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Technology when you want it, people when you don’t
Several years ago the US-Based internet car insurance company Esurance launched an advertising campaign which highlighted the benefits of their service delivery model – a model based entirely upon choices. The campaign had the tagline of “technology when you want it, people when you don’t” to emphasize the fact that everyone has a different optimal service experience and they weren’t purely a self-service organization. With this campaign Esurance focused on the customer experience over the price of the coverage, the breadth of their geographic footprint, or other traditional points of emphasis in insurance advertising.
The concept of choice in a service delivery experience makes perfect sense in a consumer-based model, but does that same thought process apply in how HR services are delivered to an organization? Over the years I’ve seen a variety of HR service delivery models which are generally predicated upon efficiencies gained by way of automating routine inquiries and transactions. Broad-based assumptions are made which impact financial modelling, assuming upwards of 80-85% of all inquires can be accommodated by way of self-service.
After all the number crunching and analysis, there often remains large barriers to achieving the desired levels of utilization based largely upon the overall user experience of the technology and supporting capabilities. This isn’t purely a technical issue, although the technical user experience is a large contributor to the experience.
The Service Experience
Service experience is defined by technology, process design, logical structure to system data, the manner in which systems are accessed by users, the structure of the support model – phone, portal, in-person, etc.
A well designed service experience becomes an enabler of transformed business operations. Conversely, a poorly designed service experience can not only be a critical point of failure in the service delivery model but ultimately result in less efficient operations.
Getting to the Point!
When working to design new systems, processes, and/or operating models, maintaining a customer-centric (employee or manager) mindset in the design becomes one of the most critical success factors. In order to deliver this optimal experience, keep in mind the following items:
- Include non-HR stakeholders in the overall design process by way of focus groups at a minimum. Ideally you have business stakeholders embedded into the design team to help ensure the needs of the customer remain front and center.
- View efficiency gains not just from a HR perspective, but from the perspective of the employee and/or manager
- Design system values such as job codes, department codes, locations, etc to be meaningful to the primary user (which isn’t HR). Use of “smart codes” should be avoided at all costs
- Make all solution design decisions as holistic as possible and replicate values across related systems. This means that finance and HR have the same definition of items such as headcount, organizational structures, etc.
- Think about the future when designing processes and systems – be sure that design decisions don’t limit you in the future.
In the end success lies not in making something technically work, but in enabling the desired outcomes. In order to drive user adoption experience matters.
If you ever want to make a salesperson cringe, just tell them that you’re going to be issuing an RFP (Request for Proposal) for a planned purchase of software or services. Uttering these three little letters can completely alter the nature of the relationship that you maintain with a vendor – and negatively impact the quality of the outcomes and organization can delivery with a service/product vendor.
In what likely originated within the bowels of the US Federal Government as an attempt to compare procurement prices between suppliers for $800 pencils, screwdrivers, or toilet seats, the RFP has morphed into a blunt object utilized by procurement departments everywhere to put low price ahead of everything else in the procurement process. For this reason, my honest opinion is that the RFP must die.
Argument #1 against the RFP: Comparing Apples to Oranges
It assumes that apples can be compared to apples – even if you’re buying oranges. Unless you’re buying either a pure commodity or a completely bespoke product/solution for which you draft the entire set of requirements or specifications, using an RFP often results in the comparison of apples to oranges and in turn clouding the entire picture.
Often when procuring technology the focus is on features and functions. In the HR Technology market the maturity of product capability has reached the point where the differentiation between vendors is often not features and functions but instead factors such as viability, product roadmap, quality of the team, quality of support, etc. Notice that I haven’t mentioned cost….. yet.
Argument #2 against the RFP: RFPs Assume You Know Exactly What You Want
Let’s face it – you don’t know exactly what you want, and neither do I. I’ve been in numerous demonstrations where I have seen product capabilities which solved problems I didn’t know existed or could be solved. We often create requirements based on either exactly what we do today (which by the way is going to change radically) or based on things we’ve read/seen/hear about. All too often the “must have” requirement is based an abstract concept which may be rooted in marketing messages which have been pushed through the industry by various influences, vendor or otherwise.
