Forrester’s View: HR Market Overview and Trends PEHRS Webinar

© 2010 Forrester Research, Inc. Reproduction Prohibited1 © 2009 Forrester Research, Inc. Reproduction Prohibited

Forrester’s View:HR Market Overview and TrendsPEHRS WebinarPaul D. HamermanVice President and Principal Analyst

Forrester Research, Inc.

November 8, 2011

© 2010 Forrester Research, Inc. Reproduction Prohibited2

Changes in the workforce,global economy, and

technology createchallenges and opportunities

for enterprises in strategicand core HR systems.


The HRM solution footprint

Overview of the HRM technology market

Ongoing market consolidation

HR apps strategy and vendor selection guidance

Work in progress

Agenda


HRM Solutions Footprint – How We See It

Source: Forrester, September 2010 “HRM Solutions: Traditional Models Clash With Next-Generation Processes And Technology”






Conclusions and research in progress

Agenda


Business, societal, and technology trends influencethe management of human capital

An unstable economy influences employment and retention practices.

Businesses want more relevant talent and performance processes.

Companies face the challenges of a changing workforce.

Social media is a double-edge sword – enables some HR processes, butraises compliance challenges. Vendors still trying to harness it.

Mobile technology reinvents employee engagement and empowerment.

SaaS becomes the HRM deployment method of choice for point solutions,and increasingly, for core HR systems.


2%

19%

15%

37%

27%

Don’t know

More than 10 systems

Five to 10 systems

Two to four systems

A single global system of truth

Most organizations face the challenge of managingmultiple systems of record for employee data

“How many systems of record for employee data do you have?”

Base: 67 HR and IT professionals familiar with either their organizations’ MDM or HRM systems

Source: August 2011 Global Employee Master Data Management OnlineSurvey


2%

0%

0%

2%

2%

5%

10%

81%

Other

Homegrown system

Data warehouse, data mart, or businessintelligence environment

Identity management system

Access management system

Master data management (MDM) hub

Payroll system or outsourced payroll vendor

Human resources management system (HRMS) orERP HR system

The HRMS application is the dominant system ofrecord for employee data

“What do you consider the official system of record for employee data?”

Base: 67 HR and IT professionals familiar with either their organizations’ MDM or HRM systems(percentages do not total 100 because of rounding)

Source: August 2011 Global Employee Master Data Management OnlineSurvey


Most organizations juggle many applications tomanage HR processes

“Besides the core HR management system(s), how many systems are in place for HR processeslike recruitment, performance management, compensation, benefits, and time and attendance?”

Source: August 2011 Global Employee Master Data Management Online Survey

Base: 67 HR and IT professionals familiar with either their organizations’ MDM or HRM systems(percentages do not total 100 because of rounding)

10%

13%

15%

21%

40%

Don’t know

Seven to 10

Three or fewer

More than 10

Four to seven


27%

27%

18%

45%

36%

31%

43%

42%

25%

27%

43%

21%

34%

40%

28%

39%

25%

24%

19%

22%

16%

10%

19%

12%

10%

6%

10%

6%

6%

9%

3%

3%

6%

10%

5%

2%

5%

3%

6%

6%

5%

5%

3%

5%

3%

5%

Reduce the number of best-of-breed HR processapplications

Create a cross-enterprise employee master tosynchronize employee data across HR systems and

processes

Create a centralized employee data mart for integrationand reporting

Improve privacy, security, and compliance levels ofsensitive employee data

Enable employees to directly access and update theirpersonal information

Modernize and standardize system interfaces toimprove HR data quality

Consolidate and rationalize core HR managementsystems

Improve the timeliness of HR processes like onboardingor termination to provide more useful employee

information

5: Very important 4 3 2 1: Not at all important Don’t know

Improving timeliness of HR processes is top of mindfor ensuring trusted employee data

“How important are the following objectives to maintaining accurate, secure, andtimely employee information globally?”

5%

Source: August 2011 Global Employee Master Data Management Online SurveyBase: 67 HR and IT professionals familiar with either their organizations’ MDM or HRM systems

(percentages may not total 100 because of rounding)


Effective Employee Data Management Requires IntegrationAround The Core

October 2011 “Manage Master Data About Your People”


HRM applications’ implementation plans for 2011: 24% ofenterprises are moving ahead


Seven Technology Trends Will Reshape PackagedApplications’ Flexibility And Value

June 2011 “Innovative Technologies Will Drive Enterprise Applications And ERP To A Bright NewFuture”


SaaS applications advance application ownership costtransparency and the software updating model

June 2011 “Innovative Technologies Will Drive Enterprise Applications And ERP To A Bright NewFuture”


SaaS is replacing licensing as the default deploymentmodel in HRM applications

September 2010 “HRM Solutions: Traditional Models Clash With Next-Generation Processes And Technology”


HRMS accounts for half of the market, but talentmanagement has the highest growth

September 2010 “HRM Solutions: Traditional Models Clash With Next-Generation ProcessesAnd Technology”


Subscriptions as a percent of total product revenues:recruiting and talent management lead

September 2010 “HRM Solutions: Traditional Models Clash With Next-Generation ProcessesAnd Technology”


HRMS Forrester Wave: Learning and TalentManagement, Q1 2011

May 2011 “The Forrester Wave™: Talent Management, Q2 2011”


HRMS Forrester Wave: multinational enterprises, Q4 2008(Update currently in progress)

Source: October 28, 2008, “The Forrester Wave™: Human Resource Management Systems, Q4 2008”


The changing enterprise HRMS landscape

Next-generation ERP HRMS: Oracle Fusion (2011)

SaaS providers shoe momentum: Workday, Ultimate Software

Infor acquires Lawson, renewing commitment to HRM

ADP and Ceridian remake their HR apps portfolios

Hosted versions of on-premise systems offered by service providers:– ADP (GlobalView), NorthgateArinso (euHReka), Infosys, Wipro, Titan

Talent management vendors entering into core HRMS:– Silkroad, Successfactors are building core HR capability, SumTotal acquired

Accero






Work in progress

Agenda


Vendors are consolidating around the four pillars of talentmanagement

Source: Forrester April 2010 “The Four Pillars Of Talent Management”


Market consolidation creates breadth and viability

SuccessFactors acquires Plateau Systems– Learning fills out the 4 Pillars for SuccessFactors by adding the leading

enterprise learning vendor.

