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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: 33
Air Date: August 13, 2015

 

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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:            Good morning and welcome to HR Tech Weekly, one step closer with Stacey Harris and John Sumser. I’m John and Stacey is checking in from beautiful North Carolina. Is that right Stacey?

Stacey Harris:            Actually today I’m in Las Vegas, so I’m enjoying the balmy hot weather in Las Vegas this week at the SuccessFactors customer event. I have to say I think this is going to be a long political season, because the entire time I was flying out here I kept seeing all the information and news stories about what’s going on with Trump. I get into my hotel room, open my window, and Trump tower’s outside my door. It’s definitely Las Vegas.

John Sumser:            That’s good then so the news here is that Stacey Harris is voting for Donald Trump. I knew there was somebody. That’s so congruent with who you are. That’s great.

Stacey Harris:            Without a doubt yeah.

John Sumser:            Did you commit some serious crimes in the recent past? You seem to be sentenced to going to Las Vegas in the summer.

Stacey Harris:            I don’t know. I think all of us … Yeah this has definitely been the Las Vegas season for the analysts who are traveling. I counted up, it’s been a total of eight visits now counting this one total. That’s a lot of time in Las Vegas. I want to say if anybody says that they’re going to do an event someplace else I think it would be a pleasant surprise for next year, yeah.

John Sumser:            Maybe they’ll make you mayor, maybe they’ll make you mayor.

Stacey Harris:            Maybe.

John Sumser:            You’re at Las Vegas for the SuccessFactors thing. What is the SuccessFactors thing? What’s it called?

Stacey Harris:            This is SuccessConnect. Each year SuccessFactors does an end user conference. Obviously SuccessFactors is an SAP company, so they have the big SAP Sapphire which was held a few months back. This is SuccessFactors specific, so this is primarily the HR community that comes to this event. This year there’s around I think two thousand twenty-five hundred participants who have attended, at least the numbers that they were giving out. Compared to the huge Sapphire event that SAP has. It’s fairly well attended. I’ve been getting some good insights about what SAP and SuccessFactors are doing together, and what SuccessFactors’ plans are going forward. I’ve had an opportunity to talk to quite a few of their customers.

There’s a lot of topics that we could maybe cover from what’s going on here at the event. There’s also, and I think just from a news perspective, both me and you have decided that it’s not an area that we either have expertise in. The other news this week I thought that was interesting to know was that ADP announced that they’re offering now their own health exchange. That I think is an important just comments for the market to know that they’re going to offer health exchange for full time and contingent workers for their clients. That I think is something that is worth noting, but neither you or I have enough details on that to probably give a whole lot of comments on it. Those are probably the two big things that I found in the news this week anyways.

John Sumser:            I’ve also noticed seeing that there’s increasing levels of weird scuttlebutt going on in the industry. I have been getting emails from people who are making claims about what their competitors are doing without substantiating them. There’s this kind of a nasty rumor generating behavior that’s going on. I think I’m starting to see signs that the heated up market may not be as hot as everybody thinks it is. We might talk about that a little bit too.

Stacey Harris:            That would be interesting yeah, because do you … I mean and maybe we could start with that just as a commentary, is that … Do you think that’s the smaller guys trying to sort of get a foot holding with some really really big companies that are holding a bulk of the customers in many cases in this industry?

John Sumser:            Well have you noticed that there are starting to be layoffs in venture backed startups in the [inaudible 00:05:00]? I don’t have names at hand, but there have been one or two kind of abrupt closings of what I would have called dot com companies twenty years ago.

Stacey Harris:            Oh I see what you’re saying, yeah.

John Sumser:            I think some of the fervor for the marketplace is dimming in the investment areas. As people try to … You know the whole trick to doing a venture backed place you get all of the infrastructure that you need at the end of two years of growth in place on day one. Then you start trying to put customers in. If you can’t get customers you’re in trouble. It seems like people are having trouble getting customers.

Stacey Harris:            That doesn’t surprise me. One of the things that I came across here while I was at SuccessFactors this week was a lot of customer conversations that … You know I think what we’re seeing a bit in the market is that the customers who are at some level connected at a high IT level right, to either SuccessFactors and SAP, or Oracle and Taleo, or you know those customers have now moved off of or moved away from a lot of the smaller solutions that they were using to now picking up some level of SAP/Oracle/products right, or they’re moving there pretty quickly. They’re not buying a lot of the … What’s left is the middle ground. Is the people who haven’t sort of given their allegiance to either side of those at the IT level.

