The battle in HR software: software for corporations or persons?

If you thought HR software comprised Payroll, HRMS and Talent Management modules, think again. There are amazing new products that serve more than just your company. LinkedIn has become the biggest of these PERSON-based products and how well these solutions fit with solutions designed for CORPORATIONS should make for interesting viewing. Read (and comment on) this three part piece!

 

Part 1 – The Evolving CORPORATE HR Products

Some unexpected surgery prevented me from attending LinkedIn’s  annual user conference a couple of weeks ago in Las Vegas. That event, believe it or not, was possibly the one software event I absolutely wanted to attend this year. Why? Read on…..

For decades, HR software has been designed for CORPORATIONS. This software kept companies in compliance with regulatory bodies and out of jail. It made sure employees were correctly and timely compensated. And, these systems enforced adherence to HR, recruiting and other related processes and controls.

SumTotal Systems slide from Analyst Meeting
Slide from a SumTotal Systems analyst briefing - Note the first three bullet points indicating the move to more of a person-based solution - Copyright 2013 - TechVentive, Inc. - All Rights Reserved

 

But, a new crop of HR solutions are entering the market and they’re different. They’re different as they were designed first and foremost for PERSONS not corporations. These differences are quite telling.  LinkedIn may be the poster child for the PERSON-based HR world.

Now, the move to PERSON-based HR products has been underway for a time.  As the PERSON-based products catch on in the market, the CORPORATION-based solutions are attempting to get some of that functionality into their products.

You’ve doubtlessly heard the announcements as one traditional HR vendor after another has been making their solutions more PERSON-friendly.  SumTotal Systems even made a reference to people in their new strategic direction. One of their strategic objectives states: “Innovation – putting people, not technology, at the center of innovation”.  

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Copyright 2013 - All Rights Reserved - TechVentive, Inc.

 

 

HR vendors have made traditional CORPORATE HR solutions easier for job seekers and job holders to use on mobile devices (finally). Now, most firms have HTML 5.0 based products that actually function well on numerous devices and don’t look like someone ported a desktop app to the small form factor of a cell phone. I like this trend as it does make the products more usable.

But the best part of this evolution is that traditional vendors had to realize that remote, mobile users don’t need all of the functionality, bells and whistles that a full-blown CORPORATE desktop user wants or needs. No, the remote, mobile user values speed and economy not slowness and piles of unnecessary functionality. Just give them the basics, fast.  The problem with earlier mobile solutions was that CORPORATE-based vendors didn’t want to re-imagine their desktop solutions for the mobile world and simply ported the old stuff to new handheld devices. It was a kludge.

Another big focus of late has been the redesign of many products’ user experience (UX). In plain speak, the old CORPORATE systems had the look and feel of some circa-1999 vintage client server solution. These products had all had the familiar Windows drop-down menus and rigid navigation paths. Heaven help you if you were trying to do a simple transaction – old UX design required the same of this transaction as it would of your firm’s most complex and daunting HR transactions. The old way worked, of course, but it had the elegance of someone dancing with a blindfold on.

UX redesign work is making traditional HR vendors rethink HOW work is actually done and it’s making these vendors acknowledge that not all users, transactions, etc. need the same solution every single time.  New UX redesigns are producing smarter CORPORATE solutions. The new UX’s often anticipate the next step a user will want to complete. The new solutions even use analytics to predict the next transaction a user should/will embark upon.  Again, SumTotal describes their UX change as: “Similar to Amazon and other consumer technology, the system understands the user’s profile and what they are trying to do and can offer relevant advice and actions to help the user be more effective.

I like the new UX work. If you haven’t done so already, check out the new UX from SumTotal, Workday  and other HR vendors.

There is one weak link in all of this though. Numerous HR vendors are trying to enhance the UX and other PERSON-specific functionality in their solutions via analytics or big data. That’s a great idea but the execution of this concept so far from most vendors is too limited, too constrained. The vendors are describing their HR databases, in toto, as the BIG DATA source for their analytics. No, big data feeds are monumentally larger than HR and ERP databases combined.  The use of analytics to predict user needs, transactions, etc. is spot-on but the sources of insight must be expanded. OK, I suspect vendors will expand their analytic reach in time but readers should expect this current capability to be a version 1.0 functionality for now.

