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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

HR Tech Weekly

Episode: 18
Air Date: April 30, 2015


This Week

This week John and Stacey discuss:

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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

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John Sumser:            Hey good morning and welcome to HR tech weekly, one step closer with John Sumser and Stacey Harris. This is John Sumser and I’m sure you’re out there somewhere Stacey.

Stacey Harris:            I am, I am here in California dealing with the spring allergies that I always get when I come out to California for a couple of days this time of year but other than that it’s a beautiful day so I can’t complain. How are you doing John?

John Sumser:            Welcome to pollen heaven. At my house which is a couple hours north of you, yesterday the pollen on my car was so thick that you could write your name in it and see it. It was a complete layer of dust on the car.

Stacey Harris:            Yeah and I think everybody experiences that who lives either in the south or California but you don’t really understand it until you get there and your eyes swell up and everything just sort of turns to a haze because of the yellow pollen or whatever color pollen you’re dealing with so yes I understand it. I think we’re here out in California for a couple of analyst events so we’ll be able to talk a little bit about that today and hopefully those will be inside and away from all the pollen. Then we’ve also got some really interesting stuff to talk about today with what’s going on in the HR tech space around sales force dot come so it should be a pretty good call today outside of the pollen.

John Sumser:            Yeah so why don’t you sort of summarize the sales force news. What is it?

Stacey Harris:            Well I think there’s actually two pieces of news and they came on the heels of each other and probably for some really planned reasons in some way. The first news that came out is last week sales force made a … earlier part of this week, the end of last week sales force made a series of announcements through some various articles and through a few of their regional events that they were moving into the HR space with a more ambitious approach than they have in the past. They weren’t really sort of leading other product yet but they had a series of sort of use cases that they were leading with that people were leveraging the sales forces dot com tools and technology for which included employee onboarding feeds, employee communities, HR help desk and sales force and analytics that was being used from an HR perspective and then what they’re calling their engagement apps which were basically all the various talent management organizations that had built products on the force dot come platform and those included cornerstone on demand, [inaudible 00:02:46] So that was big news in the fact that sales force dot com is making a big claim. Now we’ve heard that a couple times in the past but it seemed to be a more coherent and a more shorter time to get a claim than they have in the past.

On the heels of that though came yesterday’s big news. Bloomberg broke a story that sales force dot com had hired financial advisors to field take over offers and that a large organization had made a take over offer for potential acquirers and so the whole market exploded, their stocks went up and ultimately there was a whole day of me receiving emails and questions about sales force dot come from everybody and anybody in the market and how they were associated with what oracle wanted or SAP wanted or Microsoft. That’s my sort of summary of it. Anything I missed from you perspective John?

John Sumser:            Well I think it’s always hard in these cases to tell whether the company is for sale or not. If you’re trying to maximize the dollar value of the transaction, then you have to act like the company isn’t for sale. Nobody wants to be on the streets begging for money then you sell the[inaudible 00:04:18] discount so the news, the skit on the news and the people who are involved and the competing, the flows of press releases and data are a particularly difficult to penetrate at a time like this because so much of what you see is potentially just a strategic movement of negotiation rather than a bit of reality. It’s more like a fate or a bluff than it is a chunk of reality but it’s virtually impossible to tell. Which makes people like us really happy because we can have all kinds of opinions.

Stacey Harris:            And people want to hear them.

John Sumser:            About what’s going on. It’s sort of ideal news for the analyst but I’m sure there will be lots and lots of bugs. It’s nice to have this kind of attention focused our way.