Just like when I go to the grocery store with a list of things to buy, I often will come home with all the items on my list and more. I went shopping knowing exactly what I needed, yet realized I needed more. It’s hard to address the unrealized need through an RFP.
Argument #3 against the RFP: Broken Scales
RFPs are best when you have very specifically crafted requirements. The problem is the fact that all to often requirements are treated equally when they really aren’t. I’ve heard the arguments before – “We’ve weighed, prioritized, etc our requirements”. But, who is setting the weights and priorities? Is that person(s) actually writing the check or are they simply shepherding the process?
Honestly most software purchases are made for reasons that have little to do with the formal scoring models. The scoring model is a thinly veiled rationale for decisions that are made outside of the formal evaluation criteria.
Argument #4 against the RFP: Cost is not one of several considerations (it’s the ONLY consideration)
After it’s all said and done, the RFP process is simply a mechanism to qualify vendors. Having sat through countless decision sessions as both a buyer and a consultant, the best functionality, the best user experience, and the best analytics capability, etc…. the question always comes down to cost. Inevitably someone will ask whether the solution that prevailed in the formal scoring model is worth the extra cost vs. some of the other solutions. The discussion quickly becomes about the value of the extra features vs the cost. In the end this highlights that cost really is the only consideration.
We need to change this (and FAST!)
The whole point of evaluating new solutions, new vendors, new technology, etc is to deliver new business outcomes. By utilizing a requirements-based RFP process the emphasis becomes on “the HOW” and not about “the WHAT”. What I’ve personally see work extremely well with the clients I’ve advised is an outcomes-based evaluation process with potential suppliers. The discussion quickly becomes about how the solution can help deliver the desired outcomes, and the relative value of those outcomes for a specified price.
By changing the rules of the game we are able to refocus on WHAT we need to do without getting bogged down in details on HOW it will get done. While the process is important, what is ultimately critical is the outcome. Your CFO doesn’t care about the fact that it takes 3 steps instead of 4 steps to complete a transaction, or that the solution is built upon a .NET platform instead of a J2EE one, etc. They want to know what value will be delivered back to the organization in exchange for the investment necessary. Your CIO will want to make sure that the solution isn’t going to introduce additional risk into the technology environment and can be compatible with the existing technology investments. Your CEO will just care about how the solution will enable the organization to achieve greater results.
A RFP will never answer these questions. And for that reason – the RFP MUST die.
I’m writing this post from 39,000 feet as I return to Chicago from a brief trip to Ft. Worth Texas where I had a honor of serving as the lunchtime keynote
speaker at the Aquire Structure 2011 Conference. Over the last two days the customers of Aquire had an opportunity to learn more about the technology that the company offers as well as some of the business challenges that have been overcome using their products. My speech was focused on the talent shortage that the US will be facing in the coming years, the root causes, and ways in which organizations are/should be proactively addressing the challenges that lie ahead. Below is a quick summary of the findings of the research used for the presentation.
Its hard to imagine that after two and a half years of dealing with the worst economic environment in the last 75 years and the millions of jobs which the economy lost along the way we can even begin to discuss a talent shortage , but all signs point to that happening. We’re staring down a perfect talent storm which is predicated upon three key points:
1. Shifting US Worker Demographics
With Millennials entering the workforce at a pace which is double that of the exit of Baby Boomers, at first glance it would appear that we will have a talent overage rather than a shortage. Unfortunately this generation is entering the workforce with a different skillset and level of experience which makes it difficult to fill the gap that will be left behind by the Baby Boomers. Additionally, based on historical and trending immigration patterns, the US workforce will add more than 24 million new workers across all ethnicities. According to the US Bureau of Labor Statistics, explosive growth in the Hispanic/Latino segment of our workforce alone will bring 14.7 million additional workers into the US employment ranks by 2020. Continuing diversity of our workforce will result in growth in the minority populations in our workforce from 18% of the total workforce to 37% between 1980 and 2020.