And, that leads us to one of the most interesting challenges facing CORPORATE HR vendors: how to incorporate social media correctly into their, sometimes, decades’ old solutions?

Social has been something that Talent Acquisition/Recruiting vendors appreciated years ago. They saw a person’s social network as something a recruiter or employer should exploit. So, old solutions added capabilities where employers asked you to email blast job openings to people in your social networks.  And, sadly, this was one of the more enlightened, progressive ideas. On the negative end of things, some employers actually demanded passwords of employee’s personal social network accounts so that the employer could do a deep dive on the content of their workforce’s personal content. That’s a social colonoscopy!

Both employers and HR vendors have utilized social media poorly to date. But, it’s starting to change as firms like Facebook, LinkedIn and others are in ascendancy. These new PERSON-based firms are changing the HR software and business process landscape in big ways.

How? (click to part two)

Part 2 – The Rise of the PERSON-based HR software

A few weeks back, I was in Florida at the PeopleFluent User Conference. One of the speakers was a PeopleFluent executive who described in detail all of the work their firm had completed in integrating PeopleFluent software with LinkedIn.  It was a fascinating talk as it was detailed, tremendous in scope and showed a very material depth of capabilities that PeopleFluent was bringing to the market.

I paid a lot of attention to this talk.

I heard this executive describe a situation where they were elated at how better integration to LinkedIn’s member profiles was helping their corporate recruiter users. But, I also heard a number of issues raised that he wished LinkedIn would solve for his firm. This executive clearly saw huge value in the LinkedIn relationship and integration but was simultaneously frustrated at several small issues.

I knew then – this was the hallmark of a new delineation in HR software. I was seeing a big traditional HR vendor that solved one kind of problem for corporations trying to interact with another large firm that is clearly focused on another market altogether.  When these forces collide, you gain new insights into the market.  I’m seeing the emergence of the PERSON-based HR solution.

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Copyright 2013 - TechVentive, Inc. - All Rights Reserved

 

LinkedIn  may be the poster child for these new, person-oriented, systems.

LinkedIn has spent years creating a network effect around its most critical asset: the current resume data of hundreds of millions of job holders and job seekers. Don’t underestimate the effort that went into this. LinkedIn initially offered a service to help people remain in contact with others: colleagues, business associates, etc. It presented a way for people to get introduced to others who might have shared interests. It took them years just to get 100 million members. Now, they report having over 238 million members worldwide (the Wall Street Journal recently reported the number is now 259 million members (see: “LinkedIn Warns of Slowdown; Stock Slides”, Reed Albergotti, Wall Street Journal, 10/30/2013)). This always current information is the most important asset LinkedIn has – and nobody else has anything like it.

Creating successful and large networks is not easy. Ariba (now owned by SAP) has a huge supplier commerce network. Facebook has a monstrous social network. eBay, Zappos and Amazon have amassed large customer networks over the years as well. But, how many other giant networks are there?  How many really took off? Great networks are massive assets to the companies that possess them and smart firms take great care in protecting, managing and enhancing these networks.

This protection of the network often comes at a cost. People belong to networks when they perceive they are getting more value from the network than it costs them in time and money to participate. But, the minute a network provider starts to pimp out the members, the network starts to contract. So, the best networks are those that stay mostly true to their members’ needs, respect the members and keep commercial intrusions to a minimum.

When LinkedIn gets an entreaty from a HRMS vendor, I suspect that they must weigh the disruption to their members (and to LinkedIn’s own management, software group, etc.) against the value that LinkedIn, members and the HR vendor will receive. I would suspect that LinkedIn is metering out access to their data and systems just because it doesn’t want to damage their brand and their member relationships.

In fact, when I spoke about LinkedIn with other analysts and HR vendors, they described a firm that is being bombarded with alliance, integration and other requests by HR and other vendors. It seems everyone wants that always current data that LinkedIn possesses. These same analysts and vendors also placed LinkedIn in that same ‘white hot’ vendor space as Workday  – another software vendor with more potential alliance partners than they can possibly handle.

