EUROPEAN HR OPPORTUNITY: CONNECTING STRATEGY AND SYSTEMS TO ENGAGE TALENT WEBCAST 20 NOVEMBER 2014

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1 EUROPEAN HR OPPORTUNITY: CONNECTING STRATEGY AND SYSTEMS TO ENGAGE TALENT WEBCAST 20 NOVEMBER 2014

2 Today s Speakers Stacey Harris Sierra-Cedar Continuing Vice President, Research and Elizabeth Bryant Mercer Partner and North America Leader for HR Effectiveness Thorsten Barth Mercer Principal and European Leader for HR Technology Services 1

3 Today s Agenda Introduction Mercer / Sierra-Cedar Sierra-Cedar HR Systems survey findings Take-aways Q&A November 20,

4 Sierra-Cedar Fast Facts 7 Service & Solution Areas Application Services Business Intelligence Host & Managed Services Infrastructure Services Integration & Cloud Solutions Research Strategy Training 17 Years of Leading HR Systems Survey & Research 2014 merger of 4 companies with decades of experience Employees 5 Industry Focus Commercial Healthcare Higher Education Public Sector Justice & Public Safety Delivering industry-focused client success by providing consulting, technical, and managed services for the deployment, management and optimization of next-generation applications and technology. 3

5 Mercer Fast Facts We are a global consulting leader in talent, health, retirement, and investments. $4.2 billion in revenue. 76-year history. Four business segments. 20,000+ colleagues. Operations in over 130 countries. 4

6 Connecting Strategy and Systems Strategy and Culture HR Tech Strategy Foundation Cloud HRMS Innovation Social Enterprise Integration Strategy User Experience Mobile Culture of Change WFM + TM + BI Quantified Organization November 20,

7 Sierra-Cedar HR Systems Survey Demographics: All Respondents Total Workforce Represented 19 Million Organization Sizes Represented Large 10, % Medium 2,500 10,000 Small 100 2,500 29% 43% 1,063 Organizations Other Services Avg. number of Employees = 16,053 Employees + Contingent (in millions) Financial Services Healthcare 20.5% Agriculture/ Mining/ Construction 3% High-tech 6.8% Trans., Comm. Utilities Retail Wholesale 7.3% 7.9% Manufacturing 12.1% Higher Ed./ Public Admin. 12.5% 14.9% 14.9% November 20,

8 Sierra-Cedar HR Systems Survey Demographics: All Respondents Europe Organisation Sizes Represented APAC Large 10, % Medium 2,500 10,000 Small 100 2,500 25% 28% Large 10,000 + Organisation Sizes Represented 39% Medium 2,500 10,000 Small 100 2,500 22% 39% North America Organisation Sizes Represented Large 10, % Medium 2,500 10,000 Small 100 2,500 29% 43% November 20,

9 Two-Year European Look at HR Initiatives Energy on BPI, Service Delivery, Global; Declining Focus on Talent Mgt. Major Initiatives Two Year View % % 43% 44% APAC 29% 35% 33% 33% 28% 16% 14% * * Global Organizations Only 8

10 Enterprise HR Systems Strategy & Integration Increases Positive Perception of HR Organizations With a Current Enterprise HR Systems Strategy Primary Approach for HR Application Integration 8% 21% 35% 36% Regularly updated In development Rarely updated strategy No strategy/not aware 33% 15% 17% 13% 22% Integrate into HRMS Integrate into ITM Enterprise strategy/platform Case by case No approach/not aware HR organizations with an Enterprise HR Systems Strategy and Enterprise Integration Strategy are more likely to be viewed by all levels of management as contributing strategic value. November 20,

11 HCM Application Blueprint Service Delivery HR Help Desk, Portal, Workforce Lifecycle Management (Onboarding) Administrative Excellence Service Delivery Excellence Workforce Management Excellence Talent Management Excellence Workforce Optimization Excellence Self Service/Direct Access Employee Self Service Manager Self Service Administrative Apps Core HRMS, Roles/Competencies (Profile Mgt.), Payroll, Benefit Admin, Embedded HR Analytics, Embedded HR Social Workforce Management Time & Labor, Absence & Leave Management, Labor Scheduling, Labor Budgeting, WFM Analytics, Social Workforce Optimization Workforce Planning, Workforce Analytics, Predictive Analytics Talent Management Recruiting, Performance, Learning, Compensation, Succession, Career, Talent Profile, Talent Analytics, Social Business Intelligence Foundation Reporting/visualization and BI tools November 20,

