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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;VentanaResearchLogo300px 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. vr_NGLearning_02_social_collaboration_assists_learningOur 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 vr_HCA_02_key_benefits_of_human_capital_analyticsworkforce. 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, Ventana_Research_TCM_VI_HotVendor_2014which 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. vr_BDI_07_types_of_data_integration_processesIt 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.

Regards,

Mark Smith

CEO and Chief Research Officer

Big data has become a big deal as the technology industry has invested tens of billions of dollars to create the next generation of databases and data processing. After the accompanying flood of new categories and marketing terminology from vendors, most in the IT community are now beginning to understand the potential of big data. Ventana Research thoroughly covered the evolving state of the big data and information optimization sector in 2014 and will continue this research in 2015 and beyond. As it progresses the importance of making big data systems interoperate with existing enterprise and information architecture along with digital transformation strategiesVentanaResearchLogo300pxbecomes critical. Done properly companies can take advantage of big data innovations to optimize their established business processes and execute new business strategies. But just deploying big data and applying analytics to understand it is just the beginning. Innovative organizations must go beyond the usual exploratory and root-cause analyses through applied analytic discovery and other techniques. This of course requires them to develop competencies in information management for big data.

Among big data technologies, the open source Hadoop has been commercialized by now established providers including Cloudera, Hortonworks and MapR and made available in the cloud through platforms such as Qubole, which received a Ventana Research Technology Innovation Award in 2014. Other big data technologies are growing as well; for example, use of in-memory and vr_BDI_03_plans_for_big_data_technologyspecialized databases also is growing like Hadoop in more than 40 percent of organizations, according to our big data integration benchmark research. These technologies have been integrated into databases or what I call hybrid big data appliances like those from IBM, Oracle, SAP and Teradata that bring the power of Hadoop to the RDBMS and exploit in-memory processing to perform ever faster computing. When placed into hosted and cloud environments these appliances can virtualize big data processing. Another new provider, Splice Machine, brings the power of SQL processing in a scalable approach that uses Hadoop in a cloud-based approach; it received a Ventana Research Technology Leadership Award last year. Likewise advances in NoSQL approaches help organizations process and utilize semistructured information along with other information and blend them with analytics as Datawatch does. These examples show that disruptive technologies still have the potential to revolutionize our approaches to managing information.

Our firm also explores what we call information optimization,Ventana_Research_2014_Tech_Innovation_Award_Main which assesses techniques for gaining full value from business information. Big data is one of these when used effectively in an enterprise information architecture. In this context the  “data lake” analogy is not helpful in representing the full scope of big data, suggesting simply a container like a data marts or data warehouse. With big data, taking an architectural approach is critical. This viewpoint is evident in our 2014 Ventana Research Technology Innovation Award in Information Management to Teradata for its Unified Data Architecture. Another award winner, Software AG, blends big data and information optimization using its real-time and in-memory processing technologies.

Businesses need to process data in rapid cycles, many in real time and what we call operational intelligence, which utilizes events and streams and provides the ability to sense and respond immediately to issues and opportunities in organizations that adapt to a data-driven culture.vr_oi_how_operational_intellegence_is_used Our operational intelligence research finds that monitoring, alerting and notification are the top use cases for deployment, in more than half of organizations. Also machine data can help businesses optimize not just IT processes but business processes that help govern and control the security of data in the enterprise. This imperative is evident in the dramatic growth of suppliers such as Splunk, Sumo Logic and Savi Technology, all of which won Ventana Research Technology Innovation awards for how they process machine and business data in large volumes at rapid velocity.

Another increasing trend in big data is presenting it in ways that ordinary users can understand quickly. Discovery and advanced visualization is not enough for business users who are not trained to interpret these presentations. Some vendors can present locationvr_Big_Data_Analytics_08_top_capabilities_of_big_data_analyticsand geospatial data on maps that are easier to understand. At the other end of the user spectrum data scientists and analysts need more robust analytic and discovery tools, including predictive analytics, which is a priority for many organizations, according toour big data analytics research. In 2015 we will examine the next generation of predictive analytics in new benchmark research. But there is more work to do to present insights from information that are easy to understand. Some analytics vendors are telling stories by linking pages of content, but these narratives don’t as yet help individuals assess and act. Most analytics tools can’t match the simple functionality of Microsoft PowerPoint, placing descriptive titles, bullets and recommendations on a page with a graphic that represents something important to these business professional who reads it. Deeper insights may come from advances in machine learning and cognitive computing that have arrived on the market and bring more science to analytics.

So we strong potential for the outputs of big data, but they don’t arrive just by loading data into these new computing environments. Pragmatic and experienced professionals realize that information management processes do not disappear. A key one in this area is data preparation, which helps  ready vr_BDI_12_managing_big_data_integrationdata sets for processing into big data environments. Preparing data is the second-most important task for 46 percent of organizations in our big data integration research. A second is data integration, which some new tools can automate. This can enable lines of business and IT to work together on big data integration, as 41 percent of organizations in our research are planning to do. To address this need a new generation of technologies came into their own in 2014 including those that received Ventana Research Technology Innovation Awards like Paxata and Tamr but also Trifacta.

Yet another area to watch is the convergence of big data and cloud computing. The proliferation of data sources in the cloud forces organizations to managed and integrate data from a variety of cloud and Internet sources, hence the rise of information as a service for business needs. Ventana Research Technology Innovation Award winner DataSift provides information as a service to blend social media data with other big data and analytics. Such techniques require more flexible environments for integration that can operate anywhere at any time. Dell Boomi, MuleSoft, SnapLogic and others now challenge established data integration providers such as Informatica and others including IBM, Oracle and SAP. Advances in master data management, data governance, data quality and integration backbones, and Informatica and Information Builders help provide better consistency of any type of big data for any business purpose. In addition our research finds that data security is critical for big data in 61 percent of organizations; only 14 percent said that is very adequate in their organization.

There is no doubt that big data is now widespread; vr_Info_Optimization_12_big_data_is_widely_usedalmost 80 percent of organizations in our information optimization research, for example, will be using it some form by the end of 2015. This is partly due to increased use across the lines of business; our research on next-generation customer analytics in 2014 shows that it is important to improving understanding customers in 60 percent of organizations, is being used in one-fifth of organizations and will be in 46 percent by the end of this year. Similarly our next-generation finance analytics research in 2014 finds big data important to 37 percent of organizations, with 13 percent using it today and 42 percent planning to by the end of 2015. And we have already measured how it will impact human capital management and HR and where organizations are leveraging it in this area of importance.

I invite you to download and peruse our big data agenda for 2015. We will examine how organizations can vr_BDI_08_benefits_of_big_data_integrationinstrument information optimization processes that use big data and pass this guidance along. We will explore big data’s role in sales and product areas and produce new research on data and analytics in the cloud. Our research will uncover best practices that innovative organizations use not only to prepare and integrate big data but also more tightly unify it with analytics and operations across enterprise and cloud computing environments. For many organizations taking on this challenge and seeking its benefits will require new information platforms and methods to access and provide information as part of their big data deployments. (Getting consistent information across the enterprise is the top benefit of big data integration according to 39 percent of organizations.) We expect 2015 to be a big year for big data and information optimization. I look forward to providing more insights and information about big data and helping everyone get the most from their time and investments in it.

Regards,

Mark Smith

CEO and Chief Research Officer

Mark Smith – Twitter

Ventana Research

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