Please welcome Ed Newman to the HRExaminer Editorial Advisory Board. Ed is an entrepreneur with a deep background in Human Resources and Talent Management and currently the CEO of InsideTMT.com, a community web site designed for people with interests in Talent Management Technology. Over the past 20 years Ed has led the development and implementation of numerous recruiting and HR technology deployments and strategic talent management initiatives for Fortune 500 companies. Full Bio »
What’s in your Talent Management Technology Portfolio?
by Ed Newman
Over the course of the last decade, we have seen major evolution in the Talent Management Technology market. It started out as a bunch of point solutions like applicant tracking, learning management, performance and succession, designed as “bolt on” modules to your core HRIS. But through horizontal growth and mergers and acquisitions, this category has emerged as a significant platform covering up to five functional disciplines with a whole new crop of bolt on products.
Ten years ago it was pretty confusing. Talent Management was a new term and everyone was using it differently. I remember thinking that as the market matured, some day it would all be crystal clear. But as you walk through the exhibit hall of any HR conference, it is just as confusing as ever. There are hundreds of vendors all telling you that their product will help you attract and retain the best talent. Some will tell you they can do it all. How do you know if you have the right mix of products to be competitive? How do you know if you’re missing out on some hot new technology that might make all the difference?
To make some sense of it all I like to think about it like building an investment portfolio. But instead of stocks, bonds and mutual funds, we need to fill it with foundation products, applications, and extensions.
Foundation – The foundation of your portfolio is made up of Payroll, HRIS, ERP products and your investments will be lower risk, like bonds. Companies like Oracle, SAP, ADP, are all solid and proven technology vendors and are not going anywhere. With lower risk comes lower reward, but this level is the price of admission. You need to have a core system of record for things like headcount, org structure, job classifications, and compensation data. You can’t really do Talent Management if you don’t have an accurate foundation of information.
Applications – Your application products provide the functionality to execute any of the core processes in talent management like recruiting, succession planning, performance, compensation, learning management, and workforce planning. The products offer the promise of big returns through lower costs, improved efficiency, higher employee engagement and the analytical intelligence to make better decisions. Most vendors in this group have been moving horizontally in an effort to provide all of these modules on a single platform. But for big companies, no one has it all figured out yet. And like investing in stocks, this is a higher risk/reward category due to all of the M&A activity.
While we have seen some stabilization with public companies performing well, like Taleo, Kenexa, and Cornerstone, the recent acquisition of SuccessFactors by SAP is an indication there will be a lot more consolidation. And you never know who might acquire whom. SuccessFactors customers who use Oracle/PeopleSoft as their foundation for example, may be wondering If you are very risk averse you can make a bigger investment in your Foundation products to support some or all of these processes until it shakes out. But in the short run, it will probably cost you more for a smaller return.
Extensions – These products are the glitz and glamour of the industry, and more like speculative stocks. They are typically leveraging the cutting edge advances in technology such as social media, video, and mobile devices and you really have no idea what will stick. And while the potential returns for early adoption are great, they could easily diminish over time, as they become mainstream or end up as just another fad. There tends to be a greater concentration of extension products in the recruiting function, but not exclusively. Categories like Recruitment Marketing and Sourcing, Candidate Relationship Management, Video Interviewing, Reference Checking, Talent Communities, and all forms of Social Recruiting are growing and expanding weekly. But there are categories like Social Collaboration and Rewards and Recognition that are more aligned with Learning, Performance, and Employee Engagement.
You probably won’t be betting the farm on any one of these products, which makes sense because the risk is much higher. The Foundation and Application vendors are trying to deliver these types of capabilities, but have had a hard time keeping pace. They have their hands full managing the full breadth of their already large platforms. If one of them decides to put the resources behind it, they could easily build some functionality to put one of the categories out of business. But it is more likely that an acquisition will be made, and that is where you could run into some complications. For example, when ADP acquired The Right Thing the AIRS SourcePoint CRM product went with it. If you have SourcePoint integrated with one of ADP’s competitors, you have to wonder how long it will be supported. The SuccessFactors acquisition of Jobs2Web will have similar implications.
Nothing happens over night, but you should closely monitor your investments in these extensions so that you can make adjustments and prepare for change. If you are not paying attention it can start to add up and you probably don’t want it to make up a significant percentage of your portfolio.
What should be in your Talent Management Technology Portfolio?
As for the Foundation segment, if you are more than 100 employees you need to get off the spreadsheets. Microsoft excel is very capable of tracking thousands of rows, but the cost of entry level HRIS products is so low, you can afford it. The bigger you get the more industrial strength your solution should be, but there are enough options to meet everyone’s cost/benefit analysis.
In the segment of Applications with all of the horizontal expansion by the vendors it is hard not to be thinking about moving to a platform. But it does not necessarily need to be a single vendor for all functions. This is a higher risk investment and you may not want all your eggs in one basket. First of all, nobody is even close to having enough depth in each discipline to meet the needs of a large enterprise. I think it makes a lot of sense to have two or three vendors, maybe one with strength in recruiting, and another with strength in Performance or Learning. With the advances of open API’s, integration and data warehousing can give you some cohesion and cover all the bases.
In the area of Extensions everyone seems to be dabbling in social media, and you should most definitely have some sort of front end Recruitment Marketing platform that connects all the dots between job boards, social sites, and your ATS. Additionally, there are two categories that offer huge value and virtually pay for themselves. Video Interviewing and Pre-Hire 360 (Reference Checks). The cost savings alone justify the investment, and there is also a big impact on quality.
Just like a stock portfolio, you should probably have all three types of products, with the amount invested in each aligned with your propensity for risk and reward.