12 European Three-year Adoption Outlook Looking Forward, Service Delivery, Talent Mgmt., and Social Tools Three-year Application Outlook Administrative 84% 86% Service delivery Workforce management 46% 49% 69% 66% Talent management 60% 82% Social media tools 38% 66% BI (reporting and tools) Workforce optimization 14% 27% 49% 63% In Use Today In Use within 3 Years November 20,

13 Application Adoptions Level by Region Application Adoption Level by Region Worldwide Average US EMEA APAC Administrative 92% 94% 84% 64% Service delivery 49% 50% 46% 43% Workforce management 46% 46% 49% 49% Talent management 55% 55% 60% 48% BI (reporting/tools) 41% 41% 49% 26% Workforce analytics/planning 12% 12% 14% 15% Social media tools 41% 42% 38% 29% Europe/Middle East Leads in adoption of Talent Management and Business Intelligence applications Asia/India/Australia Lower adoption levels than other regions +5% above average -5% below average November 20,

14 Adoption Differences Between EMEA and US Service Delivery Average 2014 By Region EMEA US Help desk 40% 44% ESS 60% 76% MSS 54% 47% Workforce/Employee lifecycle management 29% 33% Service Delivery Average 46% 50% > 6% above comparison region 13

15 Adoption Differences Between EMEA and US Talent Management 2014 By Region EMEA US Recruiting/talent acquisition services 91% 86% Profile management 31% 29% Learning and development (training) 83% 70% Career planning and development 41% 25% Performance management 77% 72% Succession planning / Succession management 34% 34% Compensation management 63% 70% Talent Management Average 60% 55% > 6% above comparison region 14

16 Adoption Differences Between EMEA and US BI (Reporting/Tools) 2014 By Region EMEA US Simple management reporting 89% 83% Drill down and ad hoc reporting 76% 63% Dashboard (visualization of key metrics) 56% 33% Statistical tools (e.g., SPSS, SAS) 18% 17% Other visualization tool 14% 17% HRMS Warehouse 63% 50% Middleware 31% 24% BI (Reporting/Tools) Average 49% 41% Workforce Analytics/Planning > 6% above comparison region 2014 By Region EMEA US Workforce analytics 13% 16% Predictive analytics 10% 9% Strategic workforce planning 20% 11% Workforce Analytics/Planning Average 14% 12% 15

17 Adoption Differences Between EMEA and US Social Media Tools 2014 By Region EMEA US LinkedIn 35% 53% Facebook 32% 37% Collaboration tools / repository 78% 62% Twitter 13% 30% Organization-wide (corporate) social network behind firewall 29% 27% Social Media Tools Average 38% 42% > 6% above comparison region 16

18 European HR Tech Spending Outlook Over 50% of Survey Respondents Will Increase Spending Next Year Spending Plans for Next Year by Employer Size* 57% Large 32% 11% Large Medium 7% 50% 43% Increase Stay the same Decrease Medium Small 67% 24% 10% Small *Large = 10,000+; Medium = 2,500 10,000; Small = <2,500 17

19 European HRMS Deployment Models In Europe SaaS HRMS Deployments are Hitting a Tipping Point HRMS Application Deployment Only Licensed software on premise 33% 47% Today Licensed Deployments are 78% in 12 months 56% Licensed software hosted 15% 22% SaaS subscription-based 19% 44% Combinations Outsourced (process and software) 9% 8% 3% 0% Today 12 Months 18

20 HRMS European Vendor Landscape 12 Month Plans Indicate Increased SaaS Adoption HRMS Vendor Adoption Outlook Overall Please note that these represent survey adoption levels, not Market Share Today * SAP adoption underrepresented ** Columns do not add to 100% as organizations have multiple solutions in use Colored cells indicate greater than 5% gain or more than 5% loss in 12 months. Overall In 12 Months ADP 22% 15% SAP HCM 19% 18% Oracle PeopleSoft/JD Edwards 16% 14% Oracle EBS 13% 7% Workday 6% 17% Kronos 6% 4% Oracle HCM Cloud (Fusion) 3% 7% SuccessFactors Employee Central 1% 4% Other 30% 28% n=80 +5% loss +5% gain 19

