HR Systems

Softscape Settles SuccessFactors Lawsuit

Posted on December 23, 2008. Filed under: HR Systems | Tags: , , , , |

Today Softscape settled the lawsuit filed by SuccessFactors in March of 2008.   This lawsuit, which we wrote about in a prior blog post, revolved around a contentious sales presentation which was developed by Softscape and leaked into the public domain.   In the final settlement Softscape agreed that the presentation in question had some errors and should not have been distributed directly to customers.

As we discussed in our earlier post, this type of activity is very common in the enterprise software business.  It is very common for almost every software company to create harsh and pointed “talking points” about competitive products and claims.  In my days in the software industry I wrote many such documents and frequently used them in sales training and customer discussions.

In this particular case, the lawsuit, filed by SuccessFactors, seemed unnecessary and of little value.  SuccessFactors has managed to grow at over 70% during the period since March and both companies have continued to grow and prosper as the market for talent management software continues.   All the vendors in this market will continue to build aggressive sales presentations and I personally do not think lawsuits are a good way to promote healthy competition.

We continue to have great respect for both companies, and we firmly believe that the most important way to build a software company is to build excellent products, clearly segment the target market,  provide outstanding customer service and support, and stay very close to evolving market needs.   Both Softscape and SuccessFactors are successful, growing companies and both are executing well.

The Talent Management Software Market Evolves

We do see some major changes taking place in the talent management software market – and we will be explaining this further in the coming months.    Not only is the market growing, but it is becoming more mature – organizations now realize that the “talent management suite” is not really a suite, but a complex set of enterprise software which must provide a complete solution for many elements of people management.   The days of young, small companies entering this segment of the market are ending – and the players today are rapidly expanding the definition of “talent management” software to include much more than the traditional elements of performance, succession, and career development tools.

Watch for more from us in this exciting and evolving market in 2009.

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Where is the “Talent Management” Market going?

Posted on November 9, 2008. Filed under: Enterprise Learning, HR Systems, Talent Management | Tags: , , , , , , , |

As the US economy lost 240,000 jobs last month and the unemployment rate rises to 6.5%, one of the questions I know many people ask is the direction of the “talent management” marketplace.  Let me give you our thoughts on the trends taking place.

First, the urgency of “talent management” in corporate HR organizations has not slowed.  In fact, nearly every organization we talk with is moving ahead with their new talent management strategies, which includes redesign of performance management, further integration of their HR organization, assignment of a Vice-President or other senior HR leader responsible for “talent management,” and the desire to implement talent management software.

Second, we also are finding that most companies are also reducing the size of their HR and L&D organizations (the US L&D market in 2008 has shrunk significantly, and we will be publishing this data in the next few weeks).  We are now working with many organizations to restructure their training departments to create more centralized organizations in the interest of reducing costs, and we see a dramatic dropoff in the development of new L&D initiatives which are not directly related to talent management.

Third, organizations are cutting back on travel and other development-related expenditures and now investing more in lower cost, collaborative learning infrastructure.  One Fortune 100 company we are working with has decided that instead of replacing their learning managment system they are going to implement new collaborative, Learning 2.0 strategies using low cost social networking software to enhance their sales and service training and create more employee engagement.  The LMS “upgrade” looked like a $5 Million project, so it is going on hold.

Fourth, the talent management systems market continues to grow, but at a slightly slowing rate.  In fact, if we look at the Q3 2008 revenues of four publically traded companies, SuccessFactors, Taleo, SumTotal, and Saba, we see positive but slowing revenue growth in every single company.  Revenue growth rates at these four companies are 77%, 39%, 12%, and -1% respectively.  Unfortunately, each of these public companies continues to lose money and all have seen their market caps drop (along with the entire market).  But the market is still healthy:  for example we know that private companies are also growing – Plateau, GeoLearning, and each grew by over 25% in the last year.

Fifth, if you look at the talent management software market, which we see as a tremendously important part of corporate HR and talent management going forward, it is beginning to become a bit crowded.  While we still see explosive growth into many years in the future, our latest research now shows that most buyers see similar features from many software providers.  As a result the “price to enter” the market is higher, and software vendors have to invest more and more in sales and marketing to maintain their revenue growth.  SuccessFactors, the fastest growing of all, continues to invest an amazing 61% of its revenue in sales and marketing, which is unsustainable for any company over a long period of time.   We firmly believe that the talent management software market, just like the LMS market, will segment itself into leaders in different segments (global enterprise, enterprise, mid-market, and eventually small business) – and both Oracle and SAP will continue to grow.

