legacy Solutions...78 Figure 84: Total HCM Cloud Solutions...79 Figure 85: Total Talent Management, HRMS Suites...80 Figure 86: Total Talent Management, TM Suites...80 Figure 87: HRMS Vendor Satisfaction and User Experience...81 Figure 88: ITM Vendor Satisfaction and User Experience...82 Figure 89: More Satisfaction with HRMSs vs. TM Suites...83 Figure 90: High and Low Vendor Satisfaction Drivers...84 Figure 91: Percentage of Vendor Benefits and Challenges Selected by End-Users...85 Figure 92: Business Systems: To Cloud or Not to Cloud...86 Figure 93: Mobile-enabled HR Process Adoption Mobile Adoption Growth...87 Figure 94: Mobile-enabled HR Process Adoption...88 Figure 95: Social Tools Use and Plans...88 Figure 96: Workplace Collboration...89 Figure 97: Emerging Technologies Use and Plans...90 Figure 98: Emerging Technology Exploring the Explosion of Talent Acquisition Tools...91 Figure 99: Use of Emerging Talent Acquisition Tools by Talent-Driven Organizations...92 Figure 100: A Playbook for Your Style of HR...93 Figure 101: Demographics Information: All Respondents...95 Figure 102: Survey Participants Organization Types...96 Figure 103: Survey Participants Organization Strategies...96 Figure 104: Survey Participants by Function and Role...96 Figure 105: Demographics International and Global Organizations...97 iv

7 Executive Summary The Sierra-Cedar HR Systems Survey White Paper, 18 th Annual Edition is the latest research installment of the longest running, most widely distributed, and most highly participative research effort in the HR industry. Since 1997, this invaluable resource has been a catalyst for the HR Technology community, providing insight and guidance to practitioners around the world. The Sierra-Cedar HR Systems Survey stands alone as a Global benchmark of Human Resources (HR) technology adoption and the value achieved from the use of these technologies, seen through the eyes of HR Information Technologists (HRIT) and Information Technologists (IT). This year s White Paper covers adoption and trends for applications, deployment options, vendor solution outlook, expenditures, and value achieved for the following categories of applications. Throughout the report, we suggest implications and recommendations for both practitioners and vendors. Administrative Applications: Core Human Resource Management System (HRMS) Payroll Benefits Service Delivery Applications: Employee Self Service (ESS) Manager Self Service (MSS) Help Desk Portals Workforce Management applications Talent Management applications Social- and Mobile-enabled applications Business Intelligence (BI)/analytics solutions Emerging technologies Additionally, we cover insights on supporting HR practices: Systems strategy Adoption blueprints Integration practices Implementation practices Change Management practices Expenditure and Resource strategies The Survey was conducted from May 12 th through July 1 st, The Sierra-Cedar HR Systems Survey White Paper is based on 1,204 unique organizations representing a total workforce of 21 million employees and contingent workers. 1

8 HR Systems Survey Key Themes STRATEGY & CULTURE This is the year of the Enterprise HR Systems Strategy; 4 of organizations have a major HR Systems Strategy initiative. Organizations are taking multiple pathways to transforming the HR Systems Environment, with a mixture of rip and replace, combination, hosted, outsourcing, and hybrid environments. HR organizations achieve higher levels of HR, Talent, and Business outcomes by embracing their organization s culture. Data-Driven, Talent- Driven, and Top Performing Organizations provide insights on their unique approaches to HR systems. HR Technology Strategy Pathways Forward Outcome-Focused HR FOUNDATION We ve hit the tipping point: over 50% of purchased Core HRMSs are SaaS solutions. The new conversation is about the Enterprise HR Cloud, including Payroll and Workforce Management. Payroll and Workforce Management become the stumbling blocks to HR technology transformation efforts, with 20% of organizations currently evaluating their Technology vendor and solution options. HR is transforming the service delivery model with Shared Service centers, HR portals and help-desks solutions, along with mobile access. Organizations leveraging all of these technologies on average service 5 more employees per HR Administrative headcount. Enterprise HR Cloud Back to Basics Service Delivery INNOVATION Organizations leading the way in HR analytics are not only looking backward and forward, but towards business outcomes; 39% of organizations are now doing some level of HR analytics. Identifying and acquiring Talent in a consumer-driven market has opened the space for an explosion of new and emerging technologies. More than 50% of organizations are using new Talent Acquisition tools outside of their applicant tracking systems. Wearables are a hot topic this year, and we see a 30% increase in the percentage of organizations using Wearable technologies as part of their HR Strategy; 5 of organizations using Wearables leverage them to improve workforce productivity. Data-Driven HR Talent-Driven HR Wearables 2

9 This is the year of the Enterprise HR Systems Strategy! No one can deny that we are in an age of continuous change when it comes to both enterprise and personal technology environments. Without an enterprise strategy for the HR technology stack, organizations are finding that they not only spend more on total HR technology expenditures per employee, but they also reduce the overall number of employees they can serve per HR resource. Strategy is both a key component when it comes to a technology environment and a significant opportunity for many organizations; more than 40% of organizations are looking at improving or developing a new Enterprise HR Systems Strategy this year. This is a key issue for Top Performing Organizations, as well as those organizations evaluating their HR Technology environments. Part of developing an Enterprise HR Systems Strategy is working through an organization s current- and future-state HR technology plans. If the goal is to transform the technology environment, creating a more modern architecture that can support new User Experiences, mobile access, and full-data analyses requirements, then organizations need to define a pathway forward. Our research has shown that organizations are taking multiple pathways forward and are leveraging this opportunity to rethink the enterprise view of HR technology. From a strategy and cultural perspective, we re finding that organizations are spending an enormous amount of time focusing on the outcomes they re trying to achieve with HR processes and technology. We ve identified three specific HR outcome models Talent-Driven, Data-Driven, and Top Performing Organizations to give insight into how focusing on outcomes can change an organization s decisions concerning HR processes, people, and technology. Now that we ve seen a shift both from vendors and buyers towards Cloud/SaaS Core HRMS solutions, the real foundational questions turn to the enterprise HR Cloud. These solutions may include Talent, Workforce Management, Payroll, and Core HRMS, as well as emerging technology solutions. Can organizations achieve the desired transformational outcomes with hybrid environments? Can organizations manage regional requirements and global data privacy issues in Cloud environments? These are the foundational questions organizations are facing today. We ll share insights into how they are addressing these questions and their outcomes. These critical questions, along with the desperate need to gain better data and insight into an organization s internal workforce, are forcing decision makers to shift gears and refocus their energies on basic HR systems. Over 20% of organizations are evaluating their options today when it comes to critical systems such as Payroll and Workforce Management solutions, but few are ready to make a move without assurances that change would create better organizational outcomes. 3

10 One area seeing rapid change and movement is Service Delivery Applications; not only are we seeing growth and valuable outcomes from these solutions, but the change in this area is a precursor to the evolving relationships between the workforce and employers. Employees are becoming consumers of HR services, and HR is seeing a shift in its role from administrator to service provider. For organizations looking to improve user experiences, increase employees served, and add value to their HR technology investments, adoption of shared service centers, mobile-enabled processes, and supporting technologies is key to achieving these goals. Innovation comes in many formats, the least of which is simply new technology. Organizations taking new and different approaches to HR create their own level of innovation, from process to people, as well as their technology adoption strategies. We ve identified two innovative organization types this year: Talent-Driven and Data-Driven HR functions. Our goal is to share the concept that there are multiple ways to reach your business outcomes, while staying true to your organization s own culture and capabilities. As the overall technology market changes, innovative technologies tend to fall on the fringes of enterprise needs. Two areas that are attracting a great deal of attention this year are Wearable technologies and tools supporting Talent Acquisition efforts. Neither area has achieved full-enterprise acceptance yet, but we see these technologies as gateways to tomorrow s HR technology conversations. They may feel like fads, but the concepts underpinning these technologies social individualism and tomorrow s Internet of Things (IoT) are here to stay and worth the conversation. 4

11 Big Changes and Big Findings Each year we ask organizations about their top HR technology initiatives the areas in which they plan to spend 2 or more of their time and resources in the coming year. We find that organizations generally focus on specific areas year over year, so we look at this over a three-year period going back to 2013, and what we see is that business process improvement continues to be the number one area in which organizations invest. Today, 6 of organizations are planning a major initiative concerning a business process improvement effort. Figure 1: Top 5 HR Technology Initiatives 30% Increase in 3 Years % 3 Business Process Improvement HR Systems Strategy Talent Management Service Delivery BI/Workforce Metrics We might question why two-thirds of the 1,200 organizations we surveyed are vested in making changes in their processes, but our research shows that organizations with higher-than-average levels of overall Process Maturity levels see several benefits over time. These organizations report higher overall Vendor Satisfaction and technology User Experience scores, better HR and Talent outcomes, and higher levels of technology adoption. The next major initiative, HR Sytems Strategy, saw the greatest jump from fourth place last year to second place this year. There is a 30% increase over the last three years in organizations planning an initiative to create or update their strategy. The HR Systems Strategy conversation is not just about technology planning, but the changing expectations organizations have for outcomes achieved from their HR processes and technology investments. We also see a slight increase in Talent Management initiatives this year, primarily focused on organizations planning to implement additional Talent modules within their existing environments or switching to Talent technologies more closely aligned with the Core HRMS environments updated in the previous year. Overall, we see a slight increase this year in the percentage of organizations planning to completely replace Talent Management suites. Service Delivery initiatives saw a slight decrease this year from last year, which is not surprising considering we saw a 30% increase last year in the adoption of Manager Self Service solutions and HR Help Desk technology. It is still a top five initiative, and we believe the focus this year will be implementing more mobile-enabled HR environments across all HR technology environments. 5

12 When looking at the actual Business Process Improvement (BPI) initiatives organizations plan to tackle this year, we see investments in particular categories. The largest group of organizations making process improvements focuses on Recruiting, often in tandem with Onboarding; 4 are working on Recruiting and Onboarding together. We also see that organizations working on Talent Management Profiles and Data Process Improvement, as well as Learning and Development, Compensation, and Performance, tend to review these areas at the same time. Figure 2: Business Process Improvement Initiatives Core HR Learning 9% TM/Profile Onboarding Performance Recruiting % Core HR processes are changed alone 17% 4 work on Recruiting and Onboarding together 2 Compensation 7% HR Analytics ESS MSS 8% 9% 60% MSS processes change with ESS On the administrative back office side of the processes, 1 of organizations are working on BPI around Core HR processes 60% of whom focus solely on these processes areas alone. Although these percentages are smaller, we do see 8 9% of organizations working on ESS and MSS, with a focus on the end-user Experience. These process areas include master data management, employee process workflows, and employee communication strategies. Organizations working on ESS and MSS often do so in tandem, with 60% planning these process improvements in the same year. Once again, Business Intelligence and Workforce metrics rounds out the top five initiatives at 3, and we see this as a continuous area of growth. New investments in embedded HR analytics solutions doubled last year, and we expect to continue to see investments in these application areas rapidly increase. The question that remains is, Will these new embedded technologies lead to complex HR and workforce analytics in the near future, or will investments and initiatives need to shift to enterprise platforms and tools to achieve these desired outcomes? 6

13 Figure 3: Changing HR Technology Initiatives 2 Large organizations planning a Global HRMS Consolidation Initiative 1/3 Planning a Systems Integration Initiative 17% Fewer planning a major Workforce Management Initiative than last year 70% Increase in major Initiatives to Mobile-Enable HR Systems in the last 3-years Other changes in major HR initiatives that are worth noting this year: 2 of Large Global organizations are planning a Global HRMS consolidation. This remains a major initiative for Large Global organizations, and we believe they will continue to focus on consolidation initiatives as long as they have multiple solutions within individual regions that impede their ability to aggregate enterprise employee data in a single location. 1/3 of organizations are planning a systems integration initiative; this is up considerably from last year. This initiative suggests that organizations are finding, even with new solution integrations, challenges continue to cost both time and money for HR and IT departments. 17% decline in major initiatives to work on Workforce Management applications. This is one area, like Payroll, where organizations are hesitant to make a change. Not only are they concerned with what s happening in the legal and compliance market, but they are also waiting to see if the major enterprise application environments plan to make further investments in these systems. 70% increase over the last three years in organization s investing in mobile-enabled HR initiatives, to 20% planning a major initiative in this area in the next twelve months. On average, we see that organizations have doubled the average amount of employees now using some level of mobile-enabled HR processes to 2 this year. 7

14 Sierra-Cedar Human Capital Management Blueprint Sierra-Cedar HR Systems Survey and HCM Blueprint For the Sierra-Cedar HR Systems Survey, we asked questions about five primary categories and 31 individual application areas, not counting emerging technology areas that are detailed in the Sierra-Cedar Human Capital Management (HCM) Blueprint. The Survey also gathered details concerning HR system strategies, processes, vendors, implementation, Change Management, HR technology expenditures, supporting resources, and emerging technologies. Figure 4: Sierra-Cedar HCM Application Blueprint FIN General Ledger, Purchasing, Budgeting, T&E Enterprise Data Privacy Enterprise Content 6 Adoption Service Delivery HR Help Desk, Portal Self Service/Direct Access Employee Self Service Manager Self Service 9 Adoption Enterprise Social Vendor Management Enterprise Workflow Administrative Excellence Service Delivery Excellence Workforce Management Excellence Talent Management Excellence Workforce Optimization Excellence Administrative Apps Core HRMS, Roles/Competencies (Profile Mgt.), Payroll, Benefit Admin, Embedded HR Analytics, VMS 58% Adoption Workforce Management Time & Labor, Absence & Leave Management, Labor Scheduling, Labor Budgeting, WFM Analytics, 39% Adoption Workforce Optimization Workforce Planning, Workforce Analytics, Predictive Analytics Business Intelligence Foundation Reporting/Visualization and BI tools 5 Adoption Talent Management Recruiting, Performance, Learning, Compensation, Succession, Career, Talent Profile, Onboarding, TM Analytics CRM Network Security Mobile Access Backlog, Pipeline, Customer Satisfaction SOA, API, ETL PaaS Integration Platform Project Costing, Contracts, Grants Projects Over the last 18 years, we ve seen a roadmap of application adoptions emerge as we follow respondent organizations through their annual plans for implementing HR applications. Some organizations have a clear strategy for how they purchase and implement their HR systems; others exhibit an organic-growth model based on immediate needs and funds. The Sierra-Cedar HCM Application Blueprint captures the most common path an organization generally follows when they adopt HR solutions over multiple years; it further embodies our perspective on how to optimize an organization s HR solutions within the context of their enterprise systems environment. Finally, it looks at how organizations connect these solutions to attain the desired levels of excellence required to achieve organizational goals. 8

15 Starting Place, Administrative Applications Most organizations start their HCM application journey by deploying Administrative Applications, primarily in the form of a Payroll solution over 99% of our HR Systems Survey respondents have a Payroll solution in place. Most often Payroll solutions are implemented with an HRMS, but some organizations do leverage a Payroll system alone often in place of an HRMS until their needs expand. Over 9 of surveyed organizations currently have an HRMS in use. For most organizations, the HRMS sits at the heart of their HR and workforce data management needs and shares data with multiple HR applications. Once an organization reaches a certain size and complexity, an HRMS becomes necessary to manage the needs of the entire workforce, and we see a trend in increasingly smaller organizations finding a need to implement a solution. The Survey data shows organizations with just over 50 employees have plans to implement an HRMS in the next 12 months. Those organizations without an HRMS are primarily Small organizations, non-profits, and in some cases franchise organizations. Other Administrative Applications adopted by organizations include Benefits Administration and, increasingly, embedded analytics. The Benefits Administration application, also highly adopted, is outsourced more than any other application today over 2 of organizations leverage a Total Benefits Outsourcing (TBO) solution. Today, most Administrative Application packages include some level of embedded analytics. User Experience, HR Service Delivery Applications When organizations have Payroll, an HRMS, and Benefits Administration in place, they naturally achieve some level of Administrative Excellence for their HR function. Typically, they then focus on self-service applications such as Employee and Manager Self Service and other Service Delivery solutions such as an HR Help Desk, and Portal technologies. We see service delivery tools, general self service, and Manager Self Service continuing to expand and change in the next few years, in part due to the need to keep up with workers expectations for consumer and Mobile technology that can be accessed where and when it is needed. Organizations that focus on this area of application adoption achieve a high level of service delivery excellence and often experience an increase in the number of employees each HR administrative role can support across an organization. Business-driven Applications, Workforce Management, and Talent Management For many organizations, Workforce Management and/or Talent Management application adoption follows the Administrative and Service Delivery solutions. Workforce Management tools are used to help get the right person, with the right skills, in the right place, at the right time, at the right cost. Talent Management applications are specifically used to help attract, develop, and retain Talent. Each of these technology categories has multiple individual applications that encompass a total solution. Organizations spend considerable time working towards Talent Management and Workforce Management excellence but overall these two areas work hand in hand, and many organizations find they need to invest equally in both areas to be able to truly achieve their goals for Workforce Optimization. 9

16 Foundational BI and Workplace Optimization Over the past ten years, we have seen organizations that have high levels of adoption in other HR system areas focus on bringing all of their transactional and process information into a single environment for data analysis efforts. Today, we see organizations investing in a combination of enterprise platform technologies designed for data analytics, along with embedded solutions across each of the primary HR technology categories. Many continue to use traditional applications such as Excel, report building technology, and statistical tools. Finally, in the new era of Big Data, organizations are leveraging new visualization tools, as well as sophisticated dedicated HR/BI solutions that mix services and analytics technology together to analyze and visualize large amounts of enterprise data. The ultimate goal with all of these solutions is to provide wider access and insights into HR data that will help optimize the workforce efforts, as well as scenario planning, workforce planning, and predictive analytics that will provide an organization with the insights needed to make critical decisions for the future. No System is an Island, Connecting Enterprise Data and Workflows As organizations build out their own HCM blueprint, they quickly realize that HR solutions cannot exist separately from enterprise data privacy standards, content, social environments, and workflow solutions. Connecting HR systems to enterprise environments helps embed HR solutions into everyday work environments and these worlds begin to look seamless. To accomplish seamless connections, organizations need to think about their network security; access to devices such as Mobile, PC, and kiosk; data connection points provided through Service-Oriented Architecture (SOA) tools; Application Program Interfaces (APIs); Extract, Transform, and Load (ETL); and Enterprise Integration Strategy (EIS) and platforms. A recent addition to this list of enterprise connection protocols is Platform as a Service (PaaS) environments that allow for further broadening of the enterprise reach through useful marketplaces and custom-built applications and connectors. It is also important to remember that these HR technologies need to co-exist in a larger ecosystem that provides access to other data sources such as Finance or Operational data systems which, when integrated, then provide data for the best possible workforce analytics support. 10

