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February 23, 2015 in Business Analytics, Business Performance Management (BPM), Cloud Computing, Financial Performance Management (FPM), Operational Performance Management (OPM), Social Media | Tags: Analytics, Compensation, HCM, HRMS, human resources, Learning, Performance, Recruiting, SAP, SuccessFactors, Vendor Management Systems, Workforce Analytics, Workforce Management, Workforce Planning | by Ventana Research | Leave a comment
Maximizing the performance and value of people in the workforce should be a primary focus for any business these days. It is a complex task, especially for larger organizations, and chances for success can be increased by investment in human capital management (HCM) applications. In this competitive software market SAP is making a strong push, aided by acquisitions in the last three years of SuccessFactors for talent management and more recently Fieldglass for contingent labor management. Recently I attended the SAP HCM analyst summit to hear about its direction and plans to grow its market share. The company has made progress since our last analyst perspective on it. Mike Ettling, SAP’s president for the HR line of business, discussed its newly refined strategy and organizational structure; the company has added executives from around the globe to emphasize its commitment to helping human resources organizations.
SAP for HCM today is focused on HR applications in the cloud for talent management areas including recruiting, onboarding, compensation, performance, learning and succession. It has added a focus on self-service for employees and managers with payroll matters. SuccessFactors, according to Ettling, contributes 40 percent of the subscription bookings in cloud compuing for SAP. He said that 59 percent of bookings for SuccessFactors are outside North America, which reaffirms its global focus.
SAP offers its products in more than 70 countries and in 37 languages. It manages regional data centers to support in-country databases of employee information and now has more than 1,000 implementation partners. SAP’s primary market is what we term very large organizations, which have more than 10,000 employees. Executives mentioned a renewed focus in the small-to-midsize market but did not clearly articulate how it will compete with the many providers that concentrate on this segment. SAP’s intentions can be seen in these numbers: Some 4,200 companies with a total of more than 28 million employees use at least one of its cloud-based HCM applications. More than 40 customers each have 100,000 users, and 110 each having more than 50,000 users.
SAP’s evolution into cloud computing is well established now. Presenters at the analyst summit made it clear that the future of its on-premises software for HR is limited; there will be no new code lines and the vendor is in maintenance mode as it focuses R&D on its cloud-based products. Meanwhile, as it continues to execute on its mission of talent management and core HR, SuccessFactors has done well in providing to companies using SAP HR on-premises an interface for interoperating with its cloud offering. Next it will need to refine its plans for supporting those customers in migrating to the cloud.
SAP insists on its ability to supply all HCM applications, but it lacks a unified Web presence for them. Currently the SuccessFactors website presents only the SuccessFactors cloud computing products, not the entire portfolio, and the SAP website for HR lacks depth on its contingent labor products. For that you must manually navigate to the Fieldglass website. Fieldglass provides vendor management systems, a necessary part of a comprehensive strategy for HCM. Missing from the site is a discussion of how its products interoperate with SuccessFactors and SAP applications. I was surprised that no one from the Fieldglass organization was present to provide depth; the acquisition closed in May 2014. The parent company should clarify in 2015 how Fieldglass aligns to the SAP HCM strategy.
SAP will have to work harder to present a complete picture that includes contingent labor and workforce management and presents real understanding of the applications required to manage the hourly labor market. SAP speakers seemed careful to not mention any of the workforce management players in the market, such as Kronos and Workforce Software, and did not discuss the aspects of this market, which is a key part of the human capital management market overall. SAP’s information is restricted to noting that its Employee Central can perform time and attendance with absence management and time sheet support; that is only one component of workforce management. SAP ought to create and publish an overall blueprint of what it can offer for HCM and HR departments.
