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At this year’s Taleo World conference in San Francisco, more than 1,600 Taleo customers learned about the company and its suite of talent management applications. A major theme of the conference was the company’s investment in mobility and social media and the intersection of those trends with collaboration tools.

Taleo generates more than two-thirds of its revenues from its core recruiting software, which its customers are adopting its applications with recruiting (85 percent), performance (12 percent), compensation (4 percent), learning (13 percent) and succession. Taleo cross-sells to its existing customer base, which accounts for more than 50 percent of its bookings – about what you would expect of a company its size. The company’s growth fuels new technology development, which helps existing customers connect a variety of activities with Taleo applications.

As it announced and demonstrated in 2010, Taleo has been integrating social media with learning and recruiting applications. It is bringing to market new social talent-based applications that will run on Android, Apple and RIM mobile platforms, and integrating them with collaborative technologies in the enterprise and in the cloud, including Jive, LinkedIn and Microsoft SharePoint. This contrasts with the approach of companies such as SuccessFactors that bring their own collaboration and social environment products to market, then integrate with third-party providers. Which approach gains most adoption has yet to be proven.

Taleo also is trying to engage job candidates in a new way with a smartphone-based social application called Taleo Radar that is available and was announced. In its first release users can meet and interact with people in a way somewhat like they do with Foursquare, without checking in but rather based on who is around them. This application introduces a consumer and social approach that Taleo is experimenting with to see if it can be as viral as LinkedIn but focused on jobs and working people. The application has a nice user experience but lacks some significant functionality, such as integrating with social profiles from Facebook or LinkedIn as part of registration, and dynamically identifying people who could be relevant to meet. In addition, without a check-in feature it is hard to know where a person is actually located. Radar will require improvement and perhaps co-marketing with retail locations like Starbucks and others before Taleo can expect adoption by consumer candidates not familiar with the company. But in social media you can expect the unexpected, and maybe Taleo has something brewing with this application. If you want to find me on Taleo Radar, look for my name – don’t expect to recruit me socially to your organization, but I will provide recommendations on social recruiting.

In another mobility advance, Taleo demonstrated Taleo2Go, a set of upcoming applications that will operate on tablet computers and help in onboarding, talent profile reviews and integration with the social enterprise for help in finding appropriate people for business and networking within an organization. It uses innovative techniques to associate an individual with information and people based on what the person  enters into the application. It also looks at career and succession planning, along with goals and objectives reviews, in a visually intuitive manner. Talent2Go is still evolving and not available for any close-up examination yet. It is scheduled to be released sometime in 2012.

In Taleo’s core business of talent management, the company announced its latest version with advances that more recently came out to attract and engage talent and help build and assess team goals more efficiently. In addition, it keeps improving the Talent Browser application it announced over the summer. With a single click the application lets you handle tasks from performance checks to succession planning. Taleo is focused on being open with its talent profile. Since its version 10 release two years ago it has been able to interconnect with other communication, candidate-specific, social networking, collaboration, HRMS and talent-related applications. Taleo has also moved to make its career websites compatible with smartphones and tablets. Another advance coming is talent identification through searching using relevant selectors such as readiness for promotion, potential to perform and even willingness to relocate.

Taleo has invested in its infrastructure as well. According to the company it’s the only talent management provider with a hot standby data center for large enterprises. It says its software processes 6.7 million candidates, 288,000 hires, 69,000 performance reviews and 39,000 goals plans every month. This provides a foundation for Taleo to make acquisitions and migrate their users to its facilities. Taleo has been integrating recently acquired companies with its own software’s user experience and navigation methods, and simplifying secured authentication. Those recent acquisitions include Learn.com for  e-learning applications, Cytiva to gain more recruiting customers and Jobpartners for expanding into Europe.

Taleo is expanding its position in learning management systems with Learn.com and gaining ground in the crowded performance management applications market, in which it has had success in the last couple of years with new customer growth and large deployments. In 2011 improved performance of its conversation hub and integration with email have provided better collaboration. As Taleo CEO Michael Gregoire pointed out, the younger generation of workers wants to have more frequent interactions on goals and progress than the traditional annual appraisals that our performance management for talent management benchmark research has found 88 percent of organizations continue to perform. Making it simpler for managers to hold employee reviews is important, as the same benchmark research found more than half of organizations want to make alignment of goals and career management easier.

The Achilles’ heel of Taleo’s application suite is its compensation management applications. My analysis, confirmed in our benchmark research, shows the software requires broader and deeper capabilities to support a range of incentives and rewards linked with the frequent performance checks, but also on the path to a pay-for-performance set of processes. Our 2011 Total Compensation Management Value Index concluded that Taleo has room for improvement across the board, from product-level usability and functionality to customer validation, which kept Taleo from being a top-ranked provider.

