Every 24 – 48 months businesses around the world with a premise-based enterprise application face the question of whether to upgrade to their chosen vendor’s most recent version of their software or evaluate other options, whatever those options might be. It’s a tricky question to answer and the implications of which can be somewhat substantial.
The cost to upgrade enterprise software is a significant investment for even the smallest of organizations and the return on this investment is often difficult to realize. What is the modern CIO, COO, or CFO to do?
The options generally available to a customer are:
- Refrain from upgrading and go unsupported
- Refrain from upgrading and pay for additional support (3rd party or extended vendor support if available)
- Evaluate alternative solutions
An upgrade point is the most opportune time to evaluate your options and be sure that the decision to upgrade is what’s right for your business, as in some cases it might not be. Consider the following three simple questions:
1. Has your business stayed the same since you made the decision to purchase your current solution?
Many organizations selected and implemented their enterprise solution ten or more years ago when their businesses were in a different environment than we are now. Business is now more global, more integrated, and operating more lean than a decade ago. Decisions you made regarding the technology you use to run your business years ago might not necessarily be the same decisions you would make today.
2. Is running a data center a core competency of your business?
Ten or fifteen years ago the options for deploying an enterprise solution on hardware located somewhere else wasn’t commonplace. The industry has realized two waves of transformation along with the commercial availability of the internet. The first wave involved application hosting (ASP), the second is Software-as-a-Service (SaaS). As a result, ten years ago premise-based installations were not only the norm but the only likely option for most.
Fast forward to today…. With organizations looking to run more lean, focus more on their core business, and become more agile, building and maintaining data centers becomes less attractive. 3rd party vendors can pool demand from multiple sources and justify the investment in true world-class facilities which are designed to withstand disaster scenarios. Few companies can replicate this same capability cost effectively for private use.
3. Can your business needs wait until the next release of software is available and you upgrade to it?
It used to be commonplace in the software industry that if the product didn’t meet your needs due to limited or missing functionality, the vendor would show you powerpoint slides of “future functionality” which would address the missing functionality. All too often that functionality either didn’t materialize or required a very expensive upgrade at some point in the future. With major upgrades often spaced 36-48 months out, you could be waiting four years or more until you can take advantage of new functionality. Can your business needs wait that long?
Odd are that you can’t honestly answer yes to at least two of the three questions above. As a result of the questions above and the dramatic shift in the enterprise technology market, any organization facing a mandatory upgrade of their enterprise solution (HRIS, ERP, etc) would be best served by evaluating the options in the market. You may end up continuing down the path you’re on, but unless you survey the market and make an educated decision, you might miss opportunities to enhance the business.
You owe it to your stakeholders and yourself to ensure the decisions made today aren’t simply repeating history.
Its hard to imagine that after a year’s worth of anticipation and planning the 14th Annual HR Technology Conference and Exposition is in the record books – literally and figuratively. While I haven’t seen the final attendance figures, I’ve been told that the numbers far exceeded those of the conferences of the past. Showing off it’s international appeal, the event draws people from all over the world, including South Africa, Australia, various points throughout Europe and Latin America. Regardless of where the attendees arrive from they all look to learn about the latest innovations in HR practices and technology from world class practitioners who share their successes (and failures) for others to learn from.
Conference Co-Chair Bill Kutik spends a good portion of the year planning the event to the most minute detail including the brand of coffee served to attendees and the placement of lighting in the room where the general sessions are held, to deliver the best possible experience for the attendees who invest not only the cost of the conference and travel, but their precious time as well. Kudos to the newly married Mr. Kutik and the rest of the conference team for pulling off another successful event.
What makes the HR Technology Conference and Exposition so successful? See the details below:
Doubling Down on the Location
Moving the conference from Chicago to Las Vegas resulted in some new attendees, enabling many from the west coast to attend a conference they might have otherwise skipped due to the cost or time commitment to travel. Fortunately for those of us in attendance we were treated to something that has been lacking in the previous years in Chicago – a conference center which is directly attached to the conference hotel. While Chicago’s McCormick Place does have a hotel attached, it is not the official conference hotel. The Mandalay Bay offered conference attendees top notch accommodations, dining options galore, numerous entertainment options, and of course the gaming action that Las Vegas is known for. The location offered something for everyone even if an attendee didn’t gamble or drink.
Being Dealt a Full House
With a agenda filled with some of the best and brightest in the business its no surprise that attendance was through the roof with general sessions being completely packed – standing room only. Conference attendee traffic on the floor of the exhibit hall was quite heavy with many vendors I spoke with reporting high levels of engagement with prospective customers. While some vendors dug deep into their bag of tricks to attract people to their booth by way of dancing, celebrity impersonators, and flashing toys, many choose to instead go back to the basics and engage in dialogue absent the gimmicks. My friend Dwayne Lay posted his HR Tech 2011 swag video here dishing on all the cool giveaways.
Winning the Jackpot
Two of my favorite events on the HR conference calendar came together this year, resulting in a two for one experience for a number of attendees. While the HR Technology Conference was the big draw, a much less known event, HRevolution was also incorporated into the overall festivities this year. For those of you not familiar with HRevolution, I would strongly encourage you to check it out next time. An unconference is a loosely structured conference model absent powerpoint presentations, one-way communications, and the formality typically found in many conferences. Pairing this event with the HR Technology Conference offered attendees the best of both worlds.
For those who share a passion for technology like I do the conference offered a chance to see more new products from vendors. With Mobile and Social being the two largest themes of the show few vendors were without a story to tell on these topics. While the mobile applications look cool, one has to ask whether it makes sense to build the same functionality into a new channel or if the use of that new channel should result in a completely different focus on how the software should/could be used. Just because something can be done on a mobile device doesn’t mean its the most appropriate way to get something done.
