zach thomas paul hamerman senior analyst vice president

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


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


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











Performance CompensationRecruitment Learning managementsystem (LMS)














The pillars of strategic HCM

Source: March 30, 2007, “Learning And Talent Management Join Forces” report.









Performance CompensationRecruitment Learning managementsystem (LMS)



Keys performance management processes

• Performance management

» Goal management

» Performance review automation

» Career development and planning

» Succession planning


Key compensation management processes

• Compensation

» Pay for performance

» Compensation planning and analysis

» Salary and incentive management

» Compliance


Agenda







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.


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


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.


HCM value curve

Tactical

Value

Retention

Productivity

ServiceEfficiency

Loyalty

Performance

Strategic


Agenda







Evaluated vendors enter the market from different angles

OracleOracle’sPeopleSoft

SAP

AuthoriaHalogenSoftwareSuccessFactors

Softscape

PlateauSystemsSumTotalSystems

Kenexa

PerformanceAnd

Compensation

Learningvendors

ERPvendors

Performancevendors

Recruitmentvendors


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


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


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


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


Performance

StrategyWeak Strong

Currentoffering

Weak

Strong Market presence


OracleSAP

Oracle PeopleSoft

Authoria

PlateauSystems

SumTotal Systems

HalogenSoftware

Kenexa


StrongPerformers



Compensation

StrategyWeak Strong

Currentoffering

Weak

Strong Market presence


Oracle

SAP

Oracle PeopleSoft

AuthoriaPlateauSystems

SumTotalSystems

HalogenSoftware

Kenexa


StrongPerformers



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.


Agenda







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.


Oracle

Strengths

Compensation

Process coverage

Integration

Global capabilities

Weaknesses

Usability

Functional depth

Succession planning

Career development & planning


Oracle PeopleSoft

Strengths

Process coverage

Global support

Integration

Weaknesses

Usability

Functional depth

Customer adoption


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.


Halogen Software

Strengths

Usability

Goal management


Performance review process

Weaknesses

Scalability

Global support

Charting


Kenexa

Strengths

Software AND consulting blend

Usability

Review process automation

Charting

Weaknesses

Compensation

Global support

Product integration strategy


Plateau Systems

Strengths

Review automation

Career development

Breadth of strategic footprint

Weaknesses

Product integration

Usability


SumTotal Systems

Strengths

Unique review ratings


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.


Authoria

Strengths

Process breadth and depth

Usability


Succession planning

Weaknesses

Global support


Business model shift


Softscape

Strengths

Global support

Compensation

Usability

Process coverage

Weaknesses

Product vision and strategy

Strategic alliances


SuccessFactors

Strengths

SaaS offering

Goal management


Review automation

Weaknesses

Usability

Compensation

Financials


Agenda






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.


Zach Thomas

+1 617.613.6219

[email protected]

Paul Hamerman

+1 804/379-0518

[email protected]

Thank you


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

zach thomas paul hamerman senior analyst vice president

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