17 Key Practices and Outcomes Sierra-Cedar has been on an 18-year quest for the value of HR technologies. Over the past few years, we formalized that search with Dr. Janet Marler, professor at State University of New York (SUNY). Together, we developed a very clear model that looks at the link between HR technology adoption to HR, Talent, and business outcomes. We call this our value chain analysis approach. As seen in Figure 5 below, we identified four specific HR outcomes, five specific Talent outcomes, and five specific business outcomes for evaluation. Figure 5: Chain Factors and Outcomes HR Outcomes HR alignment with business strategy HR cost efficiency Employee engagement Employee and manager productivity Talent Outcomes Ability to develop a highly qualified workforce Availability of workforce data for decision making Talent mobility Ability to attract top talent Retention of top talent Business Outcomes Market share Organizational profitability Customer (constituent) satisfaction Competitive advantage Innovation Scale of 1 5 Strongly Declined Declined Neutral Improved Strongly Improved We asked Survey respondents if over the last year their HR, Talent, and business outcomes declined, stayed the same, or improved on a scale of 1 5. In addition to these Survey questions, Sierra-Cedar gathered the following independent financial data on each of our participating organizations with publicly available data: Revenue numbers Profit margin numbers Operating Income Growth Return on Equity 11

18 We then combine this data with the self-reported data on improvements or declines, and therefore are able to show correlations between adoption of certain technologies and outcomes across all respondents. This model, as seen in Figure 6, links higher total application adoption (TA) to improved HR and Talent outcomes (HR), to improved business results (BR), and ultimately to financial value in the form of return on equity (ROE). Figure 6: Linking HR Technology to Outcomes TA Higher Total Apps Adoption Predicts HR Improved HR & Talent Outcomes Predicts BR Improved Business Results Predicts ROE Higher Return on Equity HR Technology application adoption is indirectly related to improved organizational results (Competitive Advantage and Market Share) through improved HR and talent outcomes (improved Cost Efficiency, Decision Making, Employee Engagement, Developed Workforce, Talent Retention) and linked to improved financial performance (ROE). We continue to partner with SUNY on ongoing statistical testing of our annual research data to gain further validation of our research and the outcomes achieved by participants. For more details on the Value Chain Analysis process and plans for further statistical evaluation, take a deeper dive on the topic with this article. 12

19 Key Practices One additional benefit to our value chain analyses efforts is the ability to compare multiple organizational aspects and characteristics across both financial outcomes and value chain outcomes. This analysis work has given us a unique perspective on the idea of Key Practices and allowed us to look carefully at organizations taking new and different approaches to HR. This year we ve looked at three different types of organizations: Data-Driven HR Organizations Talent-Driven HR Organizations Top Performing Organizations Each of these organizations creates their own level of innovation, from process, to people, as well as their technology adoption strategies. Our goal is to share the concept that there are multiple ways to reach business outcomes, while staying true to the culture and capabilities of an individual organization. Top Performing Organizations For the past few years, we have focused on finding high value from HR technologies and associated best practices by looking at Top Performers those with high financial performance in these areas: Revenue per employee Profit margins per employee Operating Income Growth for the previous year Return on Equity For the last two years, we ve found fewer differences in how Top Performers approach HR Technology and aggregate Survey responders, leading us to recognize that the competitive advantage effect of HR technology adoption on Top Performers has minimized as more organizations adopt similar HR technologies. There are other HR practices and processes that we have called out throughout the paper, but ultimately the focus for Top Performers is often one of financial outcomes, which may occur at the expense of long-term planning. 13

20 Quantified Organizations: Data-Driven Decision Making Last year we introduced for the first time Quantified Organizations those whose HR practices support an environment of data-driven decision making. For 2015, we once again analyzed the Quantified Organization, but throughout the paper this year we ll refer to them as Data-Driven Organizations. This group was identified through a unique index of qualifiers, providing for a year-over-year review of these organizations. Data-Driven Organizations are selected based on four leadership areas: 1. BI Process Maturity the organization has high levels of Process Maturity when using Workforce Analytics, a function of Business Intelligence that is effective (aligned, best practice, strategically focused) or transformational (unique, stands above others, and contributes to competitive advantage financially and enables the organization to be an employer of choice). On a scale of 1 (manual), 2 (efficient), 3 (effective), and 4 (transformational), the Data-Driven Organizations are clearly effective and approaching transformational. 2. Direct access by line managers HR analytics and Business Intelligence is used directly by managers to support their workforce decision making. In 2015, the average access to HR analytics provided to managers was 3 of the organization by all respondents, up from 19% in An impressive 7 of managers in Data-Driven Organizations have direct access to Business Intelligence and HR analytics. 3. More data sources addtional workforce data, including Core HR, Talent Management (TM), Workforce Management (WFM), financials, sales, and various operational systems, paint a more complete picture. Organizations that use multiple data sets are more quantified in their ability to show the contribution of workforce efforts to business outcomes. Data-Driven Organizations use 4.9 BI sources for decision making compared to 2.7 sources for Non-Data-Driven Organizations. 4. More categories of HR metrics these help organizations make informed business decisions and optimize their workforce. We included six categories in our Survey: Recruiting, Absence, Learning, Compensation, Performance, and Productivity. Data-Driven Organizations are using 4.5 metrics on average for their HR reporting efforts compared to 2.9 for Non-Data-Driven Organizations. In our analysis, we compared Data-Driven Organizations to those organizations that did not meet our criteria. Those organizations that did not meet our criteria were labeled Non-Data-Driven. You can find the comparison of these organizations in Figure 7 on the following page. 14

21 Figure 7: Linking HR Technology to Outcomes Better BI Process Maturity Data-Driven Organizations BI Process Maturity 3.1 Effective Non-Data-Driven Organizations BI Process Maturity 2.3 Efficient More Manager Access to Analytics More Data Sources Managers with BI access 7 BI Sources 4.9 Managers with BI access 3 BI Sources 2.7 More Categories of Metrics Metrics Categories Tracked 4.5 Metrics Categories Tracked 2.9 When reviewing the financial outcomes of Data-Driven Organizations, we found that our indexed organizations achieved higher levels of financial performance in the form of Return on Equity (ROE) for a second year in a row. Survey data shows a 70% difference between the ROE numbers for Non-Data-Driven Organizations at 1 and Data-Driven Organizations at 27%. ROE, a significant financial metric, provides the standard basis for how efficiently and effectively an organization is run. We also look at the perceived strategic value of Data-Driven HR functions, and once again find that the Data-Driven Organizations are 6 more likely to be viewed as strategic partners by their business counterparts over the Non-Data-Driven Organizations, as seen in Figure 8. Figure 8: Introducing the Data-Driven Organization Strategic Value Return on Equity % 70% 1 Data-Driven Organization Non-Data-Driven Organization 15

22 Lessons from the Data-Driven Organizations The practices of Data-Driven Organizations provide valuable insight into how they maintain their advantage in today s insight-driven world. We looked at the differences across these organizations in three ways: Strategy and Culture Foundation and Basics Innovation Data-Driven Strategy and Culture Strategy and culture are two areas that every organization strives to cultivate, but often struggles to clearly define. This is true at the enterprise level as well as the functional HR level. Strategy and culture create an environment of common understanding where the workforce is clear about the outcomes they are trying to achieve and how an organization expects them to be accomplished. Data-Driven Organizations embrace the importance of strategy and culture within HR. As seen in Figure 9, these organizations are twice as likely to have an Enterprise HR Systems Strategy that is updated regularly, and one-and-a-half times more likely to have an Enterprise Integration Strategy (EIS). The focus on enterprise-wide strategies continues into their future plans. Finally, these organizations understand the importance of creating a Culture of Change Management. Data- Driven Organizations are twice as likely to practice Change Management efforts with every technology upgrade, release, or implementation the organization manages versus Non-Data-Driven Organizations. Data-Driven Foundation and Basics Leveraging data to inform organizational decisions requires that an organization gather, label, and house that data in similar ways; this data curation is important regardless of the size or global reach of an organization. This year s Data-Driven Organizations range in size from Small with just 70 employees plus contingents to Very Large with over 360,000 employees plus contingents. Many Data-Driven Organizations are also global, operating in an average of 27 different countries. These organizations are headquartered all over the world; locations include the US, Canada, South America, Western Europe, and India, and span all industries. As seen in Figure 10, we find that Data-Driven Organizations are more likely to have high percentages of HR process standardization and high levels of overall HR Process Maturity on a four-point scale. They are also more likely to leverage a central shared services function to deliver their HR services. Data-Driven Innovation How an organization approaches innovation can mean the difference between catching a wave, riding a wave, or being bowled over by the wave. Innovation is one of the key areas we ll see that is often differentiated across various types of organizations and dependent upon organizational culture and risk aversion. Data-Driven Organizations take an innovative approach to the technology they integrate, evaluate, and actually use on a daily basis. One of their key areas of innovation involves adopting and integrating total HR Suites in the areas of Talent Management and Workforce Management, as well as Business Intelligence tools. These organizations use more data and metrics throughout their HR processes and are five times more likely to adopt and integrate these solutions than Non-Data-Driven HR functions. These Data-Driven Organizations also look to innovation as a more effective way to reach their employees. As seen in Figure 11, they are 70% more likely to have adopted Mobile-enabled HR processes and twice as likely to leverage Wearables in an HR capacity. 16

23 Figure 9: Lessons from Data-Driven Organizations that Support Performance Updated HR Systems Strategy Enterprise Integration Strategy Change Management Culture 6 50% % 27% Data-Driven Organization Non-Data-Driven Organization Figure 10: Lessons from Data-Driven Organizations: They Get the Basics Right Process Standardization Process Maturity Central Shared Services 10 Average Shared 8 Average Shared 3.0 Effective & Efficient 2.0 Efficient 7 5 Data-Driven Organization Non-Data-Driven Organization Figure 11: Lessons from Data-Driven Organizations: They Innovate with HR Technologies Top Adopters of WFM, TM, and BI Higher Level of Mobile Adoption Early Adopters of Wearable Technology 3 39% 2 1 7% Data-Driven Organization Non-Data-Driven Organization 17

24 Introducing the Talent-Driven Organization In 2015, we are also introducing Talent-Driven Organizations entities that support an environment of Talent- Driven decision making through their HR practices. When identifying these organizations, we use a unique index of qualifiers that will provide us with a year-over-year review of these cohorts. Talent-Driven Organizations are selected based on their leadership in four areas: 1. Career Planning Process Maturity. The organization has high levels of Process Maturity in Career Planning, a function of Talent Management in a way that is effective (aligned, best practice, strategically focused) or transformational (unique, stands above others, and contributes to competitive advantage financially and enables the organization to be an employer of choice). On a scale of 1 (manual), 2 (efficient), 3 (effective), and 4 (transformational), the Talent-Driven organizations are clearly effective and approaching transformational compared to Non-Talent-Driven Organizations that have no process or a highly manual process. 2. Succession Planning. The organization conducts the process of Succession Management in a systematic manner. In 2015, only 3 of all respondents were conducting systematic Succession Planning. 100% of our Talent-Driven organizations were doing Succession Planning, compared to only 2 of Non-Talent-Driven Organizations. 3. HR Analytics Outcomes. The organizations leverage HR analytics to accomplish key talent outcomes. These organizations must identify at least one of three key talent outcomes which they are leveraging their HR analytics efforts to achieve: Employee Engagement Employee Retention Risks Identifying Top Talent As seen in Figure 12, we were pleasantly surprised to see that most Talent-Driven Organizations were focusing on achieving more than one Talent outcome in this group compared to our Non-Talent-Driven Organizations which were more likely to be focusing on no more than one or none of these outcomes. In our analysis, we compared Tata-Driven Organizations to those organizations that did not meet our criteria listed above. Those organizations that did not meet our criteria were labeled Non-Talent-Driven. You can find the comparison of these organizations in Figure 12 on the following page. 18

25 Figure 12: Introducing the Talent-Driven Organization Better Career Planning Process Maturity Succession Planning Talent Driven CP Process Maturity 3.2 Effective Succession Planning 100% Not Talent Driven CP Process Maturity 1.5 Manual Succession Planning 2 Use HR Analytics Identifying Top Talent 7 Identifying Top Talent 2 Use HR Analytics Employee Retention Risks 70% Employee Retention Risks 40% Use HR Analytics Employee Engagement 6 Employee Engagement 2 When reviewing the financial outcomes of Talent-Driven Organizations, we found that our indexed organizations achieved higher than average levels of financial performance in the form of ROE. We found a 3 difference between the ROE numbers for Non-Talent-Driven Organizations at 1 and Talent-Driven Organizations at 1. Although that is not quite as high as the Data-Driven Organizations, it is still noteworthy. ROE is a significant financial metric that provides a standard basis for how efficiently and effectively an organization is run. In addition to ROE performance, the Talent-Driven Organizations also had 1.4 times the revenue per employee and a higher profit per employee than Non-Talent-Driven Organizations. These organizations are focusing on their employees total outcomes. Talent-Driven Organizations were also 5 more likely to be viewed as strategic partners by their business counterparts over the non-talent-driven Organizations, as seen in Figure 13. Figure 13: Talent-Driven Organizations Strategic Value Return on Equity 60% 5 1.4x Higher Revenue/ Employee 39% Talent-Driven Organization Non-Talent-Driven Organization 19

26 Lessons from the Talent-Driven Organizations The practices of Talent-Driven Organizations provide valuable insight into how they maintain their advantage in today s Talent focused world. We looked at the differences across these organizations in three ways: Strategy and Culture Foundation and Basics Innovation Talent-Driven Strategy and Culture Strategy and culture create an environment of common understanding where the workforce is clear about the outcomes they are trying to achieve and how an organization expects those outcomes to be accomplished. Similar to Data-Driven HR functions, Talent-Driven Organizations truly embrace the importance of strategy and culture within HR as a major factor in supporting their Talent. As seen in Figure 14, these organizations are twice as likely to have a regularly updated Enterprise HR Systems Strategy, as well as two-and-a-half times more likely to have an Enterprise Integration Strategy (EIS). The focus on enterprise-wide strategies influences their future plans. Talent-Driven Organizations understand the importance of creating a Culture of Change Management and are two-and-a-half times more likely to conduct Change Management efforts. Talent-Driven Foundation and Basics Leveraging Talent as a key competitive advantage requires organizations to understand their current and future Talent needs at both the enterprise and individual levels. Often Talent-Driven Organizations are more alike than not and depend heavily on their Talent as a major differentiator of their brand and products. This year s Talent- Driven Organizations have an average size of 41,000 employees plus contingents and are more likely to be Large organizations. Over 5 are also global, operating in an average of 30 different countries, and are headquartered all over the world. Talent-Driven Organizations optimize their environments for their managers and employees by becoming process driven, user friendly, and integrated to allow for seamless Talent development and growth. As seen in Figure 15, Talent-Driven Organizations are more likely to roll out ESS and MSS to almost everyone in their organization. Talent-Driven Organization s Process Maturity levels are thirteen times higher and they are 1.6 times more likely to integrate their Talent Management processes, data, and supporting technologies. Talent-Driven Innovation Innovation is a key differentiator for various types of organizations, and Talent- Driven Organizations are no exception. Not only are they top adopters of Talent Management applications, as we would expect, but they have also implemented an average of nine Talent Management modules that we track, twice as many as the Non- Talent-Driven group. These Talent-Driven Organizations also look at innovation as a way to incent and motivate their critical Talent and are twice as likely to adopt a Rewards and Recognition solution for their employees and managers. Talent-Driven Organizations are also surprisingly more likely to adopt Wearables in an HR capacity they are three-times more likely to adopt these new technologies. 20

27 Figure 14: Lessons from Talent-Driven Organizations: Strategies and Culture Updated HR Systems Strategy Enterprise Integration Strategy Change Management Culture 6 60% Talent-Driven Organization Non Talent Driven Organization Figure 15: Lessons from Talent-Driven Organizations: They Get the Basics Right Employee & Manager Self Service Top Process Maturity Integrated TM Modules ESS 9 MSS 8 ESS 7 MSS Talent-Driven Organization Non-Talent-Driven Organization Figure 16: Lessons from Talent-Driven Organizations: They Innovate with HR Technologies Top Adopters Talent Tech Rewards & Recognition Early Adopters of Wearable Technology 40% 8 Modules 4 20% 4 Modules 18% 2 Talent-Driven Organization Non-Talent Driven Organization 21

28 Talent-Driven Organizations and HR Analytics The big differentiator in our Talent-Driven Organizations, versus an organization that has simply rolled out Talent Management technologies and mature Talent processes, is their Talent-focused approach to HR outcomes. This year, we looked carefully at the metrics included in Talent-Driven HR organizations HR analytics reporting. Talent-Driven Organizations used more HR metrics in their HR analytics reporting, with one of the stand-out metrics being learning. As seen in Figure 17, Talent-Driven Organizations are 1.5 times more likely to report learning metrics compared to Non-Talent-Driven Organizations. Figure 17: Talent-Driven Organizations Use More Metrics Metrics Included in HR Analytics Reporting 27% 1 60% 40% 7 29% 8 57% 90% 97% 7 7 Productivity (Rev/EE) Absence (Rates, Impact) Learning (Effectiveness) Performance (Rev/OpCosts) Recruiting (Source, Ret.) Compensation (Trends, Pay/Per) Talent-Driven Organization Non-Talent Driven Organization 22

29 HR Focus, Outcomes, and Impact Figure 18: Top Performers, Talent-Driven, and Data-Driven Organizations Top Performers Talent Driven Data Driven Top Quartiles Revenue/Employee Profit/Employee OIG (1 year) Return on Equity Mature Career Planning Succession Mgmt Metric Outcomes Employee engagement Workforce readiness Retention risks Top talent Mature Workforce Analytics 3+ Metrics 20%+ Managers/BI 3+ Data Sources Once we indexed and categorized our Key Practice organizations, we were able to compare them in multiple ways: Financial outcomes Key practices (process, technology, and people) HR, Talent, and Business Outcomes The most exciting finding of our research this year, the piece de resistance of our analyses efforts, was the outcomes analyses across these three organization types and our aggregate respondents. In Figure 19, we ve compared the average respondent s outcome analyses for our Talent, HR, and Business Outcomes. Figure 19: Achieving Outcomes Requires Focus 5 Talent Outcomes HR Outcomes Business Outcomes Attract talent Develop workforce Decision data Talent retention Talent mobility Engagement Productivity Cost efficiency Business alignment Innovation Market share Profitability Talent Driven Data Driven Top Performers Aggregate Customer sat Competitive 23