More positively I was impressed with how SAP is addressing the next generation of learning management, making it simple to assemble and deploy learning modules on mobile devices in what it calls content authoring and also supporting open content networks and even recommendations. Our research in next-generation learning management finds that collaboration on content (77%) and access to learning via mobile devices (63%) are among the top priorities for organizations. SAP is transforming the methods for how people engage informally with learning and can be self-sufficient in specific business areas while still offering the formal learning environment that is required by policies and compliance programs.
In addition SAP has taken seriously the need to make human capital analytics easier to interact with through the user experience in the latest version of SuccessFactors HR Analytics. This is a significant advance not represented in its website, which still presents basic dashboards that are not sufficient for HR to assess and act on information about its workforce. SuccessFactors had a product in workforce planning, but it is not clear how it utilizes or integrates to SAP’s business planning applications. Presenters at the event showed that it does take the aspects of succession planning and team building seriously and explained how it will use organizational charts more effectively. SAP has historically worked with Nakisa. SAP has the potential to advance analytics and especially predictive analytics through SAP HANA and its acquisition of KXEN, but it is not moving fast enough to blend them with its suite of applications and HR platform. This is a critical step; our human capital analytics benchmark research finds that improving efficiency (61%), engaging and retaining the workforce (52%) and improving management actions (51%) are the top benefits of investments in this area of analytics.
SAP continues to advance its cloud-based payroll management offering, Employee Central, through experience with its on-premises product that has global deployments. Transitioning capabilities to the cloud is not as important as designing and streamlining the tasks for managing payroll administration and employee access to the information. SAP has been taking a blended approach to use its on-premises offering, which ranked first among products in our 2014 Payroll Management Value Index. New advances in 2015 with localized support for time off and benefits along with time sheet management are meeting a growing demand for simplifying payroll processes. Our benchmark research in payroll management shows that this is important to users: 54 percent said it is very important to improve the efficiency of payroll processes, and about as many (53%) said employee self-service is an important aspect of payroll management.
SAP presenters also discussed their efforts to streamline HR operations and administration to make oversight simpler and more responsive. This includes Action Search, a capability to easily search an organization and get access to information rapidly from within Employee Central. I especially like the advances in its people profile to get to information about individuals from the Web and mobile devices. In addition, SAP continues to advance social collaboration through SAP Jam, which in the past two years has accumulated 17.5 million subscribers and more than 100 customers. Making social collaboration relevant is done through what it calls work patterns that include employee performance, mentoring and coaching and even onboarding. SAP Jam has great potential, and I hope to see more of it within the talent management applications and in workflow across its applications.
At the summit I heard no reference to what SAP is doing with compensation management, but the company is doing well here. Our analysis rated SuccessFactors Compensation a Hot Vendor in our 2014 Value Index; it is a unique offering that is well integrated with the rest of the talent management suite.
A presentation on the evolved SAP Cloud architecture discussed S/4HANA, which provides a platform for interoperating across on-premises and private and public cloud environments. It includes the use of SAP HANA Cloud’s metadata framework of specific applications. SAP is moving to its own integration technology for process and data requirements and designing its own user experience rather than continuing to work with Dell Boomi. It is not clear to me how this will help most HR organizations, which have and must interoperate with systems from several vendors and need data to flow across processes, which was easily instrumented within Dell Boomi. The demand for integration between cloud and on-premises configurations is growing rapidly; our big data integration research finds that cloud-to-cloud integration will have the largest growth, with one-quarter of organizations planning to address that in the next two years and one-third still evaluating that. This along with eliminating use of the Oracle database and using SAP HANA is key to its efforts in 2015. Presenters made mention of the Smart Data Access tool using HANA for machine learning, but it was not well articulated, referring to “robotic workflow,” which is a foreign language to any HR professional.