Bottom line:  Today’s economic environment has caused new stresses for the HR and L&D organization and will definitely slow the market for talent management software.  But is the party over?  Not at all.  Organizations of all sizes continue to push ahead with their new talent management, social networking, capability modelling, and collaborative learning strategies — they key is to maintain the focus on these programs in a highly efficient way.

New research on these topics:

The Essential Guide to Performance Management Systems and the Market

Enterprise Social Software 2009:  Facts, Analysis, Trends, and Vendor Profiles

The Talent Management Factbook

The Corporate Learning Factbook

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Restructuring HR: Where are we going

Posted on October 26, 2008. Filed under: Enterprise Learning, HR Systems, Talent Management | Tags: , , , , , |

In the last year many of our research members and clients have come to us for help in restructuring their HR or Learning & Development organizations.  There have been three major forces at play here.

1.  Reducing costs:  In nearly every industry organizations are going through restructuring, mergers, or other cost-cutting efforts.  The HR department plays a major role in these changes – both by facilitating these changes and by eliminating duplication in its own operations.  Consider the merger of two regional Banks we just worked with:  both had talent management teams, both had compensation, diversity, and compliance organizations.  

Well the decision about what to cut and how to reorganize were not easy:  one of these banks focused on high net-worth individuals and small businesses, so it had a large workforce of account and portfolio managers providing customized services.  The other was a more traditional retail bank, staffed largely by people dealing with retail clients.

Bottom line:  the combined organization design required a sharp and focused look at the new workforce strategy, the key competencies and capabilities in place, and which of the HR teams had the expertise and understanding to execute the new combined bank’s strategies.  Some of the operations went to the traditional retail banking HR leaders, others (talent management, for example) went to the HR leaders from the smaller, acquired organization.

Advice:  consider your new workforce strategy and look for the most valuable HR skills and capabilities in dealing with the new workforce, and use this to guide your reorganization.

2.  Implementing new Talent and Capability Management Solutions:  The second major driver behind new HR organizations is a need to implement talent and capability management strategies.  Consider one of our clients who is a large, well known consumer packaged goods company.  This particular company has a well established talent management strategy which moves people across functional organizations (e.g. marketing, sales, manufacturing) from product line to product line.  These people rise through the organization in these functional roles and eventually have the opportunity to become general managers of consumer products.

This is a very traditional talent strategy, pioneered by Procter & Gamble and now used by Unilever, Clorox, Kraft/Altria, and many other consumer goods companies.

But how does this type of organization work when the company enters a major economic slowdown, an acquisition, or divestiture of an entire product category?  It builds functional skills which are supposedly transferrable into a new product.  But in reality, what our research has shown, is that many such CPG (consumer packaged goods) companies have old, long-established techniques for marketing which may or may not fit into such a new market.

Clorox, for example, creates entirely new marketing and product teams to enter new markets.  The highly successful “Green Works” product line from Clorox was incubated and developed outside of the company’s traditional marketing organization.

Bottom line:  as we find in almost every industry, the “magic” to a newly combined talent management organization is not to simply squash together all the organizational development roles, but rather to stitch them together with a strong focus on the company’s strategic business needs.  In our High Impact Talent Management research we find organizations which succeed with integrated talent management create talent “pools” which are treated in special ways based on their demographic, skills, and strategic role.  Oil companies, for example, must create special “talent pools” for exploration and production engineers, because they provide such high value and are in such short supply.

3.  Adoption and Integration of New HR and Learning 2.0 Technologies:  The third major change which is causing HR to change is the rapid adoption of new HR and Learning 2.0 (read “social networking“) technologies.  It is now possible to purchase an HRMS system which includes integrated functionality for goal alignment, performance management, succession planning, talent pooling, career management, and more.  And in the area of enterprise learning, today’s new learning management systems (LMS) now have social networking, collaboration, messaging, and content management embedded.

In addition, as our latest High Impact Learning Organization research shows, more and more of an organization’s capability-building expertise now lies in its ability to create internal collaboration and communities of practices — and less relies on traditional competency management and training. 

