Magic Quadrant for Employee Performance Management Software

Transcription

1 Research Publication Date: 28 March 2011 ID Number: G Magic Quadrant for Employee Performance Management Software James Holincheck, Thomas Otter, Jeff Freyermuth The market for employee performance management software continues to grow, despite economic challenges. New releases from ERP and HR management system vendors increase the competition with emerging talent management suite providers. Leaders continue to prosper, but market consolidation continues Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner's Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity" on its website,

2 WHAT YOU NEED TO KNOW Employee performance management (EPM) software includes performance, succession and compensation management capabilities. It is a segment of a broader, emerging talent management suite (which includes workforce planning, talent acquisition/e-recruitment and learning solutions, in addition to EPM) market. Integrated EPM deployments continue to grow, and customers are increasingly implementing EPM solutions enterprisewide. Through our analysis, we have identified several market leaders Halogen Software, StepStone Solutions, SuccessFactors, Taleo, Plateau and Cornerstone OnDemand. However, the market remains dynamic, and many promising vendors have good solutions. MAGIC QUADRANT Figure 1. Magic Quadrant for Employee Performance Management Software Source: Gartner (March 2011) Market Overview The EPM software market is a subset of the emerging talent management application suite market (see "Talent Management Application Suites Can Enhance Workforce Effectiveness"), which is a subset of the broader human capital management (HCM) software market (see "ERP, SCM and CRM: Suites Define the Packaged Application Market" for more information on the different levels of suites). Publication Date: 28 March 2011/ID Number: G Page 2 of 30

3 Gartner estimates that the market for EPM software was approximately $970 million in 2009, down slightly from $979 million in 2008 (see Note 1). Even in the down economy, some vendors grew their EPM software revenue more than 25%. SuccessFactors continues to be the clear market share leader. During client inquiries, we found that customers typically want to buy new EPM solutions to automate their EPM processes, improve the linkage between pay and performance, help support the development of the next generation of leaders in the organization, and/or improve employee/associate retention (and engagement). As part of the research for this Magic Quadrant, we surveyed 109 customers (primarily from North America and Europe) that use EPM solutions from the vendors evaluated. We asked the customers how successful their EPM implementations had been at meeting those objectives on a scale of 1 to 7, with 1 being "Not at All Successful" and 7 being "Completely Successful." The following shows the mean of the respondent pool that had that objective: Automate EPM processes = 5.99 out of 7 Improve linkage between pay and performance = 5.59 out of 7 Develop next generation of leaders in the organization = 5.41 out of 7 Improve employee/associate retention = 5.42 out of 7 Other = 6.11 out of 7 The answers in the "Other" category ranged from global consistency to employee engagement to identifying talent gaps. It is not surprising that customers felt that they were the most successful in automating EPM processes it is the easiest benefit to achieve, as well as the most common we find in our inquiries. The other benefits are harder to achieve. In addition, EPM applications are delivered as "empty shells." That is, the benefits you derive are based on how you use them and what inputs go in. If you do not have the right goals and objectives or the right competencies defined, for example, then you will not achieve desired business outcomes (garbage in equals garbage out). It is as important to have the right content driving the system as it is to have good process design. We found that 59% of customers surveyed used at least performance and succession management from the same vendor, up from 46% from the 2009 Magic Quadrant customer reference survey. In addition, we found that 37% used performance and compensation management from the same vendor, up from 31% in our previous survey. It is not surprising to see a lower percentage use of performance and compensation management. We found that almost 64% of customers had different vendors (or no packaged solution for one or the other) for performance and compensation management. We believe that this is due to the minimal integration requirements to do some level of linking pay with performance. Many organizations only integrate overall performance ratings from the performance appraisal with compensation management. However, those organizations are missing out on the opportunity to directly tie rewards to goal achievement. As organizations more finely tune their pay-for-performance programs over time, we expect to see more and more granular integration between performance and compensation management. As customers solve the challenges above (automating EPM processes, improving the ability to link pay to performance and other issues), we expect the focus to shift over the next five years to leveraging talent data to make better decisions about worker-related programs and investments (see "Unlocking the Strategic Value From Talent Management Application Investments" for more information). Publication Date: 28 March 2011/ID Number: G Page 3 of 30