30 Figure 20: Achieving Outcomes Talent Not surprisingly for Talent Outcomes, the Talent-Driven Organizations are slightly higher in many of the outcome areas, while our aggregate organizations have considerably lower outcome responses than the other organization types Attract Talent Develop Workforce Decision Data Talent Retention Talent Mobility Talent Driven Data Driven Top Performers Aggregate Figure 21: Achieving Outcomes HR We find Top Performing Organizations often equal to Talent- and Data-Driven Organizations in their HR Outcomes. Here the focus on efficiency and business alignment works across all three of these category types. Once again, our aggregate respondents fall below our other organization types Engagement Productivity Cost efficiency Business alignment Talent Driven Data Driven Top Performers Aggregate Figure 22: Achieving Outcomes Business Our Business Outcomes highlight the biggest difference across the four groups. Here Talent- and Data- Organizations achieve considerably higher outcomes than our aggregate and Top Performing Organizations Innovation Market share Profitability Customer sat Competitive Talent Driven Data Driven Top Performers Aggregate This analysis provides valuable insights on the type of organizations you may look to benchmark against over time. Depending on your own organization s business model and culture, you may find that certain approaches to reaching your outcomes are more realistic and in some cases provide better long-term outcomes. 24

31 HR Systems Strategy and Culture The Year of the Enterprise HR Systems Strategy As HR systems shift from administrative support tools to strategic instruments finely tuned to engage and optimize the workforce, it becomes necessary to have an Enterprise HR Systems Strategy for the adoption, integration, and configuration of these solutions. While organizations vary in their approaches to creating and maintaining a strategy, as seen in Figure 23, just 30% of have a regularly updated Enterprise HR Systems Strategy and another 2 are working on developing a strategy today. More surprising is that 3 of organizations either do not have an Enterprise HR Systems Strategy, or they are unaware if one exists. If an organization has an Enterprise HR Systems Strategy, then everyone in the HR and IT organizations should be aware of its existence and understand the key points that drive strategic decision making. Figure 23: Percentage of Organizations with HR Systems Strategies Regularly updated strategy 1 30% In development strategy Rarely updated strategy 20% No strategy Not aware % of Top Performing Organizations have an initiative to create or improve their Enterprise HR System Strategies This year, 4 of all of our responding organizations and 60% of our Top Performing Organizations are investing both time and resources in a major HR initiative to create or improve an Enterprise HR Systems Strategy. We also know that both our Talent-Driven and Data-Driven Organizations are more likely to have a regularly updated Enterprise HR Systems Strategy, allowing them to be more aligned with business needs when making technology purchases and integrating data. As seen in Figure 24 on the next page, we also see that organizations that invest in an Enterprise HR Systems Strategy are more likely to have lower total HR Technology expenditures, on average 2 less than their peer organizations with no Enterprise HR Systems Strategy. We also found that they served 37% more employees with each of their HR technology administrative roles over their non-strategy peers. 25

32 Figure 24: Enterprise HR Systems Strategy Aligns with Lower HR Tech Expenditures and Fewer HR Resources HR Systems Strategy No HR Systems Strategy Total HR Tech Costs/Employee 1 $ 283 $367 Total HR Tech Administrative Resources/Employee 336 Employees/ HR Administrative Resource 245 Employees/ HR Administrative Resource This year we found that organizations with a regularly updated Enterprise HR Systems Strategy were twice as likely to be viewed by all levels of management as contributing strategic value to the organization, over those who have no HR systems strategy in place. The moral of the data is that an Enterprise HR Systems Strategy, when updated on a regular basis, is valuable financially and strategically to your organization. Elements of an Enterprise HR Systems Strategy We are often asked, What is generally included in an Enterprise HR Systems Strategy? and How often are they reviewed and adjusted? Most organizations tell us that their Enterprise HR Systems Strategies are reviewed annually, with minor adjustments being made each year. Enterprise HR System Strategies often include these elements: Current State Scale and Scope Benchmarking Data Blueprint Roadmaps Governance Principles Expenditures and Budgets Resources and Outsourcing An outline of the current state of your organization s Enterprise HR Technology, including integration points, vendors, and ownership details. Careful account of the internal and external workforce that requires support and access to technology that falls within the Enterprise HR environment. This often includes workforce demographics, as well as locations, and priority to organizational long-term strategies. Data or analyses of how your organization s current state compares to peer organizations in culture, size, industry, or complexity. Enterprise documentation of the outcomes desired from HR Technology environments, recommended application adoption or changes to achieve enterprise outcomes. Timelines, responsibilities, communication plans, and KPIs associated with any approved application changes or updates. Identified decision makers, ownership models, and guidelines for making decisions on Enterprise HR Technology environments, data management, and privacy issues. Past expenditures and future budgets for Enterprise HR Technology environments. Careful account of both internal and external resources, as well as outsourcing agreements that support the Enterprise HR Technology environments. This is by no means an all-inclusive list, but if these areas are reviewed on an annual basis, organizations will find that over time they are more prepared to handle both internal requests and external pressures that impact their HR Technology decisions. 1 HR Technology Costs and HR Resources normalized for size 26

33 Enterprise HR Systems Spending Each year, Sierra-Cedar asks organizations to identify whether their HR Technology spending plans will increase, decrease, or stay the same. This year, just 4 of organizations believe their spending will increase in , while 7% felt their spending would decrease. It is important look at this question by organization size and in the context of spending over the last several years as we have done in Figure 25 below. Figure 25: 3-Year HR Technology Spending Trends Outlook Large 10, % 49% 8% 3 58% 7% 4 5 Medium 2,500 10, % % 47% 4 Small <2, Increase Stay the Same Decrease Although this year s spending outlook looks very positive, it is a slight slowdown in spending plans from last year, but still very healthy when compared with 2013 s spending plans following the recent recession. In 2014, we believe spending increased due to the need for many organizations to address HR Technology issues that were put on hold during the recession. This year, we believe that most spending budgets are once again reaching more of an equilibrium going forward. Large organizations plan to increase spending next year, a positive sign for those HR Technology vendors targeting that limited, but often more profitable, group of organizations. Medium organizations have the highest expectations for decreasing their HR Technology spending at 10% of the organizations, but 47% of Medium organizations still plan to increase spending next year. Small organizations are the fastest growing segment of new HR technology buyers, so HR technology vendors will need come to the table with a compelling reason for them to increase spending next year. Over 50% of Small organizations are on target to simply maintain their existing HR technology spending. 27

34 HR Technology Resourcing Strategies Knowing that spending doesn t provide the only indicator of what an organization can accomplish when it comes to their Enterprise HR Systems Strategy, this year we added a new question concerning an organization s plans to increase or decrease certain roles across their HR function over the next year. As seen in Figure 26, we asked organizations about a wide range of roles across the HR organization ranging from administrative to management roles, as well as roles specific to supporting or working with certain applications such as Payroll, Workforce Management, and Talent Management applications. Figure 26: Tomorrow s HR is More Strategic and Analytical 29% % 1 7% 18% 1 17% 19% 2 2 Payroll HR Management HR Generalist HR Business Partner Workforce Management HR IT Infrastructure HR System Support Talent Management HR Data Analytics Increase Decrease The area with the highest expectations for additional hiring was HR Data Analytics, with 3 of organizations planning to increase headcount this position, and very few planning to decrease this role. We see that 29% of organizations also plan to increase Talent Management headcount this year. Plans to increase these roles align with plans to increase the strategic role of the HR function, particularly with a stronger focus on either finding Talent or managing existing Talent through data analytics. We also see increases planned for HR system support and HR/IT infrastructure roles, which harkens back to plans to increase shared service functions and further integration efforts. We are excited to see additions of a wide mixture of strategic services and support roles. HR Generalist and Payroll headcounts are roles most likely to decrease, at 1 and 10% respectively. Payroll roles were also the least likely to see an increase in their ranks. Overall, we see organizations working to implement technology that can reduce the administrative and generalist tasks, but this isn t a rapid transformation for most organizations. It is also important to note that even if you personally fall into one of those areas targeted for reduction over time, we believe the skillset in these roles can be easily transferred to other areas of growth. An HR Generalist could choose to specialize in an area of high growth, such as Talent Management or Workforce Management, and likewise a Payroll specialist could move into a role focusing on data security, data cleanliness, and the total HR technology landscape due to their extensive knowledge and experience with these issues in the Payroll area. 28

35 The Value of Change Management Change Management is one of those topics that everyone agrees is important, but it often gets left as an afterthought when making plans for HR systems acquisitions and deployment. When allocating budgets and time, it is hard to show the value proposition for the additional resources required to invest in effective Change Management efforts. For the second year in a row, we asked several questions concerning organizations various approaches to Change Management efforts for HR Technology. We categorized four levels of Change Management for HR Technology: Culture of Change Management Change Management is done with every technology change in our organization. Key projects Change Management is done only with a few key projects that meet certain criteria such as size, budget, or breadth of stakeholders. Sporadically Change Management is done sporadically with no criteria. Never Figure 27: Change Management Practices 29% 29% Consistent culture of change mangement Key projects that meet criteria Sporadically, with no criteria Never 3 17% increase in organizations implementing any level of Change Management from last year As seen in Figure 27, we saw a 17% increase in the percentage of organizations implementing any level of Change Management from last year and a slight increase to 29% of organizations practicing a Culture of Change Management. 29

36 If you ve started down the road of transforming your HR technology environments, a big change in thinking required for many organizations is the shift from project-based Change Management to a culture of continuous Change Management. This shift isn t just based on new Cloud technologies that require constant updates, but the increasing reality that the pace of change in technology and business simply can t be sustained with projectbased Change Management practices. Project management practices are based on the idea that all projects have a beginning, middle, and end, and that goals can be achieved as described in the beginning of the process. Today, we live by Key Performance Indicators and expected overall outcomes because, in reality, goals shift almost daily. It is easy to look at changing end-user requirements as scope creep that must be avoided at all costs, a nuisance to your project plans and Change Management strategies. In contrast, if your organization practices a culture of continuous Change Management, then end-user requirements will be reviewed regularly with an agile model meant to identify changing requirements as they appear and adjust accordingly. For organizations that have adapted to this modern approach to Change Management, we ve seen positive outcomes both financially and in HR s perceived value as a strategic partner. For the second year in a row, we have found that organizations investing in any form of Change Management experience the benefit of reduced total HR technology costs per employee. Those organizations with a Culture of Change Management spend 1.3 times less on their total HR technology costs than those that invest in no forms of Change Management. Even those who only implement Change Management sporadically or for key projects see some benefits in the form of HR technology cost improvements. By using Change Management techniques, organizations invest less in support costs, third-party resources, and extend their existing technologies by increasing their overall use. Figure 28: Benefits of Change Management Total HR Technology Costs/Employee Culture of CM $243 Key projects $253 Sporadic 57% Never $341 $572 2x Change Management Increases Strategic Value of HR Organizations with a Culture of Change Management are twice as likely to be viewed by all levels of management as contributing strategic value, versus organizations that never use change management. Like an Enterprise HR Systems Strategy, Change Management is connected to the perception of a valuable HR function. Those with a Culture of Change Management are once again twice as likely to be viewed by all levels of management as contributing strategic value, versus organizations that never use Change Management. 30

37 Overall Application Adoption by Size, Industry, and Region The charts that follow provide an overall usage snapshot for each application category by size of organization, industry sector, and global region. We provide the average adoption levels to give context and relevance to the specific data sets. While individual organizations will often vary in adoption of HR technologies, these average adoption levels can be used as a quick benchmark for any organization. Adoption by Size In general, we see a slight uptick in almost all areas of application adoption for the overall average. The only application area that did not see a significant increase in application adoption at the individual application levels was Talent Management. Overall, Talent Management initiatives were slightly down last year, and many organizations spent time replacing or upgrading existing Talent Management solutions versus adding new modules. Figure 29: Application Adoption Levels by Size % 5 39% 49% Large 10, % 4 58% Medium 2,500 10, % Small <2, Admin Service Delivery WFM TM BI/Analytics Social Large organizations continue as higher-than-average adopters of all application areas over the aggregate, especially in the areas of Service Delivery and BI/Analytics. Medium organizations are often focusing on new growth and optimizing their workforce. We see higher levels of adoption in Administrative and Social applications. Small organizations are lower-than-average adopters of all application areas, although it is important to note that we are seeing Smaller organizations purchasing enterprise-wide HR solutions at much earlier stages than they have in previous years, 31

38 Adoption by Industry Looking at each industry, readers can see that there are wide variations in overall application adoption by category, particularly in the area of Workforce Management, Talent Management, and Social technologies. Public Administration and Higher Education organizations have the lowest overall application adoption numbers of any other industries. Figure 30: Application Adoption Levels by Industry % 5 39% 49% Ag. Mining. Const % 6 40% 5 Finance 9 68% % 49% Healthcare 9 67% % 47% Higher Ed 9 70% 48% 37% 37% 38% Other % 5 40% 5 High Tech 9 69% 6 67% 4 69% Manufacturing % 5 40% 4 Public Admin. 89% % Retail % 39% 47% Trans./Comm. Utilities 9 68% 58% % Admin Service Delivery WFM TM BI/Analytics Social On the opposite side of the spectrum, High Tech organizations have the highest level of application adoption in almost all areas in part due to their need to more effectively manage highly skilled workforces while optimizing the allocation of both workers time and skillsets. Agriculture, Mining, and Construction as well as Finance organizations have adopted a large set of Talent Management applications and, as expected, we see high levels of adoption in Workforce Management applications by Healthcare and Retail, both industries with large hourly workforces. 32

39 Adoption by Region Looking at adoption by region, US organizations typically lead in application adoption, but we are seeing some areas where organizations from EMEA (Europe, Middle East, and Africa) have slightly higher levels of adoption this year particularly in the adoption of Workforce Management and Social technologies. Figure 31: Application Adoption Levels by Region Worldwide Average % 5 39% 49% USA 9 67% 58% 5 40% 48% CAN % 4 27% 48% EMEA 89% % 60% APAC 8 68% Admin Service Delivery WFM TM BI/Analytics Social Canada (CAN) shows the lowest adoption rates for Service Delivery, Workforce Management, Talent Management, and BI/Analytics. The increase in Social technology adoption for EMEA can be pinpointed to aggressive adoption of collaboration tools. We also see that the Asia Pacific (APAC) region is once again at slightly lower adoption levels in Administrative and Talent Management applications. 33

40 Three-Year Application Outlook In addition to asking which applications are in use today, we also track applications budgeted for the next 12 months or planned for implementation in the next three years as seen in Figure 32 below. While all categories of applications show slight growth over the next three years, we see very few areas of dramatic growth expectations as we ve seen in previous years. The highest levels of growth expectation are for Talent Management applications at 4 expected growth in three years and Business Intelligence/Analytics solutions with 5 expected growth in three years. Figure 32: Three-Year Adoption Outlook % 58% 5 49% 5 59% 39% Administrative Service Delivery Workforce Management Talent Management Social Media Tools BI/Analytics Solutions In Use Today In Use Within 3 Years One area of special interest, where organizations plan significant increases in investment over the next three years, is in embedded HR analytics. Over the last year, we saw significant jumps for organizations in their embedded Core HRMS, Workforce Management, and Talent Management application adoption over the last year, and we are seeing plans for adoption two- to three-times higher over the next few years. These embedded HR analytics solutions are providing a path forward for many organizations to being their journey in HR analytics and long-term Workforce Planning initiatives. Figure 33: Embedded Analytics Solutions 79% % % 1 1 Administrative Embedded Analytics In Use Last Year Workforce Management Embedded Analytics In Use Today In Use Within 3 Years Talent Management Embedded Analytics 34

41 Total HCM Deployment Strategies Now that we ve seen a shift both from vendors and buyers towards Cloud and SaaS Core HRMS solutions, the real foundational questions turn to the enterprise HR Cloud, which includes Talent solutions, Workforce Management solutions, and Payroll solutions as well as the Core HRMS, not to mention the emerging technology solutions. When looking at your entire HR systems environment and strategy, you really have to think about the HCM technology package as a whole. The real value of the Sierra-Cedar HR Systems research and our annual approach to gathering enterprisewide data is that we can look across all the various applications and provide insights for how organizations are developing their various HR environments to create a cohesive solution for end-users and codify a vast amount of enterprise-level data on their current employees and future candidates. The first thing we wanted to provide for our readers was a realistic view of which HR technologies are deployed in the Cloud today, and which systems organizations plan to move to the Cloud in the next 12 months. When organizations transition from a legacy technology to a Cloud/SaaS solution, it is not just about changing technology, but rather about transforming the experience for their end-users. If a new platform does not provide a transformative experience, moving to the Cloud offers little incentive in regards to overall costs or flexibility. Figure 34: HCM Technology Deployment On-Premise Deployments SaaS/Cloud Deployments WFM Licensed 6 5 WFM Cloud 37% 4 Payroll Licensed 59% 5 Today Payroll Cloud 38% 4 Today HRMS Licensed 58% 5 12 Months HRMS Cloud 50% 57% 12 Months TM Licensed 2 TM Cloud Average User Experience Scores 3.5 Average User Experience Scores Note these include combination and hosted environments As you can see in Figure 34, the ship to the Cloud has sailed for Talent Management solutions, as they are predominately found in Cloud/SaaS environments today. In 2015, we finally hit the 50% mark for purchased Core HRMS Cloud/SaaS solutions. You may also note that 58% of organizations still have a Licensed/On-Premise solution as well, and many organizations continue to run parallel solutions in a single organization. Year over year, we will continue to see a decline of Licensed/On-Premise solutions; but now that early adopters have made 35

42 the first bold moves, like all technology adoption trajectories, we believe that the pace of change will now slow slightly. For example, our aggregate respondents shared that only 10% of them planned to move to a Cloud/ SaaS Core HRMS solution in the next 12 months, which is not as large of a jump as organizations predicted in previous years. Aggregate Respondents Core HRMS Transition to Cloud/SaaS Solutions 2013 to to 2015 Planned 2015 to % é 3 é 10% é For Workforce Management and Payroll solutions we see even slower plans for movement in the next 12 months, although over the next 24 months, we see almost 20% of organizations making solution changes in all three application categories. It is also easy to feel like everyone has moved or is moving to the Cloud except for your organization, but the reality varies greatly by size of organization and application area. As seen in Figure 35 below, the significant movements in all three categories Core HRMS, Payroll, and WFM have been made predominantly by organizations under 2,500 employees. Figure 35: HCM Deployments by Size HRMS Payroll WFM Large 10, % 20% % 68% Medium 2,500 10, % % 3 5 Small <2, % % On Premise SaaS Hosted Although Large organizations hit their predicted 100% growth in SaaS application adoption from last year to this year, the total growth in the next 12 months for Large organizations to a Core HRMS Cloud/SaaS solution is just a 30% increase from today. 36