Yes, some HR vendors are frustrated that LinkedIn won’t drop everything and do their exclusive bidding. I actually like the sound of that as it shows that LinkedIn is focused on its members (the backbone of its network) and its own business. LinkedIn should not be overly concerned about other HR vendors and their offerings. I think LinkedIn has their priorities right. LinkedIn seems to care first about its member network, its business second and HR vendors must be a distant 8th or 9th on their priority list.

LinkedIn doesn’t need HRMS vendors as much as these vendors need LinkedIn. No, LinkedIn needs to: protect its network members; sell focused, very targeted advertising; and, carefully manage access to its members by recruiters and prospective employers.  

For recruiters and potential employers, LinkedIn:

  • Possesses a huge universe of passive and active job holders/seekers to draw upon. LinkedIn may be able to outdraw most any classified ad, posting, etc.
  • Can facilitate contact with most anyone at any firm at any stage of their employment/career
  • Permits recruiters to peruse related individuals with similar skills
  • Allows corporations to manage their talent pipeline (internal and external people) much like a marketing automation tool manages sales prospects.
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Image from LinkedIn - http://business.linkedin.com/marketing-solutions/solutions.html

 

Nowhere is the difference between a system designed for corporations and persons more acute than how LinkedIn differs from a corporate ATS.  ATS (applicant tracking system) products have the potential to hold scads of resumes for employers. But the data within these is often outdated/obsolete and rarely used. LinkedIn’s data is quite different. It is almost always current and chock full of other employment relevant data. It has recommendations from others. It contains skills and expertise that others believe a person possesses. It contains video links, knows what digital water coolers/discussion groups a job holder/seeker participates within and much more.

It is for all of these data artifacts that makes LinkedIn such a highly desired site and database for recruiters (corporate and for-hire), sales professionals, and more. The database and its currency are better than anything else out there today.

Yet, to see LinkedIn as an adjunct to a HRMS or Recruiting application is just shortsighted and wrong.

Let’s review what’s in their offering suite:

  • Solutions for recruiters (approximately 60% of total revenue or $224.7 million of the recent quarter’s revenue):
  • Solutions for sales professionals:
  • Solutions for job seekers:
  • Advertising solutions (approximately 38% of total revenue or $88.5 million of the recent quarter’s revenue)
  • Premium subscriptions (approximately $79.8 million of the recent quarter’s revenue)
  • Employer branding

HR vendors have identified some nits about LinkedIn. They don’t like the fact that LinkedIn members don’t all have the same level of detail in their LinkedIn profiles. I know my profile isn’t complete but do I care? No. Fussy employers wrongly expect job seekers will gladly: fill out a tedious, lengthy, time-consuming set of forms; complete a job application form that approaches a book in length; and, submit a resume, references, blood tests, DNA samples, a first born child, etc. just to apply for a position.  Employers that expect this kind of completeness are soooooo out of touch with the re-heating job market. Just because employers could demand such things during the great recession, doesn’t mean it will work now. Worse, employers who do this have the gall to use a piece of software (not even a human being) to reject the job seeker and never even communicate the status of these decisions to the job seeker. The old employer, their processes and technologies are simply no longer valid. If you want to hire people today, learn to love the LinkedIn profile, complete or not, and adapt your recruiting processes and systems accordingly.

Beyond LinkedIn, I am seeing a lot of movement of other vendors to the PERSON side of the fence. Firms like Entelo, TalentBin, Identified, BullHorn Reach, White Truffle, Talentral and more are discovering power in knowing about people, where they hang out digitally, who’s the most influential/respected in a particular segment, who is open to a job change, etc.  For example, White Truffle lets a person identify their dream job and it matches them (a la e-Harmony) to their dream employer. A common theme in these PERSON-based solutions revolves around knowledge about the person. That knowledge is key to successfully recruiting the right people at the right time with a minimum of cost/fuss.

What does this mean for traditional HR firms and employers? (click to part 3)



Part 3 – Implications of a PERSON-Based HR world

It looks like CORPORATE HR products will have to do more than just lightly interface/integrate with PERSON-based products. They’ll have to co-exist in meaningful ways but how will this go down?

