CedarCrestone HR Technologies, Service Delivery Approaches, and Metrics

Transcription

1 CedarCrestone HR Systems Survey: HR Technologies, Service Delivery Approaches, and Metrics 13 th Annual Edition

2 Information contained in this survey analysis was compiled and analyzed by CedarCrestone as part of our commitment to provide knowledge on workforce technologies, trends, and the impact their adoption has on the performance of the enterprise. CedarCrestone encourages customers, media, partners, analysts, and other readers to share the information found herein and to quote liberally from the survey with appropriate credit to CedarCrestone. We request that all quotes and references are credited as CedarCrestone HR Systems Survey, 13 th Annual Edition on first reference. All subsequent references should read CedarCrestone Survey. i

3 Table of Contents Executive Summary...1 Background and Survey Approach...3 Context: Economic Environment and Initiatives Underway... 4 Top Ten Initiatives in Applications Context... 6 CedarCrestone Application Blueprint...6 Overall Application Adoption by Industry and Size...8 Overall View of Application Deployment Option Adoption Application Adoption, Vendor Outlook and Value by Category...11 Administrative, Service Delivery and Workforce Management Applications Vendor Outlook Value Proposition Talent Management Applications Vendor Outlook Value Propositions Financial Services Industry Shows Striking Results Business Intelligence/Workforce Optimization Vendors...22 Value Proposition...22 Social Networking...23 Value Proposition...24 Service-Oriented Architecture (SOA) Middleware Fusion...26 Going Global...26 Expenditures Conclusions and Recommendations An Observation on Future HR Technology Adoption Priority Checklist...29 ii

4 Figures Figure 1: Respondents by Industry... 3 Figure 2: Respondents by Employee Size... 4 Figure 3: Trends in Economic Environment Impact on Plans and Budgets... 4 Figure 4: Trends in Business Challenges... 5 Figure 5: How Respondents Spend Time and Budget... 6 Figure 6: CedarCrestone Unified and Integrated HCM Application Blueprint... 7 Figure 7: Application Adoption Level by Industry... 9 Figure 8: Application Adoption Level by Size... 9 Figure 9: Three-Year Application Outlook Figure 10: Deployment Averages Across 40+ Applications Figure 11: Administrative and Workforce Management Application Vendor Adoption Figure 12: Service Delivery Technologies Impact on Employees Served Figure 13: Talent Management and Business Intelligence Application Vendor Adoption Figure 14: Financial Metrics by Above and Below Average Talent Management Use Figure 15: One-Year Sales Growth by Talent Management Application Figure 16: Financial Metrics by Talent Management Approach Figure 17: Financial Services with Higher Levels of Automation Outperform Figure 18: Talent Management Best Practices Figure 19: Top Level Talent Analytics* Organizations Outperform Figure 20: Corporate Social Network Use Figure 21: Social Tool Use and Plans Figure 22: Corporate Social Network Adoption Linked to Higher Financial Performance Figure 23: Plans to Implement SOA Middleware Figure 24: Global Highlights Figure 25: HR Technology Expenditures Overall iii

5 Executive Summary Almost 1,300 organizations responded to the 13th annual CedarCrestone HR Systems Survey, providing a worldwide benchmark of workforce technologies adoption and the value achieved from their use. Each year of the survey, we broaden our coverage scope for both core HR technologies and emerging technologies, leading us this year to explore over 40 applications concerning adoption, deployment options, vendor outlook, value achieved, and expenditures for the following categories: Administrative: core HR record keeping, payroll, and benefits administration. Service delivery: employee and manager self service, portal, HR help desk, and workforce life cycle management. Workforce management: those applications, such as time and labor and absence management, that enable an organization to place the right people, with the right skills, at the right time, and at the right cost. Talent management: applications that help an organization acquire, develop, and retain talent. Social networking: tools to support collaboration, recruiting and branding, and service delivery. Business intelligence: foundational technologies, to support metrics and analytics including a warehouse, reporting, presentation tools, and middleware. Workforce optimization: encompassing workforce planning and analytics applications and associated talent analytics practices that support organizations to determine and execute the best course of action for workforce challenges that impact an organization s business strategies. Annually, CedarCrestone reviews the applications in the above categories within the context of an HCM Application Blueprint. This is essentially a roadmap that we see many organizations follow as they achieve levels of excellence with administration, service delivery, workforce management, talent management, and business intelligence/workforce optimization. What is important about all these categories and applications is that in order to use technology to truly optimize the workforce contribution to the organization, it is important that all functionality be unified end to end and integrated within an ecosystem that provides: 1. Access to other services such as social and collaboration tools, service-oriented architecture middleware, electronic content management, and others in the light orange ring. These should ideally be architected for seamless integration rather than available as add-ons. 2. Access to other information sources such as financials or customer-facing data at the lowest total cost of ownership. With this data easily accessible, workforce performance can be measured and optimized. Key survey findings and recommendations include: Economic conditions over the past two years created a highly unstable market environment; fortunately, the survey shows a strong recovery and a forecast for almost 100% growth in talent management, social media, and analytics/planning applications for the next three years. The top initiative organizations work on is business process improvements. No organization can fix broken processes with automation, and we ve seen smart organizations always start here before deploying HR technologies. Software-as-a-Service (SaaS) as a deployment option showed stronger growth than forecast last year and will continue that growth as organizations slowly move from licensed on-premise solutions. Organizations need to understand the benefits of SaaS and options such as hosting. 1

6 Service delivery technologies started organizations on a path to automation resulting in administrative cost savings. Talent management and business intelligence result in significant impacts on key productivity measures (net income growth, sales growth, and sales per employee). Across all categories of technologies we track, organizations with more automation outperform those with less on these productivity measures. Financial services with more talent and analytic professionals focused on talent plus higher levels of automation compared to those with less automation significantly outperform. This finding suggests it is important to benchmark against your peers. Metrics such as staff counts, level of automation, and expenditures make most sense when compared to others of your industry, size, and service delivery approach. Organizations with a high level of talent analytics also outperform; adopting the technologies that enable this is the new bar of excellence. Choices that are making a difference in 2010 include: - Career development. Organizations that support their employees by encouraging their career growth and helping them find new opportunities engender employee loyalty, which in turn translates to lower turnover with reduced employee acquisition costs. - Workforce optimization technologies including workforce planning and workforce analytics. Adoption of these represents the new leading practice. Organizations with the highest level of talent analytics outperform. - An ERP-based talent management solution. The ERP-based talent management solution continues, since 2008, to be linked to the highest financial performance. - Organizational adoption of social networking. With organization-level social networking collaboration is resulting in lower costs and the organization is more agile and response. Organizations need to become familiar with service-oriented architecture as a toolset to integrate disparate software systems, applications, and processes so they communicate seamlessly. CedarCrestone offers benchmarking of application usage, staff metrics, and expenditures by industry, size, global reach, service delivery approach, level of best practice, and other criteria. 2