43 Eventually everyone will need to make some level of HR Technology transformation, if for no other reason than some current environments will simply become obsolete and vendors will stop supporting certain solutions. Additionally regardless of your industry, tomorrow s workforce will have higher expectations for all of their technology interactions and it will become increasingly difficult to encourage top Talent to overlook workforce technology that provides minimal value. Organizations are taking multiple pathways to transforming their HR Systems Environments, with a mixture of rip and replace, combination, hosted, outsourcing, and hybrid environments. Vendor solutions with high customer satisfaction ratings provide the most options for clients by supporting multiple integration options and tools that organizations might need when leveraging a mixture of deployment models. Figure 36: Multiple Pathways to an HR Tech Transformation Rip & Replace Move everything all at once to the Cloud 26. Hybrids Move ONLY TM or WFM applications to the Cloud 18% Parallel/Patchwork Combination Licensed and Cloud Solutions 2 Hosting/Outsourced Single Tenant, but hosting with the vendor or another organization 1 We see organizations making system changes generally taking one of these paths: Rip and replace, move everything to the Cloud at once Hybrid environments, moving Talent Management and/or Workforce Management solutions to the Cloud while keeping Payroll and/or Core HRMS on premise Parallel/Patchwork, running parallel Cloud/SaaS and On-Premise solutions across multiple HR systems or creating a patchwork of SaaS, On Premise, Hosted, and Outsourced solutions that are independent of each other Hosting/Outsourcing, leveraging a licensed solution, but in a hosted or outsourced environment where someone else is responsible for the maintenance, updating, and technical requirements of the solution As you can see in Figure 36 above, there is no predominant way that organizations are transitioning. There is no right or wrong path when transforming your HR technology environments, and each organization must make these decisions based on their unique needs and internal requirements. 37

44 Implementations Plans, Timelines, and Modules As previously noted, fewer organizations are planning to make solution changes in the next 12 months as compared to previous years, but we still see organizations making slow movement over the next 24 months. Organizations with low User Experience scores are two-times more likely to have near-term plans to replace their current vendor. Keep in mind, 4 of organizations are also working on an Enterprise HR Systems Strategy and, as you can see in Figure 37 below, 20% of these organizations are currently evaluating their options across all HR technology platforms. Figure 37: Plans For Replacing HR Technologies No Change Replace in Months Evaluating x More likely to replace a vendor if User Experience Score is low 2 18% 20% 19% 18% 19% 20% 1 HRMS Payroll WFM Suite TM Suite Once an organization has decided to either replace or upgrade an existing solution, the next focus becomes timelines and costs. Implementation timelines have been a constant challenge for organizations dealing with On-Premise solutions, particularly for Large Global organizations. Two- to three-year implementation timelines for enterprise-wide HRMS environments were not uncommon for organizations, especially when these solutions were implemented alongside other enterprise-wide solutions such as Finance or Sales. In last few years, we have seen a decrease in overall implementation timelines, particularly for Licensed environments, but also for Cloud/SaaS solutions. Less customization, greater access to APIs, and pre-developed connectors for integration, along with more adequately trained implementation partners have all led to a 40% reduction in overall implementation timelines over the past three years. 38

45 In Figure 38, we ve provide insight into the average timelines for both On-Premise and Cloud/SaaS implementations by size of organization, along with the average number of modules these organizations generally implement with a Core HRMS implementation. Figure 38: Implementations Timelines Continue to Decrease Length of Time for New HRMS Deployments In Months JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Large 10,000+ Large Licensed On-Premise = 17.1 Months Large SaaS = 9.3 Months HRMS + An average of 1.5 other HR modules implemented Medium 2,500 10,000 Medium Licensed On-Premise = 11.3 Months Medium SaaS = 8.8 Months HRMS + An average of 2 other HR modules implemented Small <2,500 Small Licensed On-Premise = 11.0 Months Small SaaS = 8.3 Months HRMS + An average of 2 other modules implemented We also identified which additional HR Modules were often implemented with Core HRMS environments, as seen in Figure 39 below. Neither SaaS nor On-Premise implementations varied much in the solutions most often deployed at a single time. Figure 39: Modules Most Often Implemented with an HRMS Large 10, % % 10% Medium 2,500 10, % 4 28% 2 7% Small <2, % % Core HRMS Payroll WFM Talent Management Analytics 39

46 Implementation Resources Finally, this year we asked about the resources organizations used during implementations in the last 24 months, as seen in Figure 40 below. Here we saw slight differences between Cloud/SaaS and On-Premise implementations. Currently, Cloud/SaaS implementations require more resources and time from the System Vendor, and slightly fewer resources and less time from internal resources or third-party solution providers. Figure 40: Implementation Resources, Who Does the Work? What % of your Implementation was completed by these resources? 28% 4 40% 37% 60% 5 System Vendor Third-Party Internal Licensed SaaS 1 Likely to use Mostly Vendor or Mostly 3rd-Party resources 37% Likely to use Mostly Internal resources 48% Likely to use all three resources One caveat we d mention here is that many technology vendors were implementing large brand-name clients last year, and to facilitate quality outcomes, they often hand-picked select organizations to implement themselves these additional efforts may be increasing the vendor participation in implementations this year. 40

47 Upgrades and Updates For On-Premise/Licensed organizations, upgrades are still a major part of their HR technology strategies: 40% identified themselves as being on the most current release of their Core HRMS solutions. 2 are not on the current release and have no plans to update. 3 are not on the current release but plan to update their solution within one year. As seen in Figure 41, timelines for On-Premise/Licensed upgrades vary greatly by organization size. For Cloud/ SaaS solutions, vendors generally release two to three major updates a year, along with some regular patch and minor system updates in-between major updates. Although Cloud/SaaS solutions require that updates are completed regularly, vendors have different approaches to rolling out major updates. Vendors can provide various ways to test and model the impact of updates before organizations go live, and in many cases, vendors will release a major update with everything initially turned off and allow clients to turn on certain features at their own pace. History with Cloud-based Talent Management solutions warns us to be careful of these small gifts. Over time, organizations will often forget features or ignore certain updated features that could provide better User Experiences if those features are not turned on right way. Figure 41: Updates and Upgrades, Licensed HRMS Upgrade Average # of Months JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Large = 9.3 Months Medium = 7.0 Months Small = 3.3 Months As seen in Figure 42, Major SaaS updates still require anywhere from 3 to 6 weeks for testing and Change Management efforts. Small organizations may require more time for updates, as they often have fewer resources to apply to such efforts. Figure 42: Updates and Upgrades, SaaS HRMS Update Average # of Weeks Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Large = 5.8 Weeks Medium = 3.1 Weeks Small = 3.3 Weeks 41

48 HR System Expenditures No HR Technology environment discussion can be complete without some sense of total HR Technology expenditures. Although total expenditures are difficult to identify without clear benchmarking parameters, we have attempted to provide a general view of this year s HR Technology expenditure data by organization size and complexity of the HR Systems environment. 1 As seen in Figure 43, our research found that, on average, total HR technology costs per employee can range between $100 $500 per employee annually. These numbers change dramatically based on the number of systems implemented, amount of internal resources versus outsourced resources, global scope of an organization, and the complexity of an organization s service and support needs. These global numbers are generally helpful only as a general ballpark figure, but provide us with a lens through which to review year over year annual expenditures per employee and it might be surprising to note that the total HR technology costs have seen a slight decline over the last three years. Some of this decline may be due to new Bring Your Own Device environments, the general decrease in infrastructure costs, and/or the overall decrease in implementation timelines. The lower costs have opened up enterprise technology capabilities to much smaller organizations over time and increased the number of employees with access to HR Technology. Figure 43: Total HR Technology Costs per Employees Large 10,000+ Medium 2,500 10,000 Small <2,500 In Figures 44 and 45, we provide an overview of annual expenditures for HR technology costs by size and deployment method, annual costs for vendor and third-party Implementation costs, and ongoing support costs by size and deployment model. We also chose to select organizations with similarly complex HR Technology environments, including a Core HRMS and seven-to-eight additional HR modules. Keep in mind these are wide ranges in employee sizes and should be viewed as general guidelines. In Figure 44, we found that average costs across all organizational sizes varies only slightly for SaaS vendor fees, or BPO fees, compared to On-Premise Licensed fees, maintenance, and hosting expenditures. 1 For more detailed information on benchmarking efforts more closely aligned with your organizations specific situation, please contact us at [email protected]. 42

49 Figure 44: HR Technology Costs Vary Little by Deployment SaaS Average HRMS Tech Costs Licensed Average HRMS Tech Costs Large 10,000+ $116 per Employee $114 per Employee Medium 2,500 10,000 $210 per Employee $199 per Employee Small <2,500 $394 per Employee $444 per Employee HRMS Other HR Modules SaaS vendor fees, or BPO fees HRMS Other HR Modules License plus maintenance, & annual hosting Although technology costs aren t significantly different, we are seeing that implementation and support costs can vary greatly by size and environment as seen in Figure 45. Support expenditures not included in Implementation Costs for SaaS fees may include tiered support models, super user support programs, white glove services, special content, audit and legal services, and other services areas. As organizations grow, they experience increased economies of scale, especially for SaaS support where costs can be much higher for smaller orgranizations. Figure 45: Implementation & Support Costs Vary Greatly Implementation Costs Support Implementation Costs Support SaaS Avg. External 3rd Party SaaS Avg. External Vendor SaaS Ongoing Support Licensed Avg. External 3rd Party Licensed Avg. External Vendor Licensed Ongoing Support Large 10,000+ $16 per Employee $8 per Employee $3 per Employee $37 per Employee $8 per Employee $15 per Employee Medium 2,500 10,000 $23 per Employee $20 per Employee $21 per Employee $79 per Employee $36 per Employee $40 per Employee Small <2,500 $89 per Employee $30 per Employee $121 per Employee $102 per Employee $64 per Employee $153 per Employee HRMS Other HR Modules HRMS Other HR Modules We recommend organizations use these numbers as a starting point. Large organizations will incur lower peremployee costs due to their ability to scale; Small organizations will experience higher per employee costs. For an even better comparison, consider benchmarking your organization against organizations of similar size, industry, and proposed technology environments to identify potential expenditures. 43

50 Administrative Applications Meaningful Foundations Payroll Applications Payroll applications are generally the first and most universally adopted applications, and at 99% adoption this holds true for The small percentage of organizations not using a complete Payroll solution this year noted that they are using financial tools to manage Payroll needs. One of the key questions for organizations is whether to manage Payroll completely in house or outsource all or some of their Payroll services. This question can be complicated by the number or regions and even states that an organization s workforce occupies and the various legal and compliance regulations it is held accountable to in terms of employee time tracking and payment. Payroll Verification, Pay run, Taxes HRMS Employee profile, Core record, Historical record Benefits Administration Open enrollment, Updates, Life changes As seen in Figure 46, almost 20% of organizations are doing some level of outsourcing, either fully outsourcing the entire function or co-outsourcing the effort where administrative tasks are outsourced but management of Payroll is kept in-house. SaaS Payroll solutions are less common, not reaching the levels of HRMS deployment, Embedded HR Admin Analytics Planning, Risk, Reporting with only 38% of organizations deploying their payroll in the Cloud. Cloud adoption for Payroll solutions is not projected to change much in the next 12 months, with only an 8% increase indicated for Cloud Payroll adoption. Figure 46: Payroll Deployment Models Licensed Software On Premise 4 4 Licensed Software Hosted SaaS Subscription Based % 4 Only an 8% increase Cloud adoption Fully Outsourced 8% 10% 9% Co-Outsourced 9% * Note these include combination environments Today 12 Months 44

51 Currently, Large Global organizations use a mixture of stable, On-Premise technology, newer Cloud solutions, Cloud aggregators, and outsourcing services to manage their Global Payroll needs. Although the Payroll model is often complex, organizations are fairly comfortable that their current Payroll solutions are effective at managing their Global Payroll needs. As seen in Figure 47, SaaS solutions are viewed as slightly more effective than On- Last Year Current Adoption Next Year Premise solutions in this area, but it is important to note that few Cloud/SaaS solutions offer a complete Global Cloud solution today without leveraging additional partnerships. Figure 47: Effectiveness of Global Payroll Solutions 99% 0% 2 3 0% 9 8 How Effective is Your Global Payroll Solution? 1 0 Very Ineffective 3.7 Licensed Very Effective 3.8 Aggregate 4.0 SaaS % The big fear for many organizations is that they re going to be forced to make a move in Payroll solutions before they have completed an evaluation of the current situation. While Core HR and Talent Management solutions are rapidly making the transition to the Cloud, Payroll technology is not experiencing the same level of movement. Even Cloud vendors acknowledge that On-Premise Payroll solutions are a critical part of today s HR systems environments, requiring viable interface and connection tool to accommodate organizations that do not plan to move their Payroll solutions at this time. Our Survey results show that organizations report anywhere from 1 to 100 Payroll solutions within a single organization, often due to mergers and acquisitions or Global Payroll needs. An average organization has five Payroll instances per organization. Many Global organizations view their Payroll on a country-by-country basis. If they have a good solution in a single country that s working effectively, they re more hesitant to consolidate everything under a single solution. One barrier to consolidating Global employees under a single Payroll system is that some local providers go beyond Payroll services offering regulations management services, taxation calculations, car allowances, or even housing allowances. Large Global organizations need to assess all of the services provided by local Payroll service providers before making plans to aggregate solutions. 45

52 Payroll Vendor and Solution Outlook For each application area we cover, we provide an outlook on the current state of Vendor Solution adoption by our Survey respondents and their adoption plans for the next 12 months. Please note this should not be considered Market Size data. This year, we have chosen to break each application area into Small, Medium, and Large adoption trends as the greatest changes in adoption are often found in all three organization sizes. Although the combined ADP Payroll solutions continue to hold the largest overall adoption level in the Payroll category Today and in 12 months, we also see that adoption levels by organization size highlight that PeopleSoft and SAP HCM have large current and future adoption levels for Large- and Medium-sized organizations. We also see in the Medium- and Small-sized organizations that solutions such as UltiPro, Workday, and Ceridian DayForce are seeing considerable planned gains in the 12 months adoption levels. It is important to keep in mind that only 8% of organizations plan to change their Payroll solution in the next 12 months, while 18% are evaluating their options. Figure 48: Payroll Solutions Adoption by Size 1 2 Oracle (PS) ADP (GV) SAP (HCM) Infor/Lawson Kronos ADP (Vantage) Oracle (EBS/JD) ADP (WN) NGA HR Ultipro Ceridian (HR) Meta4 Workday Ceridian Dayforce SuccessFactors (EC) Oracle (HCM Cloud) 8% 7% 7% 7% 8% 8% 7% Today Large 10, months % 9% 10% 8% 7% 8% 8% 7% 10% 7% 1 0% Medium 2,500 10,000 Today 12 months 7% 0% 0% 0% 7% Today Small <2, months Note: Columns do not add up to 100% as organizations have multiple solutions in use. As with HRMS vendors, we look at the Payroll vendor adoption percentages by size and see that the Payroll vendor models tied greatly to the size of an organization and the scale/scope of its Global needs. Oracle PeopleSoft continues to hold higher levels of adoption than other solutions. ADP Global View is second in adoption levels and is one of the predominant tools for Large Global multinational organizations to meet Payroll needs; as a solution, it has a wider global reach than other solutions. SAP HCM has a much higher global footprint than in the US; outside of the US, organizations are using SAP as a global system. In Medium and Small organizations, we are seeing Workday, UltiPro, Ceridian Dayforce, and ADP Workforce Now solution adoptions picking up dramatically as Payroll solutions of choice. 1 ADP Workforce Now has a Large population below 50 employees, which we do not track in our research at this time and may be affecting their adoption levels 2 Kronos is not split into its two primary solutions for this analyses, which includes both a legacy solution and new solution 46

53 Core HR Management System Application Central to most organizations HR system environment is a Core HR Management System (HRMS) that handles administrative record keeping and ideally is the single source of information about the workforce. More recent solutions include employee profiles, organizational structures, analytics tools, and possibly contingent worker information. The vendor and deployment model of a Core HRMS plays a major role in the decisions made concerning additional HR technologies. When the decision is made to replace or upgrade a Core HRMS, the change requires a considerable amount of work for both the HR and IT functions and can cause organizations to rethink their entire Enterprise HR Systems Strategy. Large Global organizations often have multiple Core HRMSs due to mergers, acquisitions, and unique regional requirements. These multiple systems create even greater challenges when an organization plans to update its Core HRMS environment. Beginning in 2013, we ve tracked the major initiatives for replacing or upgrading Core HRMS environments. For the last several years, we ve seen more replacements than upgrades a sure indication that organizations were rapidly moving to Cloud/SaaS solutions. This year overall replacement and upgrade intiatives are down, and just 1 of organizations are tackling either a replacement or upgrade. As seen below in Figure 49, the percentage of initiatives changes dramatically by industry; each industry is on its own transformation trajectory. As we noted, earlier organizations are focused on evaluation and strategy efforts this year, with less urgency to make changes before those efforts are complete. Figure 49: HRMS Replacement Initiatives All Respondents Upgrade vs. Replacements by Industry % 1 19% % % 1 9% 18% 7% TCPU Public Admin Financial Services R/W Higher Ed Other Services Healthcare Manufacturing High-tech AMC Replace HRMS Upgrade HRMS Big issues surrounding Core HRMS decisions range from employee data privacy issues and integration connectors, to administrative HR workflow tools and wellness solutions. It is with the Core HRMS that organizations set the tone for expectations concerning all other HR technology solutions. 47

54 Core HRMS Vendor and Solution Outlook The Core HRMS vendor solution landscape 1 has seen rapid changes in just the last five years, as new vendors have entered the market and existing vendors have shifted flagship products to focus on Cloud-based solutions. We will continue to see dramatic change across these solution providers. If we looked simply at aggregate planned change across Core HRMS platforms, we d see that three vendor solutions are leading the way in overall plans for adoption between today and the next 12 months. Workday, SuccessFactors Employee Central, and Oracle HCM Cloud are all seeing higher levels of adoption in the next 12 months. The growth rates identified are relative trajectories that were calculated as change from the solution provider s existing base. For all three of these high-adoption solutions, organizations overestimated their adoption plans last year, achieving only ½ of the projected adoption in the last 12 months. This is not the case with the more conservative growth expectations for other solutions. The remaining new Cloud solutions are not seeing large aggregate overall adoption growth but, when we look at the breakout by size, many of these organizations are currently going through Right Sizing exercises where Large clients are moving off of their platforms, while their target mid-market audience adoption levels are growing dramatically as seen in Figure 50. ADP, UltiPro, and Ceridian Dayforce are all seeing considerable growth in Core HRMS adoption plans by Small organizations. Figure 50: HRMS Adoption By Size Oracle (PS) SAP (HCM) Oracle (EBS/JD) Kronos Infor/Lawson ADP (GV/V) Workday SuccessFactors (EC) Oracle (HCM Cloud) UltiPro Ceridian Dayforce ADP (WN) Epicor 10% 8% 9% 8% 8% 20% % 1 1 Today 2 Large 10, months Note: Columns do not add up to 100% as organizations have multiple solutions in use. 9% 8% 8% 9% 8% % % Today 3 3 Medium 2,500 10, months 9% 9% 8% 7% 7% 7% Today % 1 1 Small <2, months 1 We provide an outlook on the current state of Vendor Solution adoption by our survey respondents and their adoption plans in the next 12 months. Please note this should not be considered Market Size data. 2 Outside the North American data set, SAP HCM and SuccessFactors Employee Central achieve considerably higher percentages than the aggregate data set. 48