Consider a large pharmaceutical company.  We are working with three such companies right now and each are looking for ways to reduce L&D costs by implementing integrated technologies and organization structures to share knowledge, collaboration, tools, and infrastructure across sales, research, manufacturing, and other large business functions.   The traditional HR and L&D organization which may have decentralized groups must be changed to take advantage of these new integrated technologies.

Bottom line:  new technologies can be transformational, but make sure you consider how they will force and enable your HR and L&D organization to collaborate as well.  If you want to understand how these changes are occurring, read our new Social Software 2009 research or our just-published report The Essential Guide to Performance and Talent Management Systems.

In 2008 and 2009 we expect many organizations to grapple with these challenges:  what is the “new role” for corporate training?  What do we do with the HR generalists located in our business units?  How does the talent management team create strategies which can be customized for critical roles?  And what parts of HR should be globalized vs. decentralized?

While the traditional approach to outsourcing HR transactions continues to drive cost reduction, I believe it is these higher level issues which are really going to drive HR’s value in the next 12-24 months.  With the economy slowing and more than 30% of organizations going through some type of restructure or leadership change, we must think about how we will reorganize ourselves to provide cost reduction, integrated talent solutions, and enable new technologies all at once.

(We have a variety of tools and assessments to help organizations work through these issues – please contact us if you would like to learn more.)

Comments welcome…

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Enterprise Social Software: A New Category

Posted on October 2, 2008. Filed under: Enterprise Learning, HR Systems, Learning 2.0 | Tags: , , , , , , , , , , , , , , , , , , , , |

This week we introduced some important and groundbreaking research on a new, important category of enterprise software:  the market for corporate Social Software platforms.   Traditionally our research has focused on identifying the strategies, processes, and systems which help corporate HR and L&D drive effectiveness and business value.  But as we continued to study the market for Talent Management and Learning Management software, we found that almost every software vendor was building features for internal social networking.

As we talk with corporate HR and L&D leaders they tell us that more and more of their focus is moving toward strategies and systems which support and create internal social networks, internal collaboration, content sharing, and informal learning.  So naturally we asked ourselves, how is this all going to come together?

Our research found several things.  First, today most companies are experimenting with many forms of social software in the areas of employee expert directories, customer service, customer community management, sales force collaboration and knowledge management, and technical communities of practice.  In fact, more than half the companies we talked with have active, highly sophistocated communities of practice in many of their customer facing and technical roles.  

Second, we found that very few companies have found a way to apply these tools and solutions to enterprise-wide HR, learning, and talent strategies.  Some, like IBM and Cisco, have invested heavily in this area and are well along on implementing what we call “learning on-demand” solutions internally.  But most companies are still bringing together teams from IT, HR, L&D, sales, and service and trying to figure out how an enterprise-wide social networking strategy would work.

Third, we found that this new application segment has spawned a large and very fast-growing segment of software providers.   While the jury is still out on whether these companies will grow into billion dollar companies or be subsumed into the likes of Oracle, SAP, Microsoft, IBM, and others, we believe that for the next 3-5 years these companies will become very important in the development of strategies and solutions for enterprise-wide learning and talent strategies.  The market is already over $270 Million and we expect it to grow to over $400 Million by the end of 2009.

These new, fast-growing companies like Atlassian, Jive Software, LiveWorld, Mzinga, and Telligent have built highly functional systems which implement the four major categories of “Social Software” – conversations, connections, collaboration, and content.  While most are not uniquely targeting the market for HR and corporate training, all are moving in this direction and they warrant a good look by your organization.

Does this mean that the market for Learning Management Systems (LMS) and content management systems is going away?  No, not at all — but it clearly means that a new “category” has been created, and this new category will challenge LMS providers and corporate buyers to think hard about how they build their next-generation HR and Learning systems architectures.

I encourage our clients to learn about this space – it is transformational.  Our upcoming research bulletin on the role of Social Networking in Enterprise Learning and Talent Management will help you learn more.

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Time to Reduce Costs in Corporate Learning & Development

Posted on September 21, 2008. Filed under: Enterprise Learning, HR Systems, LMS, LCMS |

Our soon to be published research on corporate L&D spending in 2008 shows a definite slowdown in spending on corporate training.  (This research will be published in October.)  This is certainly not a surprise – in August our research panel shows that today’s corporate talent managers cite “a need to reduce costs” as their #1 business challenge (54% of all respondents, up from 51% in May and 36% in January).