21 #1 Reason For Moving is User Experience! How Are Vendors Doing? 1 = Poor: not user friendly, excessive steps, limits use 2 = Acceptable: workable but requires training to use 3 = Excellent: intuitive, user centered design, effectively promotes use And, why is it is such a big deal? It s about driving user adoption, so both employees and the organization get the most value from the solution! 20

22 User Adoption Level by User Experience Scores Higher User Experience Scores with Newer Cloud Solutions 75 HR Management System Manager User Adoption and User Experience n=389 User Adoption Percentage Oracle, EBS Infor/Law SAP (HCM) Ceridian HR PSFT Multiple Vendors Kronos ADP UltiPro User Experience Scores Workday * Ceridian DF UltiPro (2013) * Oracle HCM Cloud (Fusion) * SF/Employee Central UltiPro: Manager adoption, increased by 47% from last year. Organizations with new cloud solutions will see increased adoption levels quickly. * Sample Size Small, Indicative Data Only 21

23 SaaS Takes Less Time to Deploy Length of Time for New HRMS Deployments JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Licensed On Premise = 15.3 months Licensed Hosted = 11 SaaS = 9.0 months Large Time for New Deployment for an HRMS by Size of Organization* in months n=536 Medium Small *Large = 10,000+; Medium = 2,500 10,000; Small = <2,500 Licensed On Premise Licensed Hosted SaaS 22

24 SaaS Requires Fewer Resources Requires Fewer Total HR Technology Headcount than Licensed Solutions HRIT/IT Headcount by Deployment Type* Functional HRMS Application Support HRMS Infrastructure Headcount Licensed on premise SaaS *All Licensed on premise and SaaS respondents from organizations with average of ~11,000 employees plus contingents served by the HRMS n=85 SaaS advantage holds true across small, medium, and large organizations. It is best to benchmark for your size and industry. 23

25 Integrated Talent Management European Approach to Talent Management Still Includes Point Solutions Aggregate Integrated Talent Management Approach European Integrated Talent Management Approach Point Solutions 15% None/Not Aware 14% HRMS- ITM suite 42% ITM Suite 29% None/Not Aware 16% Point Solutions 22% ITM Suite 25% HRMS- ITM suite 37% 24

26 ITM European Vendors Landscape Adoption Continues to Increase in Cloud Solutions Integrated Talent Management Vendor Adoption Outlook Overall Please note that these represent survey adoption levels, not Market Share Today Overall In 12 Months Oracle (PeopleSoft, EBS) 19% 12% Oracle HCM Cloud (Taleo) 16% 20% SuccessFactors/Plateau 14% 15% SAP* 12% 9% Lumesse (Stepstone/MRTed) 12% 10% Cornerstone OnDemand 9% 12% Workday 6% 16% n=80 Kenexa 5% 4% SumTotal/Softscape 4% 4% Saba 4% 3% Other 15% 18% * SAP adoption underrepresented Columns do not add to 100% as organizations have multiple solutions in use Colored cells indicate greater than 3% gain or loss in 12 months. +3% loss +3% gain 25

27 BI/Analytics Deployment Approaches Adoption is Less Important than Deployment. We Must Learn from the Past! Business Intelligence/HR Analytics Approach Predominantly Standalone Apps 2007 Enterprise BI Embedded HR Combination Solutions 9% 13% 53% 47% 30% 33% With experience, organizations moved to adopt Enterprise Solutions Currently, an emerging trend of Embedded HR Analytics Standalone HR Analytics Tool Today 7% 8% 12 Months Going forward, we will see 44% growth in adoption of Combinations 12 Mo n=488 Caution: consider past learning as you develop your BI/analytics strategy. While embedded analytics solutions that provide transactional and operational analytics will not go away, they are not the end solution. Enterprise solutions will be needed. 26