SAP SuccessFactors has a new customer experience methodology that uses a nine-step process to ensure satisfaction among a rapidly growing variety of companies using the software. The new approach is being led by service and support professionals from across SAP. This level of focus on customer engagement is critical as SAP must demonstrate commitment to its customers more convincingly and differentiate itself in the market where many competitors have similar HCM suites. On the other side of customer experience is the license payments for its software. Like many other vendors in the cloud computing market SAP offers significant incentives to lock in multiple-year contracts in renting its applications. SAP prefers to trigger the invoice for the subscription to an application at the time the contract is signed, compared to others that do not invoice for license seats until the time of going live – a more reasonable approach from the customer’s point of view, as it takes time to transition from existing applications and processes to new ones and truly have employees using them. This could work counter to the company’s customer experience plans.
SAP’s goal is to grow into a US$2 billion provider of HR applications by the end of 2017 and dominate the market. I believe that for it to do so will require more than just marketing and selling to HR and includes communicating to and convincing CFOs why this is an essential investment to address the talent risk of organizations. When you calculate the cost and time wasted in replacing workers who might have been retained and making new workers competent, investments in HCM and talent management are worthwhile in a financial analysis. But SAP like others does not demonstrate this value for finance and operations management. More than promoting its HCM offerings as part of ERP efforts, it will have to decide if it wants to win the hearts and dollars of Finance.
SAP needs to show it can help organizations manage hourly workers beyond tracking time and absence and contingent workers through its Fieldglass acquisition. Advancing its cloud platform for interoperability with its on-premises applications – hybrid cloud computing – is essential to protect existing customers using SAP ERP and HR, along with helping global organizations with employees based around the world. At the summit I did not hear about any progress in applying its mobile technology to applications in HCM although its platform supports Microsoft Windows Touch and the Surface 3 tablet that is beginning to appear in business as validated in our market research. Nor was there much focus on security, voice or wearable computing via mobile technology. SAP is sticking to the basics when it comes to mobile technologies and use for HCM.
SAP has transitioned SuccessFactors into a fully functioning subsidiary that remains strong in the market for HR and talent management applications. It continues to innovate and introduce simpler and more mobile methods for using its suite of applications. It has work to do to show how its overall HCM portfolio meets the broader needs of HR and workforces, and I expect movement here in 2015. The company is a major player in HCM, and organizations should evaluate its offerings to determine how they can help HR be more effective in supporting the essential asset of its people.
CEO and Chief Research Officer
February 2, 2015 in Big Data, Business Analytics, Business Collaboration, Business Intelligence (BI), Business Performance Management (BPM), Cloud Computing, Customer Performance Management (CPM), Financial Performance Management (FPM), Governance, Information Applications (IA), Information Management (IM), Location Intelligence, Operational Intelligence, Operational Performance Management (OPM), Risk & Compliance (GRC), Sales Performance Management (SPM), Social Media, Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM) | Tags: Analytics, Big Data, Cloud Computing, Collaboration, Mobile Technology, Social Media, Technology Innovation, Wearable Computing | by Ventana Research | Leave a comment
This year presents much opportunity for organizations to use a new generation of technology to compete better, be more efficient in their business operations and engage their workforces to their full potential. We have identified and begun to track the following next-generation technologies: analytics, big data, collaboration, cloud computing, mobile technology and social media, and in 2014 we added wearable computing to the list. In 2015 we will intensify our focus on all of them specifically in our research agenda and as part of our line of business research agendas.
Shifting to next-generation technologies in business processes can not only add new capabilities but help reduce the high cost of maintaining existing systems. Inefficient legacy systems and outdated approaches often hold back the potential of a business by consuming time and resources and forcing people to spend time on tasks that impede productivity and don’t add value to the business. Many organizations also are concerned with simplifying governance, risk and compliance of their business processes and workforce activities. Fully engaging the workforce is a concern for executives and providing a self-service approach to human resources and related information can help improve the effectiveness of employees. To take advantage of new technologies business users and managers must get involved and work with IT professionals in evaluating and adopting technology ensuring the security of systems and underlying data. Our 2014 Ventana Research Business Technology and Leadership Awards recognize organizations that have taken steps to maximize use of these innovative technologies.