55 Only 1 of organizations plan to change their Core HRMS in the next 12 months, and another 19% are currently evaluating their options. As organizations begin to make shifts to Cloud-based solution providers, even for those who have traditionally been with On-Premise solution providers, vendor relationships become more critical. Time spent in the selection process on upcoming roadmaps, service models, and vendor support is as important as time spent on feature and functionality checklists. With a new technology purchase, an organization is buying more than just a new piece of software, but also purchasing that vendor s future possibilities. Benefits Administration Applications Benefits Administration is at 8 adoption today worldwide. It is less likely to be adopted outside the US. As shown in Figure 51, our research looks at three categories of Benefits Administration applications: Enterprise System (Infor/Lawson, PeopleSoft, SAP, Oracle, Ultipro, Workday, etc.) Benefit Point solutions (Businessolver, Empyrean Secova, Benefitfocus, bswift, etc.) TBO-total benefit outsourcing solutions (AonHewitt, ADP, Fidelity, Mercer, Towers Watson, etc.) Benefits Administration Vendor and Solution Outlook When viewed by size, we see dramatic differences in how organizations purchase Benefits solutions. Medium and Small organizations are more likely to purchase from Point Solution providers, while we see Large organizations more likely to use an Enterprise system or use a Total Outsourcing model. Figure 51: Benefits Solutions Adoption By Size Enterprise System 57% 6 70% % TBO-total benefit outsourcing solutions 3 38% Benefit Point solutions % % Other Large 10,000+ Medium 2,500 10,000 10% Small <2,500 Today 12 months Today 12 months Today 12 months The Benefits market has changed dramatically due to regulatory requirement changes, especially in US. The Affordable Care Act (ACA) has created renewed energy in the Benefits space, and organizations are beginning to rethink their Benefits packages, solutions, and their workplace programs to wellness and productivity. Globally, a broader conversation exists around non-medical areas such as leave and absence, wellness, and Cadillac healthcare. For 2016, we plan to ask further questions and track specific vendor adoption in this space. 49

56 Service Delivery Applications Employee Access Points Service Delivery and Mobile Service Delivery Applications are an ever-evolving category of technologies that typically includes ESS and MSS, HR Help Desk solutions, HR/Employee Portals, and/or Employee/Manager Portals. Organizations that rollout Mobile access in addition to these Service Delivery Applications find that their overall adoption levels increase significantly. Employee Self Service This year, we see a considerable increase in the adoption of both Manager Self Service and HR Help Desk solutions across organizations. We can reasonably expect that the investment these organizations are making in Mobile-enabled HR processes will result in increases of both the continued growth of adoption for these applications over the next few years and employee and manager adoption of self-service functionalities. Shared Service Strategies, Changing the Service Delivery Conversation Manager Self Service Help Desk Solutions Case Management, Call Center Management HR/Employee Portals One Stop, Single Sign-On An organization s approach to Service Delivery Applications is directly connected to their approach in delivering HR services to their workforce. In an effort to increase HR efficiencies and improve the end-user experience, organizations invest heavily in Shared Service centers. This year, 70% of organizations have some level of Shared Services, a 10% increase from last year. As seen in Figure 52, the most widely deployed Shared Services model is an enterprise-wide model that employs the standardization of processes and technology, versus a regional, local, or centralized model that results in local variations in technology and processes. Figure 52: Shared Service Models 10% Increase in Organizations with a Shared Service Center 30% 4 Enterprise Shared Services Central SS w/variations 1 1 Regional Shared Services No Shared Services 50

57 HR constitutes 37% of a Shared Service function that also includes other supporting areas such as Finance, Marketing, or Operations. Shared Service Center locations are generally located in an organization s Headquarters until it can globalize its workforce and, as seen in Figure 53, when we asked organizations the location of their Shared Service centers, these locations are all over the globe. Figure 53: Shared Service Center Locations Last Year Current Adoption Next Year N/A 59% 6 7% 1 Those organizations with a Shared Services function also provided insights into the processes they currently include in their Shared Service centers, with Administrative functions being the most likely solutions to be centralized. Over 50% of organizations are sharing some level of Workforce Management and Talent Management applications, and 4 of organizations share Data Privacy work within their Shared Service centers. Figure 54: Functions Included in HR Shared Services 37% Organizations Shared Services are part of an Enterprise Shared Services Model Administrative Functions HR Records 8 Talent Functions Compensation 6 Benefits Admin 8 Recruiting 6 Payroll 78% Onboarding 5 Absence/Leave WFM Functions 6 Performance Mgmt Learning 5 4 Time & Attendance 6 Succession Plng 2 Labor Sched 18% Career Dev 2 Data and Intelligence Functions Data privacy 4 HR Analytics Workforce Plng 17% 3 51

58 Service Delivery Efficiencies and Outcomes We view Service Delivery technologies through the lens of enabling a more efficient and personalized HR organization. One way to consider the impact of Service Delivery is by the cost efficiency of an organization s HR department, measured by the ratio of employees per HR administrative staff. Figure 55: Value of Service Delivery Technologies Employees Served by HR Administrative Headcount 5 With Mobile 18% No or Low Tech With Self Service* With Self Service*, and Help Desk *With Self Service: Employee and manager self service applications serve 60% or more of employees and 50% or more of manager populations As seen in Figure 55, organizations that rollout higher levels of ESS support, on average, serve 18% more employees per HR Administrative staff. Organizations that implement self-service technology within a Shared Services function with HR Help Desk technology, and provide Mobile-enabled ESS features, serve 5 more workforce per HR Administrative staff. Though this combination of technologies delivers the highest level of efficiency for the enterprise, there are always variations by industry and size that can be addressed through benchmarking to determine your optimal service delivery model. 52

59 HR Help Desk Vendor and Solution Outlook The 3 increase in Help Desk adoptions this year is due in part to the growing sophistication of Shared Service center requirements. Shared Service centers, like any other solution these days, deal in data, and the tools that capture, tag, and manage that data are becoming increasingly important. We are also seeing an increasing focus on organizations looking for Mobile Help Desk solutions to provide employees with 24/7 access to their critical HR information. The focus on improving the service experience for the end user is not just about technology, but about the relationship an organization is developing with their employees. The first line of defense is a Help Desk function that is as well trained, well supported, well prepared as any customer service or Help Desk supporting an organization s customers. Figure 56: Help Desk Adoption Other Generic IT help desk 30% 27% Oracle (PS) 18% 18% ServiceNow 7% 1 Salesforce.com 9% Dovetail 8% Neocase HR Oracle (CX RightNow) LBi Software Today 12 months Note: Columns do not add up to 100% as organizations have multiple solutions in use. 5 49% This is the first year we ve asked organizations which vendor they are using for their HR Help Desk solution, and there are many new and legacy solutions on this list. The other category was particularly high for this application list and includes many small and mid-market Help Desk solutions that are rarely HR specific. 53

60 Workforce Management Applications Going Beyond Compliance The Changing Definition of a Workforce Management Suite There is still some debate on the actual applications that are found in a total Workforce Management (WFM) Suite or even if a suite is necessary, but we include seven applications in our definition of Workforce Management applications. Time and Attendance applications continue to be the most widely adopted solutions in this category, with 87% adoption today and respondents forecast growth in the next three years to reach 90%. In previous years, we primarily saw Time and Attendance applications adopted at high levels by organizations with large hourly and part-time workforces such as Retail, Manufacturing, and Healthcare. Today, we also see organizations in other sectors such as Financial Services, High- Tech, and Other Services with over 90% adoption of Time and Attendance solutions. Workforce/Labor Scheduling solutions, as well as Workforce/Labor Budgeting, are often overlooked for their important roles in helping organizations confirm that they have allocated individuals with the right skills, placed them in the right location, and at the right time. Industries such as Financial Services, High-Tech, and Other Services with heavy project management requirements, as well as highly specialized skills, will often leverage sophisticated Workforce Management scheduling and labor allocation solutions to help plan, schedule, and manage projects efficiently. Scheduling tools are often key components that tightly connect to Core HRMS, Talent Management, and Business Intelligence solutions. We saw a 40% increase in adoption of these solutions from last year to this year; we believe this is due in part to increased focus and regulations on workforce schedules both in the US as well as in Europe. Time & Attendance (Labor) Time tracking, Activity tracking Absence Management Request Off, Missed Work Leave Management Leave requests, Case management, Compliance Workforce/Labor Scheduling Schedule, Resource analysis Workforce/Labor Budgeting Labor analysis, Forecasting Embedded WFM Analytics Planning, Risk, Reporting Absence and Leave Management applications must consider regional labor laws and reporting requirements. Many organizations outsource these organizational processes, but for those that manage them internally, a flexible solution updated regularly for regional regulations is a critical tool for managing risk. Any modern Workforce Management solution will handle these for your organization. 54

61 Workforce Management Buying Patterns Over the years, we ve also seen changes in how organizations are selecting and purchasing Workforce Management solutions. Organizations are shifting from operations-driven decision making, which may only focus Last Year Current Adoption Next Year on the compliance and tactical elements of the technology, to a broader enterprise view taking into consideration the strategic role of Workforce Management in achieving HR goals and outcomes. Figure 57: Strategy for Selecting WFM Solutions 9% 87% 1 HRMS-based WFM Suite Point solutions No Plans 39% Other % As seen in Figure 57, 4 of Survey participants responded that their primary approach to selecting WFM applications was as part of their Core HRMS suite environment. The remaining 60% of respondents were split evenly across the approaches that include WFM Suites, Point solutions, or no strategy for selection. We also asked organizations what WFM functionality would they like to see 100% 3 5 in their current WFM solutions, and as seen in Figure 58, over 50% of organizations are looking for their vendor to provide compliance and labor law services. Figure 58: Workforce Management Technology Strategy Customers Want More Services Desired WFM Functionality % 39% 40% 19% Shift Rules Task Management Certification Management Project Management Activity Management Workload Management Compliance/ Labor Law 55

62 Breaking Free from the Time Clock We also took the opportunity to ask Survey participants what their organizations predominant methods were for gathering time from their employees. Individual PCs and company-wide devices (biometric, card-swipe, code) were literally neck-and-neck with just over 50% of the Survey respondents selecting both of these devices as their primary time-tracking solutions. The one change we saw this year was that just over 18% of organizations were also using Mobile devices; this is a 100% increase from last year s Mobile use in this HR process area. We anticipate that Wearable technologies of all types will also have a lasting impact on Workforce Management solutions. Figure 59: Workforce Management Goes Mobile & Wearable % of Your Workforce Uses These Methods for Time Tracking Computer 57% Company Device 5 Manual/Paper 2 Mobile Device Other 18% 1 100% Increase in the Avg. % of Workforce using Mobile Time Tracking from Last Year 56

63 Workforce Management Suite Vendor and Solution Outlook Our Survey respondents provide an outlook on the current state of vendor solution adoption and their adoption plans in the next 12 months. Please note this should not be considered Market Size data. Workforce Management Adoption Trends by Size Workforce Management suites are one of the least standardized HR system environments across vendor solutions. These vendors offer a wide range of features and functions, which often means that organizations have multiple solution providers to meet all of their workforce needs. Kronos solutions continue to dominate this market as the vendor of choice for Large hourly workforce requirements. Kronos has a healthy adoption level across organizations of all sizes, but particularly in Large- and Medium-sized organizations. We see that Oracle PeopleSoft has the same profile for customers, as does the smaller group of SAP HCM organizations. As we expected last year, we are now seeing movement for the newer entrants such as Ceridian Dayforce HCM, Workforce Software, and Workday particularly in the Medium and Small organization space. Only 8% of organizations plan to change or replace their Workforce Management solution today although 19% are evaluating their options. Workforce Management innovation includes new time-tracking devices, and better analytics. Once this industry begins to go beyond a compliance focus, we anticipate Workforce Management will once again become a major topic for many organizations. Figure 60: Workforce Management Adoption By Size Other Kronos Oracle (PS) SAP (HCM) Infor/Workbrain ADP (GV/E) Oracle (EBS/JD) Workday ADP (WN) ADP (Vantage) Ceridian Dayforce Oracle (HCM Cloud) Ceridian (HR) Workforce Software Ultipro Reflexis 2 17% % 0% Large 10,000+ 0% Today 12 months Note: Columns do not add up to 100% as organizations have multiple solution in use % 0% ` 0% 9% Today % 30% Medium 2,500 10, months 1 1 7% 7% 10% 1 17% 7% 1 1 Today 28% 12 months 3 Small <2,500 57

64 Talent Management Applications Shaping a Strategy The overall adoption of the Talent Management (TM) category saw almost no increase from last year to this year at 5 adoption. We believe that there was less overall energy expended on new Talent Management solutions last year while organizations replaced existing solutions and focused on improving foundational HR technology. Currently, we see a large number of organizations focusing on re-evaluating their Talent Management processes such as Performance Management and Onboarding, which will lead to changes in the technologies required to meet new expectations for managing Talent and possibly reshape our expectations for HR Technology as a whole in the next year. Talent Acquisition Marketing, Branding, Sourcing, Assessing, Onboarding Performance Management Goals, Objectives, Rankings, Plans Those Talent Management applications that saw higher levels of adoption between last year and this year included Talent Profiles, Onboarding, and Embedded Talent Management Analytics. All three applications areas were forecasted to increase last year, and show a marked difference from the type of Talent Management applications organizations focused on in the past. Next year, our forecast shows higher-than-average increases in Career and Succession Management and once again for Embedded Talent Management Analytics. Learning & Development Training, Dev, Certifications, Content/Knowledge Management Compensation Management Pay Ranges, Evaluation, Rewards, Incentives, Modeling Onboarding Compliance, Culture, Readiness Those industries with higher-than-average adoption levels in Talent Management applications include Financial Services, High-tech, and Mining Oil and Gas all industries dealing with shortages in skilled workers and key positions that require a balance of technical and soft skills. In the next few years, we expect the conversation around Talent Management applications to focus less on top Talent or total employee lifecycle management, but rather on individual talents, identifying skills and capabilities that are uniquely required for specific situations and opportunities within organizations. Talent Management Buying Patterns Over the years, we ve also seen changes in how organizations are selecting and purchasing Talent Management applications; 78% of Talent Management applications adopted today are being purchased as part of a Talent Management or HRMS Suite as seen in Figure 61. Talent Profile Competencies, Skills, Experience, Goals, Objectives, Languages, Awards Succession Management Reviews, Assessments, Ranking, Development Career Management Development, Coaching, Mentoring, Mobility Embedded Talent Management Analytics Gaps, Plans, Identification, Reports 58

65 The average organization has four Talent Management Applications as part of a Talent Management or HRMS suite today, and in 12 months organizations plan to increase that to Figure 61: Strategy for Selecting TM Solutions 7% Last Year Current Adoption Next Year 1 4 ITM Suite HRMS-based 87% 3 Point solution No Strategy Average # of TM Modules Owned Today 5.75 Average # of TM Modules Organizations Plan to Own in 12 Months This year, we saw less interest in integrating all the various Talent 0% 6 2 Management applications in our research, although high performing Talent-Driven Organizations are twice as likely to integrate their Talent Management applications as other organizations % 2x Talent-Driven Organizations are twice as likely to integrate their TM modules 0% 3 47% 1 30% 60% Talent Management Suite Vendor and Solution Outlook 9 27% 77% For each application area we cover, we provide an outlook on the current state of Vendor Solution adoption by our Survey respondents and their adoption plans in the next 12 months. Please note this should not be considered Market Size data. This year we have chosen to break each application area into Small, Medium, and Large adoption trends as the greatest changes in adoption are often found in all three organization sizes. 59

66 Primary Talent Management Suite We also ask organizations to identify their primary Talent Management suites as well as solutions they are using for individual application requirements, which provides us with a broad look across the entire Talent Management landscape. Last year, 3 of organizations planned to change their primary Talent Management solution; this year, just 1 are looking to change their primary Talent Management suite. Another 20% of organizations are evaluating their options. Figure 62: Talent Management Suite Adoption By Size Other SuccessFactors (EC) Oracle (PS/EBS) Oracle (HCM Cloud/Taleo) Cornerstone OnDemand Workday SAP (HCM) Kenexa/IBM PeopleFluent SumTotal/Softscape Saba Infor/Lawson Ultipro Halogen ADP (Vantage) Ceridian Dayforce ADP (WN) 1 9% % 19% % 1 7% Large 0% 10,000+ 0% 0% % 17% % Medium 2,500 10,000 18% 9% 1 9% 9% 1 0% 0% 0% 1 18% 1 1 Today 12 months Today 12 months Today Note: Columns do not add up to 100% as organizations have multiple solutions in use. 28% Small <2, months In the primary Talent Management suites, we see that three Enterprise Software vendors hold the greatest adoption levels for Large and Medium organizations: SuccessFactors Employee Central, Oracle PeopleSoft, and Oracle HCM Cloud/Taleo. Mergers and acquisitions over the last several years have created very large Talent Management customer bases for these organizations. We also see that Workday is rapidly picking up adoption numbers in the next 12 months across all size organizations, partuclarly from clients currently leveraging their Core HRMS environment. Although standalone Talent Management suites are seeing slight increases across multiple vendors such as Halogen, Saba, or PeopleFluent, the only stand-alone Talent vendor continuing to see high levels of adoption today is Cornerstone OnDemand, particularly in Large- and Medium-size organizations. Standalone Talent Management suites will need to create major differentiators in services, content, and innovation from the Enterprise Software market to achieve greater adoption in the future. UltiPro and ADP Workforce Now Solutions have made great strides in increasing adoption levels for Small organizations. This space should be carefully watched for Medium and Small adoption trends as many vendors are vying for this audience and making traction. We also see a large group of Other organizations that continue to address these markets needs in unique and new ways. 60

