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I’ll admit it, the HR Technology market can be downright confusing. The messaging coming from nearly every vendor sounds very similar, making it very difficult to determine which vendor does what and more importantly how they differentiate from one another. Nearly every vendor offers capabilities that are marketed as “Talent Management” or “Analytics”, ranging from assessment vendors, time-keeping solutions, and organization charting vendors. And, amazingly enough, they are all correct largely because of the lack of a generally accepted definition of what each means.
As confusing as it is to determine what a solution exactly does, its become even more difficult to determine HOW vendors deliver their solutions. Cloud-based, Subscription, Software-as-a-Service (SaaS), premise-based, perpetual, hosted, hybrid, and outsourced are terms that often are used to describe the manner in which a technology is made available. Buyers often are looking for SaaS, but many times don’t know exactly why they want or need SaaS and more importantly what solutions are SaaS versus a hosted solution – and why its important to distinguish between the two.
Software-as-a-Service has been defined by Microsoft as “Software deployed as a hosted service and accessed over the internet”. This definition is as pure and simplistic as possible. based on this definition, SaaS has a few key attributes:
- Software is hosted on servers that the vendor provides and maintains
- Software is accessible via an internet browser
- Access to the software is subscription-based rather than licensed
Based on this definition, there are countless vendors in the space that qualify as SaaS and just about any solution you buy can be made available in a SaaS model.
I would like to offer a more narrow definition of SaaS;
- Hosted and maintained by the vendor
- Delivered over the internet
- Configurable but NOT customizable
- Single code-base deployed across ALL customers
In the definition from Microsoft the author goes on to explain that there are different stages of SaaS, ranging from custom, hosted, single-tenant solutions all the way to scalable multi-tenant solutions. And while the architectural nuances of each model may cause an IT Director to squeal in delight like a schoolgirl, to the typical HR buyer they mean absolutely nothing. In my definition, only the multi-tenant options of the Microsoft definitions qualify as SaaS.
As a buyer I’m less concerned about the technical architectural details provided that they don’t limit me from achieving the outcomes I seek from a solution. I am more concerned about what investment is necessary, how complex will the implementation be, how flexible the solution can be in order to quickly adapt to the changing needs of my business and whether I need to re-skill my IT or HR staff in order to support the solution.
In order to meet MY business needs, SaaS is a must for any business application as I’m always looking to decrease the reliance on IT to support HR solutions. As a CIO I want to devote my limited technical resources to supporting the infrastructure necessary to run the business and support the applications which are most closely aligned with functions that generate revenue – which is most often not HR. As a result, anything that isn’t core to my business I would look to have delivered via an outsourced arrangement – generally provided by SaaS-delivered software.
Given that most CIOs have this objective, HR is a market that has become ripe for SaaS adoption. So given the explosion of SaaS-labeled solutions, its important to understand how to determine whether the software you’re buying is SaaS or something marketed as such but really isn’t. In order to determine what you’re buying, ask your vendor the following questions:
- Is the solution available for installation on my servers internally?
- Do I get to choose when upgrades are deployed?
- Do upgrades require me to do anything other than perform acceptance testing?
- Can I buy licenses for the software rather than pay a subscription?
If your vendor answers yes to any of the above questions, then the solution being proposed is something other than a multi-tenant SaaS solution.
I want to be clear that not every solution used by HR needs to be a multi-tenant SaaS solution. There are plenty of solutions which make sense to deploy on site, but if a vendor ONLY offers a solution through a SaaS-branded offering, be sure you know what you’re getting.
Over the years I’ve come across a number of organizations who have expensive software sitting on the shelf not being used. Not necessarily because they bought a product and chose to not implement but rather they were given the software for free and didn’t know exactly what to do with it.
ERP vendors have been known to throw in HR software as a giveaway when an organization commits the entire enterprise to their platform. Buy a supply chain and financial solution, get payroll for free. It sounds reasonable, right?
All too often CIOs and CFOs make decisions like this and it ends up costing far more than they ever realize. So why is free expensive?
Imagine a company being “given” $500,000 in Premise-Based software in the scenario below:
- When a ERP vendor provides you with a free license for their software, you typically still pay for maintenance. This is typically at 18-22% of what the license fee would have been. If the software should have cost $500k, the maintenance fee is roughly $100k annually added to the fees you pay for the other software you bought and are using.
- You will still need to implement the solution if you plan on using it. Typical implementation costs range from 1x-3x the solution cost – and sometimes much more. Conservatively, you’ll spent $1m to implement
- Premise-based software still needs to be maintained and upgraded periodically. Assuming you can go four years on the most recent major release of the software (3 years is the norm), you’ll likely spend another $750k – $1m for the upgrade project
Over five years that piece of free software has cost you upwards of $2,250,000 or more.