One of our long-term research clients is a large pharmaceutical company which has grown by leaps and bounds over the last decade.  This company, like many others in this industry, invests heavily in R&D and has benefited from the tremendous success of many of its blockbuster best-selling products.  

In the last 18 months, however, growth has slowed – so this organization is now looking for ways to better rationalize its spending on corporate training and other business support functions.  A few recommendations to consider, based on this organization’s situation:

1.  It’s time to build a truly federated spending model for training.  Centralize the programs and functions which are repeatable and scalable (typically these include leadership development, career development, LMS and training technology, vendor operations, and advanced e-learning.  

In this industry companies typically have strong functional business leaders in sales, manufacturing, research and development, and corporate functions.  These business units are going to have to give up some autonomy and rely on a shared services or corporate university function.  Such a move can save 10-15% or more of a company’s training spending with little or no real reduction in effectiveness.

2.  Rely heavily on informal and collaborative learning.  One of the least expensive ways to improve programs like onboarding, management and supervisory development, and career development is by focusing heavily on building collaborative programs which rely on communities of practice, social networking, and coaching.  David Mallon’s recent research (and soon to be published study in this are) shows that among all the social networking program in companies today, the most prevalent and successful are communities of practice.

Pharmaceutical research teams, sales teams, manufacturing teams, and technical teams can all learn rapidly and easily from each other.  And the L&D spending on such programs is minimal.  

3.  Rationalize external spending.  Most big companies (like large pharmaceuticals) have many suppliers.  In a decentralized L&D environment it is almost impossible to efficiently manage these contracts.  While many excellent learning solution providers deliver high value (e.g. supervisory training companies, content development firms), they also look for opportunities to sell services to multiple business units in a global company.  When you centralize vendor operations you often find 20-30% extra spending in many program and functional training areas.

4.  Consolidate the LMS and build a talent management systems strategy.  Finally, focus on the area which most companies have been focused on for a few years, consolidation of the corporate LMS.  Our research shows that almost 70% of large corporations (more than 10,000 employees) are now focused on LMS consolidation.  This process, in conjunction with the development of an integrated talent management systems strategy, will save millions in IT and technical expenses.

Today nearly every major LMS vendor also has an integrated talent management (e.g. performance and succession management) suite.  Look carefully at it, because our research clearly shows that organizations which buy their LMS from the same supplier as their talent management system are seeing 3-4X the return from those who buy them from different companies.

I know cutting costs is not always easy.  But it is something we must deal with continuously, and today it is probably one of the most important things you will be asked to do.

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Where is the Market for HR Software?

Posted on September 6, 2008. Filed under: HR Systems | Tags: , , , , |

One of the things we regularly do as an analyst firm is estimate the size and growth rate of various corporate software markets.  Without giving away our proprietary methodology, I’d like to point out something which should make software providers think twice about their business strategy.

In the United States, only 38% of all employees work for companies with more than 1,000 employees, and only 22% work for companies with more than 10,000 employees.  So if you focus your software sales and product strategy toward the biggest companies, you are likely to find a saturated market quickly.  In fact, there are only 912 companies with more than 10,000 employees headquartered in the United States.

The “mid-market” is actually shaped like a dumbell.  In other words, there are a very large number (nearly 6 million) of tiny companies in the US (startups, small businesses), but far fewer companies of a medium size (companies from 500-2,500 employees only make up 8% of total US employment).  My guess is that the reason for this is that it is very hard for a business to grow above a few hundred employees, and those that manage to doso are solid enough to either grow much bigger or become acquired.

What this data essentially means is that HR software companies that target the large, global enterprise buyers are going to run into a lot of competition as their market matures.  For example, the market for performance and talent management software has already become very competitive, with more than 22 software providers including Oracle and SAP.  When this occurs it becomes a “replacement” market, which slowly favors the largest most established vendors.

On the other hand, if you can find a way to tap into the small business market, you are likely to find a goldmine.  Look at ADP and Paychex, for example.  These companies dominate the market for small business payroll and both are very large, profitable, and growing.  ADP’s revenues are nearly $9 Billion and Paychex’s is over $2 Billion.  Both are highly profitable and continue to grow rapidly.