Stacey Harris:            It is nice and I think what’s sort of interesting is that … and me and you have had conversations about sales force dot com well probably starting almost a year ago because they started to make some noise about a year ago as to what they thought their sort of shape of what HR sort of systems was taking in their environment. Previously they had gone down the road of purchasing ripples, going into the work dot com environment, doing all of those things that sounded very good but there wasn’t a lot of [inaudible 00:05:58] underneath it. The route they took this time and I think was a more practical route was what are people already doing. By the way these are big, big companies and these are big, big organizations with our system and our platform because this is one of the most configurable platforms in the cloud environment in the market today that is HR like and so it was an interesting I think perspective to sort of watch this last year progression where they’ve been trying to sort of build that story and then all of the sudden in the period of really almost four weeks total you’ve heard them drop not only that story but [inaudible 00:06:35] also said he’s doing this big push to make sure that every female in his organization is being paid fairly so they announced that. He’s been on almost all of the financial analyst talk shows about where they’re at and what their plans and what their strategies are so to a point, it’s probably one of the biggest media blitzes that I’ve seen in a long time and who better to do it than one of the largest cloud organizations to make noise and get people excited. It really has [inaudible 00:07:09] of information out there which I think people are trying to make sense of.

John Sumser:            Yeah so I wish I could tell you that I have a perfect crystal ball. I do think that there’s something worth thinking about in … there’s this idea that anybody can be the largest most comprehensive platform but if you go look at what large comprehensive platform turns out to mean, you get SAP on the one hand which is sort of limited by the level of attention it pays to immigration and you get oracle of the other extreme which is limited by the way that it doesn’t do integration. I don’t mean that as a negative at all with oracle, what it’s incredibly good at doing is satisfying a wide range of customers with a wide range of [inaudible 00:08:20]. That doesn’t really match up to the one ERP system mentality that’s put forth by a lot of companies which then has to be sort of a seamless integration across a lot of things. Oracle is more [inaudible 00:08:40] That’s a little harsh, I don’t mean it to be that way. It’s got many more moving parts than other approaches to [inaudible 00:08:53]

Stacey Harris:            Yeah, I think you’re completely right on that. I almost look at the two groups as and their approach to the market. We’ll probably get more details in this coming week because they’re pushing hard to get the message out there that an oracle cloud, analyst event they just did yesterday and they’re doing some more events this week. I think at least what you see from looking at the total picture to your point is that oracle’s strategy or the approach isn’t always, it’s a single platform. The goal is trying to get all these pieces to work together but it’s the idea that you’re dealing with a single organization. It’s more that work with us because we’re going to have all the pieces underneath this umbrella. To your point SAP is, this is going to be system that’s highly integrated which means we’re great on the inside but on the outside we might not be as friendly, right, we’re not connecting maybe as easily to everybody else. There’s sort of two approaches and it depends on what the organization is trying to achieve. I think what’s interesting about all this that sales force did, I think somewhere in the middle on that because their approach has always been to connect effectively with everyone else in all the various forms that they can using force dot com and their extensive network of system integrators who do a lot of integration work with sales force dot com. When you talk about sales force and marketing and chatter, their approach has been we are a single solution for that. Does that sound about right from what you’re seeing as well John?

John Sumser:            I say it differently because I’m not sure that it’s on the spectra. When you look at the fact that the reputed buyers are oracle SAP of Microsoft, I think it just sort of underlines … and this is a modified definition, but it underlines the fact that sales force dot com is a point solution. It’s not a suite, it’s not a platform, it’s not an integration. In this case, point solution is an expanded thing because it’s a tool that serves a particular market. It’s got interesting and broad functionality inside of that market but there’s still evidence really that sales force has been able to reach outside of its market which is organizations never driven by sales. That’s a place where the larger enterprises are [inaudible 00:11:45] They have process and supply chain thinking not sales thinking at the hearts of those organizations. This is a point solution at a very elevated level [inaudible 00:12:00] That tells you why it would be for sale.

Stacey Harris:            Yeah, exactly.

John Sumser:            They’ve exhausted their market, they’ve exhausted their market and have to … like we were talking about before, if you can make more money selling software, you sell software and if you can make more money selling the company, you sell the company. The population and the final analysis, which one is going to give you the bigger payout sooner.