7 Background and Survey Approach The CedarCrestone HR Systems Survey is based on 1,289 responses, representing over 20 million employees. This year, 83% of respondents are from US organizations, 7% from Europe, 6% from Canada, and 4% from Australia/New Zealand and Asia. Unless otherwise noted, all tables and figures in this report will summarize worldwide results. The typical respondent is an executive, director or manager (64%); specialist/analyst (29%); or technical specialist (7%). All are at the intersection of HR and IT, with about 70% from Human Resources, 20% from Information Technologies, and 10% from Finance, Executive office, or Operations. Industry response percentages are statistically similar to previous years and so we will continue our trend analysis. We do see a decline in respondents from both healthcare and higher education although for both we have similar response numbers as in For healthcare, as we had a stronger increase across the past two years, we believe we are returning to a more representative response level. We note some variations in average number of employees from 2009, with some impact from non-us participation with smaller sized employers. For example, the agricultural/mining/construction organizations are significantly smaller this year as we see more respondents in these industries from Australia that are typically smaller than US organizations in this sector. Likewise financial services and other services organizations are smaller. We see a slight increase in financial services respondents. Upon reviewing them, we believe we are seeing a return to the early adopter stance of a new set of financial services organizations. While we saw a slight decrease in the percentage of public administration organizations, the size of the respondent organizations is significantly larger with the inclusion of some larger Federal and State agencies. Figure 1: Respondents by Industry Total Responses Percent Number of Employees Agricultural/Mining/Construction 44 3% 6,569 Consumer and Other Manufacturing % 19,233 Financial Services % 15,891 Healthcare % 9,640 Higher Education 56 4% 8,737 High-tech Manufacturing 93 7% 28,527 Other Services % 12,155 Public Administration 89 7% 27,355 Retail/Wholesale 88 7% 34,311 Transportation, Communications, Public Utilities 107 8% 16,713 Total 1, % 16,947 This year, we changed our size segments to enable better analysis of what is happening in the smaller-sized organizations, an area where we received significantly more responses. We chose to keep responses that had at 3

8 least 250 employees with 1) some form of HR record keeping system instead of just a payroll system and 2) one or more talent management solutions. We saw that many of both the very small and small organizations are the ones looking for a new HRMS. Figure 2: Respondents by Employee Size Total Responses Percent Number of Employees Very small ( ) % 599 Small (1,000 2,499) % 1,660 Medium (2,500 9,999) % 5,308 Large (10,000 49,999) % 21,250 Very Large (50,000+) 65 8% 141,917 Totals and Average 848* 100% 16,947 Context: Economic Environment and Initiatives Underway Economic conditions over the past two years created an environment that was highly unstable. The survey results, however, show a strong recovery among respondent organizations (See Figure 3). Over 70% of respondents are continuing on with their plans, up almost 20% from last year. However, a strong business case is still needed. Vendors will still Late adopters to new need to be prepared to assist potential customers with ROI proof because technologies have a the market is mature for several categories of HR technologies. Late prove it to me stance. adopters to new technologies have a strong prove it to me stance. Figure 3: Trends in Economic Environment Impact on Plans and Budgets % of respondents We are continuing our plans but must rigorously support requests for funds with a strong business case We have experienced significant budget decrease (greater than 10%) We have had to stop all new HR technologies plans Respondents are clearly back on track with a return to strong attention in attracting, engaging, and retaining employees with key skills, up 35% as a key challenge of respondents since Although, this is still coupled with pressure to increase productivity, reduce labor costs and still provide superior service levels. We added a new challenge this year of integrating data from multiple systems as it is one we are seeing drive organizations to a single unified and integrated solution for core record keeping, talent management, and business intelligence built on the same platform as the underlying Human Resources Management System (HRMS). 4

9 Figure 4: Trends in Business Challenges % of respondents Pressure to increase productivity, reduce labor costs, and still provide superior service levels Attracting, engaging, and retaining employees with critical skills and competencies Integrating data from multiple systems (New) 54 Inconsistent operations, practices, and systems across different locations or business lines Access to capital Inability to predict and plan future workforce needs Responding to changing consumer spending/ rapid market decline Top Ten Initiatives in 2010 Each year, we ask the following question: Where are you spending 25% of your time and where are you spending budget (i.e. buying software, hardware, and/or consultants)? Business process improvement work has topped the list for years. It was being performed by more respondents last year (79%) than this year (68%). In 2009, organizations were doing foundational work with their processes before embarking on new technology work or perhaps spending time there when they had no budget for HR technologies. This year, that work is likely done. We caution readers especially those in smaller organizations who are not spending time on business process improvements that not doing this work prior to automating is a recipe for disaster. HR technologies cannot fix inadequate or broken processes. HR technologies cannot fix inadequate or broken processes. The rank order of these initiatives is almost exactly as it was last year, except that work on providing employee and manager self service is higher particularly among smaller organizations. Smaller organizations are not indicating they are spending budget at the percentage that respondents from medium and large-sized organizations report. Two new items hit the top ten in Workforce management enters at number eight and covers applications such as time and attendance and absence management. Workforce planning enters the list at number ten. Respondents indicating this initiative as one where they are spending time or budget are primarily the larger organizations with over 10,000 employees. 5

10 Figure 5: How Respondents Spend Time and Budget % of respondents 1. Business process improvements Talent management processes and automation Employee and manager self service Business intelligence/workforce metrics 5. HR systems strategy Upgrade 7. Enterprise portal with HR info/transactions Workforce management Competency management 10. Workforce planning Spending Time Spending Budget Applications Context Application adoption and value from use are framed by the initiatives explained above and a review of the new CedarCrestone application blueprint. CedarCrestone Application Blueprint CedarCrestone tracks 43 applications divided into the categories highlighted on our updated CedarCrestone Application Blueprint. This blueprint is a roadmap that we see many organizations follow as they achieve levels of excellence with administration, service delivery, workforce management, talent management, business intelligence and newly added this year is workforce optimization. 6