Taleo showed compensation as part of its Taleo Business Edition at the conference, but that was pretty much absent in educational sessions and demonstrations. Almost two years after announcing Worldwide Compensation, Taleo does not seem to be further along than it was after acquiring Vurv, which had a good start in providing a compensation application that Taleo scrapped. Over the summer Taleo released a visual compensation calculator to make it easier to create and modify rules and calculations, which is a requirement to be competitive in this application field. Compensation is not an area that Taleo is known for, and the company would probably do better to improve the marketing of this specific application so that it is not lost in the talent management dialogue, since the buyers are focused on compensation and finance along with HR.

Taleo is now approaching a quarter of a billion dollars in revenue and thus has many synergies to its business, but it must continue to innovate in the user experience and mobility aspects of its products. It needs to dramatically improve its compensation management offering to cover more functionality and breadth of incentives, rewards and variable pay. In addition Taleo apparently does not see the importance of stand-alone workforce analytics that can bring together data from across processes in the enterprise and the cloud to provide an in-depth set of metrics and key indicators. The company’s existing workforce analytics are embedded as part of its application suite, but unless an organization converts everything to Taleo it will not be able to take advantage of cross-organizational workforce analytics. My dialogue with Taleo executives at the conference did not show much appetite to compete in the workforce analytics market or appreciation of the pain HR and Finance suffer when forced to integrate disparate data from on-premises and cloud computing applications from many providers.

Despite these shortcomings, Taleo has plenty of room for growth. Given its size and reach it can be challenged globally by only a handful of other providers. I like its aggressive exploration of the intersection of social media and recruiting, which our preliminary findings, to be published later this year, have determined to be an area for growth. Taleo is worth examining in for recruiting, performance and succession applications then look carefully at evolving compensation and more newly acquired learning applications.  If your organization cares about gaining access to larger talent pools through mobile and social media, you have to see what Taleo is doing and how it can help your organization.

Regards,

Mark Smith – CEO & Chief Research Officer

I recently got an update on mobile applications and strategy for smartphones from ADP, the $9 billion provider of applications and services in human resources, payroll and benefits. By acquiring and partnering with organizations, ADP has become the largest provider in this segment while focusing on providing added value and new offerings to its customers. For some companies, being such a large business  human capital management and talent management software could inhibit its agility, but ADP has quickly made progress in bringing its first generation of applications to the Apple iOS platform for iPhone.  

The company’s RUN Powered by ADP Mobile for the small business owner or CPA helps implement payroll activities and address human resource issues. It can be put in place for 50 employees or less, since usually as an organizations gets larger it turns to other accounting support to cover these types of needs. This mobile application, launched in 2010, is gaining users. It operates on Android, iPhone and BlackBerry smartphones. It provides a simple way to enter and review payroll data and wages for contractors, and provides quick access to employee information, reports and ADP’s HR Checkup and HR Dictionary to answer quick questions on employer/employee needs and provide weekly HR tips. The application includes security and integration to support an organization’s information privacy needs. The mobile application layers on top of the ADP payroll services are packaged for small, midsize and large organizations. Its approach is a plus for small and on-the-go businesses that have little time for spreadsheets, paperwork and email reviews of payroll and pay-related services. 

Another application, ADP Mobile Solutions, is an employee self-service environment for the iPhone that makes it easy to launch applications covering timesheets, payroll, retirement, calendar, company news and contact directory. It provides simple ways for employees to see their pay, enter timesheet information and, for hourly employees, use the clock function to punch in and out. ADP encrypts all information transmitted between its servers and the mobile application, and employs additional timeout and security methods – a significant plus when sharing sensitive information about an employee. For the next release, ADP plans to include capabilities to support talent management and social media and collaboration for employee and manager interaction. Just announced and released last month, ADP Mobile Solutions already is gaining attention within the company’s large customer base. 

ADP’s approach is to provide this common set of applications across smartphones to connect to its variety of back-end applications to make it easier for employees to operate. ADP provides native support for Apple iPhones and a browser-based application for Android and other smartphone systems. The company also promotes its advancements in mobility with a blog to create dialogue around its offering.  

ADP addresses workforce management needs with this set of solutions that layer on top of its Vantage HCM offering, providing an efficient way for its customers to manage their workforces while away from their desks. This kind of mobility and collaboration are part of what we see as the next generation of workforce management. It will dramatically streamline scheduling and interactions in the workforce and make it simpler to implement employee and manager self-service. I expect ADP will eventually support tablets as well. While you can operate the applications on tablets like Apple iPad today, they are not dynamically sized and don’t take advantage of the larger form factor yet. ADP says to stay tuned; I will, since the company has a viable approach to mobility that I can download and try directly from the Apple App Store, unlike many vendors that still provide only screenshots or videos and fail to offer interested parties a chance for immediate access and usage. 

Regards, 

Mark Smith 

CEO & Chief Research Officer

Mark Smith – Twitter

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