28 Top Adopters of WFM, TM, and BI Achieve Higher Outcome Scores and Higher ROE Workforce Management Talent Management Business Intelligence Top Workforce Management, Talent Management, and Business Intelligence Adopters: Have across the board higher HR, talent and business outcome scores Achieve higher Return on Equity (31% higher than lower adopters) They integrate WFM, TM, and HRMS data three times as often as lower adopters. 27

29 Why Add Mobile to Service Delivery Tech? Higher HRMS User Experience Scores HRMS User Experience Scores** by Service Delivery Model No or Low Tech With Self Service* With Self Service* and Help Desk With Self Service*, Help Desk, and Mobile n=158 49% increase in user experience scores with combined self service, help desk, and mobile technologies. *With Self Service: Employee and manager self service applications serve 60% or more of employees and 50% or more of manager populations **User experience scores based on a three point scale: 1 = Poor, 2 = Acceptable, 3 = Excellent 28

30 Why Increase Mobile & Social enabled Processes Higher Levels of Adoption Lead to Higher Levels of Use Employee Direct Access Manager Direct Access Employee Direct Access Manager Direct Access 26% 34% 60% 46% 58% 73% 46% 67% 53% 71% 41% 66% < 20% Social Process Enablement > 20% Social Process Enablement < 20% Mobile Process Enablement > 20% Mobile Process Enablement n=188 29

31 Emerging Technologies to Watch Gamification the Only One with Sizable Usage Today Workforce Using All Today Today EU Evaluating No/NA Gamification of applications 34% 43% 66% Wearable technology 7% 15% 4% 89% Social aggregation applications 4% 0% 6% 91% Fatigue management applications 2% 0% 1% 97% Robotics/artificial intelligence 1% 0% 3% 96% Wearables 60% of organizations using wearables believe the benefit will be increased workforce productivity. 30

32 Introducing the Quantified Organization An Environment of Data-driven Decision Making Better BI Process Maturity Quantified Organization BI Process Maturity 3.2 Effective Not Quantified BI Process Maturity 1.8 Efficient More Manager Access to Analytics Managers with BI access 74% Managers with BI access 20% More Data Sources BI Sources 4.8 BI Sources 2.4 More Categories of Metrics Metrics Categories Tracked 4.2 Metrics Categories Tracked

33 Quantified Organizations Outperform! They Have 79% Higher ROE than Non-QOs Quantified Organization Not Quantified Quantified Organization Return on equity measures an organization s success at generating profits from every unit of shareholders equity, such as that allocated for HR technologies. A company that earns an ROE in excess of its cost of equity capital adds value. ROE 18% ROE 10.1% 79% Higher ROE 32

34 Lessons from Quantified Organizations They Get the Basics Right Process Standardization Process Maturity ITM on HRMS QO 57% Non-QO 42% QO 3.0 Effective Non-QO 2.0 Efficient QO 62% Non-QO 52% 33

35 Lessons from Quantified Organizations They Have Strategies and Culture that Support Performance Updated HR Systems Strategy Enterprise Integration Strategy Migrate to Enterprise BI Change Management Culture QO 64% Non-QO 37% QO 35% Non-QO 11% QO 75% Non-QO 61% QO 37% Non-QO 26% 34

36 Lessons From Quantified Organizations They Innovate with HR Technologies Adoption of WFM, TM, and BI Higher level of Social adoption Higher level of Mobile adoption QO 41% QO 24% Non-QO Non-QO 5% 6% QO 32% Non-QO 14% 35

37 Visit Sierra-Cedar and Mercer Websites Get Full Survey Details and Sign Up To Participate Next Year! 36

38 Questions Stacey Harris Sierra-Cedar Continuing Vice President, Research and Elizabeth Bryant Mercer Partner and North America Leader for HR Effectiveness Thorsten Barth Mercer Principal and European Leader for HR Technology Services QUESTIONS Please type your questions in the Q&A section of the toolbar and we will do our best to answer as many questions as we have time for. To submit a question while in full screen mode, use the Q&A button, on the floating panel, on the top of your screen. CLICK HERE TO ASK A QUESTION TO ALL PANELISTS FEEDBACK Please take the time to fill out the feedback form at the end of this webcast so we can continue to improve. The feedback form will pop-up in a new window when the session ends. View past recordings and sign up for upcoming webcasts 37

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