A good portion of them are moving into other ERP based HRMS systems. I think it’s leaving, one a smaller pie in that environment of sort of organizations that are picking up new and independent solutions. I also think that we’re seeing a slowdown in spending. Following the recession HR was the one area that really didn’t get a lot of investment pre recession, where a lot of other systems did. Right after the recession we saw a lot of people making movements in their HR technology. I think we’re starting to see now that that’s slowing down a bit. I don’t think that, you know we’ve been through about two years of people spending in HR pretty heavily.

John Sumser:            I have this emerging idea about how people buy in the space that I think is different from the conventional story. We just published this great report about what people actually use in their companies to do HR. What we found is that there are very very few things that everybody has. There are actually very very few things that most people have. The market adoption for non payroll HR tools is barely higher than fifty percent, barely higher than fifty percent. What that means is that there’s no such thing as an ideal HR environment. It means that there is no such thing as a maturity process for HR systems, or people would observably all have the same stuff.

If there isn’t such a thing as HR maturity then the way that people probably buy things is in response to the last lawsuit, in response to the last crisis that they had. It’s easier to imagine from my point of view that the way that people buy HR technology is to fix the last really big problem that they had. That’s going to differ by company and by circumstance. If you get some sort of compliance on it on recruiting you become a recruiting buyer. If you get a series of wage hour fines because your time keeping system is imprecise, or you can’t supply adequate documentation of the [inaudible 00:09:54] room, you get a better documented time and attendance system. Because there is no such thing as a company that began with the second phrase in its mission statement, “And we’re going to do HR with excellence.” What happens is people do HR when they have to. The way that HR technology evolves is where it has to, rather than some more idyllic view where we’re off towards the bright and shiny place where everybody has an LMS, for instance. You get an LMS if you can’t do compliance stuff right.

Stacey Harris:            I can see where you’re coming from. That I think definitely makes some sense as organizations grow and develop. I will have to say I push back a little bit on that consensus in the upper mid market and large organizations. Part of sort of being at SuccessFactors this week is that most of the companies that you’re speaking with here are five thousand plus employees for the most part. These are large manufacturing, large healthcare, large financial organizations. A good portion of them when you talk to them have a real clear view of what their HR system strategy is, and the systems that they are adopting.

For example, I spoke with a large financial organization yesterday, sat down and had a good half hour conversation about how they were shifting sort of system by system and in paralleled what they were doing on their financial area and their business side systems, and how they had a strategy that went out about three years to five years. Because they were actually somewhat concerned about the fact that SuccessFactors had announced that by 2025 they were no longer going to be supporting the on premise SAP HCM system. They really were thinking through what their strategy was for their HRMS, because they’re quite happy with the on premise HRMS, although they moved everything else to SuccessFactors. That was a long term strategy for them. Of course now that’s an organization with fifty thousand plus employees. I had multiple conversations like that this week. If you think some of that’s a size thing and a maturity level.

John Sumser:            I absolutely agree with you that about half, maybe even more than half, of the people in those big companies could have the kind of view that you’ve described. You take all of those people, you’re talking twelve or fifteen percent of the workforce. You’re right, in that little area, HR is a more disciplined evolution maybe, but it’s a minor fraction of the workforce. It’s everything to SAP sure, it’s everything to Oracle, it’s everything to IBM, but it’s nothing to HR. It’s an anomaly in HR. That part of the market is spendy. It’s certainly where all the advertising money comes from. It’s certainly where all the big projects are, but it’s not how HR is practiced broadly in the land. It’s a very exceptional environment. Those are also places where you still might be able to get healthcare as a benefit. It’s a very privileged little universe of mostly white people. Okay, yeah they do HR the way the white people would do HR. The other eighty to eighty-five percent of the marketplace that’s served by HR and HR technology isn’t like that.

Stacey Harris:            Just taking your analogy or your theory a little bit more. If that’s the case I think one of the areas we should definitely see, at least here in the states, you know headquartered or organizations that have employees here in the states is the big uptick in workforce management solutions being adopted, particularly absence and leave, and time tracking. Because those are systems that should of had very big impacts in the last year and a half because of the ACA regulations, the Affordable Care Act. Would you agree with that?

John Sumser:            Yeah, the executives I know in those businesses are busy trying to figure out how to make it okay for Obama to have three or four terms because their view is that everyday he’s in office the more regulations are being created and the more their compliance oriented software is in demand. In those segments of the market you’re starting to hear a real emphasis on the importance of compliance and compliance management in HR, which is a very different story then you’d hear at something like a SuccessFactors get together. Where the story is about the sort of values of talent management.

Stacey Harris:            What do you think besides the workforce management and the ACA, are there other examples of what you think would be bigger … Because you have to be able to see some shifts in the market I think based off of the regulations and the government push back that would show up in a way you’re describing it.