This cost assumes that you actually implement and use the product. If you simply sit on it, you’ll still pay $500,000 for something that is collecting dust. Now I might not be a Rhodes Scholar, but I am smart enough to figure out when I’m paying for something that was supposed to be free.
So why do vendors give away software? They do it for two primary reasons – first and foremost, to prevent you from evaluating competing solutions that could erode their foundation within your organization. The second reason is a bit more sinister – its a money making ploy. With maintenance revenues exceeding license revenue at many software companies, its an amazing way to create a highly valuable annuity. This is simply the high-tech version of a razor blade company giving away free razors which require a proprietary razor blade.
While accepting free software may be the right thing to do in some situations, it shouldn’t be viewed as a decision with no downside. If you plan on actually implementing, and the solution being provided for free is a viable option – by all means consider it. But don’t just blindly accept the free licenses without realizing the costs associated with what you think is free.
After all, nothing in this world is truly free.
As a recruiter or hiring manager how do you know whether the candidate you’re considering for your opening is genuine? Have they embellished their background a bit? Have they shielded you from their true personality or engaged in some other form of innocent (or not so innocent) deception in order to get the job? Anyone who has has the responsibility for hiring new employees has probably run across a situation or two in which they ended up hiring someone who wasn’t exactly what they thought they were getting.
While a good recruiter can cut through most of the BS, methods of assessing the true nature of a candidate with near-perfect certainty are unavailable. While some organizations spend hundreds of thousands of dollars annually to assess candidates, there might be some more cost effective and less error-prone methods of assessment – Facebook.
I came across an interesting article on the New York Times website the other day which cited results of a study conducted by a Psychologist from the University of Texas supporting the potential of Facebook as a tool to help more accurately assess an individual’s personality. While there were many interesting findings of the study the key point that I found to be interesting is that individuals are less likely to stretch the truth in a social media forum where their friends can dispute their boasts.
While not a silver bullet in the candidate assessment process by any stretch of the imagination, this further solidifies the use of Facebook, Twitter, and other social media platforms as an excellent method of validation of a candidate’s fit for a role. When combined with more traditional assessment tools recruiters and hiring managers can feel more confident in their hiring decisions without having to invest any extra money.
After the events of the last few weeks I had an opportunity to reflect on the process of onboarding new employees. Having gone through a similar process at our local hospital recently I was shocked at how smooth the process went from collection of/sharing information, speed, completeness, etc and started thinking how HR can learn something from this process.
Lesson 1: Collect Once, Use Often – At the hospital they don’t have you complete a form for your master data – they type it in while sitting down with you. Additionally they don’t ask for your name on each and every form needing a signature, they either print the form as its needed with data from your master data record or have pre-printed labels ready to go to stick on the forms once they’re ready to be used. In a hospital this is used for wristbands, privacy waivers, insurance forms, liability notices, etc. All too often HR uses generic photocopied forms for collection of information, resulting in tremendous inefficiencies and a frustrating experience for a newly hired employee who has to write their name 20 times on similar forms, but more importantly it demonstrates that you did a less than stellar job of collecting information from them during the recruitment process that would speed up the onboarding process. My motto with respect to data is “collect once, use often”.
Lesson 2: Enterprise Forms - Many organizations suffer from “forms syndrome”, meaning that they use too many department specific forms. During onboarding there’s typically a facilities form for a badge, a finance department form for a corporate card, etc. Each form asks for similar information, may use outdated references (facilities may provide office space based on outdated job titles or something), and simply confuse people. While coming into a hospital, since they follow lesson 1 above, they can collect the necessary data to support all department’s needs without having to utilize departmental forms. Even better yet, just eliminate forms completely.
Lesson 3: Accuracy Counts -While not everyone completely understands how what goes into a patient master data record impacts operations of a hospital, everyone understands the need to be complete, timely, and accurate. Incorrect information such as incorrectly listing allergies of a patient can have dire consequences. As a result, everyone at a hospital is very well trained on the importance of the work that they do and no role is an unimportant role. My experiences with a number of HR departments is that the same level of appreciation for timely and accurate data entry isn’t near the same level of that of a hospital. Having correct information earlier in the process makes everyone more effective.
Lesson 4: Make sure everyone knows their role in the process – When coming to a hospital some staff are responsible for providing care (Doctor/Nurse), some are responsible for providing information (educators), some are responsible for collecting information (intake staff / triage nurse), and some simply support everything behind the scenes (lab techs, housekeeping, foodservice). Just as my local hospital wouldn’t have a doctor serve lunch to a patient or have a lab technician staffing the emergency room triage desk, you shouldn’t have your IT orientation performed by a finance manager. Having the correct staff available to help train new employees not only sends the right message to new workers, but also speeds time to full productivity – which drives key business outcomes.