11 Figure 6: CedarCrestone Unified and Integrated HCM Application Blueprint FIN General Ledger, Purchasing, Budgeting, Travel & Expense Security Social and Collaboration Tools Vendor Management Workflow SCM Service Delivery/ Service Center HR Help Desk, Workforce Communications, Onboarding Portal Framework With Identity Management and single sign-on Self Service and Workflow Benefits, pay, personal data Promotions, transfers, salary actions Approvals and notifications Administrative Excellence Service Delivery Excellence Workforce Mgt. Excellence Talent Mgt. Excellence Performance/Workforce Optimization Excellence Core HRMS/ERP Foundation Data for Roles and Competencies (Profile Mgt.), Position Management, Payroll and Benefit Administration Workforce Management Time Record Management, Absence Management, Labor Budgeting, Scheduling and Forecasting, Task Management Workforce Optimization Workforce Planning, Workforce Analytics, Predictive Analytics Talent Management Competency Mgt., Recruiting, Learning Mgt., Performance Mgt., Compensation Mgt., Succession Mgt., Career Planning/Dev. Business Intelligence Tools HR warehouse Reporting/dashboards Middleware CRM SOA Electronic Content Management Backlog, Pipeline, Customer Satisfaction ETL Bus. Process Mgt. Projects Project Costing, Contracts, Grants What is important about all these categories and applications is that in order to use technology to truly optimize the workforce contribution to the organization, it is important that all functionality needs to be unified end-toend and integrated within an ecosystem that provides: 1. Access to other services such as social and collaboration tools, service-oriented architecture middleware, electronic content management and others in the light orange ring. These should ideally be architected for seamless integration rather than available as add-ons. 2. Access to other information sources at the lowest total cost of ownership. This often means that integration must be direct rather than through interfaces. You hear a lot about the importance of an integrated talent management solution that enables you to share and use data from a performance management process, perhaps to identify profiles of high performers to then use that information in recruiting or workforce planning. Also integrating the data directly with other information sources such as finance or customer-facing repositories is important to do workforce analytics to show how the workforce impacts financials or customer results. Further integrating talent with project costing, time, scheduling, absence management, activity-based costing, pay and more ultimately enables workforce optimization. CedarCrestone believes that talent management or in fact any aspect of human capital management today must interplay as seamlessly as possible with all these other organizational resources to provide the strongest value and the lowest total cost of ownership. 7

12 Administrative Excellence: Organizations begin their journey towards administrative excellence with the deployment of a core recordkeeping system typically deploying a state-of-the-art HRMS along with payroll and possibly benefits administration. Increasingly within that, best practice organizations are implementing competency management and, in some industries, position management. Further, organizations are beginning to expand employees profile information, maintained within the core HRMS. Keeping these pieces at a bestpractice level through upgrading to recent vendor releases enables organizations to achieve Administrative Excellence and sets them up to achieve excellence in talent management. Service Delivery Excellence: Organizations then deploy self service applications, often under a portal umbrella. Medium and large-sized organizations then move to a service center approach with streamlined and standardized processes. Call center technology and a knowledge base that couples person-specific content with transactional services is also a leading practice. Organizations with this profile are achieving Service Delivery Excellence. Workforce Management and Talent Management Excellence: Workforce management is key to getting the right people, with the right skills, in the right place and time, at an optimal cost. Organizations with a high percentage of non-exempt and contingent employees that need to schedule these workers to cover specific business hours and locations use the applications in this category to achieve Workforce Management Excellence. Talent management is key to acquiring, developing, and retaining talent. Organizations implementing the applications in this category are achieving Talent Management Excellence. Performance and Workforce Optimization Excellence: Bringing all the transactional and process information into a data repository, expanding reporting capabilities, extending the business intelligence environment to end users, and then deploying the new workforce optimization applications enables organizations to do analytics to enable planning and measurement of workforce performance. The adoption of business intelligence and workforce optimization applications enable organizations to achieve Performance and Workforce Optimization Excellence. Readers might use this blueprint to navigate through their HR systems strategy. To support developing such a strategy, we offer deep-dive benchmarking of application usage and deployment approaches by industry, size, and other criteria such as use of service centers or level of talent management practice and automation. For global organizations, we also benchmark by global type. Contact [email protected] for more information. Overall Application Adoption by Industry and Size The following two figures show overall adoption numbers for each category of applications we track, first by major industry sector and then by size of employer. Each figure highlights those that are above or below the worldwide average adoption levels for applications in each category. The individual applications in each category are highlighted in the Blueprint above. We also invite readers to visit to download tables that show the current and projected adoption levels for each application. 8

13 Worldwide Average Figure 7: Application Adoption Level by Industry Agricltr., Mining, Constr. Financial Services Healthcare Higher Education High-tech Mftg. Consmr/ Other Mftg. Figure 8: Application Adoption Level by Size Other Services Public Admin. Retail/ Wholesale Transp., Comm., Public Util. Administrative 90% 98% 93% 92% 82% 93% 89% 88% 83% 87% 92% Service delivery 47% 42% 55% 47% 51% 52% 35% 46% 31% 41% 56% Workforce management 45% 41% 44% 56% 31% 48% 38% 46% 31% 39% 53% Talent management 43% 52% 46% 43% 35% 55% 37% 39% 39% 41% 47% Social media tools 15% 20% 13% 12% 17% 27% 15% 19% 7% 15% 16% Business intelligence 37% 38% 37% 38% 33% 48% 35% 33% 31% 41% 41% Workforce optimization (New) 17% 19% 16% 22% 9% 25% 14% 13% 13% 19% 25% Worldwide Average Large Medium Small Administrative 90% 94% 92% 87% Service delivery 47% 56% 46% 41% Workforce management 45% 49% 42% 44% Talent management 43% 54% 40% 38% Social media tools 15% 20% 8% 11% Business intelligence 37% 47% 34% 32% Workforce optimization (New) 17% 22% 14% 16% In 2010, organizations within the High-tech and Transportation, Communications, Public Utilities industry sectors are higher-than-average adopters of many of the categories we track. Moreover, the large organizations within any industry with over 10,000 employees are higher-than-average adopters. Individual organizations will always be different, but these average adoption levels can be used as a quick calibration for your organization to benchmark against. Three-Year Application Outlook All application areas will continue to grow. Respondents may choose another deployment option for their HRMS, but Administrative applications will grow only negligibly in adoption. Service delivery applications will grow as more organizations move to more of these applications such as the help desk for HR, workforce lifecycle management, or workforce communications and more organizations will continue to roll out more and more employee and manager self service. Three application categories will grow 90% or more: talent management, social media, and workforce optimization, the latter of which includes workforce planning and workforce analytics. 9

14 Figure 9: Three-Year Application Outlook % of respondents Administrative Service delivery Workforce management Talent management % Business intelligence Workforce optimization % Social media % In Use Today In Use within 3 Years Overall View of Application Deployment Option Adoption In addition to application adoption levels, the CedarCrestone Survey also collects information on how each application is deployed as shown in Figure 10. Detail is available for download for all categories at Crestone.com/annaul_survey.php. In the figure below, we show the deployment averages across all applications we track. Figure 10: Deployment Averages Across 40+ Applications % of respondents Licensed software on premise Licensed software hosted SaaS subscription based Outsourced (process and software) 5 6 Other including in house/bespoke Today 12 Months Overall, licensed software deployed on premise continues as the leader across all applications in all the categories we track (44% today, declining to 41% in 12 months). The talent management application category shows less deployment via licensed on premise (31%), although still slightly in the lead, followed by in house/ bespoke (30%), Software as a Service (SaaS) subscription based (20%), licensed software hosted (17%), and outsourced process and software at just 2%. SaaS deployment over all applications has increased even faster 10

