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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New Disciplines of the Modern Training Organization

Posted on June 2, 2008. Filed under: Content Development, Learning 2.0, Learning Programs, Talent Management | Tags: , , , , , , , , , |

This month we are launching The High Impact Learning Organization®, a research study which has been more than three years in development.  During this time we have interviewed hundreds of corporate HR and training leaders and reviewed in-depth trends of more than 780 global organizations. 

Listen Audio Overview of this research:  click here.

As I have been discussing this research with our research members, I realize that one of the most profound changes that is taking place in corporate learning and development is the need for a new set of disciplines, a new set of skills and competencies.  The traditional “instructional design, development, and delivery” skills, while still important, are fading into the background.

New Skills and Disciplines

  • Facilitating learning, not Delivering learning.  In today’s networked organizations, informal or collaborative learning is now critical.  Rather than creating a learning program and delivering it to an audience, today’s high-impact learning organizations create learning opportunities – by creating communities of practice, social networking experiences, and subject-matter expert-led experiences.  NetworkAppliance, Cisco, Dell, Pfizer, IBM, and many of our other research members have transformed their learning organizations by providing tools and opportunities for experts to teach and share information. Such tools and systems include blogs, wikis, video studios, rapid e-learning tools, RSS feeds, and even “twitter” and other social networking tools. 
  • Information Architecture, not just Web Design.  In today’s corporate learning environment, it is not enough to build “compelling courseware” or an “easy to use LMS.”   We have too much information available to our employees and customers:  product documentation, job aids, online courses, how-to guides, videos, and more.  The critical skills needed are the ability to create an online experience which is relevant and usable for the employee at their time of need — and this requires a focus on information architecture, not just “ease of use.”  (For more information on “information architecture” please read our research.)
  • A Learning Architecture, not just Blended Learning.  The concepts of blended learning, which I first wrote about in 2003 and 2004, have not gone away.  In fact they are more important than ever.  But now you have so many choices of media, collaborative tools, simulations, and other forms of content that you must ration and simplify your choices.  The answer is what we call a “corporate learning architecture,” which describes the tools, approaches, and processes you will support in your organization.  It gives program managers and learning executives a recipe of what to do when.  Again, we discuss this in detail in our research.
  • Competency-Based, Role-Based, and Function-Based Learning, not just Learning Paths.  In today’s “content-rich” organizations, our job is now to create “relevance and context” not just “content.”  This means that when we create a learning program and some online experience to supplement it, we must consider how the learner will locate, use, and apply the content.  If the program is a career or leadership development program, it must be competency based.  If it is a performance-driven learning program, it may need to be role-based (e.g. defined and customized for a certain job role) or function based (e.g. defined and customized for certain job functions which may cross roles).  Each of these models requires a slightly different way of thinking about and developing content.

    A perfect example is sales training for a new product rollout.  Do you want to develop skills in product usage and demonstration?  Do you want to develop skills in sales objection handling?  Or do you want to build solution-selling skills?  Each possible training strategy will required content in different forms for different uses – and in most major product rollouts you need all elements!  Read our Learning Leaders® report on how Symantec solved this problem in their massive new security product rollout.
  • Integration with Talent Management, not just Driving Organizational Competencies.  Finally, one more “new discipline” which we must all address is the need to work closely with our talent management brethren.  In today’s talent-constrained organizations, the L&D organization must understand the needs for new career development programs and portals, integrated performance and development planning processes, competency-based assessment and recruiting, and onboarding.  These processes are not new to L&D professionals, but they take a different level of rigor and approach to the traditional “performance-driven” training programs.  They are more complex, take longer to implement, and require a deeper level of organizational commitment and change.

The Traditional Skills and Disciplines

 Many things in organizational learning have not changed.  You must still understand the principles of performance consulting, needs analysis, instructional design, and assessment.  Learning organizations must still partner closely with line managers and business executives to understand the skills needed to meet urgent new business priorities.  And they must continue to hold themselves accountable for measuring the adoption, alignment, efficiency, and impact of the L&D investment.

But while these disciplines remain, our research clearly shows that the “high-impact” organizations are focusing more and more on developing the new skills above.  Read more about the Top 18 High-Impact Best-Practices of High-Impact Learning Organizations in our research.

As always, I welcome your comments.  

(To get a copy of The High Impact Learning Organization® research report, click here.)

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Whither goes the LMS market?

Posted on March 12, 2008. Filed under: Content Development, Enterprise Learning, LMS, LCMS | Tags: , , , |

As we read more and more about talent management suites and the rapid growth in the market for integrated HR software, what has happened to the market for learning management systems?  I’d like to provide our readers a brief update, with more details available in our research library.

1.  The LMS market continues to grow. 

The LMS market will reach over $700 Million this year and it continues to grow.  While more than 70% of large enterprises have some LMS in place, almost 40% of these are being replaced, consolidated, or upgraded.  In the mid-market segment (more than 20,000 organizations in the US alone), this market is still very under-penetrated, and as more and more LMS vendors deliver SaaS products, the buying will continue.