2. We’re Becoming Less Educated as a Society
Over a 20 year period the levels of participation in higher education across all ethnicities has grown by roughly 50%, yet due to the project growth in various demographic segments we will be adding newly minted college graduates at a rate which is lower than the growth in the population lacking a college degree. The percentage of the US working age population having attended any college let alone possess an associate, bachelor, or a graduate degree is projected to steadily decline while the population without a high school education will grow by 10%.
The largest areas of population growth in the US are those that historically been vastly underrepresented in higher education. According to a US Department of Education study, the percentage of working age Asian-Americans with a college degree in 2000 was 46% while 11% of Hispanic/Latinos obtained college degrees. Factor this along with the population growth trends and it becomes very easy to understand why we are becoming less educated while participating in higher education at historically high rates.
3. The Nature of Our Work is Changing
In 2005 McKinsey & Company performed a study which was published in the McKinsey Quarterly 2005 Number 4 called The Next Revolution in Interactions in which they analyzed the nature of the work that we perform. In their research they categorized all work into three groupings:
- Transformational: Jobs that involve extraction of raw material and converting them into finished goods. Jobs in this category include Carpenters, Production Line Workers, Fast-Food Cooks
- Transactional: Jobs that involve routine interactions. Examples would be cashiers, truck drivers, and office clerks operator.
- Tacit: Jobs that involve more complex interactions – knowledge jobs. Examples of jobs in this category would include executive/manager, Registered Nurse, Salespeople
The research performed by McKinsey found that between 1998 and 2004 transactional and tacit jobs were growing while transformational jobs were quickly vanishing due to either advances in technology and/or movement of many jobs to other parts of the globe where skilled labor was more abundant and less expensive. Of the remaining categories of jobs that showed growth, 7 of every 10 jobs was a tacit job – ones requiring more complex skills and higher levels of education.
Without getting too deep into the data, graphs, charts, and algorithms, the challenge ahead of us of fairly clear. With the combination of population growth , educational participation rates, and shifts in the type of work we perform its likely just a matter of time before the US labor market hits the perfect storm and we’re locked in a talent shortage unlike anything we’ve ever seen.
Born 1/15/1999, deceased 4/18/2011. The stand alone talent management vendor passed away quietly in its sleep after a long, hard-fought battle with innovation. It started as an idea born in a cafe somewhere in the East Bay, grown and developed by bright, dedicated, hard-working professionals supported its evolution with its education funded by several eager venture capitalists looking to prop talent management into a highly-valued technology company with a large book of fortune 500 clientele. The Talent Management Vendor is survived by its brother the Talent Acquisition Vendor, and its parent the Enterprise Core HR system. Memorial services will be held Mary 15-18 at the IHRIM conference in Washington DC.
Let be perfectly clear, I’m being tongue in cheek here – but there is a point to be made if you keep reading.
It started with applicant tracking and automated performance management systems at the same time as the dot-com meltdown. Vendors rose from the ashes of the internet’s birth bringing simplicity and efficiency to necessary HR processes. They promised flexibility and a more engaging user experience to these processes than their ERP-based predecessors. This wasn’t too difficult at that time since many back-office systems being designed for more frequent users of the software. Casual users of ERP-based solutions were often left trying to navigate through a perplexing set of menus and features which left many frustrated and deterred.
Adding to the complexity of the user experience, the functionality offered by vendors ERP-based vendors at the time were a fairly lackluster attempt to “check the box” on RFPs to say that they had features which were sought by some more progressive HR organizations at the time. The features were still evolving, with functionality that was limited and more complex than the solutions offered by newly formed companies such as Recruitsoft (now Taleo), Recruitmax (which became Vurv which was acquired by Taleo), SuccessFactors, Brass Ring (acquired by Kenexa), Learn.com (acquired by Taleo), and countless others.