Lesson 5: Prepare everything before people arrive – If you are admitted to a hospital, generally they know exactly what room you will be occupying, which doctor and supporting staff is assigned, etc. Additionally the bed is always made, room is clean, and the drawers are fully stocked with the necessary equipment to get the job done. In short it helps a patient feel as if the hospital was ready and waiting for them and if needed, anything necessary is within reach at a moments notice. In the HR world, nothing sends a stronger message to a newly hired employee than an organization that is well prepared for their arrival. Office set-up, laptop configured and waiting, network and email passwords ready to go, already added to the phone directory, and a mentor assigned.
It sounds easy and logical, but few organizations do this very well. IT needs an employee ID number before a network ID is created, HR won’t “hire” the employee in the HRIS until their first day, etc. The end result is tightly controlled processes which have been designed to satisfy an auditor’s desires with no regard for the actual business impact of such processes. Which is more costly – assigning a laptop to someone without an employee ID #, or a $200k exec leaving after 2 days because he/she felt that the organization didn’t have their collective act together?
In conclusion: Its not that HR sets out to do things wrong, but simply HR is in many cases forced to work around challenges presented from throughout the organization. From IT security requirements, space planning issues, lack of planning with respect to equipment needs of new staff, many issues are outside of HR’s control – yet HR is the most visible piece in the onboarding puzzle. In my experience, adopting an onboarding team consisting of stakeholders from across the organization is one of the most effective ways to help make the dreaded onboarding process more impactful and drive positive outcomes.
Take notes from your next hospital visit – you can learn a lot.
Earlier this week I was engaged in a discussion on twitter with a few individuals debating the value of all the acronyms in the HR Technology space and what it all really means. HRIS, HCM, ERP, ATS, CRM, BI, EDW, TA, TAS, TM, TMS, LMS, et al. Those of you who know me know how hard this is for me to admit, but … I find the various acronyms for HR technology to be confusing. There… I said it.
If someone who follows the space for a career can’t keep it all straight, how is the typical HR or IT professional able to keep track? In addition to worrying about the technology in their areas of responsibility, these folks have day jobs which encompass things other than technology. In short, the market is complex and confusing – but does it need to be?
I’m not sure that the market needs to be as confusing as it has been, and more importantly as there is continued consolidation of point technology solutions towards fully integrated suites, the individual capabilities attributed to each of the acronyms become less relevant. Until the point in time in which this becomes reality, I’m proposing the following standard definitions for industry acronyms:
HRIS – Human Resource Information Systems: Typically a transactional system designed to house employee demographics, current and historical job information, salary information, as well as often including capabilities to track & administer benefits enrollment/elections, and payroll processing. While there are a host of other capabilities that these systems can provide, the capabilities listed above are the most common.
ERP – Enterprise Resource Planning: ERP systems are typically those provided by vendors such as Oracle, SAP, Lawson, etc. They often have HR capabilities in addition to features to support financial management, supply chain management, inventory and much more. Many times an organization will have a single vendor for ERP and “bolt-on” HRIS capabilities through the vendor-provided modules
HCM – Human Capital Management: The term HCM is a broad-based definition for any technology which is used to track and manage the people in an organization. This can often include HRIS, ATS, TMS, LMS, and much more.
ATS – Applicant Tracking System: Technology used to track job requisitions, applicant flow, applicant status, communications with candidates, interviewer notes, plus online job postings and integration with 3rd party job boards & job distribution partners
CRM – Candidate Relationship Management: Technologies used to help facilitate the marketing/search elements of recruitment such as delivering email campaigns to maintain contact with candidates and potential candidates. This is an interesting segment of the market and one that has been growing fairly rapidly
BI – Business Intelligence: With a host of disparate applications being used to run a business, there has to be a better way to aggregate and correlate data between systems. Fortunately someone else saw this opportunity many years back and have evolved solutions to where you can not only report on information across multiple systems, but have more robust analytical capabilities through this technology. Utilizing BI tools for talent management capabilities and decision support lends itself to an emerging market called Talent Intelligence (TI). Vendors who operate in the BI space include Oracle, Cognos (IBM), Hyperion (Oracle), Business Objects (SAP), etc. Interesting to note that the three largest independent vendors in the space have been acquired by IBM, SAP, and Oracle.
