zach thomas paul hamerman senior analyst vice president
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TeleconferenceForrester Wave™: Integrated Performance And Compensation SolutionsZach Thomas Paul Hamerman
Senior Analyst Vice President
Forrester Research
August 20, 2007. Call in at 10:55 a.m. Eastern Time
2Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Theme
Pay for performance is a business necessity and
drives bottom line results
3Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What are performance and compensation solutions?
• Performance and compensation market trends
• The Forrester Wave™: Performance and compensation solutions, Q3 2007 — review and analysis
• Vendor summaries
• Summary and recommendations
4Entire contents © 2007 Forrester Research, Inc. All rights reserved.
The pillars of strategic HCM
Source: March 30, 2007, “Learning And Talent Management Join Forces” report.
Recruitment Learningmanagementsystem (LMS)
Performance Compensation
Planning and analysis
•Requisitions•Sourcing• Applicant tracking• Onboarding
•Training administration•Learningcontent management• Online learning delivery•Course catalog•Learningreports•Compliance•Individual learning plans
•Goal management•Performance appraisals• Multirater appraisals (360)• Succession planning•Career planning
•Payfor performance• Salary administration•Market pricing•Commission plans•Pay-equity analysis• Stock programs
Competency management•Competency libraries• GAP analysis• Skills assessment tools
HRMS transaction system
Recruitment Learningmanagementsystem (LMS)
Performance Compensation
Planning and analysis
•Requisitions•Sourcing• Applicant tracking• Onboarding
•Training administration•Learningcontent management• Online learning delivery•Course catalog•Learningreports•Compliance•Individual learning plans
•Goal management•Performance appraisals• Multirater appraisals (360)• Succession planning•Career planning
•Payfor performance• Salary administration•Market pricing•Commission plans•Pay-equity analysis• Stock programs
Competency management•Competency libraries• GAP analysis• Skills assessment tools
HRMS transaction system
Recruitment Learningmanagementsystem (LMS)
Performance CompensationRecruitment Learning managementsystem (LMS)
Performance Compensation
5Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Recruitment Learningmanagementsystem (LMS)
Performance Compensation
Planning and analysis
•Requisitions•Sourcing• Applicant tracking• Onboarding
•Training administration•Learningcontent management• Online learning delivery•Course catalog•Learningreports•Compliance•Individual learning plans
•Goal management•Performance appraisals• Multirater appraisals (360)• Succession planning•Career planning
•Payfor performance• Salary administration•Market pricing•Commission plans•Pay-equity analysis• Stock programs
Competency management•Competency libraries• GAP analysis• Skills assessment tools
HRMS transaction system
Recruitment Learningmanagementsystem (LMS)
Performance Compensation
The pillars of strategic HCM
Source: March 30, 2007, “Learning And Talent Management Join Forces” report.
Planning and analysis
•Requisitions•Sourcing• Applicant tracking• Onboarding
•Training administration•Learningcontent management• Online learning delivery•Course catalog•Learningreports•Compliance•Individual learning plans
•Goal management•Performance appraisals• Multirater appraisals (360)• Succession planning•Career planning
•Payfor performance• Salary administration•Market pricing•Commission plans•Pay-equity analysis• Stock programs
Competency management•Competency libraries• GAP analysis• Skills assessment tools
HRMS transaction system
Recruitment Learningmanagementsystem (LMS)
Performance CompensationRecruitment Learning managementsystem (LMS)
Performance Compensation
6Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Keys performance management processes
• Performance management
» Goal management
» Performance review automation
» Career development and planning
» Succession planning
7Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Key compensation management processes
• Compensation
» Pay for performance
» Compensation planning and analysis
» Salary and incentive management
» Compliance
8Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What are performance and compensation solutions?
• Performance and compensation market trends
• The Forrester Wave™: Performance and compensation solutions, Q3 2007 — review and analysis
• Vendor summaries
• Summary and recommendations
9Entire contents © 2007 Forrester Research, Inc. All rights reserved.