In addition, the HR software solution providers must realize that the real needs of small businesses (those with more than 10-20 employees) are not much different than the needs of large companies.  Functionally, they still need payroll, performance management, learning, succession, and compensation management systems.  While they need a very simple, easy to use interface, one will find that once you start to fill their needs their requirements are very similar to big companies.  Halogen Software and Kronos are two of the best  examples of companies that understand this.  Their products are widely used by small and mid-sized companies and both have grown successfully and profitably in this huge market.

In the coming months we are going to introduce two major research reports on enterprise software markets, one discussing the marketplace for corporate social networking software (a very exciting and rapidly changing space) and the other focused on the exploding market for performance and talent management software.   In each report we will point out the current market size, growth rate, and potential penetration in each segment. 

Finally, one more important thing to consider.  Two seperate but also large markets for HR software are the federal and the state and local government markets.  In the US both are very big:  the Federal Government employs over 2.2 million employees and state and local governments employ more than 23 million employees.  As you consider your growth strategy, think about when and how you will target these segments as well – both of which need precisely the same software as profit-making businesses.

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SaaS will never Kill Licensed Software

Posted on August 29, 2008. Filed under: HR Systems | Tags: , , |

I have to smile.  Today I read an interview with Harry Debes, the CEO of Lawson Software, discussing why he thinks the SaaS (Software as a Service) model will fade and die.  While I dont agree 100% with his discussion, I do agree with much of what he has to say.

I also have lived through the era of mainframes and dumb terminals, service bureaus, the ASP model, and now SaaS.  Every new incantation does the same thing:  move the burden of software development and systems management from the buyer to a vendor.  And in every era since the 1970s, the service-provider model has not won over 100% of the market.

There is no question that SaaS business models are great for solution providers once they reach a certain size.  SuccessFactors is desperately trying to prove this in the HR market (but so far they still lose nearly 95 cents for every dollar of revenue they produce).  Many solution providers like payroll providers (ADP, Paychex), CRM (Salesforce), Survey Software (Vovici), and others are doing fine.  And the reason they succeed is because the product they sell provides tremendous amounts of functionality and their core market is mid-sized to small companies. in particular has done an amazing job of also providing APIs and integration solutions to integrate its product with many internal systems.

But in most large enterprises the hodge-podge of internal systems is quite complex, and buyers become nervous about being dependent on a small company’s R&D for strategic applications.  The largest talent management software providers today are less than $200M in revenue, while their customers are often billion dollar companies.  It will only take a few mergers or product failures for buyers to scratch their heads and wonder if they did the right thing.

Our research clearly shows that many companies prefer the SaaS model (particularly small and mid-market companies), but the larger more complex organizations often prefer to own the software, pay for it once, budget for the ongoing maintenance fees, and put their additional dollars into customization, integration, and internal development.  Hence our research finding that most SaaS solution providers still get 80-90% of their revenues from companies with fewer than 10,000 employees.

It’s very exciting to read articles (and marketing from vendors) about how exciting the SaaS model is.  It’s very interesting and exciting for sure, but I have to agree with Harry that it won’t take over the world of enterprise software. 

His comments are here: .

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Your “Incumbent” HR Systems Vendor – What to do?

Posted on August 19, 2008. Filed under: HR Systems, Talent Management | Tags: , , , , , , , , , , |

I just completed a series of interviews with three organizations going through the important, challenging, and time consuming process of implementing a new performance management system.  In each case (a large healthcare provider, a global mining company, and a global call center operations company), the company is using the implementation of a performance management system to implement a new, re-engineered, strategic performance management process.  But rather than discuss this, I’d like to give you some thoughts on their vendor strategy.

These three companies each chose to use their “incumbent” systems vendor.  Rather than go to the “biggest” or “noisiest” systems vendor (I wont mention any names), they felt that they would see far greater benefits by using a newer system from their provider of recruiting software.  Why did they do this?  Because in each case they felt they had a wealth of data, experience, and strong working relationship with this company.

This points out two critical points, which we are publishing in a major research bulletin in the next few weeks:

1.  The biggest ROI from HR systems comes from integration, not automation.  As Leighanne Levensaler, our Director of Talent Management research has pointed out in many of her findings, the real breakthrough benefits of HR systems now come from newly enabled applications, such as pay-for-performance, integrated career and development planning, enterprise succession management, and strategic internal and external recruiting – not from automating or improving a single process.

As our data will prove, this means that the benefits of integration are now far greater than the potential downside of going with a product which may be missing a few features.  (Assuming your incumbent vendor is developing the features you need.)