4 EPM Suite Adoption/Talent Management Suite Impact In the previous Magic Quadrant, we noted that EPM suite use is not uncommon. We had found that approximately 20% of the customer references surveyed had used both of the following: Performance, compensation and succession management from one vendor Performance, succession and learning management from one vendor In the customer reference survey for this year's research, we found that suite usage had gone up to approximately: 26% for performance, compensation and succession management from one vendor 22% for performance, succession and learning management from one vendor We found that the almost 56% of customers surveyed were using three of the five talent management applications (recruiting, performance, succession, compensation and learning) from a single vendor. Customers continue to adopt broader "minisuites." However, more comprehensive use of talent management suites is becoming more common. More than 21% of the customer references surveyed for this research used four of the five talent management applications from one vendor. Full talent management suite adoption is still limited; less than 4% of the surveyed customers used recruiting, performance appraisal/assessment, succession management, compensation management and learning from one vendor. These results show that the depth and breadth of talent management suite offerings is improving, and that customers increasingly want to work with fewer providers to ease integration and analytics, and simplify vendor management requirements. Software-as-a-Service Use Our vendor survey for the previous Magic Quadrant showed the percentage of customers using software as a service (SaaS; see "Essential SaaS Overview and 2010 Guide to SaaS Research" for the Gartner definition of SaaS) at almost 50%. For this year's Magic Quadrant, vendors reported 62% of customers using SaaS. Interestingly, the vendors also reported another 3% of customers being externally hosted. On-premises implementations were reported at 35% of customers by the vendors. This is an increase from approximately 25%. What has decreased significantly is the percent of customers externally hosted. To corroborate the vendor claims, we also look at what customer references tell us about their delivery model usage. This tells quite a different story. On-premises implementations were still approximately 35%, but customer references reported about 32% as SaaS and about 28% as externally hosted. In previous research, the results had actually been close enough between vendor and customer responses that we felt comfortable reporting the vendor numbers without additional elaboration. However, for this Magic Quadrant, the difference was quite stark. We believe customers are becoming savvy in understanding the differences between SaaS and externally hosted solutions. In addition, we believe that some vendors are calling hosted applications SaaS that are not really SaaS. Regardless, market acceptance of externally hosted (via SaaS or one-off application hosting) continues to grow for EPM solutions, because these applications are well-suited to the model (less-stringent uptime requirements and broad organizational use), and there is now a critical mass of customers of all sizes deploying this way. However, we still find that SaaS use of EPM solutions in certain industries (for example, in the public sector) is limited, primarily because of a lack of focus by vendors on meeting industryspecific functional and technical requirements. Technology Trends Publication Date: 28 March 2011/ID Number: G Page 4 of 30

5 With the proliferation of smartphones and the burgeoning interest in tablet computers, we have started to see more vendors emphasize mobile and context-aware computing options for their EPM (and broader talent management) solutions. We have not seen customers in our inquiries include mobile as a key requirement for EPM solutions, but we do expect it to increase over the next 12 to 24 months. We continue to see vendors integrate social capabilities into their EPM solutions. There is still a big opportunity to integrate talent profile data that exists within EPM (and broader talent management solutions) with social profile data to enable a richer view. Since the last Magic Quadrant, we have seen new product introductions (like Saba Impressions) and acquisitions, such as SuccessFactors' acquisition of CubeTree (see "SuccessFactors to Go 'Social' by Acquiring CubeTree"), potentially accelerate this trend. In the last Magic Quadrant, we reported that the biggest technology trend in EPM was in the user experience. Many EPM vendors have gone through user experience modernization efforts. It is still important because ease of use is an important factor in employee and manager adoption of EPM solutions. However, the biggest technology trend in this Magic Quadrant is around reporting and analysis. This is a good thing, as our customer references surveyed showed again that reporting was still relatively challenging for many of them (it had a mean score of 4.65 on a seven point scale, ranging from completely dissatisfied to completely satisfied). SuccessFactors' acquisition of Inform Business Impact (see "Acquisition of Inform Will Shake Up Workforce Analytics Market"), and the emphasis given to analytics by other vendors such as Taleo and Peopleclick Authoria (as well as its partner Mercer), will push improved analytics based on EPM data into the market. Market Consolidation Mergers and acquisitions have continued apace since the last Magic Quadrant. Private equity firms have been a major driver of this trend. Vista Equity Partners acquired SumTotal Systems (see "SumTotal Bidding War Signals Change, but Clients Shouldn't Panic"). Bedford Funding acquired Peopleclick and merged with Authoria to create Peopleclick Authoria (see "Creation of Peopleclick Authoria Bolsters Bedford's TMS Portfolio"). HgCapital acquired StepStone Solutions, which recently acquired MrTed (see "HgCapital Enters HCM Market With StepStone Acquisition Deal"). Other vendors certainly have been in the mix as well. ADP acquired Workscape (see "ADP to Expand Benefits Outsourcing With Workscape Buy"), Taleo acquired Learn.com(see "Taleo's Buy of Learn.com Extends Taleo's Talent Management Suite"), Kenexa acquired Salary.com, and SumTotal acquired Softscape and GeoLearning (see "SumTotal Dives Deeper Into Talent Management With Softscape Deal" and "Corporate Learning Market Consolidates as SumTotal Buys GeoLearning"). The recent economic challenges continue to put pressure on smaller vendors. We expect to see more acquisitions during the next 12 months, as vendors with a stronger financial position look to buy additional market share, or fill out their talent management suites. Customers should continue to put the appropriate contract protections (see "BEA Customers Should Seek Contractual Protections Before Acquisition by Oracle") in place so that they have the most flexibility if there is a change in ownership control, including: Assumption of any existing contract obligations Lock-in of any pricing/discounting Guaranteed product support for a specific period of time Lock-in of maintenance/subscription pricing, entitlements and caps Publication Date: 28 March 2011/ID Number: G Page 5 of 30

6 Source code in escrow (if possible) even for SaaS contract Allowing changes to license agreement terms and conditions through an addendum signed by both parties SaaS customers should take extra precautions, such as ensuring that they receive a regular backup of data, because if a SaaS vendor fails (or runs into cash flow problems), then access to the service could get cut off (see "SaaS Contracting Guide: Avoid Costly Mistakes" for more information). Market Definition/Description Gartner defines the market for EPM solutions as one that encompasses the following functionality: Performance appraisal and assessment Goal and objective management Competency management Performance appraisal management 90-degree to 360-degree assessment management Multirater feedback Developmental planning Career path management Calibration Succession management Employee profile management Visualization (organization charting, 9-box grid and others) Talent pool management Succession planning Talent review/assessment Impact analysis Compensation management Plan/program administration Guideline/pay practice administration Budgeting Planning (support for merit increases, bonus and stock allocation, and others not complex incentive compensation) Coaching Publication Date: 28 March 2011/ID Number: G Page 6 of 30