15 than forecast in our 2009 survey (100% increase vs. 67% forecast in 2009) and will continue to increase by 50% over all applications tracked. Within the talent management application category, SaaS deployment (28%) will essentially equal licensed software on premise (30%) within the next 12 months. Clearly organizations need to become familiar with the benefits of SaaS as well as other deployment options, such as hosting. Vendors can continue to look at the in house/bespoke deployment choices of organizations as potential net new sales. However, with the SaaS deployment growth gaining so strongly, opportunities abound amongst customers of all deployment approaches. Application Adoption, Vendor Outlook and Value by Category For the 2010 survey, we will not provide the application adoption and application deployment detail numbers here as we have in the past. These are, however, available at Rather, we will focus on a high-level view, the vendor outlook, and the value achieved for each category of applications in this white paper. Administrative, Service Delivery and Workforce Management Applications Application adoption of the major administrative applications is quite mature. What primarily drives change in a solution provider today is a choice to move to a different deployment model. Organizations need to familiarize themselves with the benefits of SaaS as well as hosting deployment options. Employee and manager self service, two of the three key service delivery applications, are relatively mature in adoption across 60%+ of respondent organizations. Industries still slow to adopt are public administration, higher education (particularly manager self service), manufacturing and retail organizations that have difficulty providing direct access to all employees, except among large organizations. The deployment trend of the core HRMS is essentially the same for these applications. The third key service delivery application is the HR-oriented help desk application which is adopted at essentially the same level (36%) as last year (38%) because of the addition of more respondents in small organizations that typically do not use this capability. However, 55% of large organizations of over 10,000 employees have now adopted an HR help desk. As we will discuss in the Service Delivery section, its use with a move to a service center approach drives greater efficiency in most organizations. We also note that the role-based portal that includes access to HR transactions and information has increased in adoption from 39% overall in 2009 to 48% in Again, large organizations are more likely to adopt such a portal (54%) than smaller organizations. Vendor Outlook Not all respondents will provide current and planned vendors, but of our respondents, 500 did. The charts below show the current and projected vendor outlook for the HRMS, Payroll (both within Administrative Applications) and Time and Labor (within Workforce Management). These charts show those vendors that are identified by at least 5% of our respondents. The Other category includes legacy solutions, some of the large outsourcers, and the up and coming vendors such as Workday in the HRMS category, Paterson in the payroll administration area and CyberShift in the workforce management category, all vendors we expect to see increase in use. 11

16 Figure 11: Administrative and Workforce Management Application Vendor Adoption % of respondents (n=500) HR Management System PeopleSoft ADP Oracle (EBS) 11 9 SAP 11 8 Lawson 8 8 UltiPro (Ultimate) Other 18 Payroll Administration ADP PeopleSoft 24 8 UltiPro (Ultimate) 9 7 Lawson 8 6 SAP 7 4 Oracle (EBS) 5 27 Other 23 Time and Labor/Time and Attendance Kronos PeopleSoft ADP SAP Oracle (EBS) UltiPro (Ultimate) Today In 12 Months Other Just 9% (43 respondents) indicated that they will move from one vendor to another over the next year. Most of that movement is among the small organizations with below 2500 employees (22) and as a result we see a percentage increase for UltiPro. The other area we see changes is from the Other category where respondents will move to the ERP vendors, with SAP, PeopleSoft, Oracle and Lawson picking up customers from users of Ceridian, Tesseract or in-house developed/bespoke solutions. Of great interest in the market these days is Workday. Fewer than 10 respondents indicate use or plans for Workday, although two reported that they will move to Workday over the next 12 months. Many (18) of the 43 are still evaluating their choices. We expect to see those choices most likely going to SaaS providers. Value Proposition There are several value propositions related to administrative and service delivery solutions that we have seen over the years present in 2010 as well: Efficiency of application service delivery is represented by the number of Information Technology (IT) and Human Resources IT (HRIT) staff needed to support the HRMS and the entire HR technology environment. One consistent finding this year as in the past is that the hosted approach lowers the need for IT, HRIT, and related consultant staff. This year those that host report they are able to serve 5% more employees with the same number of staff. Impact of purchasing HRMS on premise vs. subscription-based HRMS might also be represented by the number of IT and HRIT staff it takes to support the workforce. This is a somewhat tricky metric as the size of organizations is highly different between those that purchase software vs. those that acquire an HRMS via the subscription model. Those using the subscription model, among respondents 12

17 have fewer than 5,000 employees. What we see is that the HRIT staff in organizations that purchase their HRMS are serving 25% more employees with their HR technology and consulting staff, while the IT staff serves essentially the same number of employees for both models. We encourage readers most interested in this metric to contact us for benchmarking services as there are numerous variables at play (size, industry, service delivery model, applications in use, etc.). Overall efficiency of HR service delivery improves particularly when organizations deploy employee and manager self service and move to a service center approach for service delivery. Figure 12 shows the number of employees plus contingents (if served by HR) divided by total HR FTE. We show by selected industry where organizations are with Minimal or No Technology; with employee and manager self service serving at least 40% of the workforce; and then both employee and manager self service, along with the adoption of a service center approach that is serving at least 90% of the employee population. Figure 12: Service Delivery Technologies Impact on Employees Served per HR Staff Employees plus contingent workers divided by HR FTE Minimal/ No Technology Service Delivery* Employee/ Manager Self Service Service Center** Self Service and HR Help Desk Financial Services High-tech Manufacturing Transportation, Communications, Public Utilities Other Services Average (all industries) *Employee and manager self service applications serves 40% or more of employee or manager populations **Service center serves 90% or more of the workforce and includes employee/manager self service and call center technologies Over the years of conducting our survey and post implementation review work, we find that once service delivery technologies are in place for at least one year, that organizations typically achieve a 20% to 25% reduction in HR administration staff, especially among medium and large sized organizations. But the more such work we do, we see other factors at play as organizations continue to apply more automation as they move to improve talent practices. A case in point is Financial Services, one of the earliest adopters of almost all the technologies we track. What we see with Financial Services is that, as these organizations become more sophisticated with talent management, workforce management, and business intelligence practices including automation, there is an increase in HR staff. As their HR staff increase, their HR/employee ratio lowers. For those with less automation (16 applications or less) their HR/employee ratio is 87, while those with more automation (17 applications or more) have an HR/employee ratio of 78. At the same time, most importantly, we see an increase in financial performance. We will discuss this further in the talent management section. Thus the HR/employee ratio is no longer a good indication of best practice in Financial Services; it is only good if an organization in this sector is just starting to turn to automation. 13