This means that if your LMS vendor has a solution, or your recruiting vendor has a solution (or even your ERP vendor), you should really look hard at the time, energy, and existing investment you have made in this system before you rush out and bring in a new solution provider.  Obviously there are tradeoffs when your incumbent vendor is not keeping up, but in today’s HR systems world remember that “integration” is far more important than “automation.”

2.  The big “Incumbents” are getting their acts together.  The second point I want to make is that the traditional incumbents (recruiting systems providers, ERP providers (Oracle, PeopleSoft, SAP, Lawson), and LMS providers) are all getting their “talent and performance management” software acts together.  While there are many feature differences between the providers (and our Talent Management Suites research will help you identify these), all now provide some form of an end-to-end solution which includes performance management.

While this continues to be a wild and wolly world of innovation (watch social networking coming around the corner), we think the role of your incumbent is becoming more important than ever.

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Social Networking in Talent Management: Where are we?

Posted on July 2, 2008. Filed under: Enterprise Learning, HR Systems, Learning 2.0, Learning Programs, LMS, LCMS | Tags: , , , , , , , , , |

Whew.  Earlier this year we embarked on a major research effort to understand the growing role of social networking in enterprise learning and talent management.  The results are amazing.   Let me give you a brief preview of some of our initial findings:

  1. Organizations are working mightily to figure out how to leverage social networking (blogs, wikis, presence awareness, messaging, expert directories, communities of practice) in all forms of corporate training, customer education and support, and talent management.  For example, 77% of all L&D organizations believe that younger workers (under 25) have significantly different learning styles than older workers, yet only 16% feel they have developed some level of expertise in the implementation of collaborative learning.  In our most recent Learning On-Demand research, even the most advanced companies tell us that only 14% of companies are using blogs or wikis, and fewer than 4% feel highly successful with these solutions yet.  One big surprise:  28% of our research respondents are not even using Instant Messaging yet, illustrating how long it takes for collaborative solutions to reach broad adoption (and support from IT).
  2. Learning platforms are being “re-examined.”  Most of the companies we talk with are significantly rethinking their entire learning platform strategy (LMS) to understand how to evolve or add new systems which support collaboration.  And today’s LMS is not as successful as one would believe:  across all the organizations we studied (approximately 900 different organizations), on average only 51% of employees use the learning platform at all.
  3. Sophistocated, large, global companies are moving fast.  Almost 1/4 (24%) of organizations now have some concept or strategy for “learning on-demand” (the term we have coined to describe the next era of corporate e-learning), and larger organizations (those with more than 10,000 employees) are twice as far along as small to mid-sized organizations.  The reason, of course, is that large organizations have no choice – without collaborative solutions they can no longer scale their L&D programs.
  4. Social networking software companies are sprouting up like weeds.  We identified 90 such companies in our research, and more than 35 of them are somewhat focused on the corporate internal employee market.  Our initial research clearly shows that these companies fall into four categories:  (A) software providers focused on corporate learning, HR, and collaboration systems and solutions (e.g. IBM, Microsoft-Sharepoint, Jive, Mzinga, Awareness, Q2 Learning, and others), (B) providers focused on external customer and public-facing collaborative networks like a company external blog (e.g. Lithium, Ning, Communispace, Telligent) (C) providers focused on content management systems, who have added on systems for collaboration (EMC, OpenText,  Ektron, Alfresco) and (D) true application software companies who are adding collaboration and social networking to their systems (SuccessFactors, Saba, CornerstoneOndemand).
  5. I firmly believe that this new form of software-enabled collaboration is a revolution, not an evolution.  Like many of the software innovations that I have personally witnessed over my career (e.g. the first color graphics PC, the CD-ROM, the web-browser, Flash, SaaS architectures, and others), social networking is really going to shake things up.  The reason is that these systems are both complex, data-rich, and require a new type of software architecture.  A system which supports 200,000 employees and customers with in-depth employee and customer profiles, active communication and blogging, tagging, content management, custom branding, and tracking each and every communication is quite a complex software solution.  As we examine these vendors we are finding some very significant new areas of functionality which are going to change and upset the traditional HR software companies.
  6. The jury is out on what our ultimate HR software architectures will look like.  Small and mid-sized companies will likely adopt social networking through their SaaS application solutions.  Enterprises are more likely to develop IT standards eventually.  And many companies will implement departmental, divisional, and application-led solutions while the market evolves.  While most enterprises would like to have a corporate “architecture” in this area, it will take time for this to occur and it often takes a few years for the “safe, corporate-approved” solutions to emerge.  (None are there yet.)