I suspect the CORPORATE-based products will do a lot of changing to be relevant in the new world. Why? The new PERSON-based systems will dramatically change HR processes, data models and much more. Moreover, the new PERSON-based products are so dynamic, their frequent changes will continue to rattle old-school CORPORATE solutions for years to come. But, I’m getting ahead of myself.

Processes

Let’s talk processes first.

HR processes today really are changing. In a joint research paper I recently completed with the consultancy Baker Tilly (see post on this later this week), it became obvious that modern, successful HR leaders are already using a mélange of new PERSON-based technologies. They’re not following old HR processes and are instead creating new, pioneering and novel ways to attract and retain talent in a rapidly changing and increasingly competitive labor market. As a result, these executives see little value or relevance in many of the older CORPORATE-based solutions.  The old solutions were designed for a time (and processes) that simply doesn’t exist anymore. Let’s face it, want-ads, paper-based resumes, etc. just aren’t powering today’s job market the way they used to do. In fact, if your firm’s HR processes look almost identical to the way they were in 2008, you’re in deep trouble. The economy, work force and more have really changed and moved since then.

There’s a real opportunity here for people to develop modern processes in this space. HR practitioners are already running with this task. Where are the systems integrators, consultants, established HR vendors, etc. on this issue?

Data Models

And, these process changes presage even bigger disruptions to the old data models that were behind the old processes. More obsolescence!!  What does an HR data model look like when large chunks of data originate and are retained with the cloud data stores of firms like LinkedIn and Facebook? What data model today considers the new data elements found in big data repositories? Does any HR data model even address some of the alternate data types (like video content)? Are HR departments supposed to replicate cloud data store information and put it into their own, old-school systems for safekeeping?  Who is effective-dating all of this self-curated, social data? What controls are needed for these new data models? 

I’ve got a million questions on this – but – it’s still just the first inning for these massive changes.

 

HR Tech Buyers

HR users are changing and so will their technology appetites. They will pressure vendors to introduce bigger, more integrated solutions but these larger suites aren’t just HRMS with Payroll and Talent Management added in. No, customers will want bold additions to the suites. They’ll want tight, deep, meaningful social media integration AND they’ll want all kinds of PERSON-based and large network solutions part of the equation, too. HR users will want solutions that support multiple different modern business processes.  The list of emerging requirements should make any HR software vendor’s product manager swoon. 

 

Bottom Line:

Businesses need to carefully re-evaluate, if not totally re-imagine, what HR should be. If your HR group hasn’t  been out playing in traffic lately with all-new, innovative HR firms (i.e., the PERSON-based ones!), then what are they waiting for? HR executives need to get cosmopolitan FAST!

Many people who don’t know LinkedIn well don’t seem to see their real market power.  Last Thursday, I heard a senior HR executive say to the effect that she had to beg her employer to let her take 3 people to LinkedIn’s annual conference. She said it was transformative and can’t believe how many people underestimate the power of what LinkedIn has. I think she’s right on.  Get to the next conference of theirs!

Begin to re-define the processes, controls, data models, etc. that are needed to recruit and retain today. If you’re starting with a 10-year process model as a guide, you’re already screwing up.  I recommend you take a folding chair with you and camp out at a bunch of all-new HR vendors (the PERSON-based ones again) that are at the next HR technology or professional seminar. Don’t leave their booths or demonstrations until you know exactly how you’ll need to change your firm.

Thoughts?

 

Disclosure:  Workday, SumTotal and PeopleFluent covered my lodging and travel at their recent analyst events or user conferences. I own a modest number of shares in LinkedIn and Workday.

Coming Soon: Later this week, I’ll post some highlights from some fascinating interviews Ann Blakely of Baker Tilly and I recently completed with HR executives. Their perspectives add even more urgency to the commentary in this post.

Also, I’ll be on a televised panel December 10 with a couple of heavy hitters in the HR space. Workday is doing this thing called Predict & Prepare and it will be moderated by Bill Kutik of HR Technology Conference fame. Naomi Bloom, Vinnie Mirchandani and I are going to be offering predictions on the Finance and HR space.  I can’t wait to tangle again with Vinnie and if you’d like to see how it goes down, hit the link and watch.  And, if anyone knows what the Vegas line is on whose predictions will reign supreme, drop me a line.

 

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