– Recent acquisitions also include CubeTree (social collaboration) and Inform(analytics)

Infor Acquires Lawson– Large ERP vendor fills a major hole with Lawson’s core HRMS, talent

management and employee interaction capabilities (Enwisen)

Authoria and Peopleclick join forces to become Peoplefluent– Authoria has talent management

– Peopleclick provides recruiting and compliance

Lumesse, the former StepStone buys MrTed– Lumesse adds recruiting depth with MrTed

– Now a complete talent management solution


Market consolidation (continued) Taleo gets learning management with Learn.com.

– Taleo acquired Learn.com after a partner relationship

– This acquisition gives Taleo capabilities in all four pillars

Kenexa adds its fourth pillar with acquisition of Salary.com.– Salary.com has compensation tools and content

– These features round out Kenexa’s recruiting, assessment, performance,and learning capabilities

SumTotal Systems fills out its offering by acquiring Softscape.– The combination adds comprehensive talent management capabilities to

SumTotal’s core strength in learning management. Acquisition ofGeoLearning adds SaaS learning

– SumTotal also gets core HR and time and attendance with Accero andCybershift.






Work in progress

Agenda


Best-of-breed solutions vs. comprehensive solutions

HRM customers predominantlyhave mix of best-of-breed HRMsolutions across variousprocesses

These best-of-breed HRMsolutions, predominantly SaaS,are organized around the coreHRMS solution, which is eitherSaaS or on-premise.

Core HRMS vendors continue toplay catch-up through internaldevelopment, especially ofperformance management,recruiting, and learning

January 2008 “HR/HCM Applications 2008: Best-Of-Breed Solutions Make A Comeback”


General recommendations for clients

Examining the six solution categories and prioritizing the importance toyour organization.

Having a clear plan for managing employee master data.– This includes a core HR system of record for the enterprise, and

– Limiting the proliferation of best-of-breed add-ons.

Selecting a deployment model that provides cost of ownershiptransparency.

Embracing mobile and social technologies to build loyalty and innovateprocesses.

Optimize your HR applications strategy by:


HR application strategy conceptual building blocks

Source: December 19, 2008, “Building Your HRM Applications Strategy” Forrester report


Five Stages for building your HRM applicationsstrategy

Source: December 19, 2008, “Building Your HRM Applications Strategy” Forrester report


Example: Strategic process capability assessment

Core HRMS and Payroll

Performance and Talent Management

Reporting and Analysis

Talent Acquisition

Employee Records& PersonnelActions

Health andWelfare Programs

PayrollPosition Mgt.and JobDescriptions

Compensation and Benefits

Wellness Paid Time Off

AbsenceManagement

HRCompliance

TrainingScheduling andEnrollment

ApplicantTracking

EmployeePerformance

SuccessionPlanning

CareerManagement

Salary andIncentives

WorkforcePlanning

HR Analytics andMgt. Reporting

ComplianceReporting Data Integration Surveys

New HireOn-Boarding

Delivery andMeasurement

LearningProgram Design

CandidateExperience

Talent Development

Timekeeping

OrganizationCharts

RetirementCompensationAnalysis and Equity

Goals Competencies

Medium HighLow


Vendor selection process guidance

Use a concise set of process-oriented requirements and evaluation criteria, thenengage with the vendors on the recommended short list. The requirements shouldfocus on key HR business process scenarios more than data.

Scripted, process-based demonstrations is the key evaluation mechanism by whichthese vendors should be judged.

High level selection criteria focus on more than cost and functionality. These shouldinclude flexibility, usability, vendor/product viability, industry knowledge, SaaS,technical architecture, and customer base/references.

Cost analysis should focus on total ownership costs for 7 to 10 years. For on-premisesystems, factor in hardware, upgrades, internal support staff, vendor support costs,and additional staff. SaaS is much simpler to estimate.

The overall vendor selection process is described in the graphic below on the nextslide, as well as in the new research document, Reinvent Your Applications VendorSelection Process To Fit Cloud Deployment Models , January 26, 2011.


Application Vendor Selection Methodology

Source: January 26, 2011, “Reinvent Your Applications Vendor Selection Process To Fit Cloud Deployment Models”






Work in progress

Agenda


Work in progress – Q4 2011

Research:– The Forrester Wave: HR Management Systems, Q4 2011 (Due out in late

Dec.)

– 2012 Trends in HRM, Finance, ERP

– Oracle Fusion Apps – progress report

Client engagements:– HR apps portfolio strategy – 7,500 person medical products manufacturer

– Benefits vendor selection – 1,500 person financial services company

– Recruiting automation - $3b federal agency

– Product strategy roadmaps and advisory sessions with 3 HRMS vendors

Events:– Microsoft, SAP, SumTotal analyst events

© 2009 Forrester Research, Inc. Reproduction Prohibited

Thank you

Paul D. Hamerman+1 [email protected]

mailto:[email protected]

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Forrester’s View: HR Market Overview and Trends PEHRS Webinar