18 Again, we encourage readers to benchmark themselves to others in their industry/of their size with characteristics of interest such as staff counts and level of automation during planning your transformation process and modifying your HR systems strategy. Workforce management adoption is positively correlated with net income growth. Those at the highest level of workforce management adoption, including time and attendance, absence management, labor scheduling, and labor budgeting have 38% net income growth compared to those without that high level of adoption and associated practices (21%). Talent Management Applications Worldwide talent management application adoption appears not to have increased since 2009 due to the sizable increase in respondents from smaller organizations that are not as far along. Detail is available for download for all talent management applications at Across the board, medium (2,500 9,999) and large (10,000+) employers have continued to aggressively adopt all talent management applications. All applications among these organizations increased in adoption a minimum of 10% and in the case of the learning management system, by 20%. The average number of talent management applications currently adopted across all respondents is 3.1, with large employers with 3.9 applications. The most adopted combinations are typically recruiting and performance management in fast growing organizations or recruiting and learning management in organizations more focused on profit. Compensation is the next most adopted application with either of these combinations. While licensed on premise solutions still lead as the predominant deployment choice among our respondents, deployment of SaaS solutions increased more than forecast in 2009, and is forecast to continue to increase for 2011 to almost equal licensed on premise solutions among our respondents. Vendor Outlook Looking at the talent management vendor solutions with at least 5% adoption this year or next, we see adoption is increasing for most vendors. Respondents indicate that PeopleSoft, SAP, and other ERP-based talent management vendors will increase in use, as will most all of the talent management and BI vendors it is a hot growth area. As the ERP-based solutions have gained in functionality, customers of best-of-breed or niche vendors have switched to the new talent management functionality of their ERP vendor. The talent management and business intelligence vendor landscape will continue to see change with mergers providing the opportunity for many of the leading talent management vendors to offer a talent management suite. Taleo s proposed acquisition of Learn.com portends well for its leadership role, if it can truly make functionality merge seamlessly. To date, the only non-erp-based talent management vendors we see identified in two or more application areas are Cornerstone OnDemand and SuccessFactors. Cornerstone being organically developed does have this seamless integration. SucessFactors does as well with the exception of to/from the analytics capability added through its acquisition of Infohrm and to/from CubeTree that forms the basis of its social collaboration strategy. In subsequent surveys, we will begin to calibrate the level of adoption of functionality within integrated suites. 14

19 Figure 13: Talent Management and Business Intelligence Application Vendor Adoption % of respondents PeopleSoft Oracle (EBS) SAP Lawson SuccessFactors Compensation Management Other Succession Planning/Management SuccessFactors PeopleSoft Oracle (EBS) Cornerstone OnDemand Authoria Other PeopleSoft Taleo/Vurv Kenexa/BrassRing SAP Virtual Edge PeopleSoft SuccessFactors Oracle (EBS) 5 5 Halogen 3 5 Cornerstone 2 OnDemand 5 Other Talent Acquisition Other Performance Management Today In 12 Months PeopleSoft Pathlore/Sum Total Learning Management Plateau SAP Saba/Centra Oracle (EBS) Cornerstone OnDemand Other Cognos/IBM Oracle/Hyperion SAP/BusinessObjects Other BI/Workforce Optimization Value Propositions In our business case and post-implementation audit work, we see evidence of improved productivity of talent management processes, improved decision making, more engaged employees, and improved quality of hire with increased talent management automation. For more concrete proof points, we further look at the financial performance of publicly traded respondent organizations to see if there is any link between application adoption and financial performance. This year, we looked at one-year sales growth, one-year net income growth, and sales per employee, using Hoovers to pull data. After all, the objective of talent management improvement is to impact key business objectives represented by these key metrics. Our correlations of organizations with and without talent management show: More talent management automation is positively correlated on net income growth, sales growth, and sales per employee among organizations with more than the average talent management applications as shown in Figure 14 compared to those with less than the average. The average number of talent management applications in use is 3.1 in 2010, so we compared those with four or more talent management applications to those with three or less. 15

20 Figure 14: Financial Metrics by Above and Below Average Talent Management Use Two Key Growth Indicators Key Productivity Indicator Greater than average TM applications Less than average TM applications 48% $516,682 $472,147 11% -2% -4% * Organizations with 4 or more talent management applications vs. those with 3 or less. While all metrics are higher for organizations with more automation, the net income growth difference stands out. Reasons are that there is value in more efficient processes, reduced advertising costs with the branding and outreach capabilities of more automated recruiting, more appropriate pay for fairer compensation management practices, more effective learning management, and more. Perhaps the best impact of automation comes from better alignment of the workforce towards cost control during difficult economic times, possible with performance and goal management automation. Of note is that those organizations with greater than average talent management applications more frequently have career development, learning management, recruiting, and compensation management applications. In the best practices section (Figure 18), we show that those with these applications have consistently higher sales per employee. Talent management applications that make a difference: This year, organizations with career development in use had positive one year sales growth: 16

21 Figure 15: One-Year Sales Growth by Talent Management Application 4% 3% 2% 1% 3% 0% -1% -2% -3% -1% -2% -2% -2% -4% -3% -4% -5% Recruiting Competency management Learning management Career development Performance management Succession planning Compensation management Higher financial performance of those with career development is similar to a finding reported in our report, prior to the economic decline. What we said then holds true today: Organizations that support their employees by encouraging their career growth and helping them find new opportunities, engender employee loyalty, which in turn translates to lower turnover with reduced employee acquisition costs. This also translates to increased customer satisfaction, with employees who understand customer requirements remaining in place to serve customers better than new employees would, ultimately leading to improved revenue and lower customer acquisition costs as well. As reported since 2006, organizations with competency management also had better than average sales growth. With competency management as the core of any talent management approach, organizations can optimize their talent management practices. They can plan for, recruit for, develop for, and pay for needed competencies. Moving to codify competencies and using that information to drive a talent management strategy should impact an organization s ability to improve its sales growth. Organizations will have the right people with the right skills working on the right objectives at the right pay. Competency management continues to be a key component of successful organizations. Talent Management Approach Matters: With our broad set of respondents from a broad set of sources, we can look at what all the talent management approaches available on the market mean to an organization s financial performance. In past years, we analyzed respondents vendor choices and allocated them to three categories: best of breed (as designated by Bersin, Forrester, Gartner or IDC as in the upper quadrant, right wave, etc.); ERP-based (i.e. from Lawson, Oracle, PeopleSoft, or SAP); or Mixed (some combination of the above). This year we asked respondents to self-identify their approach, so our 2010 results come from correlating respondents choice with publicly available financial metrics: a. Best of breed (24%) is the least selected approach of our respondents despite the fact that over 50% of respondents come from many of these vendors! 17

