2007 09 27 HRServices Holincheck

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Looking Ahead: Key Trends Shaping the HCM Vendor Landscape Jim Holincheck VP – HCM Applications James.holincheck@gartner.com September 26, 2007

HCM Software Hype Cycle: 

HCM Software Hype Cycle

Key Issues: 

Key Issues What are the trends happening right now than will impact the future direction of HCM software? What is the future direction of HCM software?

Key Issues: 

Key Issues What are the trends happening right now than will impact the future direction of HCM software? What is the future direction of HCM software?

What are the Key Strategic HCM Drivers Today and Tomorrow?: 

What are the Key Strategic HCM Drivers Today and Tomorrow? Attract/Retain Talent Key C-Level Executive Issue Focus required on Key/Critical Talent What attracts talent may not be the same things that retain talent Develop Next Gen Leaders Identify HiPos and Readiness Define Appropriate Development Plans Understand risks and craft retention strategies Pay for Performance Link individual Goals to Corporate Goals Spend Scarce Compensation Dollars Wisely Encourage desired actions and behaviors Link HCM to Bus Results Understand correlation/causality of HR initiatives and business metrics Proactively plan for future workforce needs based on business drivers

Workforce and HR Challenges Grow in Complexity: 

Workforce and HR Challenges Grow in Complexity Workforce Demographics Aging Workforce Generational Differences in the Workforce Globalization of Work Workforce Challenges Employee Engagement Leveraging Contingent Labor Dealing with Change Increasing Technology Sophistication HR Challenges Credibility Business Acumen

Human Capital Management Systems Landscape : 

Reporting/Analytics Portal/Self-Service Personnel, payroll and benefits Integrated Core HRMS E-Learning Succession Management Contingent Workforce Management Compensation Management Performance Management E-Recruitment Time and Attendance Labor Scheduling On Premise Hosted/ SaaS Single-Process Outsourcing Multiprocess BPO Human Capital Management Systems Landscape Talent Management Workforce Management

Key Issues: 

Key Issues What are the trends happening right now than will impact the future direction of HCM software? What is the future direction of HCM software

The Future of HCM Applications: 

The Future of HCM Applications Automate Enable Partner Key Enablers Product Focus Personnel Admin Benefits Admin Payroll Applicant Tracking E-Recruitment Performance Mgt. E-Learning Compensation Mgt. Succession Mgt. Decision Support Planning Talent Process Management Collaboration Non-Routine Self-Service End User Reporting SaaS Competency Mgt. Business Intelligence/ Dashboards BPO SOA/Web 2.0 Integrated TM Apps Social Software Analysis/ Forecasting Tools 2011 Type B Type A Type C 2007 Type A Type C Type B A=Early adopter, B=Mainstream,C= Late adopter

Evolving Approaches to Developing and Delivering Software: 

Evolving Approaches to Developing and Delivering Software Services: The New Delivery Model Growth of Granularity in Software: Driven by demand for more granular business processes and increased enterprise agility. Enabled by Service-Oriented Architecture, Business Process Management, composite applications, reuse, metadata, etc. Shifts to Well-Defined, Atomic Functional Components and Processes Next – Event-Driven Architecture: Events and services State held in storage Long-chained business processes Managed by Service Provider: Customer buys access to application. Services Provisioned by Service Provider: Customer buys a service with no awareness of application. Managed by Customer: Customer buys application.

Web 2.0 Defining Characteristics: 

Web 2.0 Defining Characteristics Technology Principles: WOA, data-driven, syndicated content, rich semantics, mashable, rich client, build by example Aspects: Architecture & Platforms Community Principles: Participation, collaboration, social, transparent Aspects: People, Interaction, Data Business Principles: Long-tail, continuous innovation, collaborative offerings, open business models Aspects: "Ecosystem," process, value models

Inverting Worldviews — How Do You See the World?: 

Inverting Worldviews — How Do You See the World? Business Goals

What Role Does Technology Play in Business Transformations Like P&G's?: 