EDW – Enterprise Data Warehouse: If you have several ERP applications and/or other business applications to leverage, where do you store all the data to be analyzed by your BI tools? In your Enterprise Data Warehouse of course. An EDW would typically include sales data, financial data, people data, performance/talent data, etc. Data in an EDW is stored differently than would be stored in its native application to help facilitate easy reporting and analysis. Additionally the data can very easily be reviewed from a trending perspective as well as a high-level summary which can “drill-down” into transactional details which make up the high-level numbers.
TA – Talent Acquisition: Business processes and practices related to the recruitment function.
TAS – Talent Acquisition Systems; Historically referred to as the ATS Talent Acquisition tools enable the recruitment process via technology from job requisition to job postings all the way through new hire on-boarding. TA tools generally have the ability to configure job libraries, online screening/assessment questions, automated email templates, and allow recruiters to easily search candidates and track (hence the ATS name) who is in consideration for which job. Big players in this space are Taleo, Kenexa, iCIMS, Silk Road as well as the ERP solutions, and many more.
TM – Talent Management: While there are several schools of thought on the scope of what is included under the definition of Talent Management, I typically define it as “managing, optimizing, and understanding the supply and demand of talent within the enterprise” Processes which may fall under the TM area of functionality range from talent acquisition, performance management, succession/talent review, learning & development, career development, and compensation. While technically TA and Comp can be included in the definition of TM, most organizations have not yet adopted this broad of a definition ad instead consolidate the functions listed above except for recruiting and compensation.
TMS – Talent Management Systems: Technologies that assist with functions related to the business processes of Talent Management. Functionality ranges along a spectrum from transactional to strategic. Transactional meaning automating processes formerly conducted on paper such as performance appraisals, merit reviews, bonus allocations, etc. Strategic meaning analysis of rich data related to people in the organization, correlating performance reviews to business results, matching talent with opportunities through career development and succession processes, to analysis of bench strength, talent pipeline, critical roles, etc. Leading vendors in this space include SoftScape, StepStone, SuccessFactors, Taleo, Authoria, Halogen, Plateau, Sum Total, Saba, Cornerstone OnDemand, and a host of others
LMS – Learning Management Systems: While technically LMS is a subset of TM technologies, it has long been a stand alone function related to course management and eLearning content delivery used by corporate learning professionals to administer the educational process in-house. Since the core capabilities of these solutions have largely become a commodity, the vendors have been busy evolving their products to become more complex, and more tightly engaged in the talent management and development processes. As a result, many of the leading LMS vendors are also listed in the TAS vendors; Sum Total, Saba, Plateau, etc. Additional options here include Learn.com, GeoLearning, and others.
While this isn’t an exhaustive list of definitions it should serve well as a foundation from which to grow. I encourage readers to add to the list, debate/dispute the definitions, etc as this can become a valuable resource for others. I look forward to everyone’s comments
Having run and sat through countless numbers of software evaluations I’ve developed a firm belief that while features are important, the leading enterprise-class vendors have solid enough functionality. In most of their solutions the requirements of many organizations are able to be met through delivered functionality. What separates many of the solutions is how they go about delivering the functionality and less about what functionality they have. One important aspect of how a vendor delivers the outcomes promised is making sure that users actually use the tool.
The vendors all know this and have been busy incorporating new and flashy features into their products. What used to be all about configuration capabilities, flexibility in process, and end-user reporting capabilities has shifted to whose user experience will grab more attention. Adobe Flash used to be the tool of choice for highly creative web sites, and feature-rich consumer-oriented eCommerce sites. In the last several years the software vendors in the HR space have firmly embraced Flash, Flex, and similar technologies to help make their products more engaging to end users. Additionally, some vendors have gone so far as to build plug-ins into Outlook to engage users in the single-most popular business tool ever invented.
While there is a need to continue to push functionality forward, one cannot discount the user experience. To that end, I strongly believe that a more engaging user experience will lend itself to better outcomes. Having users want to use a tool and getting terrific adoption of a mediocre process generally will provide more value than a functionally superior tool, coupled with well engineered processes, wrapped around a less engaging user experience. Think of it using the diagram below where tool grade refers to the grade of the user experience:
This model assumes that the level of functionality in both solutions are fairly similar.
May times I’ve seen times when a superior product from a functionality perspective is not selected simply due to the user experience. A well designed user experience can reduce your training costs, simplify your change management efforts, and help to build/further the credibility of HR within the organization. The ideal solution should look more like a consumer-focused website such as Amazon.com and less like something you need an engineering degree to comprehend.
When a tool is intended for a small audience who will be utilizing the application on a daily basis, you can get away with a sub-optimal user experience (the big ERPs got away with this for years). As the number of users grows and more casual users are exposed to your solution, the user experience becomes critical.
In short, software shouldn’t always about features & functions – it should be about enabling outcomes. Please be sure to keep this in mind during your next product evaluation.