22 b. The mixed talent management approach is identified the most (42%). c. ERP-based talent management approach is in the middle (34%). We have 354 respondents with the required data to conduct this analysis, i.e. they have at least two talent management applications. Of these, 151 are publicly traded, enabling us to do the requisite financial analysis with cohorts of 30 or more for all. In Figure 16, we see that for all metrics, the ERP-based solution is correlated with the highest financial performance. This is a consistent finding since We believe this finding argues for the unified and integrated talent management solution to be built upon the ERP-based HRMS. The ERP-based talent management solution continues, since 2008, to be linked to the highest financial performance metrics. This finding argues for the unified and integrated talent management solution to be built upon the ERP-based HRMS. Figure 16: Financial Metrics by Talent Management Approach Two Key Growth Indicators Key Productivity Indicator Best of breed ERP based Mixed 6% 1% 0% -4% -6% -2% $544,381 $487,132 $413,743 Net Income Growth Sales Growth Sales per Employee Financial Services Industry Shows Striking Results Organizations for years have implemented self service and moved to provide service delivery from shared service centers. The justification was fewer HR staff that reduced the costs of HR administration. Further, self service functionality started organizations on the path of automating processes a known HR best practice. Without that paradigm of employee and manager self service, other direct-access technologies could not be successfully adopted. For years in our survey reports, we saw organizations with higher levels of service delivery automation had higher HR/employee ratios. 18

23 But with Financial Services we see a leveling out of the number of Financial services with lower HR/employee ratio and greater automation compared to those with higher ratio and lower automation significantly outperform! employees served amongst those with more automation (Figure 12). This industry, more than others, has continued to adopt more and more automation, with an average of 17 or more compared to 15 for others. In this year s survey results, we see the fruits of their adoption of more automation and the underlying best practices associated with talent management and business intelligence. Within Financial Services, those with more than the average automation have both more HR staff (and thus a lower ratio) as they provide more focus on talent management and analytics. And there is a significant link to higher productivity in the form of higher sales per employee (Figure 17). Financial services organizations with this combination of lower HR/employee ratio and higher automation have 55% higher sales per employee than those without that high level of automation. Figure 17: Financial Services with Higher Levels of Automation Outperform HR/Employee Staff Ratio Key Productivity Indicator Higher level of automation* Lower levels of automation $803,008 $518,735 Number of Employees Served Sales per Employee * Financial Services organizations with greater than 17 applications vs. those with less Best Practices in Talent Management To further emphasize the importance of integration, we asked a series of questions about whether respondents believed they were at a best practice level with their talent management processes. We provided a definition of best practice for each of the processes. One aspect of each included a practice or specific comment about the level of integration (i.e. was data from the talent management process, the HRMS, and the financial system all integrated for workforce or process A leading practice is the integration of talent management processes with the system of record and the business intelligence environment. 19

24 analysis). CedarCrestone believes that integration across these processes and systems is a best practice. We recommend your organization work towards integration from the talent management processes to the system of record and to the business intelligence environment to achieve leading practice level. The table below shows the average self-reported level of best practice for those with each related application against those without, along with the average sales per employee, which in all cases is higher. Figure 18: Talent Management Best Practices Talent Management Best Practices Level With Level Without Recruiting. Job candidates are sourced through multiple channels (internet job boards, referrals, and social networking tools). Workflow manages on-boarding, notification of performance review, and off-boarding processes into the system of record. Hiring managers conduct 90-day review and results are used to assess quality of hire. Automated screening of internal and external candidates is supported. Performance management. Performance management process is able to identify and reinforce successful behavior and flag unproductive performance. Goal setting process is automated. Competencies have been identified for key positions and competency levels are assessed for use in planning, training, and development. Data in the HRMS, financial system, and all talent management applications is available along with performance appraisal results so that analysis on worker performance is possible. High performing employees are identified for succession planning initiatives. Learning management. Learning management system manages all aspects of learning: training, on-the-job learning, content, and training administration with results managed into the system of record and available to other talent processes. Learning and development programs align with goals and objectives. Skills and competencies needed both today and in the future are evaluated and learning and training opportunities to close any gaps, especially in critical areas where employees lack skills or knowledge, are available. Training and development opportunities are available to employees from performance appraisal results. Return on investment (ROI) is measured through trainee satisfaction, increased knowledge, changes in on-the-job performance, and organizational results of training. Career development/succession management. Links performance plans to development/career plans and rewards so that employees can monitor and track their progress against results. Organization provides succession planning and leadership development initiatives for high-performing employees and supports employees at all levels with career exploration and development. Compensation management. Compensation programs build a competitive edge for recruiting and retaining a high-performing workforce. Performance that supports and meets organizational goals is linked to pay. Salary planning process uses workflow and rules-based approvals into the system of record and across talent management processes. Employees and managers can view salary history, compensation-related metrics, and timelines for compensation planning. A Total Rewards philosophy is promoted whereby employees understand and value cash and non-cash incentives (including salary, bonuses, stock options, benefits, employee development and career planning, and work environment). 3.5 Sales per Employee $519, Sales per Employee $495, Sales per Employee $533, Sales per Employee $673, Sales per Employee $512, Sales per Employee $464, Sales per Employee $456, Sales per Employee $472, Sales per Employee $467, Sales per Employee $491,025 20

25 Talent Management Best Practices Level With Level Without Talent analytics. Employees and managers are supported with automated tools to manage their competencies. Competencies are then assessed and can be used in planning, recruiting, development, and compensation activities. Reporting and analysis tools to support analyzing talent management processes and success rates are available and ideally used by line managers. Able to analyze worker performance with data integrated from HRMS, financial, and customer-facing data to constantly fine tune recruiting, development, and retention programs. Able to measure ROI based on impact on the organization, not just HR, in all areas of talent management through an integrated view of the various talent management processes. 3.6 Sales per Employee $546, Sales per Employee $345,206 Business Intelligence/Workforce Optimization We began tracking business intelligence technologies five years ago and its growth is the strongest of all categories today. We see there is a toolkit of business intelligence technologies that are needed to ultimately deliver workforce analytics and enable organizations to manage with metrics. This year, we have split out the actual analytics components into a category called Workforce Optimization. Application usage charts are available at Overall adoption numbers for HR-oriented business intelligence ffoundation have not risen substantially since However, we see increased use in large and medium-sized organizations, but not at the same high level in small organizations. Warehouse. A warehouse to offload reporting from transactional systems that include both HR specific and enterprise warehouses fine-tuned for HR. Some form of reporting and presentation including simple management reporting, ad hoc reporting, operational reporting, multidimensional reporting, HR or enterprise scorecard or dashboard, and simply presenting metrics on a portal. Technologies. CedarCrestone tracks middleware that handles the extract, transform, and load from data sources to presentation approaches, along with push technology. Analytics. Still the domain of early adopters, usage of this category increased over 50%. Workforce optimization applications is a category of technologies and associated practices that allow organizations to determine and execute the best course of action for new or predicted workforce challenges to strategies and goals that impact an organization s business strategy. They are being adopted and used regardless of whether the organization has institutionalized the foundational BI technologies. Since the category is new, there are no market leaders for workforce optimization solutions. We see Cognos/IBM, Oracle/Hyperion and SAP/Business Objects used as well as some use of Inform (previously Infohrm and now a part of SuccessFactors), Aruspex, Nakisa, Human Concepts, Aquire, ethority, and MicroStrategy being used as effective solutions. The solutions of these vendors provide one or more of the workforce optimization and underlying BI infrastructure applications. The specific applications we currently cover in our survey and their adoption level include these: Labor budgeting: tool that supports labor cost estimating based on forecasted sales or tasks; adoption is c urrently at 27% Workforce analytics: separate solution not embedded in other application; adoption is currently at 22% 21