By paying close attention to the various capabilities available in the market from the numerous vendors, attendees have the potential to shift the odds in their favor. Unlike at the blackjack tables, you will not get tossed out for having an unfair advantage, it simply means you’ve successfully managed to pick and choose the best tools available.
While the conference was largely a very positive event, I wanted to highlight some of the ways in which the conference can be improved moving forward:
- High-speed WiFi (emphasis on high-speed) – first and foremost thanks to ADP for serving as the sponsor of the WiFi service for HR Tech. While it was a great gesture, unfortunately the demand for internet service far exceeded available supply. The result was internet connections which reminded me of my 14.4 kbps modem from 1993. Next year having not only high speed but greater bandwidth is a must have.
- Closer Meeting Rooms – I’m not how many people experienced the challenge of having to leave the exposition show floor to head to a suite for meetings but for those who did you know what I’m talking about. With limited meeting rooms directly adjacent to the expo hall vendors were forced to secure suites in the hotel towers for meeting rooms. The long walk between the hotel elevator tower and the expo hall was just a hit under a 3/4 of a mile. Having three or four meetings in the towers meant quite a few miles logged between the two locations. Ideally the exposition hall would have “suites” available directly from the show floor where vendors could quickly escort prospects for more in-depth discussions.
- More Casual Food Options – While the dining options at Mandalay Bay were terrific (the hamburger at Fleur is amazing), there is a lack of more casual dining options where attendees can grab a less formal (and less expensive) meal. For attendees on a budget the best options were either hitting up a vendor party for free food or venturing over to other hotels in search of more reasonable dining options.
This was the 7th year that I’ve attended the HR Technology Conference, and continue to be impressed with how well Bill Kutik and the LRP team manage to pull it off. I’m looking forward to next year back in Chicago.
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.
It’s hard to believe but 48 years have passed since the Equal Pay Act of 1963 was passed, officially ending the legal disparate compensation between men and women for similar jobs. If only it were so simple to sign a bill into law and correct decades of behavior overnight. The fact is that 48 years later the gender earnings gap still has yet to be fully closed. As recent as 2008, unmarried women earned 94.2% of what their unmarried male colleagues earned. Overall, women on average earned 79.9% of what men earned in 2008.
The problem that I have with statistics is that they can distort reality. Anyone who has pain attention to a presidential election knows that you can make data support even the most extreme position on something by simply altering the lens by which you analyze. For every data point thrown out by a candidate, their opponent can throw out a counterpoint supported by data (often from the same dataset) to refute the original point.
Given the fact that numbers can lie, how can one make sure that the gender pay gap is as substantial as it is portrayed? Just talk to people. Look at data within your organization for similar roles, compare pay by job code by gender both at an aggregate level and at an individual level. Do you see any patterns? Any biases (intentional or not)? I’m sure its hard to imagine that this is an issue within your organization – this only happens other places, right? WRONG!
Earlier in my career I actually was a HR practitioner who worked in the compensation function of an organization. Given that we were one of the city’s better known employers, progressive, and skewed towards a female workforce you would expect that our pay practices supported pay equality or even a positive bias towards women. Unfortunately after some in-depth analysis and major MS Excel & Access data-crunching I noticed that the perception didn’t match reality.
Needless to say that I was very surprised. Its hard to believe that an organization like ours knowingly engaged in pay practices which were the exact opposite of everything I know to be right. Was this part of a sinister plot? Was this a conscientious direction the company chose to take? The answer ended up being yes and no. While pay practices were designed to be gender neutral, there were some very specific aspects of the culture which impacted the ability to remain gender neutral.
- We were a very paternalistic organization – Our company culture had long been one based on taking care of our employees. As a result of this there was a fair number of managers who made decisions related to compensation and promotions, etc based on not only individual performance and contributions but also based on key life events. Got married? There might be an off-cycle raise or a larger merit in your future. Had a baby? Diapers cost money, so let’s make sure your incentive payout is able to help out.
- While we were a female-heavy population, the women in the organization tended to be younger than the men. Women occupied larger percentages of the more junior roles than the senior roles (with almost no presence in the executive team). It wasn’t because the organization didn’t promote women, but rather women who started out on a career track moved into a mommy track at a rate that was higher than some other industries resulting in a larger percentage of more senior roles being occupied by men.
- Our highest paying individual contributor roles were in occupations which historically were dominated by men. As a result, the pay bias in these roles did get skewed
Regardless of the reasons for why this happened, it did. Since then I’ve been much more aware of the issue and have more vocally advocated for pay practices which encourage organizations to pay the job not the person. By consistently paying the job you can remove many of the factors that contribute to unintentional (or intentional) pay biases. How can this be put into practice:
1. For your highest volume positions publish standardized guidelines for compensation which managers and recruiters can use to have a discussion around before an offer is extended. e.g. Staff accountants are consistently paid at $37,500 per year. Anything that deviates from that requires compensation review.
2. Avoid counter-offers whenever possible. Employees who obtain offers elsewhere will eventually leave you anyway even if you do counter offer. More importantly, yet highly unscientific, my personal experiences show that men use this approach to obtaining a raise more so that women. Where I have tracked this information the male/female ratio of increases due to counter offers was 3:1.
3. Be sure to consider both internal and external equity when considering a manager’s request for a salary adjustment. If an adjustment is requested to an employee’s compensation, determine whether its a performance-related increase or something else. If performance, determine if a promotion is more appropriate than simply paying more for the same job.
It seems like common sense, but inequities occur on a daily basis. What are your thought on the topic and your experiences?
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.