John Sumser:            Here’s the thing, even the smallest companies, even the smallest companies are starting to harness the idea that not everybody has to come to work everyday. That means that even the smallest companies are generating payroll in multiple regulatory, or you know multiple municipalities. Then what I’ve been hearing is there are four or five hundred American legislative or regulatory arenas in which somebody is issuing regulations about payroll, time off, overtime, minimum wage. In order to be an employer in something other than your town you have to have a way of understanding and navigating all of that regulatory change, and that’s brand new. That’s brand new. That’s not the way it was ten years ago. That’s not the way it was five years ago. It’s just because of the intersection of mobility and the currency is having some sort of a weird problem in America. Those two things make this happen. You need software that helps you stay in compliance with stuff that you didn’t even know you needed to be in compliance with.

Stacey Harris:            One of the things that SuccessFactors rolled out this week was sort of along the lines I think of what you’re talking about. It’s something they’re calling Intelligence Services. I think it’s worth noting as a point I think in the conversation around this idea that all of these regulations, all of these processes, all of these different things that are being requested of organizations at the payroll level, at the regional level require really interesting steps to be taken outside of the system right now often times. Paper work sent places, people notified, things being done.

The Intelligence Services piece that SAP is rolling out is the idea that they’re going to start to monitor all of the things that happen right after some sort of employee self service action takes place, and start to aggregate across all of their businesses some level of sort of machine learned at a very very sort of I think tongue in cheek kind of machine learned [inaudible 00:19:11] list of here’s what probably happens in seventy percent of the organizations right after someone gets hired on a new job, or right after someone clicks to change an address. The example one of the speakers presented was that he had an environment where he had taken a leave of absence and yet he kept getting requests to make sign offs, and requests to address people’s payroll requirements. The system had put that in and said, “Okay so now someone else has to take care of those things.” Are you seeing that the systems will ever be able to handle that level of complexity that you’re seeing come up at the local level?

John Sumser:            You know what’s interesting is I’m seeing kind of an opposite thing emerge. They’re probably both true. The opposite thing that I’m seeing is people are starting to realize that software and automation are good for a lot of things, but generally the function of software is to get all of the crap out of the way so that somebody can actually insert human wisdom in a process. The object of software isn’t to get things done, but perhaps the object of software is to queue things up so a human being can finish them properly. That’s not the story that the software companies have been telling.

Stacey Harris:            Yeah.

John Sumser:            That’s not at all the story that the software companies have been telling. You’re starting to see that [inaudible 00:21:01] that software actually, right that the analytics move- Analytics is a really interesting thing, but nobody’s using it. Why is nobody using it? Because they don’t want that necessarily out of their software. What they want is to be lined up so that they do their job properly. It’s a very very different orientation that we’ve had.

Stacey Harris:            Well and does that come back to actionable data or does that come back to I think what you were talking about is it’s lined up at the point at which you should be ready to take action. Another story I got this week that I thought was really interesting, ran into an old friend, runs a large consulting business. He is the head of HR and IT for it. He was talking about how he was globalizing all of his payroll. He had taken over payroll in a single … They were moved from local payroll providers in an Asia Pacific location, and had moved them to a global payroll provider. In that process what he found out was that the local payroll provider wasn’t just providing the system. The local payroll provider was also providing things like walking the documentation over to the government requirement, allocations for rent and housing, because that was done in that location. Allocations for car allowances, all the things that were once they moved this to a new provider were now sort of sitting in limbo. I think to your point without having the human sort of setup to do that this HRIS person said, “Now I was being asked by the Asia Pacific HR Function to say, ‘Now you’ve also got to solve this for us, because you took the vendor away who was doing [inaudible 00:23:00].'” Do you think that’s kind of what you’re talking about? Is that what-

John Sumser:            Well that’s exactly, the theory in lots of lots of software development companies is that business is a logic problem. That you can come up with a set of rules that will define a business and then the software can just do it. Business is not a logic problem. Business is anything but a logic problem. Business is attending to the idiosyncratic needs of customers when they have those needs. Business has a much higher service quotient to it than any software company ever, has ever imagined.

The simplest things like in our work at KeyInterval we look very closely at the fact that the social contract or having a job is different in Macon, Georgia than it is in Minneapolis. It’s different in many different places around the country. When you have a job it means something different depending on industry, region, business size, business level probably. To say that all of those jobs are the same, and that the social contract is the same, is to sort of pretend that the United States is just the interstates and McDonald’s, and the lovely local color that’s off the interstates and out of the brand name hotels and on the local market doesn’t have anything to do with anything. For most people, the vast majority of people, life is about living in the village or in the neighborhood, not living at the intersection of two major highways with a McDonald’s and gas station. We’re about to wake up in that world, and that probably hits HR first. Because HR, when it is working properly, generates its value by lubricating the work horse so that it moves faster.