7 Pay-for-performance support Inclusion and Exclusion Criteria The inclusion criteria for this Magic Quadrant are: Or Added At least 25 production customers (live, with more than 1,000 employees) for at least two of the three categories: performance management, succession management and compensation management Have at least 10 production customers (live, with more than 1,000 employees) for at least two of the three categories: performance management, succession management and compensation management, and have more than $30 million in total revenue Jobpartners TalentSoft Umantis Other Vendors to Watch The following vendors did not meet the inclusion criteria for this Magic Quadrant, but we list these vendors here because each has specific capabilities worth considering: ADP: It resells Cornerstone OnDemand's learning, performance and succession management solutions to its National Accounts division customers (U.S.-based organizations with greater than 1,000 employees and global organizations). In addition, it recently agreed to acquire Workscape and its compensation management solution (see "ADP to Expand Benefits Outsourcing With Workscape Buy"). CadreHR: Its solution Decusoft includes both market data analysis tools and manager self-service compensation planning. Customers looking for both types of compensation solutions should consider CadreHR. Cytiva: It is best known for its recruiting solution, SonicRecruit, but now offers a performance appraisal/competency assessment solution called SonicPerform. Organizations considering integrated recruiting and performance solutions should consider Cytiva. HCR Software: It offers CompensationXL, a Microsoft Excel-based compensation planning solution. In addition, it offers a performance management solution called PerformanceXL. We have seen HCR Software considered by a number of clients for stand-alone compensation management, but it can be considered as a broader pay-forperformance offering as well. HRN Management Group: Its solutions Performance Pro, Compease, and Incentease are geared to small or midsize businesses looking for performance appraisal, competency assessment and compensation management capabilities. Infor: One of the largest ERP vendors, Infor offers a number of HR management system (HRMS) solutions. The company also offers performance and learning Publication Date: 28 March 2011/ID Number: G Page 7 of 30

8 management solutions (from its acquisition of Boniva Software/SSA Global). Infor customers should consider this offering as an extension of their existing investments. Lawson: Lawson Talent Management (LTM) encompasses a global HR database with integrated talent management applications (including EPM). It is most appropriate for North American and Western European customers who want a global HR repository with integrated talent management applications. Mercer: It recently started to offer Human Capital Connect. The solution combines technology provided by Peopleclick Authoria and intellectual property and services from Mercer. Intellectual property provided by Mercer includes role profiles, competency models, decision guides, and dashboards and analytics. It is best suited for global organizations that want one-stop shopping for their EPM software, content and services. MidlandHR: itrent is best-suited for U.K.-based organizations wanting core HRMS capabilities and talent management as an integrated suite. NorthgateArinso: Based in the U.K., NorthgateArinso has two main product lines: euhreka and ResourceLink. The euhreka solution is the platform it uses to provide multinational HR business process outsourcing (BPO) services and is based on SAP ERP HCM (with a different user interface). It provides support for the full range of delivery models, including SaaS. The euhreka solution includes EPM as part of a broader HCM solution, and includes all of SAP's capabilities in this area. ResourceLink is an HCM solution that is primarily sold in the U.K. and Australia, and most recently the U.S. ResourceLink includes basic EPM functionality as part of the broader solution. NuView Systems: NuView offers core HRMS solutions with integrated talent management applications (including EPM). Midsize to large U.S.-based organizations that want an integrated HCM solution that includes core HRMS and EPM could consider NuView. Organisation Metrics: Canada-based Organisation Metrics offers a suite of talent management applications that includes workforce planning, e-recruitment, performance management, succession management and compensation management. The company has more than 20 customers in more than 130 countries. North America-based multinational organizations can consider Organisation Metrics for their EPM needs. PageUp People: Based in Australia, PageUp People is best suited to multinational organizations wanting EPM solutions focused on development (learning, performance and succession management) and recruiting. Personal & Informatik: Based in Germany, P&I's Loga solution is an integrated HCM solution that includes basic EPM capabilities and is best suited to midsize Europeanbased organizations. PeopleStreme: Based in Australia, this company has a strong position in the Australian market, and is expanding globally. PeopleStreme has a full suite of talent management applications (including EPM), and has a strong service offering. Asia/Pacific-based (especially in Australia and New Zealand) organizations could consider PeopleStreme for EPM solutions. SHL: SHL differentiates itself not by providing the process automation tools for EPM, but by delivering objective testing and assessment into EPM. SHL has partnerships with many leading EPM providers. Consider SHL when you need a strong combination of assessment content and services. Publication Date: 28 March 2011/ID Number: G Page 8 of 30

