Posted by: Ron Hanscome | October 1, 2010

HR Tech 2010 Recap: Data Points Part I

I’m back in the home office after two very full days at the show in Chicago. Congratulations to Bill Kutik, David Shadowitz, and the host of supporting cast for another well-run and successful event. This year the bloggers took a “divide and conquer” approach to attending the sessions in order to ensure more topics were covered; as a result my choices reflected my love of research as well as the feeling that some of the less sexy “nuts and bolts” topics contained important and relevant content as well. There are a number of great “fast response”  top-level summaries of the event already posted by The HR Capitalist, KI OnDemand and others…so rather than compete with that, I’m hoping to go a little deeper, and thus take a little longer. So this is the first of four or five posts over the next week that will cover presentation content as well as vendor interactions.

Wednesday Morning: Show attendees were privileged to get a recap of the CedarCrestone 2010-11 HR Systems Survey from Lexy Martin, the Grand Dame of HCM technology research. This is the 13th edition of a study that initially covered the growth of HR self service applications, but has over time broadened to track trends across the entire HCM technology landscape; this year’s survey gathered data in the May-July time period, and (after scrubbing/cleansing) is base on 1289 responses representing 20+ million employees. There is loads of useful stuff in her Highlights slide deck (need the attendee password) and the White Paper itself, here are some key findings that caught my eye, along with my comments in italics:

  • Respondent focus has turned back to managing talent as a roughly equivalent priority to increasing productivity and reducing costs — talent management as a business challenge was cited by 57% of respondents, up 35% from 2009, and only slightly behind productivity/cost (60%). “Integrating data from multiple systems” was a new option in this year’s survey, and was cited by 54%;
    •  I believe that this high ranking reflects the increasing pressure HR is under to measure the impact of HR processes and show the return on HR program investments, as well as the difficulty of utilizing data stuck in system silos.
  • While survey respondents plan to increase their use of all types of HCM applications over the next three years, the biggest planned growth categories are talent mgmt apps (from 43% today to 82%, a 91% increase), workforce optimization tools (workforce planning and predictive analytics – from 15% today to 33% in 3 years, a 120% increase), and social media (from 15% today to 29% in 3 years, a 91% increase).
    • Note that these focus areas tied strongly into the primary marketing messages of most of the vendors on the tradeshow floor; it was rare to hear a pitch that didn’t have “social” or “analytics” included somewhere.
  • Higher use of HCM technologies (more than 16 applications) is correlated with higher net income growth, sales growth, and 40% higher sales per employee.
    • Linkage to business results has been added to the study over the past couple of years, and these data points can really help drive an HCM business case.
  • Overall adoption of SaaS for HCM deployments was greater in 2010 (12%) than forecast by survey respondents in 2009 (10%), and it is forecast to increase by another 50% in twelve months to 18%
    • This is showing the increasing acceptance of SaaS in the HCM marketplace (although it should be noted that licensed on-premise is still the most prevalent model, used by 44% now and forecast to still be 41% in twelve months).
  • Competency management and career development application usage has the strongest linkage to one-year sales growth for those survey respondents with publically available financial data.
    • The data support for these findings continues to grow and was validated by anecdotal conversation with a competency management practice leader in the Exhibit Hall, who indicated very strong growth in competency definition projects and deployment of related technologies.
  • “ERP based” talent management (e.g., using modules of core HRMS applications) is linked to highest financial performance (better net income growth, sales growth, and somewhat higher sales per employee)
    • Some reasons discussed during the presentation include the benefits of built-in integration of a single platform as well as one source of data for reporting and analysis that also includes other financial and operational data. While this finding certainly does not make the many best-of-breed and suite vendors very happy, it nonetheless highlights the importance of  these issues, validated by anecdotal evidence of “first generation” talent management failures.
  • Organizations that have invested significantly in “heavy duty” talent analytics have achieved substantial business results, including almost 6x net income growth (29% versus 5%), 4x sales growth (11% versus 3%), and 58% higher sales per employee ($547k versus $345k)
    • Getting to this level of sophistication for analytics requires a significant effort, as the metrics are complex and hard to derive; but the effort seems to be paying dividends for the firms that have adopted these leading practices
  • Corporate Social Network Adoption was linked to higher financial performance – those firms that reported using these tools had 54% net income growth versus -5% for those without. interestingly, impact on sales growth was much lower (-4% versus -6%), and sales per employee was only 7% higher.
    • Growth in net income reflects cost reductions in recruiting as well as the benefits of internal collaboration; impact on sales and productivity is yet to be fully reflected.
  • Therefore, Lexy’s list of leading practices for organizations to consider includes competency management, career planning, integrated talent management modules of core HRMS/ERP vendors, implementation of foundational business intelligence tools, analytic and planning applications, and change management.
    • Regardless of the technology and process changes being considered, organizations chronically under-invest in internal marketing, communication and change management activities during the roll-out phase of an HCM deployment. Be sure to take your initial budget & resource estimate and increase it by at least 50% in order to increase your chances of a high level of user adoption.

Kudos to Lexi and the CedarCrestone team – the great data contained in this survey is a real gift to the HCM marketplace. It was for me a great beginning to two days of informative, meaningful presentations.

Stay tuned for the next post on the two customer presentations I covered — Thomson Reuters Global Payroll and Kraft Foods comprehensive HR BPO.

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Responses

  1. Ron, Thanks for the great summary and analysis of survey results. And I too want to add my kudos, shout outs, sincere humble thanks to our CC team. Any who want to download the full survey white paper, here’s the link: http://www.cedarcrestone.com/annual_survey.php

    I’d appreciate feedback too: on methodology, contents, assessment, etc.

    Perhaps the one area that I find most intriguing is the results for the Financial Services industry. More automation, more HR people, strong link to higher financial performance compared to Financial Services organizations with less automation, less HR people. To me, this is really showing that those that use best practices and focus attention on talent management and business intelligence activities are outperforming!

    thanks again


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