26 Workforce planning: applications to help create planning scenarios that balance acquisition, development, and retention to meet current and future strategic needs; adoption is currently at 18% Predictive analytics: adoption is currently at 15% (we find no common definitions agreed upon today) Mobile analytics: adoption is currently at 7% (we find no common definitions agreed upon today) Vendors Earlier in Figure 13: Talent Management and Business Intelligence Application Vendor Adoption, we showed the outlook for this category. The leaders are Cognos/IBM, Oracle/Hyperion and SAP/Business Objects with all growing smartly in adoption since 2009 and the latter two will continue to add new customers. The Other category is where vendors mentioned earlier are more often used for workforce planning: Aquire, Aruspex, Human Concepts, Inform and Nakisa; or for workforce analytics: ethority and MicroStrategy. Value Proposition We have just published a comprehensive analysis of usage of these technologies for the IHRIM organization and refer readers to that article. 1 To briefly summarize our research, we identified a subset of large organizations with an average number of employees over 50,000 that 1) identified their level of talent analytics at a high level of practice, and 2) use almost all of the workforce optimization technologies. These organizations are also characterized by a higher level of adoption of talent management applications. Finally, they also have substantially higher staff dedicated to workforce planning and reporting than those not at the high level of practice. This combination of high automation and high staff gives additional credence to our Financial Services industry discussion above. The definition of the leading practice of talent analytics includes: Employees and managers are supported with automated tools to manage their competencies Competencies are used in planning, recruiting, development, and compensation activities. Reporting and analysis tools to support analyzing talent management processes are available and ideally used directly by line managers. Managers are able to analyze worker performance with integrated data from the HRMS, financial, and customer-facing data to constantly fine-tune recruiting, development, and retention programs. The organization is able to measure ROI based on the impact on the organization, not just HR, in all areas of talent management through an integrated view of the various talent management processes. The value proposition is that organizations adopting workforce optimization technologies deliver strong results across all financial metrics as shown in Figure 19. The conclusion of that article is that workforce optimization technologies workforce planning, workforce analytics, predictive analytics and the others are now the mark of organizations at the very leading edge. It is the new mark of excellence in organizations and adoption is a leading practice. Adoption of workforce optimization technologies and underlying processes are the new leading practice. 1 IHRIM Wire, September, 2010: 22

27 Figure 19: Top Level Talent Analytics* Organizations Outperform Two Key Growth Indicators Key Productivity Indicator Higher level of talent analytics best practice Lower level of talent analytics best practice 29% $546,534 5% 11% 3% $345,206 Net Income Growth Sales Growth Sales per Employee * Talent Analytics organizations identified by an analysis of level of best practices at all Large respondent organizations Social Networking Organizations are increasingly allowing social tools to be used by individuals with LinkedIn being, by far, the most strongly allowed at 42% up from just 9% in But allowing the set of social tools to be used by individuals is not the same as the organization using social networking in a programmatic way that addresses organizational issues and provides value to the organization. These social tools, or as they are increasingly being called, collaborative applications, do just that: support the organization both internally and externally to recruit and brand, to enable collaboration on processes and projects, and to extend service delivery. While social networking at an organizational level is still the domain of early adopters as evidenced by Figure 20, it has grown from 13% adoption in 2009 to 21% among our respondents in Figure 20: Corporate Social Network Use % of respondents Social network in use Yes Evaluating No While use of the various social tools also grew, there is very little differentiation in what is used at the organizational level as shown in Figure 21 defined by organization use. The blue line in the figure that follows surrounds the huge potential for continued adoption and evolution of social tools. There is still substantial growth ahead as organizations move from just allowing use by individuals or evaluating them, to true organizational use. Given that so many of the talent management or even HRMS solutions are now being designed to embrace collaborative 23

28 processes, such as collaborative recruiting spanning applicants, hiring managers, and internal reviewers; collaborative talent reviewing spanning the operational manager, the employee, and HR; or collaborative intelligence connecting the right decision makers to metrics in need of action, it is only a matter of time before collaborative applications at the organization level become significantly more prevalent. Figure 21: Social Tool Use and Plans % of respondents Wikis and other collaboration tools Secure instant message Internal blogs Facebook LinkedIn Twitter External blogs Organizational use Allowed for individual use Evaluating No plans/not allowed For extending recruiting branding, collaboration or service delivery Value Proposition It is the organization use that we see as contributing value to the enterprise. Last year, we showed that early adopters had higher financial metrics than those not yet adopting and we see the same this year. It is interesting that the huge difference is on net income growth. We believe we are seeing potential results that collaboration is greater in these organizations, supported With social networking, collaboration is greater resulting in lower costs and the organization is able to be more agile and responsive. by social tools, which results in lower costs for collaboration. Further we think that recruiting, branding, and service delivery, which are mostly internal costs, are also most likely being reduced. The impact on sales is ultimately to enable the organization to be more agile and responsive to changing market dynamics through use of collaborative applications wherever possible. 24

29 Figure 22: Corporate Social Network Adoption Linked to Higher Financial Performance Two Key Growth Indicators Key Productivity Indicator With corporate social network Without corporate social network 54% $524,813 $492,090-4% -5% -6% Net Income Growth Sales Growth Sales per Employee Service-Oriented Architecture (SOA) Middleware Organizations have begun to plan for and use SOA middleware to automate business processes (21% of 2010 survey respondents, up from 10% last year). Figure 23: Plans to Implement SOA Middleware % of respondents 21 Our definition of SOA in the survey was solutions such as Oracle s Fusion middleware that can replace or enhance inter-system communications and integration points. At CedarCrestone, we simply define SOA as a way of integrating disparate software systems, applications and processes so they communicate seamlessly. Plans The early adopter industry, financial services, is the one reporting No plans it is beginning to use SOA for actual core processes such as banking services. Hospitality industry leaders are using SOA for their reservation processes. We are seeing more organizations using SOA 79 for integrating data for business intelligence and to/from core HCM from/to a myriad of vendors to integrate talent management processes. The most mentioned HR processes addressed by SOA continue to be on boarding and provisioning, with other activities such as security access, terminations and other work life processes like leave of absence. We recommend that the adoption of SOA should be on everyone s planning horizon. To determine where it fits, it s important to remember SOA s sweet spot is in the remediation of key and perhaps emerging business 25