9 Dropped Sonar6: New Zealand-based Sonar6 has a highly innovative user interface for performance, development and succession planning. Customers wanting a leading-edge user experience should consider Sonar6. Ultimate Software: It is best known for its HRMS solutions. However, the company also offers integrated EPM solutions based on its acquisition of RTIX in Midsize to large U.S.- and Canada-based organizations seeking integrated HCM solutions that include core HRMS and EPM can consider Ultimate Software. Workday: It is best-suited for multinational organizations that want a SaaS-delivered integrated solution for core HRMS and EPM (see "Workday 10 for Human Capital Management Is Emerging as a Global Alternative"). Learn.com Though it offers solutions for EPM, it changed its strategy to partner primarily with Taleo in EPM, and recently Taleo acquired Learn.com. Taleo is not offering the Learn.com solution for EPM (just for learning). Pilat HR Solutions It did not meet the inclusion criteria for the research this year, but large North American and European enterprises that want a combination of software and services (including strategic consulting) where the vendor is willing to tailor the solution to customer-specific needs (Pilat indicates that it will guarantee upward compatibility with new releases) should consider Pilat. Towers Watson (formerly Watson Wyatt) With the merger of Towers Perrin, Watson Wyatt is no longer an independent entity. It did not meet the inclusion criteria this year, but still offers a strong compensation management (and good performance and succession management) capabilities. However, prospective customers should ensure they understand Towers Watson's product road map for its Talent Reward Suite. Workscape It did not meet the inclusion criteria this year and has agreed to be acquired by ADP (see the ADP section above). Workstream It did not meet the inclusion criteria this year, but it recently has undergone a recapitalization and brought on a new CEO. It has competitive EPM functionality (especially in compensation management); however, its financial condition still has risk for customers and prospects. Evaluation Criteria Ability to Execute Gartner analysts evaluate technology providers on not only their product/service capabilities and viability (both as an organization and for the product line itself), but also how well they execute on other aspects of their business, such sales, marketing and customer experience (see Table 1). Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria Product/Service Overall Viability (Business Unit, Financial, Strategy, Organization) Sales Execution/Pricing Weighting high high standard Publication Date: 28 March 2011/ID Number: G Page 9 of 30

10 Evaluation Criteria Market Responsiveness and Track Record Marketing Execution Customer Experience Operations Source: Gartner (March 2011) Weighting standard standard high low Completeness of Vision Gartner analysts evaluate technology providers on more than just their EPM product strategies. They also focus on their sales, marketing and service strategies, as well as the technology provider's vision for EPM market segmentation by geography and vertical market. Finally, Gartner analysts look at innovation, both in solutions and business models (see Table 2). Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Source: Gartner (March 2011) Leaders Weighting standard standard standard high standard low standard high Leaders have strong product functionality and, often, provide superior customer experience. In addition, these vendors have strong direct sales and/or channel sales capabilities. Leading vendors also have strong or emerging multinational solutions (with corresponding service and support). Challengers Challengers have good product and service capabilities, along with a solid financial position. However, these vendors have generally been followers in functionality, user experience and other key developments in the EPM market. Visionaries Visionaries have been advanced in promoting the latest trends (for example, social software integration, talent management suites and SaaS),driving EPM solutions. Niche Players Niche Players have good, but not necessarily comprehensive, functionality. In some areas, they may be best in class; however, in others, they may not have the functionality, maturity or user Publication Date: 28 March 2011/ID Number: G Page 10 of 30

11 experience to be competitive with best-in-class vendors. In addition, Niche Players may not be growing their EPM business at the same rate as market leaders. Finally, some niche players may face financial challenges in competing long-term with leading or emerging vendors. Vendor and Cautions Cezanne Software Cezanne Software is headquartered in the U.K., with corporate management and R&D based in the U.K. and Italy. In February 2006, Cezanne merged with U.K.-based HRM Software. Cezanne offers an integrated talent management suite that includes e-recruitment, surveys, organization charting (through the HRM Software acquisition) and learning management, in addition to performance management, succession management and compensation management. Version 8 utilizes a Microsoft technology stack (Active Server Pages and SQL Server), but Cezanne continues to move to full.net support, along with reworking its user interface using Microsoft Silverlight (a change from previous plans to leverage Adobe Flex). In terms of architecture and user interface, Cezanne has been more of a follower of EPM market trends. Cezanne offers multiple delivery models, including perpetual license/on-premises implementation, perpetual license/hosting and SaaS. Cezanne is well-suited for Europe-based multinational organizations that want good, out-of-the-box functionality with the opportunity to customize. Cezanne offers its solutions beyond Europe, including via a partnership with the Hay Group and Sapien in the U.S. Cautions Cezanne has solid functionality across all EPM domains, with performance and compensation management being the strongest. Customers continue to indicate that product quality and system performance were better than average. In addition, customers felt that initial implementation and deployment was better than average. Cezanne has a strong alliance strategy. In addition to the Hay Group, it has a number of sales and distribution partners, including ADP-Byte, Mizar Informatica, Sapien, HR Management Software, Tecnasa, The Optimize Group, Gruppo Tekno, ADP and Cegedim SRH. Also, Cezanne partners with Deloitte (in Spain and Portugal) and Novabase (in Portugal). Compared with some other EPM vendors, Cezanne is smaller, and has had a lower growth rate. Cezanne was later to market with a SaaS solution, but revenue and customer usage continues to grow from this delivery model (50% of new business in 2010). Cezanne lags behind other vendors in modernizing its technical architecture, but it is progressing to an all-.net architecture with an improved user interface built with Silverlight. Cezanne's brand awareness is lower, when compared with other EPM vendors, based on our client inquiries and our customer reference survey data, so Cezanne needs to continue to improve its marketing strategy. Publication Date: 28 March 2011/ID Number: G Page 11 of 30

