Upload
julie-fernandez
View
7.243
Download
0
Embed Size (px)
Citation preview
© 2013 Information Services Group, Inc. All Rights Reserved.
Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means,
including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.
HRO Today Forum, London
Julie Fernandez, Director ISG
November 2013
Practical Lessons from HR Buyers
HR SaaS
© 2013 Information Services Group, Inc. All Rights Reserved 2
HR Provider Market
AcquiringAcquiring BuildingBuilding Providing HRO ServicesProviding HRO Services
March 2012
April 2012
November 2011 Time Tracking
Canada Payroll
Big Data Analytics
HR SaaS platforms race to round out their offerings at a time when HR must
address its next generation delivery. But is HR ready and able to make the buy?
► Enterprise demand for SaaS is surging.
► Providers are acquiring, building, and wrapping services around SaaS platforms at a breakneck
pace.
► Options to buy and integrate HR technology and services have become much more complex
Aon Hewitt
IBM*
NGA*
Aon Hewitt*
* Client(s) In transition, but not yet live
© 2013 Information Services Group, Inc. All Rights Reserved 3
ISG Client Experience
► Media and marketing noise suggests a heightened level of interest from HR buyers in
aggressively pursuing and buying HR technology and/or services
� There is a significant amount of formal RFX and informal “shopping” activity by
buyers
o Direct pursuits may outnumber advisor-led projects, but are less likely to have
the same diligence, broad scope, or executive sponsorship or success
o Fast growing armies of software firms use demos and grassroots appeal to stir
demand from a user perspective
� HR SaaS suppliers cite growth in number of client logos with little apples-to-apples
comparison in client size, geography, or comparable platforms
► The extent to which this activity materializes into signed HR Cloud and/or HR
Outsourcing deals is elusive to most, if not all, HR buyers
� ISG’s analysis of engagement details for 24 HR buyers in the last 24 months
represents the largest available data set for HR clients with 10,000+ employees in
scope1
With nearly 25 recent data points from HR buyers, ISG has perhaps the largest
sample of actual data and results from HR clients actively seeking SaaS solutions
1 All but two of the client HR engagements analyzed included 10,000+ employees in-scope.
© 2013 Information Services Group, Inc. All Rights Reserved 4
How to Choose HRO Platform?New or Repeat Buyers? What is HR Buying?
HR Client Demand and Approach
The ISG client sample is a reflection of the incredibly diverse needs, approaches,
and outcomes that are taking place in the market today.
9
6
1
8
0
0
Both (HRO)
Tech Only
Services Only
0 10 20
Competitive
Sole-Source
► There is a stronger mix of new
HR buyers, half of which are
seeking HR Technology only
► 50% of new buyers seek
technology only; the other half
expect HRO services
► A diverse mix of buyers seeks HR technology with and without outsourced services
� Dotted lines estimate comparable size deals signed directly by HR SaaS providers
► HRO renewal activity is frequently sole-sourced where buyers are satisfied
n = 24
HR Buyers
New
Renewal
► HRO buyers rely on the HRO
provider to solution the best HR
platform
► One in three HR technology
outcomes was reversed or
delayed due to the business case
76%
18%6%
Platform Selection
Bid by HRO
Client
DictatedConcurrent
RFPs
© 2013 Information Services Group, Inc. All Rights Reserved 5
HR Technology Outcome
58%12%
17%
13%
% of HR Buyers
No HRIT Change TBD
Move to SaaS Move to ERP
HR Client Results – HR Technology Only
Results may surprise you. Despite the frenzied activity in the market, large HR
clients are moving with caution and recognize value in “letting the dust settle”
►A majority of HR buyers (68%) are highly
motivated to buy HR technology
� Without a current version HR system,
most seek to upgrade or buy new
►Less than one third of HR buyers (29%)
chose to buy or upgrade HR technology
� Four had custom legacy HRIS to replace
� Two were new M&A entities with no HRIS
� One replaced vendor’s extinct platform
►1 in 4 “wait and see” buyers chose contract
extension or some other tactic that
postpones an HRIS decision two years (2015)
HR SaaS providers decline to provide stats to confirm deals with 10,000+ seats in 2012-2013
and remain elusive during client pursuits. ISG can point to only a handful of announced deals.