Stacey Harris:            With that being said, I think you hit the nail on the head with that particular comment. It was one of the ones when we were talking about earlier today, that’s probably something a lot of people aren’t even thinking about, right, in this equation. There was some great back and forth between [inaudible 00:12:50] conversation through the media, right, about what was effectively the real financial worth of each organization. Was it cash flow, was it revenue, was it the amount of recurring revenue and how long was sales force dot com planning to continue to reinvest in itself so that its profits to losses, we’re going to be balanced or [inaudible 00:13:23] They’re still putting more investment in the company than they are getting out of it. Do you think that plays into this picture at all? That’s a lot of things that people sort of don’t look at every day when they’re looking at the total worth of the company standing on the outside but the financial audience obviously does.

John Sumser:            What’s interesting to me is that the way that people think about value of a company is so [inaudible 00:13:51] that the game of valuation at the level that we’re talking about is almost a fashion show. It shifts from this year to next year to the year after that and the people who are at the heart of that fashion show have a very significant interest in not being perceived as a fashion show. These are investment banks, they make big decisions for people who invest their money and so they want to present the aura of certainty, the aura of minimization of risk but the reality is nobody knows what a software company is worth. It’s worth whatever you can get for it on the market just like everything else. That’s the idea that you can have a magic wand and a special formula that allows you to determine what that value is. It sells lots of diplomas for MVAs but if I have something to sell you and and you want it and we’re in a commercial capitalist kind of market, I’m going to extract as much money out of you as I can possibly get for the thing that you want and that’s how much the company’s worth.

Stacey Harris:            If you’re looking at who the most sought after prettiest girl at the dance, right, sales force dot com definitely has the … as I think a lot of people are saying is that they’re the kids on the block to be, right, so if that’s where you’re coming from, it makes you a much more attractive opportunity than being someone who is openly struggling or openly trying to decide what their next step is, right?

John Sumser:            Right. Are you buying software dot com stock?

Stacey Harris:            Well it’s not a place that I spend a lot of my time but I think that what you’re going to see is that there will be a lot more stories probably coming out on this and I think there are going to be a lot of ups and downs in the market probably in the next few weeks around this particular topic. Kind of standing on all this, John, not only have we talked a little bit about where the news buzz is at about sales force dot com and its connection to will it go on the market, who might be the possible buyers, one of the often asked questions is where does Microsoft sit in the story of the cloud and a jar. Is that space you’ve done a lot of conversations because we pretty much know where oracle and SAP are at because they were heavily in the HR space I think. That’s almost their forerunners, right, for their cloud solutions and they’ve put them forth as sort of their firs to the gate in many cases with a cloud solution. What about Microsoft in this picture, have you looked at what they’re doing in HR and do you think they are interested in the HR space at all beyond just the operations and work force component?

John Sumser:            You’ve opened [inaudible 00:17:33] box. We see a lot in the research at [inaudible 00:17:39] we see a lot of reference to Microsoft as HR software provider. Lots, almost dwarfing anybody else. Big, big numbers of people that Microsoft is the supplier of their HR software. While Microsoft has some enterprise products, it doesn’t really have a presence in the HR business. In all of my time and I get all over the place and talk to all sorts of people, nobody I’ve ever talked to has ever mentioned Microsoft as a serious contender of the HR space. They’ve got some business because you can’t be that big and not have some business but they’re not serious about it. That said, the fact so many people see them as an HR provider and what that means is that the bulk of HR, the bulk of HR automation and data manipulation is done inside of office products. That’s the real primary HR technology is Google docs or Microsoft office or some similar suite of tools for communicating information.

Stacey Harris:            I think to add to that picture is that Microsoft excel is at the end of the day the primary analytics tool that people are still using. Something like in our last survey and you were seeing similar numbers, eighty percent of when people list what their [inaudible 00:19:29] analytics tool, eighty percent of people note that excel is part of that picture, right, so it’s not just [inaudible 00:19:36], it also becomes the tool in which they share the data and analyze the data.