What these other companies offered were two advantages when competing against the big dogs in the space; the ability to empower HR to function with more limited support (or none) from their counterparts in IT, and more frequent updates to software as a result of the emergence of SaaS capabilities. While most of these vendors actually were hosted, subscribed systems rather than multi-tenant SaaS, it was the birthplace of SaaS HCM. They offered solutions for a monthly fee and handled all the technical care and feeding. No matter how you look at it, the market has become fragmented with talent management platforms focused on strategic functions and the core HCM platform supporting more transactional elements of HR which include personnel data maintenance, benefits administration, payroll, position management, and even less exciting capabilities (but equally if not more critical).
After having a fairly free run at the market uncontested by their ERP-based counterparts, vendors with roots in a single discipline of talent management quickly morphed into talent management suites. The sought to fulfill the promises of unified or integrated talent management. In 2008 much of the momentum in product development, sales and marketing were in efforts to deliver upon the integrated talent management story. 2009 and 2010 were periods significant market consolidation driven by the downturn in the economy and rapidly shifting dynamics of the HCM technology market. Well known brands disappeared, new ones emerged, and the future of the market shifted in ways we could have only dreamed about ten years ago.
Now, 12 years after the industry started, we are staring at two monumental developments which have the capability to reshape the market yet again. First is the formal delivery of Oracle’s Fusion HCM suite. With this much anticipated product the team at Oracle have taken the time to provide a substantial
upgrade ground-up rebuild of the HCM product line. The result is a highly competitive offering which should cause many Oracle customers to give it a good look when their SaaS Talent Management contracts are up for renewal. With strong functionality, mixed-deployment options, and what I anticipate will be more flexible contract terms than on-premise software much of what caused the birth and growth of the dozens of vendors in the talent management space will have vanished.
At the same time, Workday has been aggressively developing their talent management capabilities while rounding out their product offering in the HCM space. Workday’s VP of HCM Product Strategy Leighanne Levensaler brings a wealth of talent management domain expertise from her days as an industry analyst at Bersin & Associates. Additionally, Ultimate Software, SuccessFactors and a number of other vendors have also been busy evolving their product line to bridge the gap between the strategic functions which HR desires and the administrative functions which HR cannot live without. Needless to say there is a substantial sea change underway in the HCM technology market right now.
Twelve years ago the talent management technology market was in its infancy. In order to grow, develop, and mature the market it needed to exist as a separate set of capabilities. We’ve reached a point in the maturity of the HCM technology market where the emphasis is not on new bells and whistles (although there are plenty), but rather how HR can and should absorb all of these capabilities. The questions being asked aren’t as much about can a product function in a certain way, but rather do we need specific features at all? And if so, why?
Just as the talent management technology space was born out of a need to separate from Core HR, the same challenges are likely to drive the reunion of these two in the not too distant future. For those talent management vendors who choose to head down the Core HR path, the road is paved with high levels of competition from the vendors who have been there all along. Those who choose to avoid that route may find themselves with a somewhat darker future.
2010 was the year of the acquisition in the HCM technology space. The coming year or two might see a few more big ones fall but for very different reasons. While I can’t predict which vendors will thrive, survive, or fall, many paths seem to lead to the same end-point.
10 days ago I posted a somewhat provocative post questioning whether enterprise software was dead. Based on the results of the Gartner Executive Program 2010 CIO Survey, Enterprise Software experienced a dramatic decline in the list of top priorities of CIOs who where included in the survey. After a fairly steady #2 in the list the past four years, Enterprise software plummeted all the way off the top ten, to land at the eleventh most pressing priority for CIO. While the survey results are interesting, being the inquisitive individual that I am I want to understand what this means.
Is Enterprise Software dead?
In response to the specific question of whether Enterprise Software is dead, I would argue that the answer is a resounding NO. Enterprise software is the lifeblood of many organizations, controlling the flow of money and product between an organization and their customers and/or employees. A modern enterprise could not function without the ability to execute these types of transactions. It gets to the heart of commerce and commerce is what sustains nearly all organization (excluding government and/or mission-driven organizations).