12 Customers indicated that the ability to customize, integration with other applications, reporting and documentation could be improved. In addition, customers felt that aftersales care could also be improved. Cornerstone OnDemand Cornerstone OnDemand, founded in 1999, is a privately held company based in Santa Monica, California. Cornerstone has operations in North America, Europe and Asia/Pacific. It offers a full set of EPM applications, as well as a full learning solution (see "Magic Quadrant for Corporate Learning Systems"), onboarding and corporate social networking solutions. Cornerstone's compensation management solution is new and has limited adoption by customers. Cornerstone is built using Microsoft technologies (Active Server Pages/.NET and SQL Server), and leverages Ajax for certain aspects of the user interface. Cornerstone offers its solutions exclusively through a SaaS model. Cornerstone has shown its suitability for large, global multinational customers in North America and Europe. In addition, its solution is used by small to midsize businesses. Cautions Its performance management and succession management functionality is best in class. The overall customer experience through the entire relationship life cycle continues to be better than average or best in class. The customer experience across all facets of the product experience was better than average. The vision for integrating corporate social networking with talent management (including EPM) is strong. Billings and booking growth was strong in 2010, despite the weak economy. The company has filed its S-1 for an initial public offering. Cornerstone has a strong partnering strategy. It has reseller agreements with ADP and Talent2 (in Australia). The ADP relationship is notable because it will allow Cornerstone to more easily sell to the midmarket, while focusing direct sales efforts on larger enterprises. Compensation management is a newer functionality module for Cornerstone. It is promising, but it is not quite as easy to configure as other solutions for more-complex, variable-compensation scenarios. Cornerstone's brand awareness has improved, but still lags somewhat compared with other leading EPM vendors based on our client inquiries and customer reference survey. The company needs to continue to execute well on its strategy to improve awareness, especially in its target vertical market. Halogen Software Halogen Software, founded in 2001, is a privately held vendor based in Ottawa, Canada. It sells directly in North America (it is opening a U.K. office in 2H11 to sell directly in Europe as well) and primarily through value-added resellers (VARs) in Western Europe and Asia/Pacific. Halogen offers a suite of talent management solutions that includes performance appraisal/assessment, succession management, compensation management, learning management and job description management. Halogen uses a Java EE platform, and supports Oracle and SQL Server databases. It offers multiple delivery model options for customers, including subscription license/hosted and subscription license/on-premises. Halogen indicates that approximately 70% Publication Date: 28 March 2011/ID Number: G Page 12 of 30

13 of customers are now externally hosted. Halogen is well-suited for global midsize to large enterprises (typically, 10,000 employees or fewer) that want very good overall functionality that is relatively inexpensive and easy to implement. Cautions HRsmart Halogen's performance appraisal/assessment and pool-based succession management functionality are very strong. Halogen has a strong industry strategy. Its first vertical market solutions for the healthcare and professional services industries have been successful. It also offers solutions for the financial services industries, manufacturing, hospitality, education and the public sector. Halogen's focus on ease of use to set up and implement its products makes it attractive to its target market of midsize to large enterprises. It has one of the largest EPM customer bases because of this focus. Halogen has provided data that indicates it has grown well during the down economy and continues to be cash flow positive. The overall customer experience through the entire relationship life cycle was better than average or best-in-class. The customer experience across all facets of the product experience was better than average, except for reporting, which continued to be considered average. Compensation management is adequate for matrix-based allocations (merit increases, bonuses and other allocations), but has little support for complex, variable-pay scenarios. Halogen continues to improve its global results (15% of revenue is now from outside North America, up from 11%). It needs to continue to execute on its strategy to leverage a broad array of resellers in different parts of the world to continue to grow its global presence. HRsmart, founded in 1999, is a privately held vendor based in Richardson, Texas. In addition, the company has offices in South America, Europe, the Middle East, India and Asia. HRsmart started in the e-recruitment market and now offers solutions that encompass much of the talent management suite, including performance management, career development, succession management, compensation management, learning management and offboarding. Version 11.3 leverages open-source technologies, including Linux, PHP and MySQL. HRsmart offers its solution via a subscription license and a hosted model. HRsmart is best-suited for global midsize to large enterprise customers (up to 25,000 employees, although the company does have some larger customers) that want very strong performance and succession management solutions integrated with recruiting. The company's performance and succession management functionality is very strong. Publication Date: 28 March 2011/ID Number: G Page 13 of 30

14 Cautions Jobpartners HRsmart has a comprehensive vision for an integrated talent management suite (including EPM). Version 11 also introduced a new user interface that streamlines the user experience. HRsmart's extension of its partnership with Monster to EPM will provide channel sales opportunities. HRsmart offers good value. Its product functionality, relative to price, is strong. In addition, innovations like a suggestion box in the application have been well-received by customers. Customers cite HRsmart's ability and willingness to customize as a strength. HRsmart is a smaller vendor that has limited resources, when compared with some other EPM vendors. However, it has provided data indicating that it has continued to grow revenue at a good pace given the economic conditions. HRsmart has an improved focus on vertical markets, but still does not have as deep a focus as other EPM vendors. HRsmart needs to improve its awareness in the EPM market to drive more net-new sales opportunities. However, its installed base in e-recruitment represents a good cross-sell opportunity. Founded in 2000, Jobpartners is privately held and headquartered in London. It has offices in Paris, Heidelberg, Utrecht, Krakow, Edinburgh, Barcelona and Bethesda, Maryland. Its Enterprise Edition EPM solutions include ActivePerformer (performance appraisals and competency assessments), ActivePlanner (career development and succession management) and ActiveRewarder (compensation management) delivered via SaaS. The solution is largely built using Java and XML open-source technologies. Jobpartners also offers an e-recruitment solution (ActiveRecruiter) in its Enterprise Edition. It has launched a solution dedicated to the small or midsize business market using the Force.com platform called Business Edition (which has ActiveRecruiter and ActivePerformer solutions to date). Jobpartners' Enterprise Edition solutions are well-suited to multinational organizations that want a talent management suite (including EPM) that requires strong workflow capabilities. It demonstrates flexible workflow and good configurability, especially for performance appraisals and succession management. It has a good vision for and execution on an integrated talent management application suite with the Enterprise Edition. Jobpartners is the first talent management vendor to build a suite, Business Edition, on Force.com the platform-as-a-service solution from salesforce.com. It has strong multinational capabilities, including handling multiple subsidiary requirements. Publication Date: 28 March 2011/ID Number: G Page 14 of 30