Stacey Harris:            So it moves faster and it can perform.

John Sumser:            That’s not a logic problem. That’s a “which of the big egos is flaring up today” kind of problem.

Stacey Harris:            I also think it’s a human problem. I had this conversation actually a couple of times this week. When I first went into the HR research space there was a number of connection points that I made to my previous work, which had been retail. It was distribution centers, and warehousing, and manufacturing. A number of people had written books about how we can make HR like manufacturing. In my ten years of doing research here one of the things that I can definitely say is that humans are not boxes. There’s no barcode that you can put on a human to sort of give them, you know that they’re going to react the same way that you would expect dollars to react, or finances to react, or boxes to react, or anything like that. That I think is the essence of why HR technology has to be the most complex technology, and we haven’t quite gotten there understanding that yet.

John Sumser:            Isn’t it really sad that people aren’t barcodes?

Stacey Harris:            [inaudible 00:26:53] technology companies, right?

John Sumser:            This is my inner engineer popping up here.

Stacey Harris:            Well John we’re down to the last three minutes. I should probably mention just a couple of quick other things that happened at SuccessFactors that I think everyone might be interested in. One is that they launched a new user interface. I don’t think it’s dramatic. It’s just sort of brings them up to the next step. They also launched a partnership with Workforce Software. I think that’s worth noting because that’s a preferred reseller program for Workforce Software. I think if anybody’s worked with Workforce Software that’s going to impact, you know Workforce Software is going to probably gain quite a bit, particularly globally from that reseller agreement. Because now there’s agreements where the sales people are going to get paid for the work that they do to resale Workforce Software as a workforce management solution within the, and they’re going to have some deep connections and pre integration done with SAP and SuccessFactors.

The other one I thought you might be interested in. You might be able to answer this question. LinkedIn came on stage with SuccessFactors this week, and their head of business development with Success Factor’s head of business development, and mentioned that not only like all the other systems will SuccessFactors be able to pull candidate data from LinkedIn with approval from candidates. They’re also going to have the opportunity for employees to pull their employee profile data from LinkedIn with employee’s consent. One of the analysts had mentioned that’s the first time they’d heard that on the employee profile level. You’ve worked with LinkedIn and other companies a lot on this. Is SuccessFactors the first group doing that with employee profiles?

John Sumser:            It may be that it’s the first sanctioned version of that. There are lots of little work around tools out there that allow and encourage companies to do that. There are even sort of one and two increments out from LinkedIn companies who have larger universes of stuff, and provide supplemental data to the HRIS. It’s not a new idea, but I don’t think I’ve ever heard it being formalized. LinkedIn has been tentative in this area.

Stacey Harris:            Maybe LinkedIn is getting to a point where they’re realizing that it’s going to be harder to hold the data in, so they’re going to start to formalize. I would assume that that relationship has, I would assume some level of, you know if not monetary at least some agreements in it that make that a benefit for both LinkedIn and for SuccessFactors as well.

John Sumser:            What’s really interesting about that to me is that, and correct me if I’m wrong, but I tend to see SAP as the most conservative of the enterprise houses. They surprise me all the time with moves like this. This is not a move of a conservative player. This is something you’d expect from one of the other three or four to pull off. I find that interesting. Maybe it tells you that there is a deeper relationship with LinkedIn that has to do with their need to expand their global markets.

Stacey Harris:            That very much could be. I also think that, actually SAP is very conservative partially because obviously they’re being headquartered of Germany. They are dealing with a lot of German regulations around privacy with their employees themselves. My sense that this is actually driven more from the sense of, “We need to get ahead of this privacy and personal employee information … I think it’s the PPI or whatever they’re calling it, as a way to get ahead of it is to put in some capability for people to agree that they’re willing to share this information. I think part of it, being conservative has led to building a big agreement like this because it allows them to feel comfortable that they have gone through the legal and the work counsel conversations around it. It’s a fascinating area to watch around the personal data and privacy issue.

John Sumser:            That’s great. Just in time for our next report from having the correct data strategy in HR. Perfect, perfect, thanks for being the street man on that one.

Stacey Harris:            I didn’t plan it all John.

John Sumser:            We have come to the end of another half hour. This is our 33rd show. Thanks Stacey. It’s been fun as usual. Thank you everybody for tuning in. You’ve been listening to HR Tech Weekly, one step closer with Stacey Harris and John Sumser. We’ve had fun being with you. Enjoy your weekend.

Stacey Harris:            Thanks everyone, bye.

End transcript

 

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