What Role Does Technology Play in Business Transformations Like P&G's? P&G's transformed innovation strategy enabled it to more than double its market capitalization Moved from research and develop to connect and develop Internal research no longer sufficient for growth. New goal: 50% of innovations from outside (CEO Lafley) Outsiders (firms and individuals) willing to sell and buy ideas Exploit the 200 times as many researchers outside P&G This is not outsourcing innovation: collaborate and leverage internal skills Proprietary networks and technology entrepreneurs Content mining through face-to-face trade fairs Co-create with top suppliers' 50,000 engineers leveraged by P&G's 7500 Open networks: NineSigma, InnoCentive, YourEncore, yet2.com Internal idea exchanges Web community-based market research IT is a great enabler

Non-Routine Behaviors — Five Key Words: 

Non-Routine Behaviors — Five Key Words Business Goals

Corporate Challenges: 

Corporate Challenges Goldcorp $575,000 prize offer Exposed all geological information. Thousands contributed, including students, consultants, soldiers, physicists and mathematicians. Fifty five new targets, 80% provided significant yield: billions of dollars of gold identified. Market capitalization grew more than twenty times. Prizes not new in commerce 1714 Longitude solution prize (£20,000 about $5 million today). Newton thought the answer lay in astronomy. Harrison (a joiner) won with a clock. 1919 Orteig prize for New York to Paris nonstop flight ($25,000) won in 1927. 2002 Ansari X Prize — SpaceShipOne. X Prize Foundation: Revolution through competition DARPA Urban Challenge: $2 million, $1 million and $500,000 prizes

A Model for Workforce Analytics: 

A Model for Workforce Analytics Decision Support Executive Reporting Operational Reporting Administrative Reporting Roles HR Analytics Professionals Executives Line Managers HR Professionals Types Workforce Decisions Interventions Opportunities Planning Workforce in Context of Business (e.g., Balanced Scorecard) Workforce-Specific (e.g., headcount) Application-Specific Regulatory Reports Ad-Hoc Reports Inquiry

Proactive Workforce Planning Highlights Emerging Issues: 

Proactive Workforce Planning Highlights Emerging Issues Source: Vemo

Reaching the Promise: Integrating Talent Management and Workforce Analytics: 

Reaching the Promise: Integrating Talent Management and Workforce Analytics EO = Expected Outliers UO = Unexpected Outliers TD = Targeted Development TR = Targeted Retention Case Example: Improving Sales Leadership Performance at a Pharmaceutical Company Approach Correlated behaviors with sales performance. Identified seven differentiating behaviors. Develop profile for top performers. Determined ROI. Results Top performers contributed 25%-50% more than others. Found correlation between a few key behaviors and high performance. 5% improvement in key behaviors translated into $40 million increase in sales. Actions Modified interviewing process and tools to hire sales leaders with strength in critical behaviors. Changed promotion criteria. Integrated critical behaviors with assessment process. Revised training and development program. Job descriptions rewritten for all sales positions. Used communication and accountability to facilitate development. EO TR TD UO Source: viaPeople 360-Degree Feedback Behavior Ratings 3 2 1 0 -1 -2 -3 Sales Contribution 2,000,000 1,000,000 0 -1,000,000 UO EO

Making an Impact on the Bottom Line: 

Making an Impact on the Bottom Line Case Example: Improving Controllable Contribution at a Retailer Approach Created a conceptual linkage model between employee experience (tenure), employee perceptions, employee behavior, and business outcomes Tested the model to see which variables were correlated to higher CC Determined the impact of changes in variables on CC Defined actions to take to make improvements in variable Results Aggressive case: 1 standard deviation improvement in variables would lead to a $210 million improvement in CC Worthy case: ¼ standard deviation improvement would lead to a $50 million improvement Actions Managers target workgroup engagement behaviors to ensure high employee engagement Identify optimal level of store manager time in position Assess competitiveness of total pay vs. market Employee Experience Employee Perceptions Employee Behavior Business Outcomes

Recommendations: 

Recommendations “Skate to where the puck will be” – Wayne Gretzky