John Sumser:            Right, right. It’s not dumb if you’re in that position because you know nobody looks at that brand as hard and deeply as Microsoft does so they know this. They know that there’s a huge volume of people who think that they’re in a business that they’re not really in so to pull into that business is an interesting thing. If you look at the sales force dot com functionality, it really makes an interesting layer in the Microsoft office suite. It’s a kind of database application that’s a super spreadsheet. It solves problems in a way that spreadsheets don’t solve problems. It allows for multi dimensional tracking in simple ways and anybody who’s got any kind of a sophisticated business had a multi dimensional tracking problem. It’s a great ad there and then conceivably expands the argument that it is the practitioner’s suite of tools that are the heart of HR technology rather than the enterprises suite of tools.

Stacey Harris:            To me that’s probably the most interesting story between Microsoft and sales force dot com. When you talk about the buyers of most enterprise platforms, generally driven by CIOs and CFOs [inaudible 00:21:26] trying to get better data and smoother operations, right. Sales force dot com as well as Microsoft tools and I would say people would probably call them tools in many cases, that are really driven as far as the usage, the expectations, the desire to have them function more effectively in the organization by those practitioners. It’s interesting because I’ve worked in a lot of organizations that are sort of very sales driven organizations and you never hear people say, oh I wish my HR system could be used to do this and that and this and it would be a product I get to use more often, right? You actually hear that request from people who are using sales force dot com. Can we make the system do this? These are on the ground practitioners, right, salesmen and operations people and marketing people who are looking to say, can I make this system do this? How can I use it even more in my job every day? That I think is the big differentiator to what you’re talking about.

John Sumser:            Yes, so I think if you go and you look at the three possibly buyers here for sales force dot com what you get is that exact analysis but set into each of the other pieces and so if sales force dot com is the fifth or sixth major element in the Microsoft office suite [inaudible 00:23:04] You’d value it differently there than you’d value it as sort of a vertical integration inside of oracle or as an additional paradigm inside of the SAP thing. It’s like the stone is worth a certain amount but the setting really makes the stone.

Stacey Harris:            Well it’s going to be an interesting couple of weeks I think and probably an interesting couple of months and it’s not going to come out over night but we’re going to hear a lot more about it. They’ll do a lot more conversation about it between the various analys firms, both financial and industry because I think both of them are looking at this very, very closely. I think we’re going to hear a lot more about it from the practitioners too because right now they’re in a buying cycle. This is the point at which most of them are in the middle of a lot of budget processes and RFPs concerning big technology decisions and if they’re making the decisions right now, they have to look at how does maybe sales force dot com play into a picture that people weren’t originally thinking about. If they’re an organization that has a heavy influence or heavy focus on sales force dot com. From a buying perspective do you think that any of the HR functions that you’ve spoken with previously John, think about sales force dot com as part of their HR decision making process right now? I know I haven’t had a lot of conversations with HR people who think the way other than chatter. Chatter seems to be the place where they’re trying to figure out how that fits with their HR picture. How about you, have you talked to a lot of organizations who see [inaudible 00:24:55] as part of their conversations?

John Sumser:            I’m probably stereotyping like crazy here but I think the mutual dislike of sales people and HR can’t be overstated. [inaudible 00:25:17] it’s not just sales that the HR people think that the sales [inaudible 00:25:20] are great. It’s the sales people who just hate HR, they hate each other. There’s always an exception approves the rule and the market of people who work in HR inside of sales driven organizations is not insignificant. I don’t talk to HR people regularly. I can’t wait until I get my sales force dot com system in there. That’s like bringing a meat eater to a vegetarian dinner. I have a little question mark whether or not sales force has a leg in the broad HR markets but I am absolutely certain that there is a magnificent and wonderful market for HR inside of the universal sales driven [inaudible 00:26:23]. Huge market. That’s better served by sales force as an independent than it is … unless there’s an entire initiative inside of the acquiring companies to shift the focus of who their customer is when a purchase is made. That’s where the thing would have risk is can the acquiring culture expand it’s definition of who’s a customer. That’ll be easier for some of the buyers and harder for other buyers.