67 Individual Talent Management Solutions and Vendor Outlook Outside of the primary Talent Suite, we continue to see organizations leverage niche solutions and make purchasing decisions based on unique requirements for individual Talent Management applications. This is still a technology space with many individual vendors working to create innovative features focused on industry verticals or ever-growing consumer demands. It is also important to understand which Talent applications are seeing the greatest growth in HRMS and Talent Suite solutions. We share data down to aggregate adoption levels in this section to provide detail on the shifting vendor landscape in these individual Talent Management areas. We ve also broken out data by Small, Medium, and Large organizations in all charts. It should be noted that many vendors who may have slight drops in adoption include respondents who are evaluating current solution groups, for which these vendors are still contenders. Recruiting and Talent Acquisition Applications Recruiting or Talent Acquisition applications are almost universally adopted, particularly across Large and Medium organizations. Those organizations with over 2,500 employees are typically ahead of the average adoption level by 10%, and Small organizations are typically 10% below the average. Much of the growth and innovation in this space is taking place outside the Recruiting application in solutions that support existing tools by providing better decision-making data or increasing candidate engagement such as video interviewing, big data analysis tools, and assessment technologies. More details on these applications can be found in the Emerging Technology Section of the paper. Several HRMS and TM suite vendors who originally had no Recruiting applications have since launched their own Cloud-based applications in the last two years and have now begun to see adoption gains. Figure 63: Recruiting Applications Adoption By Size Other Oracle (HCM Cloud/Taleo) Oracle (PS/EBS) Kenexa/IBM icims SuccessFactors (EC) SilkRoad SAP (HCM) Lumesse PeopleFluent Workday Ultipro Cornerstone OnDemand ADP (Vantage) ADP (WN) Ceridian Dayforce % 10% 10% 10% 9% 1 1 0% Large 10, % 20% 18% % 10% 1 Medium 2,500 10,000 8% Today 12 months Today 12 months Today Note: Columns do not add up to 100% as organizations have multiple solutions in use. 7% % 9% 10% Small <2, months 61

68 Although Oracle (HCM Cloud/Taleo) continues to hold the largest adoption level for Recruiting vendors today, we forecast growth for many new and traditional solution providers in the Recruiting space over the next 12 months. SuccessFactors Employee Central, Workday, UltiPro, and Cornerstone OnDemand are all seeing plans for considerable adoption growth in the next 12 months. We also see Point solutions icims and Kenexa/IBM continue to hold large adoption percentages, with icims seeing slight forecasted growth in Small organizations. Ceridian Dayforce recently released their own Recruiting solution and is also seeing slight forecasted growth in Medium and Small organizations. Across Small, Medium, and Large organizations the other category of solutions continues to grow rapidly offering organizations more options each day. Compensation Applications Compensation Applications are generally adopted by larger more complex organizations and are often tightly connected to services associated with Compensation benchmarking. These complex solutions play a major role in an organization s ability to forecast and plan for the future. Figure 64: Compensation Applications Adoption By Size Other Oracle (PS) Workday SuccessFactors (EC) SAP (HCM) Oracle (EBS) PeopleFluent Oracle (HCM Cloud) Infor/Lawson Kenexa/IBM ADP (WN) Halogen Cornerstone OnDemand ADP (Vantage) UltiPro SumTotal/Skillsoft Ceridian Dayforce 1 10% 1 10% 10% 8% 8% 8% 1 0% 0% Today Large 10, months % 2 20% % 10% 0% 0% 7% 0% 0% Today Medium 2,500 10, months 7% 1 1 0% Note: Columns do not add up to 100% as organizations have multiple solutions in use. 8% 7% Today % Small <2, months Oracle PeopleSoft continues to hold the highest adoption level for Compensation Applications, particularly in Large- and Medium-sized organizations. As in other application areas, the 12-month view shows declines in Oracle PeopleSoft adoption while forecasting dramatic increases for Oracle HCM Cloud. There are also high levels of forecasted growth for Workday and SuccessFactors Employee Central in Large and Medium organizations, as well as UltiPro for Medium and Small organizations. In Large organizations, we also see slight forecasted adoption gains for Cornerstone OnDemand and PeopleFluent, and for Small organizations with Ceridian Dayforce, ADP Workforce Now, and Halogen. 62

69 Learning Applications Complex learning needs often require that organizations approach learning and development separately from their Talent Suite solutions. Large and Medium organizations are much more likely to have high levels of learning application adoption over Small organizations. We anticipate a major shakeup in next year s Survey data on Learning, as multiple HRMS solutions have recently come out with their own unique Learning platforms, including Workday and Oracle HCM Cloud. Over time, these new solutions will be direct competition for many of the standalone and Learning-based Talent Management suite vendors who originally partnered heavily with the HRMS suite providers in offering complex learning solutions much like in the Recruiting industry, these changes will have an impact on next year s adoption numbers. Figure 65: Learning Applications Adoption By Size Other Cornerstone OnDemand SuccessFactors (EC) SumTotal Oracle (PS) Skillsoft Saba HealthStream Oracle (Taleo/Learn) Oracle (HCM Cloud) Blackboard SAP (HCM) NetDimensions SilkRoad Halogen % 2 10% 18% 9% 9% 1 1 7% 8% 7% 9% 7% 8% 8% 0% Large 10,000+ 0% Today 12 months 20% 1 18% 2 8% % 8% 7% 8% 0% Today Medium 2,500 10, months 2 1 8% 10% 8% 0% 0% 0% 0% Today 4 4 Small <2, months Note: Columns do not add up to 100% as organizations have multiple solutions in use. Cornerstone OnDemand continues to be a major provider in the Learning space, and holds the highest level of application adoption at 19% in this highly fragmented industry. In Large and Medium organizations, Cornerstone OnDemand sees high levels of forecasted adoption in the next 12 months. We also see high levels of expected growth for SuccessFactors Employee Central, Saba, Health Stream, Oracle HCM Cloud and Oracle Taleo Learn (these are being rolled out as two different solutions), and NetDimensions along with Saba, SuccessFactors Employee Central and Oracle Taleo/Learn. SumTotal and Skillsoft, now combined organizations, continue to hold large adoption shares in Learning across all organization sizes, but little movement is projected in the next 12 months for either of this vendor. However, if they can quickly harness their shared learning heritage, they could create some waves in this market next year. We also see slight growth in the Learning adoption for our legacy solutions Oracle PeopleSoft and SAP (HCM); in part, we believe this is due to organizations moving forward with rolling out previously purchased modules. Learning is another area where we have a large group of Other solution providers, often times small content providers with light LMS environments meeting the needs of Small organizations. 63

70 Ranked Learning Features We see great changes ahead for the Learning industry as vendors begin to compete on multiple Talent and HR applications that are directly related to the Learning space. This year, we wanted to understand which key learning features not generally offered in all traditional LMS environments would be most valuable to Survey respondents. We didn t find any particular feature that completely outshined the other areas, but across all rankings, Video/ Virtual classroom capabilities was most often ranked the number one feature by our audience. Figure 66: Ranking Learning Features Rank Feature % Ranked 1. Video/Virtual classroom 2 2. Industry specific online courses 20% 3. Content creation 18% 4. Intelligent learning recommendations 2 5. Generic online course 1 6. Coaching/Mentoring tools 1 7. Learning communities 2 8. Access to Massive Open Online Content (MooCs) 2 Performance Management Applications We are seeing a minor revolt in the Performance Management space, with organizations Large and Small looking for ways to change their approach to Performance Management and disconnect these efforts from annual merit increases. We believe this changing focus on Performance Management is having an impact on the overall adoption of Performance Management solutions. Figure 67: Performance Management Application By Size Other SuccessFactors (EC) Oracle (PS/EBS) Oracle (HCM Cloud/Taleo) Cornerstone OnDemand Workday SAP (HCM) Infor/Lawson PeopleFluent Ultipro SumTotal Halogen ADP (WN/V) 0% 0% 0% 9% 8% Today % 1 19% Large 10, months Note: Columns do not add up to 100% as organizations have multiple solutions in use. 2 0% 8% 20% % 18% 18% Today 20% 2 Medium 2,500 10, months 0% 8% % 10% 10% 1 Today 20% 2 2 Small <2, months 64

71 Currently, SuccessFactors continues to hold the highest adoption level for Performance Management applications across Large and Medium organizations, with slight plans to increase adoption in Large and Small organizations. There are also high levels of forecasted growth for Oracle HCM Cloud and Workday for Large organizations. Slight growth is forecasted across multiple organization sizes for PeopleFluent, Cornerstone OnDemand, Halogen, UltiPro, and ADP Workforce Now/Vantage. Succession Planning/Management Applications The highest adoption levels for Succession Management applications are within Large organizations 20% above average adoption numbers. Succession Management is the least integrated of all of the Talent Management applications, but we see many organizations planning to integrate these solutions in the near future. Figure 68: Succession Management Applications By Size Other SuccessFactors (EC) Cornerstone OnDemand Oracle (PS/EBS) Oracle (HCM Cloud/Taleo) Workday SumTotal SAP (HCM) PeopleFluent Ultipro ADP (WN/Vantage) Halogen 0% 7% Large 10, % 38% 0% 0% 0% 0% Today 12 months Today 12 months Today Note: Columns do not add up to 100% as organizations have multiple solutions in use. 8% 8% 8% 10% 1 18% 18% Medium 2,500 10,000 7% 7% % % 19% 20% Small <2, months In this Large organization-dominated space, SuccessFactors by a wide margin holds the highest application adoption levels today, and we are forecasting continued growth in Large organizations over the next 12 months. We also see high levels of adoption growth forecasted for Oracle HCM Cloud and Workday across organizations of all sizes, as well as Cornerstone OnDemand for Medium organizations. UltiPro has clearly taken a leading role for Small organizations in this application area, and we see slight growth for them as well as PeopleFluent and ADP Workforce Now/Vantage. 65

72 Onboarding Applications This is the first year that we ve looked at vendor solutions specifically meeting organizations Onboarding needs. We saw a 70% jump in application adoption levels for Onboarding applications this year and we know that increasing numbers of organizations are focusing not only on the compliance components of the Onboarding experience, but also on creating an engaging experience for new employees. In many cases, organizations will use multiple vendors to handle their entire Onboarding process, particularly for compliance rather than development needs. Figure 69: Onboarding Solutions Adoption by Size Other Oracle (HCM Cloud/Taleo) icims SilkRoad/RedCarpet Workday SuccessFactors (EC) Infor/Lawson Oracle (PS/EBS) Kenexa/IBM Equifax Ultipro Cornerstone OnDemand ADP (WN) Ceridian Dayforce ADP (Vantage) 7% 10% 10% 10% 9% 7% 7% Today 1 18% 19% Large 10, months % 8% 1 10% 1 17% 7% 10% 7% Today 30% Medium 2,500 10, months 20% 8% 1 7% 1 17% 0% 9% 1 Today Small <2, months Note: Columns do not add up to 100% as organizations have multiple solutions in use. Currently Oracle HCM Cloud, icims, and Silkroad hold the highest adoption levels this year across Large, Medium, and Small organizations. UIltiPro, ADP Workforce Now, and Ceridian also have high current adoption levels and forecasted growth expectations for Small organizations. We are forecasting high levels of adoption for Workday, Successfactors Employee Central, and Oracle HCM Cloud/Taleo growth in the next 12 months for this application area. It is also important to call out the expected growth we see for Equifax and Ceridian Dayforce, both of which are heavily focused on the compliance elements within the Onboarding process. We expect to see a continued increase in regional and state-specific hiring requirements that will lead many organizations to look for solution providers that not only offer the Onboarding technology, but also compliance support services. 66

73 Ranked Onboarding Features We see great changes ahead for the Onboarding industry as hiring regulations continue to change and the expectations of new employees continue to rise. This year we wanted to understand which key Onboarding features not generally offered in all traditional Onboarding solutions would be most valuable to Survey respondents. By a wide percentage, the most popular feature for Onboarding solutions were Configurable Onboarding Workflows. Figure 70: Ranking Onboarding Features Rank Feature % Ranked 1. Configurable onboarding workflows 59% 2. Regional electronic paperwork 30% 3. e-verification 27% 4. Benefits sign-up 2 5. Tax credit processing 18% 6. Development activity tracking 2 7. Social communication 19% 8. Technology/Systems setup 1 9. Offboarding 4 Onboarding is a dual-edged sword for every organization with the need to create an engaging and memorable welcoming experience while adhering to the growing level of compliance requirements for complex and global organizations. It creates opportunities for the greatest employee moments and the most costly employer mistakes. We believe this is an area worth watching more closely as the arenas of compliance and engagement begin to merge. 67

74 Business Intelligence, HR Analytics, and Workforce Optimization Breaking Through the Hype, The Realities of BI/HR Analytics The challenge with Business Intelligence and HR Analytics applications in today s technology environment is that there is no single tool set, suite concept, or platform that covers the entire space. In reality, it is a disparate mix of tools that are cobbled together by end-users to accomplish a series of tasks that fall into the Business Intelligence analyses process. The process itself looks much like Figure 71 below. The first challenge in this process is identifying the need or question, and often times that is the biggest hurdle for HR. What type of questions should HR be asking and answering for the organization? Can I answer this question within the guidelines of Data Privacy for our organization? Is there a tool that can point me to the most critical questions my data might be able to answer? Collecting the data may often be the easier part of the process, but clarifying and cleaning the data can be almost impossible when it is unstructured or poorly entered. Sharing the results in a way that is engaging and valuable often requires a great story, and knowing when to start over or rethink the entire question is an even harder skill to develop. Since Business Intelligence is such a complex topic, for 2015 we wanted to begin by looking at the specific tools that organizations were using to conduct their Business Intelligence and HR Analytics work. We found that across the board, 39% of organizations are doing some forms of BI/HR Analytics with one of these tools today. The most popular tool for BI and HR analytics is still Microsoft Excel, with 98% of organizations using it for HR analytics efforts, compared to 48% of organizations using a platform BI solution. Microsoft Excel Platform BI Solutions OBIEE, Cognos, Business Objects Embedded HRMS Analytics Embedded WFM Analytics Embedded Talent Management Analytics Statistical Tools SAS, SPSS BI Visualization Tools Tableau, Spotfire, etc. Dedicated HR BI/Analytics Solutions Mercer Analytics, Visier, Vestrics, etc. Figure 71: Moving to a Data-Driven HR Function DESIGN IMPLEMENT Identify Need/ Question Identify Data/ Analysis Plan Collect Data Clarify Data Make Actionable Share Results & Optional Solutions Start Again 68

75 However, analysis cannot be done without data, and one way to make sure that you have the data is to use a solution that is embedded within an HRMS, WFM, or Talent Management solution; these solutions are all poised to experience large growth in the next 12 months and have doubled in adoption from the last year. We also look at the tools organizations are using to pull data out of current systems and conduct analysis or visualization outside of Last Year Current Adoption Next Year the original system. As we see in Figure 72, the adoption for basic statistical tools is 2, and 2 for BI Visualization tools such as Tableau and Spotfire. N/A 98% 0% Dedicated HR/BI Analytics service and solution tools often offered by consulting organizations such as Visier, Mercer Analytics, or Vestrics are based on deep consulting experience with HR N/A 48% 1 analytics services and were developed to pull together disparate data sources from both HR and non-hr environments. With the help of their internal professionals and pre-developed algorithms, % these solutions may answer the most common HR analytics questions. Only 1 of organizations have Dedicated HR/BI analytics solutions; this number is poised to grow by 80% in the 100% 3 5 next 12 months. Figure 72: Business Intelligence/HR Analytics 9 27% 77% If They Have a BI/HR Analytics Solution, What is in Use? 50% 2 N/A 2 39% Embedded Solutions have Doubled in Adoption from last year 57% 1 80% 98% 39% of Organizations are doing some form of BI/HR Analytics with one of these tools 10% Dedicated HR/BI Solutions 2 2 BI Visualization Tools Statistical Tools 27% Emb TM Analytics 3 Emb WFM Analytics 4 Emb HRMS Analytics 48% Platform BI Solution Microsoft Excel 69

76 BI/HR Analytics Solutions Use Cases After a clear picture emerged of the various tools and applications being adopted in the BI/HR space, we wanted to understand what organizations were actually accomplishing with their BI tools. We broke our Use Cases into three different categories: Simple HR Analytics and Reporting Visualizing and Sharing Complex Analytics and Forecasting As seen in Figure 73, the favored applications for Simple HR Analytics and Reporting were: Microsoft Excel Platform Business Intelligence tools Embedded HRMS, WFM, TM Solutions Figure 73: Tools for Simple HR Analytics Excel 90% 90% 7 Platform BI 7 67% 50% Emb HRMS 8 70% 4 Emb WFM Emb TM 80% 6 47% Statistical Tool BI Visualization Dedicated HR/BI solution 6 70% 48% Simple Reporting Simple Analytics Data Aggregation 70

77 As seen in Figure 74, the favored applications for Visualizing and Sharing Data were BI Visualization tools and Dedicated HR/BI Solutions. The capabilities of these solutions lend themselves to making data more attractive and creative storytelling. Figure 74: Tools for Visualizing and Sharing Data Excel 39% 7 Platform BI 5 5 Emb HRMS 47% 48% Emb WFM 47% 4 Emb TM 5 5 Statistical Tool 2 3 BI Visualization 7 70% Dedicated HR/BI solution 7 6 Dashboards Shareable Charts & Graphs As BI needs of organizations become more complex, no specific tool emerges as an industry standard. Statistical tools and dedicated HR/BI solutions are most frequently used for complex analytics, but at the same time some organizations are doing complex analytics in Excel and their embedded solutions. Forecasting is least likely to be done in the embedded solutions, but 30% of organizations are doing forecasting in Excel, a number higher than organizations forecasting within their Platform BI or Visualization tools. More importantly, we see that Embedded solutions are rarely being used for complex BI analyses. Figure 75: No Standard Tools for Complex BI Needs Excel 2 30% 10% 1 Platform BI % 2 Emb HRMS Emb WFM 2 19% 19% 17% Emb TM 18% 1 10% 1 Statistical Tool 59% 4 50% 3 BI Visualization % 2 Dedicated HR/BI solution Complex Analytics Scenario/Forecasting Predictive Big Data 71

78 The one disconcerting call out from the Use Case data was the number of organizations that felt they were doing Big Data Analysis with Microsoft Excel solutions. Big Data Analysis was defined in the Survey as large-scale data collection, data mining, and pattern recognition applied to workforce data, and is by definition on a scale that is beyond the capabilities of Microsoft Excel. Although a small number of organizations report this practice, it is prudent to point out that the industry as a whole is confused by terms, technology, and expected outcomes from BI/HR efforts. Figure 76: Data Sources Integrated Into an HR Analytics by Deployment Method 89% 89% 4 58% % 28% % 1 Core HR TM WFM Financials Benchmarking Sales/CRM Licensed HRMS SaaS HRMS If you analyze business data in a vacuum, you often miss the full picture of what s really going on in your organization. We asked organizations which sources were integrated for HR analytics, and also looked at integration by Licensed or SaaS HRMS deployments to determine which data was more likely to be integrated for HR analysis. We found that both Licensed and SaaS deployments had high levels of Core HR deployment (89%), but SaaS solutions were more likely to include Talent Management and Workforce Management, while Licensed HRMS solutions were more likely to integrate financial data in their business decision making. 72