30 processes that have one or more of the following characteristics: they cross applications or systems, they may have multiple handoffs, there are data consistency requirements, typically there are complex business rules that may even change and that can be supported by workflow, there may be unstructured and structured data, and high volumes and/or high perceived value to the organization. The adoption of SOA middleware should be on every organization s planning horizon. Fusion We also asked respondents about their plans for Fusion applications. As of the May July, 2010 timeframe, 20% of Oracle customers reported they have plans. Now that Fusion applications are concretely announced, we expect this area to change rapidly. Going Global Among respondents from global organizations, defined as those operating in countries outside their headquarters location, 31% are spending time on a global initiative and 22% are spending budget, up from 23% and 19% respectively in CedarCrestone will again publish a research paper to update the one done from 2008 HR Systems Survey data. 2 For the 2010 research, we again asked respondents to characterize their global organization model type, using the same model developed by Bartlett and Ghoshal 3 that we did in Preliminary highlights from our survey data are summarized in the figure that follows. 2 Martin, Lexy and Karen Beaman, Leveraging HR Technology: From Global Savings to Transnational Value. This paper, authored by CedarCrestone and Jeitosa Group was originally published by the IHRIM Journal, 2009 Volume XIII, Number 3. It was further expanded and is available at 3 Bartlett, Christopher and Sumantra Ghoshal. Managing Across Borders: The Transnational Solution. Harvard Business School Press

31 Figure 24: Global Highlights Focused on responsiveness. Highly decentralized with power and control held locally. Focused on efficiency. Highly centralized and standardized; decision made at corporate. Multinationals 26% Average employee count 68,416 Average HR/employee ratio 191 Average application count 15 Globals 38% Average employee count 28,444 Average HR/employee ratio 116 Average application count 18 Average number HRMS 3.5 Average number HRMS 2.6 Workforce managed on single HRMS 73% Workforce managed on single HRMS 93% Workforce paid from single payroll 71% Workforce paid from single payroll 76% Focused on learning and sharing. Moderately centralized. Focused on efficiency, flexibility, and learning; combining aspects of all other types. Internationals 20% Average employee count 21,171 Average HR/employee ratio 114 Average application count 17 Transnationals 16% Average employee count 34,224 Average HR/employee ratio 91 Average application count 18 Average number HRMS 2.5 Average number HRMS 2.8 Workforce managed on single HRMS 82% Workforce managed on single HRMS 81% Workforce paid from single payroll 81% Workforce paid from single payroll 78% We invite readers interested in further benchmark data to contact us as soon as possible so we can tailor or report to meet your needs. Contact Expenditures Given the complexity of so many aspects of HR technologies, the most difficult analysis we do each year is to compare expenditures across major deployment types and truly get an apples-to-apples comparison. This is an area where we get the fewest responses: only 318. When we started the survey, most everyone was licensing software and running it on premise. Organizations are no longer doing the same things. Not everyone is yet doing self service. Not everyone is doing payroll or benefits administration in the same way (licensed on premise vs. outsourced, for example). Today, we are seeing more SaaS, certainly among the talent management applications. It is also important to consider the organization size and aspired-to service delivery model (i.e. shared services, global, etc.). 27

32 With these caveats, Figure 25 shows the per person expenditures for the average Figure 25: HR Technology Expenditures Overall Per employee in Large employers (n=77)* large employer with over approximately HR Technology Current Year Next Year 50,000 employees based on 77 respondent Core HRMS $82 $96 organizations. We have attempted to Payroll $39 $35 provide a true comparison of solution set. Most of these respondents have a licensed on premise HRMS. Among those, Oracle customers pay less than customers of other ERP-based solutions. Only 10% of the organizations are either legacy solutions Benefits Administration Workforce Management Talent Management and Business Intelligence Total *Average number of employees = 50,010 $32 $35 $60 $32 $37 $68 or have an outsourced deployment model. Only one respondent has a SaaS deployment for its HRMS. After validation with the respondent and discussion with the SaaS provider, we determined we have an unusually high first year implementation cost, so we eliminated its numbers. Looking at the Medium and Smaller organizations, we see more SaaS usage for all components. SaaS appears to cost less than licensed on premise once past the first year implementation. Hosted and outsourced models pay about the same, but outsourced costs vary by components included. It is important to compare your organization s current and planned budget to others with similar headcount, services delivered and service delivery approach (self service only or with shared services, for example), the mix of deployment options, and even the vendor choice. Conclusions and Recommendations An Observation on Future HR Technology Adoption Last year we cautioned the vendor community that we saw a softening in the incremental adoption for At the overall level that has been the case, and we attribute this to the fact we have more small organizations. The large and medium-sized organizations, however, continued their application adoption. But, we continue to forecast for the vendor community that sales will become more difficult going forward. In this business climate, vendors must show prospects the value they can expect and help them make their business case. The large and medium-sized organizations without automation represent a late adopter stance and need to be shown the value. The smaller organizations do not have budget. 28

33 Priority Checklist The following key applications consistently show the highest value and therefore must be considered for use within your organizations. The HR help desk is a must when you move to shared services. It has consistently been in place at organizations with a best-practice level of employees served by HR. If not already adopted, it must be considered for removing unnecessary costs from HR service delivery, particularly in large and mediumsized organizations. Competency management is at the heart of any integrated talent management strategy. Providing some way to facilitate employees or managers to identify strategic competencies and manage them is the foundation for best practice talent management. Career development and supporting your employees to be the best they can be differentiated those adopters with the highest financial performance. An ERP-based talent management solution also links to higher financial metrics and has the lowest total cost of ownership today. CedarCrestone is an Oracle partner so we are biased. However, we see that sticking to an integrated solution from core HR record keeping throughout talent management that includes business intelligence and integrates with other ERP-based solutions delivers the lowest total cost of ownership. Foundational business intelligence requires a toolkit to be able to manage with metrics and achieve performance excellence. Deploying analytics and planning applications to support workforce optimization is practiced by those at the leading edge of our community. Organizations that have adopted these technologies and the underlying practices are ahead of others financially and competitively. Social networking continued to show promise. We live and work in a social network and organizations that have corporate collaborative applications are showing great results. Service-Oriented Architecture (SOA) middleware should be on everyone s planning roadmap. We close with a brief word on change management. We are speaking to the choir in our community on the need for this critical success factor. We see this in practice at all leading edge organizations. To embrace any new technology, it is critical to start from a business need, ensure the organization is ready for change, convey the value of what s in it for me to every involved stakeholder for whatever you are implementing, provide training if not on the technology then on the process changes, and even do the little things: business process documentation, job aids, and user guides. 29

34 About CedarCrestone CedarCrestone delivers industry-focused client success by providing consulting, technical, and managed services for the deployment, management, and optimization of ERP solutions. Corporate Office 1255 Alderman Drive Alpharetta, Georgia w w w.cedarcrestone.com

35 CedarCrestone HR Systems Survey: HR Technologies, Service Delivery Approaches, and Metrics 13 th Annual Edition