Stacey Harris:            I definitely see that as well, the science of who is your customer is a big part of the conversation, right, is what you’re talking about.

John Sumser:            Yeah and so there’s a reason that these three buyers don’t have a well articulated product of the sales department. It’s different in each one of the cases but there’s a reason there’s a hole there. These are companies who don’t really serve that side of the business. They’re process companies, not companies that are revenue oriented.

Stacey Harris:            And sales and marketing driven, right? They’re opportunities for them to learn from each other because I think on the other side of that picture is that sales force dot com, as flexible as that solution and as flexible as that audience needs to be to do what they do well, the sales and the marketing division, what they lack often times is that process and rigor that makes sure that a data can be leveraged in a more enterprise perspective. How often does the sales organization think about the fact that everybody that they’re touching is not only a customer but also a possible representative for the organization and a possible candidate down the road, right? Those are the conversations that ran out that weren’t taking place as often.

John Sumser:            It’ll be a good couple of weeks for water cooler talk.

Stacey Harris:            It will be, definitely. I think before we wrap up it’s probably also worth noting that I think another thing that happened this week that I think is worth mentioning is that [inaudible 00:28:47] India held their first HR tech conference in India with four hundred and fifty pitches and a hundred and twenty organizations. I thought that was an interesting article that came out and I know we have a couple of friends who participated over there at their first event. Did you have any feedback from that, John before we sign off today.

John Sumser:            I didn’t. I didn’t but I think it’s exciting that there’s a market that’s opening up there and it seems to be opening up independent of the American market. I don’t know of anybody … no, that’s not true. There are a couple, there are small efforts who see India as HR market and so that means a lot of what’s selling in India is [inaudible 00:29:36]

Stacey Harris:            I would agree with that, that’s part of what I was going to say. Looking at who spoke and what the conversations were just from that particular event, there were a lot of organizations we’ve worked with [inaudible 00:29:49] and a lot of those organizations overworking on making a US presence but a lot of those businesses and technologies were very much Asia pacific based and I think it’s going to create a bit of a dynamic in the market because as far as the need and desire for that technology, it’s growing rapidly in that market from what we can see and particularly as a whole they’re looking not just for HR systems that can handle processes and procedures but HR systems that can handle processes and procedures of thousands of employees very quickly and effectively. I don’t think we’ve ever seen a scale of what we’re probably going to see in that market right now.

John Sumser:            I think that’s right, I think it’s going to be exciting to follow and it underlines a conversation that we might start with which is how much of technology is culturally based. I think that one of the reasons that the Indian market will be self contained in its early years is that there are fundamental differences. Fundamental cultural differences in the nature of work, the nature of the relationship with the employees, the nature of talent management, the nature of opportunity. You can’t really take process [inaudible 00:31:18] from the United States and [inaudible 00:31:21] in a complex polytheistic culture like India. That’s going to be interesting to watch. I think that applies in the United States actually too, I think that’s what we were talking about with sales force dot com. The software is culturally specific but we don’t have a way of quantifying that yet so it’s an elusive [inaudible 00:31:51]

Stacey Harris:            It is but it’s definitely something that’s going to drive a lot of conversation is the culture and how does that impact the system division. John, we’re at time already. I think we’ve a great conversation.

John Sumser:            I hope the people who listen to this have as much fun as we do.

Stacey Harris:            Definitely.

John Sumser:            These are such great conversations. We’ll do this again next week and Stacey, thanks for your time. I will see you at the oracle [inaudible 00:32:20]

Stacey Harris:            Sounds good, all right bye everyone.

John Sumser:            Bye-bye now.

End transcript

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