79 Business Intelligence and HR Analytics Solution Outlook As with other vendor categories, we also look at HR BI/Analytics solution adoptions by size and although we do see differences based on organizational size, they are not as pronounced. Large organizations are the most likely to adopt BI solutions overall, and therefore have the highest vendor adoption percentages. Figure 77: HR BI/Analytics Solutions Adoption By Size Other Oracle (Hyperion/OBIEE) SAP/Business Objects Tableau Software Cognos/IBM Emb BI/HCM solution Emb BI/Talent Mgmt MicroStrategy Emb BI/Workforce SAS Equifax (ethority) SPSS Visier Mercer Analytics 2 18% 2 28% 18% 18% 17% 20% 1 10% 1 17% 9% 1 8% 8% 7% 8% 7% Large 10,000+ 0% 0% Today 12 months % 18% 18% 9% % 17% 2 Today Medium 2,500 10, months 7% % 1 10% 1 Today Small <2, months Note: Columns do not add up to 100% as organizations have multiple solutions in use. Overall, the HR/BI Analytics vendor marketspace is really still in its infancy, with no one vendor having a sizable market share. Oracle (Hyperion/OBIEE) has the largest market share for Large and Medium organizations, and is one of the few with projected growth in 12 months. SAP Business Objects, Tableau, and Cognos/IBM are the next most popular vendor solutions, although Tableau s adoption is markedly larger for Large and Medium organizations than for Small organizations where Cognos/IBM is the solution with the largest single market share. 73

80 Data-Driven Organizations and HR Analytics One of the key questions we asked in the Survey this year was, What are you currently using your HR Business Intelligence/ Analytics Solutions to accomplish for your organization? We wanted to understand the outcomes organizations were striving to identify with their BI/HR Analytics work and how it connected to the outcomes they actually achieved. In other words, does measurement help achievement? To take a closer look at this we wanted to compare our high performing Data-Driven Organizations to everyone else in the Survey data, and see how they differed in the outcomes their BI/HR Analytics was used to accomplish. Most organizations use HR analytics to look backward, with about half of organizations using analytics to review compliance risks, retention risks, and perform HR benchmarking. Data-Driven Organizations were similar in this approach as well. Looking Backward is a realistic practice for your HR Analytics efforts. Figure 78: Most Use HR Analytics to Look BACKWARD Compliance Risks Retention Risks HR Benchmarking 68% 5 50% Data-Driven Organization Non-Data-Driven Organization Forward-looking organizations are going to spend more time on workforce assignments, identifying Talent, improving the employee experience, and focusing on workforce skills readiness with an eye to Talent who can fill future roles. Here we see Data-Driven Organizations are twice as likely in some cases to be Looking Forward with their HR Analytics efforts. 74

81 Figure 79: Some Use HR Analytics to Look FORWARD Workforce Assignments Identify Talent Improve Employee Engagement Workforce Skills/ Readiness 80% 60% 48% 5 40% 30% 3 30% Data-Driven Organization Non-Data-Driven Organization Data-Driven Organizations focus on their Business Outcomes and not just their HR outcomes. These Data- Driven Organizations are considerably more likely to be working on optimizing workforce productivity, therefore increasing competitive advantage, maximizing innovation and agility, and facilitating customer satisfaction with their HR Analytics efforts. This involves taking HR data and analyzing against all of these areas, and determining how it can have an impact on their business. The business outcomes adoption becomes especially critical when compared to Non-Data-Driven Organizations, that, if they are looking at business outcomes at all, all are doing so at lower levels than their Data-Driven counterparts. The real difference between the two groups is business outlook, where Data-Driven Organizations are 15 more likely to focus on business outcomes compared to their Non-Data-Driven counterparts. Figure 80: Data-Driven Organizations Also Focus on the BUSINESS Customer Satisfaction Increase Innovation/ Agility Increase Competitive Advantage Optimize Workforce Productivity % 2 1 9% 1 Data-Driven Organization Non-Data-Driven Organization 75

82 The Total HR Systems Environment Integrating the HR Experience One of the challenges facing the HR systems conversation revolves around how organizations think about HR processes and supporting tools because they often look at technology solutions in silos rather than as a total HR environment. Although we ve been discussing breaking down silos for years, we still do our reporting on separate solutions, we identify roles focused on separate process areas, and we know that 4 of organizations still decide how they ll handle HR system integrations on a case-by-case basis. In this section, we want to present a holistic view of the HR Technology environment and show in aggregate how the vendors and buyers are approaching the industry as a whole to create a broader conversation. HR isn t a siloed event for our end users; their needs cross all boundaries and require a seamless experience. Our technology environments shouldn t mirror these silo walls, thereby increasing the chance that an individual will cease and desist the transaction and move on to something more important. Technology should help break down barriers and encourage interaction. Figure 81: Integration Strategies Matter Enterprise Integration Strategy? Approach to Integrating HR Technology Yes, updated regularly Case by Case 4 17% 19% Yes, rarely updated Into Core HR % In development No Strategy Unknown Into TM Suite Integration platform Other 17% 8% None 4 Spend between 10% to 2 of their HR Technology budgets on Integration Although looking at a holistic HR environment is important, this doesn t mean that every application needs to reside on a single platform; in fact, recent conversations with many organizations who have implemented new Cloud-based HRMS environments feel that the industry as a whole may have over-hyped the reality of all-in-one solutions to the market. There is no doubt that fewer applications and increased integration facilitates more data cohesion and better User Experiences, but we ll always have some solutions that sit outside of the traditional toolset, including content providers, package services, assessments, and industry tools. 76

83 Budgets are crucial for integration efforts, particularly during implementation years where costs can be as high as 40% of the overall solution. Only 19% of organizations shared that they have a regularly updated Enterprise Integration Strategy at this time, and only 8% have one in development. An Enterprise Integration Strategy isn t just about technology, it also includes: Insights into the data shared across platforms Clear definitions on the data not shared across platforms The preferred locations and ownership for master data management The preferred integration approaches, APIs, Enterprise Integration Platforms, etc. The integration tools and skillsets in-house The vendors pre-vetted for integration support The audit and risk concerns reviewed with all integration efforts Data Privacy and Integrations Data Privacy is a growing topic of conversation for many HR and IT communities, particularly due to recent EU rulings concerning the Safe Harbor pact which challenged a 15-year agreement. Among other things, it outlined how organizations could transfer data across EU borders into the US. Organizations that transfer data of any kind need to be aware of the most recent laws and regulations concerning Data Privacy and verify that their Cloud vendors are also working diligently on these issues. While 40% of organizations in our Survey felt that they were Effective at handling Data Privacy Processes, growing challenges on a Global front may leave many organizations less prepared and protected than originally assumed. As organizations continue to build personalized HR environments delivering real business insight, navigating data challenges is an area of concern for the future. Figure 82: Self-Reported Data Privacy Process Maturity Levels Safe Harbor Wellness Programs Wearables Global Data Rights Data Transfer Protocols 39% 1 40% Transformational Effective Efficient No process/manual Don't know 77

84 Total HCM Environment When looking at internal HR environments, it is also important to look at the vendors playing major roles in shaping our industry. When looking at suite providers, it is easy to view them through only a single lens: specific product, organization size, total number of customers, industry focus, or their marketing persona. However, we provide a view that shows environments through multiple lenses which gives a comprehensive sense of strengths and opportunities, as well total current and future adoption levels for specific vendors and products. In the Figures that follow, we ve visually represented the Total HCM suite adoption landscape for each vendor, from their individual Core HRMS, Payroll, Workforce Management and Talent Management suite adoption levels. We ve also provided an aggregate view of the delta of change between today s base adoption and plans for adoption over the next 12 months. Figure 83: Total HCM Legacy Solutions Adoption Today Planned Adoption in 12 Months Oracle (PS) - Kronos* SAP (HCM)** - 1 Oracle (EBS/JD) - 20% Infor/Law/WB - ADP (GV/E) - 10% Core HRMS Payroll WFM Suite TM Suite * Kronos is not split into its two primary solutions for this analyses, which includes both a legacy solution and new solution **SAP (HCM) total adoption levels are much higher outside the US, but the overall percentage of change is expected to be similar. The entire group of vendor solutions categorized as Legacy On Premise are experiencing overall declines in adoption, but not as steeply as many would expect based on the adoption growth trajectory of the Cloud solutions. We believe products such as Payroll and Workforce Management are seeing plans for careful maintenance by many organizations in these solution areas while they move Core HRMS and Talent Management Solutions in the Cloud. 78

85 When we look at the newer Cloud solutions, we see increased adoption plans across individual vendor s aggregate solutions. If a vendor does not offer a specific solution set in the Cloud, we often see that the lower adoption numbers are offset by the higher adoption numbers for their On-Premise solutions such as Payroll or Workforce Management. The simple truth is that this is a time of growth for almost everyone in the Cloud HCM market. Figure 84: Total HCM Cloud Solutions Adoption Today Planned Adoption in 12 Months ADP (WN)* - 7% UltiPro 2 Workday 6 SuccessFactors (EC) 1 Ceridian Dayforce 3 Oracle (HCM Cloud) 6 ADP Vantage 18% Core HRMS Payroll WFM Suite TM Suite *ADP Workforce Now has a large population below 50 employees, which we do not track in our research at this time. We believe this is impacting their total adoption growth numbers. 79

86 Total Talent Environment In the Talent Management suite environment, we break the aggregate data into Core HRMS and stand-alone Talent Management suites, including the percentage of organizations that selected a specific solution as their primary Talent Management suite as well as the vendor solutions selected for their individual Talent applications. Figure 85: Total Talent Management, HRMS Suites Adoption Today Planned Adoption in 12 Months SuccessFactors (EC) Oracle (PS/EBS) Oracle (HCM Cloud) Workday UltiPro ADP (WN/VAN)* SAP (HCM) Silkroad Infor/Law/WB Ceridian Dayforce ITM Recruiting Onboarding Learning PM SP 1-9% 5 80% 1 2 0% % Compensation *ADP Workforce Now has a large population below 50 employees, which we do not track in our research at this time. We believe this is impacting their total adoption growth numbers. We see growth in the adoption of Talent Management for almost all new Cloud-based Core HRMS suite environments. As in the case of Ceridian Dayforce, some organizations are starting from very small if almost no Talent Management bases, and thus the delta between this year s adoption and plans for next year s adoption can be very large Figure 86: Total Talent Management, TM Suites Adoption Today Planned Adoption in 12 Months Cornerstone OnDemand SumTotal/SS - 20% Halogen 3 Kenexa/IBM - 1 PeopleFluent 10% Saba 0% ITM Recruiting Onboarding Learning PM SP Compensation 80

87 When we look at the total adoption trends for our Talent Management suites, the outlook for adoption levels is not as positive. Stand-alone Talent Management suites will need to create major differentiators in services, content, and innovation from the Enterprise Software market to achieve greater adoption in the future. Organizations like Halogen have worked diligently at differentiating their approach to Talent Management from the Core HRMS solutions and can expect increased adoption in the next 12 months. Voice of the Customer on Core HRMS and TM Another lens through which to view vendor solutions is their approach to User Experience and Vendor Satisfaction. In the past, we have captured User Experience scores from our Survey participants on the their organization s technology solutions; this year, we also chose to ask about their vendor relationship experience. These questions were asked on a 1 5 scale, and individual answers were given for each vendor solution. Individual vendor solutions received at least 20 individual responses before they were included in the average analyses data. Over 800 individual organizations provided data in this area of our Survey, and many of these responses included scores for multiple solution providers. For further insights into Vendor Satisfaction and User Experience, we also asked organizations to provide insight into which factors had the greatest impact on their ratings for each solution. Below we ve shared the findings from this analysis for Core HRMS solution providers and Talent Management Suite solution providers. Core HRMS Figure 87: HRMS Vendor Satisfaction and User Experience Very Satisfied Workday Vendor Satisfaction Satisfied Ceridian HR SAP (HCM) Oracle EBS Oracle PS ADP GV/E SuccessFactors (EC) SilkRoad ADP (Vantage) Infor/ Lawson Kronos ADP (WN) UltiPro Ceridian DF Oracle (HCM C) Dissatisfied Poor Good User Experience Excellent As we look at the vendor marketplace, we note that no single vendor solution achieved an average rating which exceeded expectations in either vendor relationships or User Experience scores. Every solution has opportunities to improve. 81

88 Once again, we found that the newer Cloud solutions generally had the highest User Experience scores, as well as Vendor Satisfaction scores. Even for vendors with multiple solutions, respondents were more satisfied with the overall relationship for the newer Cloud solutions as compared to other deployment types. The three vendor solutions that received the highest overall User Experience scores are built on single-platform architectures and have higher overall adoption levels this year in Medium and Small organizations. We know that many organizations such as Oracle HCM Cloud, SuccessFactors Employee Central, and ADP Vantage have recently rolled out new user interfaces that may have an impact on their User Experience scores in the near future. Organizations with larger client bases and/or who had experienced recent mergers and acquisitions, generally saw lower Vendor Satisfaction rating leading to opportunities to reengage customers who may feel frustrated with recent changes or a lack of attention. When asked which factors had the greatest impact on an organization s Vendor Satisfaction rating, 47% of them stated that Poor User Experience was a major influence in their rating. The connection between an organization s User Experience and Vendor Satisfaction cannot be denied. Talent Management Suites Figure 88: ITM Vendor Satisfaction and User Experience Very Satisfied Vendor Satisfaction Satisfied SAP (HCM) ADP (Vantage) Ceridian DF ADP (WN) Oracle Cloud UltiPro Oracle PS N/A Saba Kenexa/ IBM Workday Halogen CSOD PeopleFluent SilkRoad SuccessFactors (EC) Dissatisfied Poor Good User Experience Excellent We also conducted similar analyses on respondents User Experience ratings and Vendor Satisfaction ratings for their primary Talent Management solution. In general, stand-alone Talent Management suites saw higher ratings for User Experience scores and slightly better ratings for Vendor Satisfaction scores. Halogen and Cornerstone OnDemand achieved the highest User Experience scores and Vendor Satisfaction scores. Talent Management solutions which offer overall larger numbers of Talent Management modules received higher ratings than those that offer limited packages or have only recently begun to add Talent solutions in the last few years. 82

89 One of the more interesting findings this year was in our comparison of total Talent Management Suite scores to Core HRMS scores. As seen in Figure 89 below, we have plotted the Core HRMS scores on the same chart as the Talent Management Suites scores. The green (TMS) and red (Core HRMS) trend lines highlight the differences in overall scores. We find that organizations are less Satisfied with the User Experience of their Talent Management solutions and slightly less Satisfied with the vendor relationship. In the past, the Talent Management suites have been seen as the hipper more modern solutions in the market, especially when it comes to improved vendor relationships. Figure 89: More Satisfaction with HRMSs vs. TM Suites Very Satisfied Vendor Satisfaction Satisfied Dissatisfied Poor Good User Experience Excellent Talent Management Suites Core HRMS Two factors may be impacting these overall numbers for Talent Management solutions: one is that we ve recently seen an explosion of innovation in the Core HRMS environment from new user interfaces to expanded modules for wellness, travel, and expense reporting (all areas that are near and dear to end-user hearts); second, as Enterprise-Wide System vendors snatched up some of the largest Talent Management vendors in this space, this industry shifted from a focus on innovation to a focus on increasing market share during the chaos of change. We 83

90 hope to see additional innovation over the next few years in the Talent Management space. For further insights into Vendor Satisfaction and User Experience, we also asked organizations to provide insight into which factors had the greatest impact on their ratings for each solution. Below we ve shared the findings from this analysis for Core HRMS solution providers and Talent Management Suite solution providers. Figure 90: High and Low Vendor Satisfaction Drivers Top Benefits Correlated with High Vendor Satisfaction Top Challenges Correlated with Low Vendor Satisfaction 47% 27% % 2 27% 3 3 Ease of Upgrade Good Relationship User Experience Service & Support Best Practice Functionality High Costs Lack of Innovation Services & Support Poor Relationship Poor User Experience When the HR community talks about the importance of User Experience and Vendor Satisfaction, it is almost always done with the hopes of influencing change in the market. No two vendors are alike, and each organization has something unique that they can offer to individual clients. We find that most buyers and users are fairly happy with their current solutions and relationships, but would love to see one or two items adjusted. Our goal in capturing and providing Vendor Satisfaction data is to provide a voice for the HR Community in the areas for which they would like to see improvements from their solutions providers. We were overwhelmed with the number of organizations who responded to this section of the Survey. As seen in Figure 90, on an aggregate level we saw that the Benefits that corresponded with higher Vendor Satisfaction scores were similar to the Challenges that corresponded with low Vendor Satisfaction scores. Issues such as Best Practices Functionality, Services and Support, and User Experience play heavy roles in both the positive and negative Vendor Satisfaction ratings. On the followng page, we ve provided the top three benefits and challenges selected for each Vendor Solution. It s important to note that this is aggregate data, and a benefit to one organization may be a challenge to another. 84

91 Figure 91: Percentage of Vendor Benefits and Challenges Selected by End-Users ADP GV/E Benefits Good Vendor Relationship Good Service & Support Low Costs % Chosen % Challenges Lack of Innovation Inability to customize Poor user experience % Chosen 38% 3 3 ADP WFN Good Vendor Relationship Good Service & Support Low Costs 28% 40% 30% Poor Service & Support Poor handling of updates Inability to customize 47% 3 3 Ceridian DayForce Good Vendor Relationship Good Service & Support Positive User Experience/Best Practice 60% 4 30% Poor Service & Support High Costs Lack of Industry functionality 30% 30% 20% Cornerstone OnDemand Good Service & Support Ease of Configuration Good Vendor Relationship % Inability to Customize Lack of Integration tools Lack of Industry Functionality % Halogen Good Service & Support Good Vendor Relationship Ease of Configuration % Lack of Integration tools Lack of Industry functionality Poor Handling of Updates Infor/Lawson Industry specific Best practice functionality Ability to customize Lack of Innovation Lack of Integration tools Poor Service & Support 37% 29% 29% Kenexa/IBM Best Practice Functionality Ease of Configuration Available Benchmarking Content 3 27% 18% Lack of Integration tools Poor Service & Support Poor Handling of Updates % Kronos Good Service & Support Good Vendor Relationship Best practice functionality 39% 3 29% High Costs Inability to customize Poor handling of updates % Oracle (EBS) Ability to customize Good Vendor Relationship Ease of Integration 3 29% 2 Poor User Experience Lack of Innovation High Costs Oracle (HCM Cloud) Best Practice Good Service & Support Ease of Upgrade/Configuration Lack of Integration capabilities High Costs Inability to Customize/Service & Support Oracle (PS) Ability to customize Best Practice Good Service & Support 70% 40% 28% High Costs Poor User Experience Poor Handling of Upgrades 5 39% 3 PeopleFluent Positive User Experience Good Vendor Relationship Best Practice Functionality 60% 60% 20% Lack of Integration tools Inability to Customize Poor Service & Support 40% 40% 20% Saba Positive User Experience Good Service & Support Short Implementation Timeline 60% 40% 20% Lack of Industry functionality Lack of Integration tools Lack of Benchmarking data 2 20% 18% SAP (HCM) Ability to customize Good Vendor Relationship Global functionality Poor User Experience Poor Handling of Upgrades High Costs 59% 38% 3 Silkroad Good Service & Support Positive User Experience Ease of Configuration Poor Service & Support Lack of Innovation Poor User Experience 3 27% 27% SuccessFactors Employee Central Best practice functionality Ease of Configuration Positive User Experience/Global functionality 4 39% 3 Poor Service & Support Poor Handling of updates High Costs Ultimate Good Service & Support Good Vendor Relationship Ease of Upgrade/Best Practice Poor Service & Support Lack of Integration tools Lack of Industry functionality 29% 27% 2 Workday Positive User Experience Best Practice Ease of Configuration/Upgrade % High Costs Inability to Customize Lack of Integration & industry capabilities 60%