HR/HCM market overview
• Core HRMS is the largest segment at $5 billion, or 48% of the total market
• Best-of-breed segments are dynamic:
» Recruitment — mature and fragmented
» Workforce management — mature concentrated
» Performance and talent management — rapidly evolving
» Learning management — benefiting from new technology
Base: 2006 worldwide HR/HCM application license and SaaS revenues
Other7%
Workforce mgt.14%
Learningmgt.7%
Recruitment15%
Performanceand talent mgt.
9%
HRMS48%
Segment analysis
Source: January 23, 2006, “HR/HCM Applications: Strategic Processes Move To The Forefront” report.
10Entire contents © 2007 Forrester Research, Inc. All rights reserved.
HR/HCM segment growth analysis
Source: January 23, 2006, “HR/HCM Applications: Strategic Processes Move To The Forefront” report.
Base: 2004-2009worldwide HR/HCM applicationlicense and SaaSrevenues and projectedrevenues
0% 5% 10% 15% 20%HRMS
RecruitmentOther
Learning mgt.Workforce mgt.
Performance and talent mgt.
Growth analysis
11Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Trends
• HR transactional applications are mature, but companies need to get to a single system of employee records.
• Performance focus: Business strategies drive individual goals and measures.
• Our aging workforce demands proactive talent retention and development strategies.
• Software-as-a-service (SaaS) is well established in HR/HCM applications, blending more with outsourced services.
• SOA technology is starting to affect software delivery and partnering strategies.
12Entire contents © 2007 Forrester Research, Inc. All rights reserved.
HCM value curve
Tactical
Value
Retention
Productivity
ServiceEfficiency
Loyalty
Performance
Strategic
13Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What are performance and compensation solutions?
• Performance and compensation market trends
• The Forrester Wave™: Performance and compensation solutions, Q3 2007 — review and analysis
• Vendor summaries
• Summary and recommendations
14Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Evaluated vendors enter the market from different angles
OracleOracle’sPeopleSoft
SAP
AuthoriaHalogenSoftwareSuccessFactors
Softscape
PlateauSystemsSumTotalSystems
Kenexa
PerformanceAnd
Compensation
Learningvendors
ERPvendors
Performancevendors
Recruitmentvendors
15Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Evaluation criteria
Competency management
Goal management
Performance review process
Career development planning
Succession planning
Compensation management
Global support
Usability
Technology
Customer experience
How well does the product support competencies?
How well does the product manage goals?
How well does the product support performance review automation?
How well does the product support career developmental planning?
How well does the product support succession planning?
How well does the product support compensation management processes?
How well does the solution support multinational requirements?
How easy is the product to use?
How well does the solution compare across technology factors?
How well does the vendor handle customer support?
Current offering
16Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Evaluation criteria
Product strategy and vision
Deployment options
R&D
Strategic alliances
Does the vendor have a sound and well-defined product strategy and vision?
What options does the vendor provide for deployment of the application?
What is the vendor’s commitment to R&D?
How well does the vendor leverage strategic alliances?
Strategy
17Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Evaluation criteria
Customer base
Revenue
Revenue growth
Employees
How large is the vendor’s base of customers for this product and for all products?
What was the vendor’s revenue over the past four quarters?
What was the vendor’s year-over-year revenue growth over the past four quarters?
How many engineers does the vendor have dedicated to this product? How big isthe vendor’s sales presence?
Market presence
18Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Integrated performance and compensation
StrategyWeak Strong
Currentoffering
Weak
Strong
RiskyBetsContenders Leaders
StrongPerformers
Market presence
SuccessFactorsSoftscape
Oracle
SAP
Oracle PeopleSoft
Authoria
PlateauSystems
SumTotal Systems
HalogenSoftware
Kenexa
Source: August 17, 2007, “The Forrester Wave™: Integrated Performance And Compensation Solutions, Q3 2007” report
19Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Performance
StrategyWeak Strong
Currentoffering
Weak
Strong Market presence
SuccessFactorsSoftscape
OracleSAP
Oracle PeopleSoft
Authoria
PlateauSystems
SumTotal Systems
HalogenSoftware
Kenexa
RiskyBetsContenders Leaders
StrongPerformers
Source: August 17, 2007, “The Forrester Wave™: Integrated Performance And Compensation Solutions, Q3 2007” report
20Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Compensation
StrategyWeak Strong
Currentoffering
Weak
Strong Market presence
SuccessFactorsSoftscape
Oracle
SAP
Oracle PeopleSoft
AuthoriaPlateauSystems
SumTotalSystems
HalogenSoftware
Kenexa
RiskyBetsContenders Leaders
StrongPerformers
Source: August 17, 2007, “The Forrester Wave™: Integrated Performance And Compensation Solutions, Q3 2007” report
21Entire contents © 2007 Forrester Research, Inc. All rights reserved.