While Enterprise Software isn’t necessarily dead, what is happening is a dramatic shift in how these types of applications are delivered to customers. As highlighted in the newer entries in the top ten of the list of CIO priorities in the Gartner survey, the top three are virtualization, cloud computing, and Web 2.0. In each of these three new top priorities, one can extrapolate that Enterprise Software is interwoven (web 2.0 is a bit of a stretch, but not much). As organizations look to deliver greater return on investment in their technology assets and CIOs look to deliver efficiencies, both server virtualization and cloud computing have substantial impacts on Enterprise Software.
Virtualization – Without going into too much technology speak, virtualization technologies permit organizations to harness the processing power of multiple smaller, more efficient (and less expensive), and typically standardized servers into a single “virtual” server. Rather than having to purchase a larger server which at times may only run at 20% of capacity, reflecting 80% inefficiency, virtualized servers allow you to dynamically balance server utilization based on need and harness extra processing power when needed and lend it elsewhere when it isn’t needed. In short, it helps to fill in the peaks and valleys in server utilization, resulting in fewer servers in the data center and greater utilization of the servers that do exist. The financial impact of this for larger organizations can be quite substantial.
Cloud Computing – Cloud Computing is one of the most over-hyped and widely misunderstood terms. Without oversimplifying it, cloud computing is less about a specific technology and more about the mechanism by which a software solution is architected and delivered. Cloud Computing is often a term used interchangeably with Software-as-a-Service (SaaS), referring to solutions which are offered to an enterprise on a subscription basis and accessed via a browser. What makes Cloud Computing really interesting is the fact that multiple companies run on a single installation of software and are all “segmented” in such a way that they will never bump into one another. I like to think of this as an apartment building where everyone has a private door. You all share the same infrastructure, walls, etc, yet can live without ever seeing a neighbor. Just as building apartments is cheaper than building stand alone houses of similar sizes due to economies of scale and the costs of common elements such as the lobby, roof, parking lot, etc are distributed across a larger number of individual owners.
As you can probably imagine, both of these technology solutions/approaches can easily adapt for the purposes of Enterprise Software. By running across virtualized servers an enterprise application can be run more efficiently, helping to drive towards a more standardized technology infrastructure and a more efficient use of hardware. Cloud computing can be used to help reduce the overall costs associated with running enterprise solutions within an organization, but with some limitations.
While the overall prioritization of Enterprise Software has declined in the latest CIO survey, Enterprise applications are far from dead – they’re just evolving.
Big software, like ERP solutions from vendors like SAP and Oracle are what most large business use to run their operations. From supply chain logistics controlling how much product to order, from which supplier, at what price to human resources management solutions which help organizations keep track of their inventory of talent and produce payroll – it’s all part of what is called Enterprise Applications. Since the death of the mainframe, Enterprise Applications have been the lifeblood of many IT organizations and one of the largest initiatives on the mind of a typical CIO.
How do we know that what the top priorities of a CIO are? To help answer this questions, analysts from Gartner publish the results of their annual Executive Program CIO Survey which queries over 1,500 CIOs on their top priorities for the year. In the 2010 survey there was a remarkable absence from the top 10 priorities – Enterprise Applications
Gartner Executive Program CIO Survey, January 2010
After ranking as the second most pressing priority for CIOs, Enterprise Applications suddenly fell out of the top 10 slots. Equally interesting is that Cloud Computing has quickly shot up from #16 in 2009 and not ranked before then to #2 on the list.
While there are a number of questions that this study raises, the specific ones to consider for this post are:
- Is the sudden and dramatic shift in Cloud Computing an anomaly or an indication of something more substantial?
- How does Business Intelligence go from #1 to #5 behind several relatively new topics?
- Is the substantial decline of Enterprise Software’s ranking related to the sudden increase in focus on Cloud Computing?
- Is Enterprise Software Dead?
I have my own perspective on this one and will share it in a future post. Meanwhile, I would welcome your thoughts on this topic. Please join in the conversation by posting your comments.