92 Emerging Technologies and Innovations in HR Technology Each year, we track emerging HR technologies that may eventually impact an organization. This year, we looked at the following categories of emerging technologies: Total Enterprise Cloud Movement HR Going Mobile Social Applications in HR Tomorrow s Enterprise Technologies: Wearables Engagement Recognition Talent Acquisition Total Enterprise Cloud Movement The movement to Cloud solutions is a hot topic for HR technologies, and as organizations with Cloud deployments are seeing benefits in increased User Experience and User Satisfaction scores, it s logical that they consider a move to the Cloud for their other business solutions as well. What business systems (Sales/CRM; Vendor Management; Marketing, Financial, and Operations Systems) are joining HR solutions in the Cloud? Our data shows that by far the most common system to have moved to the Cloud is a Sales/CRM solution which we estimate is much higher than the 18% shown due to the numbers of Unsure respondents; however, less than 10% of companies have other business solutions in the Cloud. The largest projected gain for the next 24 months is in Financial Systems, with an additional of organizations planning to have such systems in the Cloud and 1 of organizations evaluating a move. Figure 92: Business Systems: To Cloud or Not to Cloud Sales/CRM 18% 8% 3 37% Vendor Management 8% 10% 3 4 Marketing Systems 8% 7% 4 4 Financial Systems 8% 1 28% 4 Operations Systems 7% 10% 37% 4 Cloud today Cloud in 24 months Evaluating Unsure No plans 86

93 HR Going Mobile The Mobile technology adoption in our personal lives is almost universal and a large part of how individuals interact and communicate with the world around them. If we want to meet our workforce where they are, then look to Mobile devices as the answer. Mobile goes beyond phones in a world where tablets, phablets, headsets, and Wearables are all part of the Mobile conversation, so organizations need to think less about any one device and more about how to optimize information and communication for multiple delivery devices in a wireless environment. The introduction of mobile phones to the general population transformed the way individuals communicate, learn, shop, photograph, and work. It may be hard to believe, but the first iphone was introduced in June , just eight short years ago, and today nearly two-thirds (6) of US adults own a smartphone up from 3 in Survey responses indicated a 90% increase in mobile adoption from last year and another 6 growth is forecasted for next year. Figure 93: Mobile-enabled HR Process Adoption Mobile Adoption Growth Average workforce adoption across all mobile-enabled processes % Last Year Today In 12 Months Mobile is no longer a new technology, but one that is becoming a standard tool by which organizations do business. When we look at the current and planned growth in the HR application areas tracked by the Survey, we see that both BI/ Analytics and Administrative Applications are critical areas for mobile growth, and although those areas project significant growth, other areas are not to be ignored. More than 40% of organizations plan to have mobile Workforce and Labor scheduling, and Recruiting and Onboarding, within the next 12 months. The overall growth for Mobile within organizations is projected at over 60% for the Administrative, Workforce Management, and Talent Applications, and 160% growth for BI/Workforce Analytics

94 Figure 94: Mobile-enabled HR Process Adoption Administrative Workforce Management Overall HR Mgmt/ Rcrdkpng Payroll Today In 12 Months 39% 39% 39% Overall T&L/T&A Leave/ Absence Mgmt Workforce/ Labor Sched Talent Management BI/ Workforce Analytics 37% % % % 160% Overall Recruiting & Onboarding Performance/ Goal Mgmt Learning & Development Compensation Succession Planning/Mgmt Overall Social Applications in HR Social Media tools continued to see overall growth in adoption from last year to this year; we saw a 20% increase in application adoptions, but the overall pace of application adoption growth is slowing. Going forward, we will see incremental increases in adoption as organizations identify more strategic ways to leverage Social tools that go beyond the Recruiting and Communication Use Cases that have been identified today. Figure 95 makes the distinction between when Social Tools are allowed for individual use as opposed to strategic use within an organization for areas including Recruiting, Branding, or Service Delivery. Collaboration tools, including internal tools such as SharePoint or Central Desktop, continue to have the highest levels of strategic adoption, while enterprise social networks behind a corporate firewall such as Yammer, Jive, or Chatter have the lowest adoption levels. Figure 95: Social Tools Use and Plans Collaboration 6 8% 10% 1 LinkedIn 6 2 Facebook 47% 19% 1 8% Twitter 4 19% 1 1 Social Network 27% 7% 9% 1 8% 3 Strategic Use Today Evaluating Use Strategic Use in 12 Months Individual Use Only Not Allowed No Plans 88

95 The social sites Facebook and Twitter are used strategically for corporate purposes by almost 50% of organizations now, with another 4 planning to take strategic advantage of these in the next 12 months. LinkedIn, considered a tool for corporate connections and Recruiting, increased strategic adoption by over 10% points from last year to 6 of the Survey participants. Workplace collaboration has become an area of considerable growth and experimentation, with some organizations claiming to do away with entirely 1 and replace it with other social tools. As workplaces become more geographically distant and new technology becomes more available, the manner in which people choose to communicate and collaborate will continue to be part of the HR conversation. When it comes to emerging technologies in the Social space, the highest level of adoption is for Collaboration tools; we see that 6 of organizations are using such tools today, and another 8% plan to use them in the next 12 months. Popular tools include Yammer, SharePoint, Lync, Google, and any number of other options. Often no single tool is used, and the best option changes as business needs and times dictate. The Word Cloud in Figure 96 below represents the write-ins provided by our Survey respondents when asked which collaboration tools are currently used within their organization. Figure 96: Workplace Collboration

96 Although Mobile and Social are still considered emerging technologies, we see a large number of innovative ideas shaking up the HR systems space. This year we gathered input from Survey respondents on employee feedback applications, Wearable technology, and Rewards and Recognition applications. Figure 97: Emerging Technologies Use and Plans Workforce Using Today Evaluating No Plans Employee Feedback Applications Wearable Technology 10% 8 Rewards & Recognition Applications % Employee Feedback 8 of Talent Driven Organizations Use Employee Feedback solutions Wearables 5 of organizations using wearables believe the benefit will be increased workforce productivity. Rewards & Recognition Over 70% use R&R solutions to encourage behaviors aligned with enterprise values and improve engagement. Engagement Applications Employee engagement is an ongoing topic in corporate hallways: how do we increase it, how do we track it, and is it a real thing? Employee engagement has been touted as an opportunity for organizations to increase their profitability, productivity, and product quality while at the same time reduce turnover, absenteeism, and safety incidents 1. With significant gains realized from engaged employees, it s no surprise that 6 of organizations are using employee feedback applications to measure and improve upon their employee engagement. Our Talent- Driven Organizations particularly shine in this area, with 8 using some sort of employee feedback solution. Wearable Technology For many, the new fashion accessory is some sort of Wearable fitness tracker or watch that doubles as a phone. Individuals enjoy tracking their movements and heart rate with technology, or making calls from their wrist like old cartoons of Inspector Gadget, but can these technologies be leveraged for corporate use? Wearables are devices that leverage Wearable/RFID/Mobile-tracking technology to capture data from the person carrying or wearing the device. Data from these devices can be used to capture information on an employee s location, vital signs, habits, experiences, environment, and a continuously growing list of items based on the innovation of sensor development. In our Survey, we see that 10% of organizations are using Wearable technology today, with another 8% evaluating Wearables for business use. When organizations use Wearable workplace technology 5 of our respondents are using it to track productivity, 4 are concerned about workforce safety, and 3 are implementing workforce technology for audit purposes

97 Rewards and Recognition Applications Reward and Recognition applications are fairly new to the market and initially grew from the Years of Service and Anniversary Programs that most Large organizations practiced in previous years. Today Rewards and Recognition programs have become highly engaging applications that garner employee attention and often address short-term motivation issues. Rewards and Recognition applications are used by 2 of organizations, with another 1 evaluating the technology for future use; 78% of the users want to encourage behaviors aligned with corporate values; 70% want to improve employee engagement; and 6 want to retain employees and build teams. Less than 2 of organizations are using Rewards and Recognition tools to improve business goals. Talent Acquisition Ecosystem In the last few years, we ve seen an explosion of new tools supporting the Talent Acquisition industry flood the market, often backed by large amounts of venture capital funding. It isn t surprising to see HR Technology innovations coming out of the fringes associated with Recruiting efforts. The abundance of ideas are in part due to the fact that dated Applicant Tracking systems connected to enterprise Talent Management solutions have been struggling to innovate outside of their traditional goal to manage the Recruiting process. In today s consumer driven workforce, the new focus has shifted to managing the end-user s experience and understanding the unique qualities of a workforce beyond our current corporate walls. The averge tenure of a worker in the age group is only three years 1, requiring organizations to maintain an ever-flowing pipeline of qualified candidates to fill open positions. The most popular tool to fill a candidate pipeline is Employee Referral Applications, used by 50% of organizations, with another 2 evaluating future use. This is followed by Branding Tools/Applications (4), Behavior Assessments (4), and Candidate/Talent Pool Tools (4). Social Searching And Matching Tools at 4 and Video Screening/Interviewing at 38% are also significant pieces in the Talent acquisition toolkit. Marketing Campaign Management Tools are only used by 30% of organizations, but are 9 more likely to be used by Large organizations than by Small organizations. Figure 98: Emerging Technology Exploring the Explosion of Talent Acquisition Tools Employee referral applications 50% 2 2 Branding tools/applications 4 28% 2 Behavior assessments Candidate/Talent Pool tools 4 38% 19% Social searching and matching tools % Video screening/interviewing 38% 2 3 Marketing campaign management tools 30% 3 38% In Use Today Evaluating No Plans

98 We also wanted to get a sense of how our high-performing Talent-Driven Organizations were leveraging these new Talent Acquisition tools. We weren t surprised to see that they were more aggressively adopting all forms of these emerging technologies, particularly the Branding Tools. Figure 99: Use of Emerging Talent Acquisition Tools by Talent-Driven Organizations 4 37% % % 70% 7 39% 4 Video Screening Talent Pool Tools Behavior Assessments Talent-Driven Organization Campaign Management Employee Referral Tools Social Searching Tools Non-Talent Driven Organization Branding Tools Going Beyond the Data, Future Walking What are some of our predictions for the future of HR? Unique services will be the differentiators of tomorrow s HR Technology PaaS will re-open the world of customization and harness the power of savvy system integrators Contingent Workforce Management will change the concept of Talent Data Privacy movements will become the biggest challenge to creating individual User Experiences Mobile and Wearables are a steppingstone to Internet of Things (IoT) As we continue to track technology and how it changes the marketplace, we always try to take a historical perspective to our future predictions, and our eighteen years of Survey history gives us some long-term insights into the trends that will have staying power in today s HR marketplace. Organizations no longer operate HR from a filing cabinet or recruit from the yellow pages; technology has radically changed the HR space. In the beginning of this research effort, our quest was to actually prove the value of HR Technology; today the need for many HR systems is no longer a debate, and the focus of our research becomes helping organizations when choosing, using, maintaining, connecting, and harnessing the power of various systems to achieve outcomes most relevant to them. Some people say the future of HR technology is here and now, but we will always be asking, What s next? If you want something new, you have to stop doing something old. Peter Drucker on Doing Something New All emerging technologies have a place in history, but not all of them will have enterprise-wide impact for HR over time. This section of our research is an ever-evolving list of technology topics based on feedback we receive from our research community. We welcome input on additional emerging technology trends or other research areas you d like to see included in our Survey at [email protected]. 92

99 Recommendations We are pleased to share the findings from this year s Sierra-Cedar HR Systems Survey. It is our most fervent hope that this information provides you with insights and data to help you make informed decisions concerning your HR systems environment. The lessons learned from this year s leaders Data-Driven and Talent-Driven Organizations provide a great playbook for HR function strategists who wish to increase their value as strategic partners. Each step an HR organization takes toward greater levels of efficiency, internal reflection, and focused decision making improves its ability to add greater value. Figure 100: A Playbook for Your Style of HR Data-Driven Get the Basics Right Focus on process standardization Attend to Process Maturity Develop Central Shared Services Talent-Driven Invest in Employee and Manager Self Service Attend to Process Maturity Integrate your Talent Management applications Strategy and Culture that supports a vision Create and consistently update an HR Systems Strategy Implement an Enterprise Integration Strategy Implement a Culture of Change Management Create and consistently update an HR Systems Strategy Implement an Enterprise Integration Strategy Implement a Culture of Change Management Innovate with HR Technologies Adopt and integrate Workforce Management, Talent Management, and Business Intelligence Applications Adopt Mobile-enabled processes Consider the role of Wearables Adopt Talent Technologies Adopt Rewards and Recognitions Consider the role of Wearables 93

100 Survey Methodology and Approach Sierra-Cedar conducts the longest running and most highly respected annual HR Systems survey in the market. Since 1997, this invaluable resource has been a catalyst for the HR technology community, providing insight and guidance to practitioners around the world. The Depth and Breadth of the Research Each year, over 1,000 organizations around the world complete the Sierra-Cedar HR Systems Survey, providing valuable research data from organizations of all sizes and industries. Survey participants come from multiple distribution sources, with only from the Sierra-Cedar client base. This promotes a broad and varied audience group when gathering data on technology adoption and usage metrics, as well as safeguards against data bias towards any particular vendor or user community, so that the data is truly representative of the overall HR technology environment. Participating organizations answer over 300 in-depth enterprise HR systems questions across multiple topic areas: Technology adoption for Core HRMS, Payroll, Talent Management, Workforce Management, and Business Intelligence/Analytics solutions Deployment roadmaps Integration and implementation practices HR resources and system budgets Emerging and innovative HR technology Enterprise outcomes and business details related to HR systems adoption Target Survey participants are HR and IT practitioners and leaders at the center of HR technology decisions, implementations, or Change Management efforts. Many organization executives and business leaders who focus on workforce technology issues also find the Survey of interest. 1. Survey objectives 2. Survey design 3. Survey distribution 4. Data collection 5. Survey sample validation 6. Data cleansing 7. Data analysis 8. Results and analytics 9. Post implementation support Sierra-Cedar follows rigorous standards in the form of a nine-step survey methodology, independently validated in 2011 by the Mercer Survey Quality group. More information on the Survey Methodology can be found here. Each year, this annual reach provides a wealth of knowledge that is shared openly with the HR systems community. All participants are kept strictly anonymous, and only aggregate data is used. 94

101 Survey Demographics Figure 101: Demographics Information: All Respondents The Sierra-Cedar HR Systems Survey, 18 th Annual Edition was conducted from May 12 th through July 1 st, For this edition, 2,462 individuals participated in our Survey this year. Survey responses are subject to an extensive cleansing process that removes duplicates, incomplete submissions, and very Small organizations, resulting in the final totals below. The Sierra-Cedar HR Systems Survey White Paper is based on unique organizations representing a total workforce of 21 million employees and contingent workers. Survey data is divided into three organization sizes: 49% Small, less than 2,500 employees 2 Medium, 2,500 to 10,000 employees 27% Large, 10,000+ employees Large 10, % 1,204 Organizations Medium 2,500 10, Million Employees/Contingents Small <2,500 49% Avg. number of Employees = 17,709 The data set includes Small organizations down to 50 employees because organizations at this size are leveraging enterprise-level HR technologies at early stages in their growth trajectory. Responses are statistically similar to those from previous years. A wide range of organizations participate in the Survey annually; the data is categorized into nine primary industries. 1 Industries % 9% 7% `` Other Higher Ed Finance Healthcare Manufacturing Trans./Comm. Retail High Tech Ag. Mining. Utilities Const. 1 Survey data is closely aligned in both size and industry percentages with the Bureau of Labor Statistics for the US. Outside the US data is considered indicative only due to Small sample sizes. We will publish subsequent reports identifying the size of these groups. 95

102 The 1,204 organizations represent multiple organization types, as seen in Figure 102: Figure 102: Survey Participants Organization Types 1 37% Privately Owned Publicly Traded 18% Nonprofit Government Owned 28% Subsidiary/Other These organizations also represent a wide range of business models, as seen in Figure 103. Figure 103: Survey Participants Organization Strategies 20% 1 Growth Profit 4 Stewardship Sustainability 19% Other The Survey respondents are a mixture of HR and IT practitioners and leaders at the center of HR Technology decisions, implementations, and Change Management efforts. These respondents are intimately involved as HR Technology decision makers! A breakout of participants by function and role is seen in Figure 104: Figure 104: Survey Participants by Function and Role Participants by Function Participants by Role Human Resources 9% 7% Information Tech Manager/Director 1 Other Finance 5 3 Individual Contributor Executive 68% Line of Business Other TM & Learning 96

103 The Sierra-Cedar HR Systems Survey s worldwide audience includes 460 global organizations that operate in multiple countries outside their headquarter country: the average global organization has operations in over 27 countries, with an average workforce size of 30,357; 240 organizations are headquartered outside of the US, which is 20% of the Survey population (Figure 105): Figure 105: Demographics International and Global Organizations 240 Organizations with HQ outside the US 460 Global Organizations 80% 1 Non- Global 6 Global 39% The average global organization has operations in over 27 different countries. 97

104 About Sierra-Cedar Sierra-Cedar helps clients navigate their application and technology roadmap, whether to modernize their existing portfolio or move to emerging technologies by integrating industry knowledge, deep technology capabilities, breadth of service offerings, and global delivery model into best-value solutions. Our services are categorized into industry-based consulting services and industry-agnostic shared services. Corporate Office 1255 Alderman Drive Alpharetta, Georgia