2.  LMS products are evolving in two important directions:   talent management and Web 2.0.

Learning management systems are what I call “bread and butter” applications.  Everyone who does any significant amount of training needs one.  In that role, they are critically important systems for the administration and management of training programs.

In a broader role, however, LMS systems are growing in two ways.  First, most companies now realize that their training must be integrated with their performance, career, and talent management processes – so these systems must interoperate and function as talent management tools.  Second, once companies have tens to thousands of learning programs loaded into the system, the LMS becomes a critically important content management system which facilitates informal learning and what we call “learning on demand.”  The next step will be social networking.

Directions for the LMS Market

Fig 1:  Two Directions for the LMS Market

Vendors which have jumped onto this include KnowledgePlanet (completely renamed to Mzinga and refocused the company on corporate social networking, while continuing its enterprise class LMS business), Saba (acquired Centra and offers blogs, wikis, and collaboration within the context of every learning program), (built its own web conferencing system which is available in its platform), SumTotal (which just announced support for the iPhone), and almost every other LMS provider.  In fact one of the potential risks to the LMS market is that you can now implement a Wiki so easily with tools like Customervision or Gaussian that collaborative learning can be implemented fairly easily without an LMS (although the tracking, registration, and administration features are still needed).

3.  New financial investments and financial progress.

Most financial analysts find the LMS market confusing.  This is changing.  This last quarter both Saba and SumTotal delivered operating profits, an important step.  In addition, two of the fastest-growing Software as a Service (SaaS) LMS vendors received large investments:  GeoLearning received a $31 Million investment from Fidelity Ventures and CornerstoneOnDemand received $32M last Fall.  These investments show that the financial community now understands the ever-growing need for these systems and the huge market opportunity for vendors with well positioned products and SaaS offerings.

4.  Where is the market going?

The LMS market continues to expand.  Despite the fact that the two largest vendors are now over $100M in sales (SumTotal is now running at a $133M revenue runrate and Saba around $107M), smaller companies continue to grow rapidly.  CornerstoneOnDemand, Plateau, Softscape, GeoLearning,, Meridian, Certpoint, Mzinga, as well as Oracle and SAP are all seeing tremendous growth.  While the market is highly competitive, each of these companies is identifying its own market niches – and there are many.   We consider training to be a “horizontal” market – it takes place in almost every large organization.  But within this horizontal market there are many segments:  customer training, reseller/channel training, certification and compliance training, rapid e-learning for small companies, global enterprise learning management, as well as content development, publishing, and informal learning. 

LMS vendors are reaching into content management and publishing in different and valuable ways.  Plateau’s i-Content offering provides a unique and open approach to management of corporate e-learning;  EEDO, Outstart, and Certpoint offer robust content management and development systems to manage enterprise-wide content and blended learning programs, and we recently talked with another exciting company which has developed an enterprise-class LMS for the publishing industry.

Will this market “consolidate?”  I do not see it happening.  There are still many “unsolved problems” in the LMS space, and buyers continue to select different solutions based on their own internal strategy.  While all HR managers would like to have an end-to-end software system for all elements of talent management, only 15-20% of organizations can even do this.  Organizations have a “tower of babel” of existing systems — and the LMS is a system with many masters.  While it is often purchased by the L&D organization, it is used by sales, compliance, talent management, career development, customer education, and many other groups in the company.  With exciting new technologies now available for corporate learning (tagging, blogs, wikis, mobile interfaces, social networking, and we see many new ones on the horizon) the role of the LMS is everchanging. 

If vendors do not continue to evolve with this market, organizations will find that their LMS becomes a “back office mainframe” (I guess many of you have never seen a mainframe – its a big blue file cabinet in the IT department) which is only used by training adminstrators.  But we have a vibrant industry of creative professionals serving this market, and rather I see a tremendous amount of new innovation continuing to fuel the corporate learning market.

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Is it time to Re-Centralize Corporate Training?

Posted on December 4, 2007. Filed under: Enterprise Learning, Organization & Governance | Tags: , , , |

An interesting trend is occurring in 2008.  Over the last 7-8 years organizations have been working very hard to create a “federated” model for training, which centralizes certain core functions (e.g. LMS administration, leadership development, compliance, tuition reimbursement, catalog content) and decentralizes key training areas in sales, onboarding, customer service, and operations.

This organization model has been difficult to implement.  While we continue to help organizations define the “constitution” of this model and expect this to continue, we are seeing a trend toward greater centralization.  Why?  Because the implementation of organization-wide talent management programs is often dependent on heavy new investments in L&D.

For example, a major healthcare provider who is a research client is re-centralizing all 600 of its training professionals into a centralized reporting structure.  Many of these individuals will remain located and assigned to work with business units, but now by being part of the centralized talent management team, they can be focused on organizational-wide learning initiatives.  Another client, a major retailer, has recently consolidated its national brands and is also centralizing L&D to create more consistent and brand-centric onboarding and new hire orientation.

As we prepare to publish our High Impact Learning Organization 2008 research, we see this trend occurring in many industries.  You thought it was hard to organize training when you first started e-learning?  Time to start further re-thinking the problem again.

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