We also recently hired David Mallon, our newest analyst covering this area – who is actively involved in identifying case studies and product solutions in “learning on-demand” and the applications of social networking to corporate talent management. 

Research Available:  A Primer on Social Networking in Talent Management

We recently published “Social Networking for Enterprise Learning and Talent Management:  A Primer” which is available to anyone who would like to register at our website. 

Note:  we are actively seeking input on your experiences and organizational strategy in this area – you can participate in this study by clicking here.

An exciting area and we look forward to giving you more information as we learn more!


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Talent Management in a Slowdown – Update

Posted on June 22, 2008. Filed under: Enterprise Learning, HR Systems, Organization & Governance, Talent Management | Tags: , , , , , , , |

In the last few months we have read more and more about the global economic slowdown.  Jim Cramer, the Wall Street pundit, wrote in today’s New York Magazine, that he has never seen things as dismal as they are on Wall Street.  Today the State of California announced a 5.7% unemployment rate, an increase of almost 12% over last month.  And I have noticed a fairly steady increase in HR and L&D leaders now looking around for work.

How is this affecting our HR and L&D organizations?  Our most recent Business of Talent® survey shows a similar impact on corporate HR and training.  Today 45% of HR and L&D executives cite “reductions in cost” as their top priority for the coming quarter, an increase of almost 30% over the last three months. 

In our just-released High Impact Learning Organization® research, we see similar trends.  Today’s L&D managers and executives cite “reducing the cost of training” as their #2 challenge, after business alignment.  And for the first time ever, people cited “building a business plan for learning” as their #3 challenge – illustrating the need to further take L&D investments and make them business-relevant and operationally excellent.

But in the midst of such news, we see many many good things coming.  As I mentioned in our earlier post on the economic downturn, “only when the tide goes out can you tell who is swimming naked.”  Now is the time for HR and L&D to become more relevant than ever.  In fact, one could argue that business slowdowns are good for talent organizations – they force us to become laser focused on what really matters now.

Witness some critically important things going on:

  • Organizations are focusing very heavily on building critical capability models for success.  Such models are mandatory to determine who to hire, who to develop, and who to lay off.  Organizations such as British Telecom, Microsoft, Chevron, GSK, Mercer, and Pemex are all spending significant new dollars to identify their critical competencies.  Such work is strategic and long-lasting.
  • Organizations are looking more carefully at HR systems investments.  We now see RFPs from companies which look far more carefully at the business strategies behind talent management, rather than projects to “automate” processes which may or may not be adding value.  One of the world’s leading consumer packaged goods organization recently asked us to help them rebuild their business case for talent management systems after spending six months gathering requirements.  Such an effort is good – it creates focus and business alignment in HR systems investments.  Nothing is worse than buying HR software to find that noone wants to use it.
  • Informal learning is exploding.  We are just about to publish a major research report on the use of social networking in corporate L&D.  Organizations now realize, often driven by cost reductions, that the corporate L&D organization can not possibly build all the content the company needs.  They are starting to invest in social networking and communities of practice as a mainstream solution.  In fact, in our High Impact Learning Organization Top 18 findings, we found that informal learning and content sharing are now more important to success than the traditional disciplines of performance consulting.
  • Centralization is coming back.  Almost all the clients we talk with now are looking for ways to reign in spending on L&D and other HR initiatives throughout the company.  Such efforts may look like cost savings from the outside, but inside they are driven by the intense need to coordinate L&D and HR efforts to build an integrated talent management process.  Caterpillar, Aetna, Rogers Communications, Wellpoint, and other clients are all focusing heavily in this “strongly centralized federated approach.”

We are preparing a series of reports on the economic trends driving HR, so stay tuned.  Even if the economy does continue to slow down, I hope you believe, as I do, that such a slowdown will not last beyond early to mid 2009.  My experience talking with hundreds of organizations shows me that even in times of great dislocation, our economy is filled with entrepreneurial and creative spirit to build new businesses in the face of change.  And change is something we must deal with in good times and bad.

More to come…  your comments welcome as always.


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