Among these next-generation technologies, last year our various research projects made clear that analytics is the top technology priority for businesses; many organizations invested in this area and also in data preparation to produce reliable, standardized data. After decades of leaving management of business intelligence tools to IT, the lines of business have taken an active role to acquire a better understanding of what is required for analysts and business professionals who are held accountable for the outcomes of their activities and need capable tools to access metrics and facilitate improvement. Many business areas asserted themselves in applying analytics to business processes, including finance, human resources, operations, the supply chain, sales, marketing and customer service. Many organizations are using timely metrics derived from analytics and made easy to read in dashboards, and more of them are coming to see the value of applying predictive analytics and data discovery to identify opportunities and view them through visualization methods. Those on the leading edge represent the results of analysis in geographic and natural-language contexts known as narratives that can explain or tell a story from the actual data. Such means of presenting results can help analysts keep up with the demand for actionable information from business professionals.
Another new technology, big data, is intimately connected to analytics. This burden grows heavier with the proliferation of volumes; drawing on these sources organizations need big data analytics to become more intelligent and less dependent on individuals to decipher meaning from data. At the same time the flow of data and events from machines and what is called the Internet of Things in real time introduces new challenges that for operational intelligence systems that support event-focused information gathering and delivery processes. Our research into big data analytics finds that better communications and knowledge sharing was the top benefit organizations realized from applying analytics, which is enabled by presenting information in easily understand forms. A major benefit in visualizing big data is better understanding of content, according to 45 percent of organizations in our big data research. As types and volumes of data continue to increase, organizations will need robust strategies for analytics and data management, including selecting technologies that help them stay competitive and gain business advantage.
We saw advances in big data in 2014 as organizations began to move beyond use of standard RDBMSs to Hadoop and a new generation of big data machines that are blending technologies and approaches. Hadoop-focused technology companies received significant amounts of investment capital to continue their efforts, and it is clear that these systems must become part of enterprise and information architectures, focusing attention on how to integrate them. Advances in big data and information management revealed an increasing need for information optimization, which focuses on getting information to business professionals in actionable forms. This information need requires efficient integration of data across systems both in the enterprise and in cloud computing environments. In our research into big data integration 39 percent of organizations said it is important to make information available in a consistent manner. Big data will be more important for organizations in 2015, and they should not be overlook its integration with analytics and business operations.
Cloud computing is an increasingly popular option as businesses try to deal with the flood of data and learn from it. In 2014, it became even more widespread in a variety of private and public approaches. But many organizations are still holding on to on-premises systems, many of which have become antiquated and expensive to maintain. Most suppliers of business applications and tools now offer cloud deployment through their own or leased data center facilities or environments such as Amazon Web Services. Some businesses can reduce significantly the load on IT by packaging their specific environments through virtualization and deploying them in the cloud. Essentially cloud computing is a means to onboard and use applications more easily and reduce the overhead of paying in-house IT professionals responsible for implementation, maintenance and upgrades of business systems. Our research shows that cloud computing has declined importance in technology innovation, but we attribute this to its acceptance as a method for accessing and licensing software. However, cloud computing has become a more important priority regarding integration of data; one-quarter of organizations in our big data integration research said that is a priority now and through 2016.
Collaboration technology, both business and social, which enables business professionals to interact in a variety of methods, is gaining traction more slowly than others as technology suppliers focus more on designing the user experience than the interactions. But we find that business professionals recognize the importance of collaboration across the lines of business. In our benchmark research on next-generation customer analytics collaboration was deemed important more than the other next-generation, selected by almost two-thirds (62%) of organizations. A key purpose of this technology is to streamline the activities that involve groups of individuals; doing that can improve business process effectiveness. The most widely used methods are well established, such as discussion forums and videoconferencing, but social media approaches including activity streams, broadcasts and postings are increasing in importance; social recognition for contributing to or accomplishing tasks is the social collaboration method most organizations are planning to use (29%). The approach called gamification, which involves earning badges and awards in contests, is a method that 37 percent are planning to use or evaluating. If implemented properly and in tight conjunction with applications, collaboration can raise the level of interaction and engagement among the workforce and ultimately increase efficiency and outcomes. Embedding collaboration in business processes and applications should be a focal point in 2015.