15 Cautions Kenexa Jobpartners is relatively well-known in Europe (especially in the U.K., the Netherlands, France and Germany), but it does not have a high degree of awareness globally. Its growth rate is slower than that of some leading EPM vendors. However, it had several wins (multinational customers with more than 50,000 employees) in the second half of Its strategy has not focused on specific industries as much as some competitors. Kenexa, founded in 1987, is a publicly traded company headquartered in Wayne, Pennsylvania and offers its EPM solutions globally. Kenexa has multiple product lines that encompass the spectrum of talent management applications. Some of these product lines have come through acquisitions (BrassRing and Webhire in e-recruitment, and, most recently, Salary.com). Kenexa is at a transition point. It offers CareerTracker, which is best-suited for North American and European midsize to large enterprises that want strong performance management functionality with good succession and compensation management. However, it is just bringing to market a new EPM solution as part of its next-generation integrated talent management suite (called Kenexa 2x), which encompasses recruiting (delivered), EPM and learning (no delivery time frame has been announced). In addition, it now owns Salary.com. Salary.com's TalentManager solution directly overlaps with Kenexa 2x Perform. Kenexa indicates that it intends to support both product lines, but what is less clear will be the relative level of investment. We expect that Kenexa will position Salary.com as its large enterprise solution for compensation management, where it is strongest and has the most adoption, much like it has positioned BrassRing in e-recruitment. Kenexa 2X Perform will be the choice for customers wanting a broader integrated EPM (or talent management) suite. Kenexa 2x Perform uses a Java EE platform and runs on the Oracle database. Kenexa offers 2x Perform as a SaaS-delivered solution. Cautions Performance management functionality is very strong in CareerTracker. New functionality, such as employee career path and talent book (a graphical metaphor for a talent profile), are promising in 2x Perform. The acquisition of Salary.com provides Kenexa with a strong compensation management offering. Kenexa's offering of software, content and services differentiates it in the market. It provides a full range of services, from strategy to program design to implementation. In addition, it offers content ranging from competency models to behavioral assessments. Kenexa's financial position is strong. It is profitable, with good liquidity and a positive cash flow. Kenexa's vision of an end-to-end, integrated talent management (including EPM) suite is strong with Kenexa 2x. Kenexa 2x Perform is the future. We expect Kenexa to support CareerTracker, but there will be little new development going forward as it focuses efforts on 2x. Few details are available yet about the requirements for Kenexa CareerTracker customers to migrate to Publication Date: 28 March 2011/ID Number: G Page 15 of 30

16 Kenexa 2x. Kenexa needs to provide a road map for how 2x Perform and Salary.com will coexist for EPM. The succession management and compensation management functionality in CareerTracker is good, but it is not best in class. Kenexa's overall brand awareness in HCM is strong, but it is lower in the EPM segment, compared with some other vendors based on our client inquiries and customer reference surveys. Kenexa's customers typically choose it for the combination of software and services. Overall customer satisfaction has been very good; however, as Kenexa grows in EPM, prospective customers should ensure that they vet the consulting resources proposed by Kenexa to ensure a good fit to need. Meta4 Meta4, founded in 1991, is privately held, with headquarters in Madrid. The company is bestknown for its core HRMS capabilities, but it also offers talent management applications, including e-recruitment, performance management, succession management, compensation management and learning. Meta4's PeopleNet v.7.2 uses an object-oriented architecture (leveraging common standards for connectivity, including XML, SOAP, Component Object Model [COM] and Open Database Connectivity [ODBC]), and the applications can run on Oracle and SQL Server. Meta4 continues to add rich Internet application (RIA) support to its solutions/products using Windows Presentation Foundation. Approximately 80% of Meta4's EPM customers implement the solution on-premises. However, Meta4 also offers options for hosting and for a subscription license (approximately 15% of customers have chosen a subscription license). Multinational customers in Europe, the U.S. and Latin/South America that want to purchase a core HRMS solution, along with EPM solutions, should consider Meta4. Cautions Performance, compensation and succession management functionality is very good. Meta4's technical architecture vision is strong (for example, object orientation, RIA and other innovations, such as desktop gadgets). Currently, RIA (Windows Presentation Foundation [WPF]) is being strengthened, and gadgets are still a work in progress. Customers highlighted the integration between EPM and the core HRMS as very strong. Meta4 grew revenue and was able to break even during the economic downturn. Meta4's EPM functionality can be implemented as a stand-alone, but most customers have implemented it in conjunction with the Meta4 HRMS solution. For Meta4 to expand the use of its EPM capabilities beyond its current and prospective HRMS customers, the company needs to build awareness of its stand-alone capabilities. Customer experience scores were a little lower for Meta4 in this evaluation compared with the previous Magic Quadrant. Meta4 needs to continue to evolve its product configurability and improve its implementation and ongoing support. Meta4 needs to continue to build awareness in the U.S. market. Publication Date: 28 March 2011/ID Number: G Page 16 of 30