What It Means
• Aboriginal performance vendors fared best.
• Learning vendors are entering the game.
• Differentiation is emerging — and will continue.
• ERPs lag behind best-of-breeds, but are investing to catch up.
22Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What are performance and compensation solutions?
• Performance and compensation market trends
• The Forrester Wave™: Performance and compensation solutions, Q3 2007 — review and analysis
• Vendor summaries
• Summary and recommendations
23Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Overall thoughts about the Forrester Wave™
• The performance and compensation market is hot.
• We only evaluated a small portion of vendors.
• The market is still in an innovative phase.
• Leaders today do not have the market locked up — even for the short term.
Contenders: On-premise solution providers with process
breadth (not depth) suited for existing customers.
25Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Oracle
Strengths
Compensation
Process coverage
Integration
Global capabilities
Weaknesses
Usability
Functional depth
Succession planning
Career development & planning
26Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Oracle PeopleSoft
Strengths
Process coverage
Global support
Integration
Weaknesses
Usability
Functional depth
Customer adoption
27Entire contents © 2007 Forrester Research, Inc. All rights reserved.
SAP
Strengths
Process coverage
Global support
Integration
Weaknesses
Usability
Functional depth
User adoption
Strong Performers:Enter the market from different angles; namely
learning, recruitment, and performance.
29Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Halogen Software
Strengths
Usability
Goal management
Competency management
Performance review process
Weaknesses
Scalability
Global support
Charting
30Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Kenexa
Strengths
Software AND consulting blend
Usability
Review process automation
Charting
Weaknesses
Compensation
Global support
Product integration strategy
31Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Plateau Systems
Strengths
Review automation
Career development
Breadth of strategic footprint
Weaknesses
Product integration
Usability
32Entire contents © 2007 Forrester Research, Inc. All rights reserved.
SumTotal Systems
Strengths
Unique review ratings
Career development & planning
Goal management
Review automation
Weaknesses
Comprehensive compensation
Global support
Succession planning
Leaders:Aboriginal performance vendors fared best with
best-of-breed functionality and greater dedication to SaaS.
34Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Authoria
Strengths
Process breadth and depth
Usability
Competency management
Succession planning
Weaknesses
Global support
Career development & planning
Business model shift
35Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Softscape
Strengths
Global support
Compensation
Usability
Process coverage
Weaknesses
Product vision and strategy
Strategic alliances
36Entire contents © 2007 Forrester Research, Inc. All rights reserved.
SuccessFactors
Strengths
SaaS offering
Goal management
Competency management
Review automation
Weaknesses
Usability
Compensation
Financials
37Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What are performance and compensation solutions?
• Performance and compensation market trends
• The Forrester Wave™: Performance and compensation solutions, Q3 2007 — review and analysis
• Summary and recommendations
38Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Recommendations
• Create a long-term integrated HCM strategy — and use it to evaluate vendors.
• Performance and compensation initiatives are about people and change — software is only a small part.
• Use SaaS (on demand) to validate success up-front.
• As an HR professional, this will be your most strategic and visible project across the enterprise.
39Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Zach Thomas
+1 617.613.6219
zthomas@forrester.com
Paul Hamerman
+1 804/379-0518
phamerman@forrester.com
Thank you
40Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Selected bibliography
• March 30, 2007, “Learning And Talent Management Join Forces” report
• January 26, 2006, “HR/HCM Applications: Strategic Processes Move To The Forefront” report
• August 17, 2007, “The Forrester Wave™: Integrated Performance And Compensation Solutions, Q3 2007” report
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