In the area of mobile technology, business use of smartphones and tablets advanced in 2014, and more is still to come. The diversity of devices running Apple, Android and even Microsoft mobile operating systems being brought in by workers makes it challenge to establish a standard set of applications for business. The most common preference is for Apple smartphones (57%) and tablets (67%), with Google Android being a distant second, in one-fifth of organizations, and Microsoft Mobile trailing at 5 to 8 percent, according to our next-generation learning management research. Even so “bring your own device” (BYOD) maintains a strong presence in many organizations.
Nor have suppliers of mobile applications standardized on a common user experience that can operate natively across devices and does not require the pinching of fingers to zoom in and out of the application to operate it. While this might seem a simple goal, it requires significant investment by suppliers to realize it. Additionally, suppliers hesitate to commit as they assess the level of demand for Microsoft Surface tablets, for which Microsoft had challenge in 2014 and appears headed for more changes in 2015. However, manufacturers of notebooks running Microsoft Windows continue to make them smaller and thinner with touch-screen interfaces, becoming closer to tablet size and usage styles; still most software providers have yet to invest in converting their applications to touch and gesture based on Windows 8 and now Windows 10. For their part, business organizations should begin to rationalize their mobile approach and communicate priorities to their main software suppliers to ensure that their employees can truly be mobile.
The newest entry in mobile technology is wearable computing that enables people to attach technology to their bodies in the forms of watches, jewelry or clothes. This advance in miniaturization has introduced devices that can assist business users through receiving notifications and other communications to tracking the relation of time worked to tasks accomplished. In 2014 we awarded Apple the Technology Innovation Award for the Apple Watch, which is taking the first generation of smart watches to the next level of biometric and commerce enablement. Health and wellness use of technologies such as FitBit and others have advanced past prototype phases and into production. Most interesting is gamification of the wellness information collected in real time from individuals or manually entered data; it has generated contests and inspired motivation for improvement. In 2014 only small steps were taken by a few workforce management vendors to build prototypes and initial versions of such devices for time and attendance along with notifications. The potential of these devices in sales, field service and workforce management applications is significant, but software suppliers will need organizations interested in taking a leading edge to commit to the technologies to justify expanding their R&D investments. Organizations seeking to engage and improve the productivity, safety and wellness of their workers could find wearable computing a useful business tool within three years.
In evaluating any of these next-generation technologies functionality alone is not a sufficient consideration. Issues of usability, manageability and reliability appear to be as important to organizations, or more so, in all of our benchmark research in 2014. In particular, usability and the user experience for all roles and competencies is not to be underestimated. Software must be able to adapt to and support the tasks and responsibilities of its users, but we find that many technology suppliers are still not taking this as seriously as they should in their R&D efforts. In addition companies striving to improve their performance should consider people, process, information and technology in a balanced approach to gain the best possible outcomes from any technology investment. Organizations should refocus their RFI and RFP methods to ensure they select technology that can serve all the intended roles and responsibilities of their organization.
To learn more about our business technology innovation research agenda for 2015, please download the presentation to see how you can supercharge your business with technology. To see what your peers and leading suppliers are doing, check our Ventana Research Technology Innovation Awards. For more personal discussions of advanced technology for business, tune in the replay of the 2014 Ventana Research Summit to hear presentations and panels on the topics I have discussed here. It looks like 2015 will be a big year for technology advancements, and businesses will need to be prepared and ready to embrace what they need to be as successful as possible in their business processes and outcomes.
CEO and Chief Research Officer