17 Oracle EBS Oracle, founded in 1977, is publicly traded, with headquarters in Redwood Shores, California. Oracle offers a broad array of applications, as well as middleware and database technologies. Oracle E-Business Suite (EBS) is a comprehensive HCM suite that includes integrated talent management (including EPM) applications. Oracle EBS r.12.1 is built using a combination of Oracle Forms, an HTML framework and Java EE architecture. EBS r.12.1 runs on Oracle Fusion Midddleware and the Oracle database. Oracle offers EBS through a perpetual license. In addition, customers can choose to implement on-premises or have Oracle host the application (most customers implement on-premises). In addition, system integrator partners such as Kbace Technologies have started to offer SaaS versions of Oracle EBS (multitenancy support was also improved in 12.1). Existing customers that want to add very good performance and compensation management functionality should consider Oracle EBS r.12. In addition, global organizations that want to purchase a core HRMS with integrated EPM functionality should consider Oracle EBS. Cautions Performance and compensation management functionality is very good. Succession management functionality has improved in r Oracle added the ability to define critical jobs, create a succession plan and integrate with performance management. However, it needs to continue to improve its support for pool-based succession planning. Oracle's financial performance is strong. It is highly profitable, has demonstrated strong growth and generates very positive cash flow from operations. However, EPM represents a relatively small part of the business for the EBS product line. Customers cited integration within EPM and between the core HRMS and EPM as a key reason for purchase and as a strength. Oracle has good implementation partners that have driven successful implementations (most customer references used a third-party system integrator), including Deloitte, Kbace, Tata Consultancey Services (TCS) and Wipro Technologies. Oracle's EBS EPM functionality requires the customer to implement its HR and selfservice solutions. It would be challenging to use these solutions with a different core HRMS. Customers indicated that service and support were average (down somewhat from the last Magic Quadrant evaluation). In particular, training and documentation were cited as areas for improvement. Although Oracle's architecture is strong and has good multinational support, we have found few large-enterprise, global deployments. Oracle EBS has strong awareness in the ERP and core HRMS markets, but it struggles with its "EPM brand" outside compensation management. Oracle plans to release its next-generation product line, Fusion Applications, by 1Q11. It is unclear how this new product line will impact the future direction of Oracle EBS. We have seen some customers looking to adopt a coexistence strategy, with Fusion Talent Management applications (which include EPM capabilities) on top of the EBS core HRMS applications (see "Oracle Fusion Applications: A Mystery Resolved"). We expect Publication Date: 28 March 2011/ID Number: G Page 17 of 30

18 additional releases of EBS beyond 12.1, as well as family packs in the interim that include new functionality. Oracle PeopleSoft Oracle completed its acquisition of PeopleSoft in January PeopleSoft's HCM suite includes core HRMS functionality, along with integrated talent management (including EPM) applications. PeopleSoft 9.1 is built using a proprietary toolkit (PeopleTools), and runs on several Java EE applications servers (Oracle WebLogic, IBM WebSphere and Oracle Fusion Middleware) and databases (Oracle, SQL Server and DB2). The user experience was significantly revamped in 9.1, leveraging enhancements in PeopleTools 8.50 (specifically, support for Ajax). PeopleSoft applications are offered by Oracle through a perpetual license, and can be implemented on-premises (approximately 95% of users choose to implement on-premises, according to Oracle) or hosted by Oracle (or a third-party partner). Existing customers that want to add very good performance management functionality should consider PeopleSoft Enterprise 9.1. In addition, customers that want improved compensation management and succession management functionality should also consider 9.1, but may want to implement it toward the end of the upgrade/implementation project. In addition, global organizations that want to purchase a core HRMS with integrated EPM functionality should consider PeopleSoft Enterprise 9.1. Cautions Performance management has very good functionality. Customers cited integration with other applications as a particular strength. PeopleSoft's HCM solutions have a large installed base and strong brand awareness in the market. Oracle's financial performance is very strong. It is highly profitable, has demonstrated strong growth and generates very positive cash flow from operations. Although HCM is a key product line within PeopleSoft, EPM represents only a small (albeit growing) part of the business. Oracle's vision for its PeopleSoft EPM solution is strong. Version 9.1 addressed some key functional gaps in EPM (including career planning, succession management, and cascading goals and objectives), and improved the user experience to keep it competitive with niche solutions. PeopleSoft EPM functionality requires customers to implement PeopleSoft's HR solution. It would be challenging to use the solution with a different core HRMS. However, Oracle is providing an option to integrate 9.1 talent management applications (including EPM) with 8.9 and 9.0 HRMS. Although the PeopleSoft architecture is strong and offers good multinational support, we have found few global deployments. We have found that larger domestic organizations are implementing EPM successfully. Customer feedback has been somewhat mixed. Some customers have successfully implemented EPM functionality with no customization. Others have used PeopleTools to address gaps. Customers indicated that they would like to see reporting improved. There are many different reporting tools available, and customers struggle to understand which ones to use for which purposes. Publication Date: 28 March 2011/ID Number: G Page 18 of 30