© 2013 Information Services Group, Inc. All Rights Reserved 6
SaaS Market Trends
Workday’s quick growth and maturity are credited with breathing life back into a
stagnant HRO market and SaaS is touted as a disruptive technology.
► HR buyers were among the earliest adopters of SaaS, beginning with talent
management, learning and recruiting platforms and now progressing to HCM
► Workday’s native SaaS platform has solidified from a U.S.-centric mid-market platform
to a formidable global market leader for HR cloud technology
� Client base has grown from 105 clients at the end of 2010 to close to 500+ clients
� Most Workday implementations (75%+) are handled by systems integrators
� Workday inundated with marketing requests; until certain the buyer is “serious” do not expect
any meaningful negotiation on fees or terms and conditions
► Oracle Fusion and SAP Employee Central are playing catch up based on their 2012
acquisitions of Taleo and SuccessFactors, respectively
� Current race to expand SaaS talent platforms acquired to include core HR/Payroll
� Incumbent providers must articulate the path to upgrade or replace the current ERP cash-cow
� Experience with ERP predecessor platforms is widespread, but there is no army of dedicated
systems integrators comparable to the Workday model
► Buyers are quickly sold on the usability, analytics and simpler infrastructure delivered
by SaaS, but less prepared for contracting and deal terms which are unlike ERP
© 2013 Information Services Group, Inc. All Rights Reserved 7
Disrupting the Disruptor
Watch for messaging from technology and service providers alike which is designed
to further drive HR buyer behavior as they shop for HR Cloud solutions
► Oracle Fusion continues to extend the trajectory of its various ERP platforms
(PeopleSoft, EBS, Fusion) in hopes of creating a smoother evolution to SaaS
► SAP has begun informal communications to suggesting there will be little or no
investment to future releases for EC6 as new product dollars fund its SaaS offering
� Until formally announced, this rumour may serve to tip the scale to SaaS for HR
buyers who already favour cloud solutions and clarify SAP’s EC6 expected life span
� Provides a strong incentive for HRO providers to consider a jump to a SF Employee
Central cloud platform to avoid transitioning clients to a “dead end” platform
► HR buyers face ambiguous options for Payroll which is limited by geography, does not
include payroll administration and tax services, or is not multi-tenant SaaS
� Global payroll providers NGA (euHReka) and ADP (GlobalView) aggressively pursue
regional and global clients that are driven by concerns to solve for multi-country
payroll and that offer proprietary HR multi-tenant technology
� Workday provides SaaS payroll for North America only, plus sophisticated
CloudConnect interfaces to global payroll providers for rest-of-world payroll
� Oracle and SAP continue to draw on their country payroll templates in ERP,
generally deployed in a single tenant model
© 2013 Information Services Group, Inc. All Rights Reserved 8
Talent and Core HR: Travel with Caution
Clients struggle today with a roadmap for integrated HR delivery and often travel
different paths depending on their focus. What happens when they meet?