19 Oracle plans to release its next-generation product line, Fusion Applications, by the end of 1Q11. It is unclear how this new product line will impact the future direction of PeopleSoft Enterprise. We have seen some customers looking to adopt a coexistence strategy, with Fusion Talent Management applications (which include EPM capabilities) on top of the PeopleSoft core HRMS applications (see "Oracle Fusion Applications: A Mystery Resolved"). We expect additional releases of PeopleSoft beyond 9.1, as well as feature packs delivered with PeopleTool releases in the interim that include new functionality. Peopleclick Authoria Authoria, founded in 1997 and headquartered in Waltham, Massachusetts, has been owned by the private equity firm Bedford Funding since late Since the last Magic Quadrant, Bedford Funding has also acquired Peopleclick, and merged it with Authoria to form Peopleclick Authoria. Charles Jones, CEO of Bedford Funding, has assumed the responsibilities as CEO of Peopleclick Authoria, succeeding Joe Licata and Jim McDevitt; Jones has served continuously in his role as Chairman since September In addition to solutions for EPM, Peopleclick Authoria offers two e-recruitment solutions dependent on customer needs (the original Authoria e-recruitment solution, as well as the Peopleclick solution) and knowledge base/communication, vendor management, and workforce compliance and diversity solutions. Version 10 of Peopleclick Authoria's EPM solution is built on a Java EE platform. Peopleclick Authoria delivers its solutions to new clients only via a SaaS model. Peopleclick Authoria's EPM solutions are best-suited for large U.S.-based organizations that want strong functionality across EPM, as well as a broader talent management suite that includes e-recruitment. Peopleclick Authoria is also an emerging EPM solution in Europe and the Asia/Pacific region as it builds out its infrastructure and grows through its Mercer partnership. Cautions Peopleclick Authoria is one of the few vendors that offers an integrated talent management suite that has deep functionality across recruiting, performance, succession and compensation management. In EPM, compensation is the strongest area, and has the most customer use. Bedford Funding's capital provides a strong financial foundation for Peopleclick Authoria, as well as resources to continue to pursue acquisitions that fill out its HCM application footprint. Customers cited ease of use, system configuration and product quality as strong, and customer feedback overall has improved since the last Magic Quadrant. Customer references cited stronger account management as a major reason. Mercer now offers Human Capital Connect based on the Peopleclick Authoria EPM platform. This partnership extends Peopleclick Authoria's reach internationally and helps it compete with a complete solution (including content and services). Peopleclick Authoria awareness in the EPM market is down considerably since the previous Magic Quadrant based on our inquiries and customer reference survey (we ask clients who they considered besides the vendor selected and look at the frequency of vendor mentions). Publication Date: 28 March 2011/ID Number: G Page 19 of 30

20 Plateau Peopleclick Authoria built its talent management suite through acquisitions. It rebuilt the solutions on a common platform (with the exception of Peopleclick) and has strong functionality, but the suite continues to mature. According to Peopleclick Authoria, approximately 63% of clients are now on the 10.x platform. Plateau, founded in 1996, is a privately held vendor based in Arlington, Virginia. It is a leader in the e-learning market, and has expanded into performance management, succession management and compensation management (through the acquisition of Nuvosoft in February 2007). Version 6.3 is built on a Java EE platform and runs on the Oracle database. Plateau offers a perpetual license/on-premises installed solution, as well as a SaaS solution. Close to 50% of its EPM customers have chosen the SaaS solution (up from 35% in the last Magic Quadrant). Plateau's EPM solutions are appropriate for global customers of all sizes that want strong functionality across the full spectrum of EPM capabilities, in addition to best-in-class learning solutions. Cautions Saba Plateau offers strong functionality across performance, succession and compensation management. The offerings have good global capabilities, including support for 25 languages, as well as operations in the three major geographic theaters (North America, Europe and Asia/Pacific). Plateau has a strong vertical-market focus. It has dedicated go-to-market operations in the public sector, financial services and healthcare/life sciences. Plateau has provided data that shows it continued to grow during the economic downturn and was non-generally-accepted-accounting-principles (GAAP) profitable, even as it continues to transition from a perpetual license-based to a subscription-based business model. Customer feedback was not quite as positive as the last Magic Quadrant. Version 5.8.x customers continue to cite reporting and ease of use as areas for improvement, but 6.x customers are happier. Version 5.8.x customer should consider upgrading to address these issues. Although Plateau offers strong functionality and has grown its EPM customer base relatively well, it is still known more as a learning vendor, and needs to improve its market awareness as a provider of talent management solutions that include learning and EPM solutions. Saba, founded in 1997, is a publicly traded vendor headquartered in Redwood Shores, California. Saba has expanded from the corporate learning system market into Saba Performance Suite (Saba Performance Reviews, Saba Goals & Objectives, Saba Impressions [informal feedback], Saba Succession, Saba Workforce Planning [part of what other vendors would include in career development/succession planning] and Saba Compensation). Version 5.5 (a newer release, 5.5.1, is now available) of Saba's EPM solution is built on the Java EE platform (supporting JBoss, Oracle WebLogic and IBM WebSphere), and runs on Oracle, SQL Server and DB2 Publication Date: 28 March 2011/ID Number: G Page 20 of 30