Business Case
Technology
Delivery Model
Business Case
Focus on TalentFocus on Talent
Technology
► SuccessFactors, Fusion (Taleo), and
other SaaS modules offering deep
functionality & broad client base
Population / Delivery Model
► Focus on salaried workforce and top
talent with similarly limited scope
of hierarchy, self service, and
workflow for talent only
Business Case
► Expected “return on talent” with
softer business value measures
► Impacts populations most visible to
executive sponsors
Focus on Core HRFocus on Core HR
Technology
► Workday SaaS or ERP upgrades to
newly evolving SaaS modules
(Oracle Fusion, SAP/SF EE Central)
Population / Delivery Model
► Include all workforce populations
with broad support of employee
master data changes, portal/call
center & global payroll integration
Business Case
► Expected reduction in cost; focus
on hard dollar budget savings
► HR process transformation to COE
and shared services delivery
Optimize Workforce Performance
Leverage mature SaaS talent
platforms; add recruiting/learning
modules and predictive analytics
Optimize HR Operations
Deploy a single HCM for global
leverage of headcount, employee
data, and payroll integration
© 2013 Information Services Group, Inc. All Rights Reserved 9
HR Technology & Services Outcome
25%
4%
41%
17%
13%
% of HR Buyers
No Services TBD
Same HRO Switch HRO
New HRO
HR Client Results – HR Technology & Services
HRO clients want SaaS technology, but are not willing to lose their existing HR
administration support and service channels (e.g., portal, chat, contact center)
►A majority of large HR buyers (71%) chose to outsource HR technology AND services
� All but one looked to the HRO provider to propose the HR technology platform
� Workday demand has driven all HRO providers to articulate a Workday offering
►All 5 clients dissatisfied with their current HRO provider continued HR outsourcing
� No HRO clients left the outsourced model to delivery services in-house
►HRO providers are quickly productizing services around other HR technology options
HR buyers who begin their journey with a technology-only selection will ultimately struggle to
determine whether it is possible to create their own HR Shared Services delivery or outsource
© 2013 Information Services Group, Inc. All Rights Reserved 10
Value and Appeal of Combined HR Technology & Services
► The HRO delivery model is poised to become a strong channel for SaaS HCM adoption
among large global clients (7,500+ employees)
� Workday is the only SaaS system deployed to date in an HRO delivery model by
Aon Hewitt who has transitioned 3 clients and signed 5-6 more in 2013
� IBM and NorthgateArinso both have Workday clients and services in transition
► HRO clients are accustomed to a “seamless” user experience, which requires portal
capabilities and other integration that is part of the HRO’s proprietary offering
� Integrated case management, email, and chat inquiry channels
� Integrated access to online knowledgebase and policy/procedures repository
� Integration of 3rd party applications and portals (i.e., Learning, Payroll, Benefits)
� Back office administration (data entry, errors) and ongoing systems configuration
� Access to reports and analytics that combine data within the core HRIS with data
from other HR point solutions
► Clients who have already outsourced payroll for large populations have little or no
interest to bring payroll administration back in house
� Watch for HR service offerings delivered on SaaS as stand-alone payroll support
© 2013 Information Services Group, Inc. All Rights Reserved 11
HR Buyer Demand
Supplier markets are moving quickly to capitalize on filling the gaps that are of
greatest interest to HR buyers
HR SaaS Market GapsHR SaaS Market Gaps
HRO / Portal Gaps
• Adapted HRO offerings to include “thin portal” and standard services
Payroll Gaps
Shared Services / Portal Gaps
• SaaS module development• Payroll SaaS offerings• Global payroll providers
ISG believes the
combinations and
depth of SaaS-BPO
solutions will expand
significantly over the
next five years as
leading HR suppliers
productize their IP
into standard
offerings.
Provider MarketsProvider Markets
Systems Perspective
• Portal tool providers• Consulting for shared
services and org design
SaaS Deployment Gaps
• Systems integrators
Services Perspective
© 2013 Information Services Group, Inc. All Rights Reserved 12
Practical Lessons from HR Buyers
► Each HR engagement is unique and requires a carefully
thought roadmap - don’t lose focus on overall HR
� Solving for one set of HR challenges can limit or
significantly affect cost and fit in other HR areas
� Plan your timeline to select a systems integrator
► The factors that most influence HR buyer approach and
results include
� Existing HR, payroll and talent platforms
� Currently outsourced HR/Payroll services
► Capital investment in HR is hard to come by – plan for
evolving products/services and multi-year funding asks
► Contracting SaaS is a very different animal from ERP
� Data is not widely available to HR buyers for use in
vendor selection or negotiations
� Security and risk challenges to move from on-
premise to SaaS require involvement outside HR
The ISG client sample is a reflection of the incredibly diverse needs, approaches,
and outcomes that are taking place in the market today.
HR Buyer Demand for SaaSHR Buyer Demand for SaaS
HR SaaS Platform
• RFX & feature comparisons• Business case, negotiations• Systems integrator RFX• Portal platform selection
HRO Technology & Services
• HR strategy, renewal & RFX• Benchmarking• Platform change• Global payroll• Business case, negotiations
HR Services
• HR transformation, shared services strategy, research
• Process harmonization