The talent management systems market has undergone a considerable amount of consolidation over the past few years as vendors raced to acquire all four modules necessary for a complete "suite": recruiting, performance management, corporate learning and compensation management. But the work didn't end once the deals were finalized; vendors then had to integrate the acquired products with their existing modules.
Customers who bought talent management suites shortly after the dust settled and were sold on the pitch of an integrated talent management platform often found their systems to be anything but. The issue was noted by Lisa Rowan, research vice president of human resources and talent management services at Framingham, Mass.-based research firm IDC, in her "Worldwide Integrated Talent Management 2012 Vendor Analysis" MarketScape report.
However, according to the recently released 2013 report also written by Rowan, integration is improving -- and along with it, customer satisfaction. What's the downside? It comes at a cost.
In this Q&A, Rowan delves into some of the 2013 report's most significant takeaways and gives an update on the adoption of social and mobile capabilities in talent management systems. She also provides perspective on the high number of vendors that emerged as leaders.
What are some of the most important findings in this year's report?
Lisa Rowan: This is the fifth year for the [Worldwide Integrated Talent Management Vendor Analysis] and … differentiation is getting more difficult than ever before. A couple of years ago one vendor didn't have learning or another didn't have recruiting, [but] there [has] been a convergence either through development or acquisition so that pretty much every [vendor] in the suite report has the basics covered -- to varying degrees. If [a vendor] came from a background of learning, then learning is probably their strongest element, [or] if they came from performance that would be their strongest, but really every [vendor] in that report has a viable solution that people are buying.
One of the things I noted is the list price has gone up dramatically in the last couple years: The pricing on average rose 40%. It's counterintuitive [because] you would think the market is maturing so prices would level, [and] buyers are buying multiple modules so pricing would come down due to volume discounts. I think that speaks to the fact that integration is tough to do and vendors need to command a certain level of pricing to keep up with the challenges of making sure the suite is integrated and deep in all its component parts.
Another important element I'll point out [is] … client satisfaction jumped up over last year. The vendors are delivering on their promises. Buyers using the [systems] feel as though things are better integrated [and] they're seeing that customer-service levels have gone up. Vendors in the suite space have done more to build up all the components so the feature set is richer, and they're working on the user experience and making things more seamless and integrated. So by and large, buyers are more satisfied than they were a year ago.
Considering that basic functionality is leveling out, what are some non-functional differentiating factors?
Rowan: Service. [For example], a sense of good response times, the degree to which releases are coming out at appropriate times, [and if] vendors are being responsive with feature and function upgrades that buyers are looking for. Also, the integration and deployment of social, mobile and analytics [capabilities]. So it comes down to those things that aren't related to feature[s] because, for the most part, those standard sets of capabilities are in place.
Earlier this year, Thomas Otter, who was at the time research vice president at Gartner, said social and mobile capabilities in talent management systems were somewhat overhyped. Can you give an update on adoption of mobile and social capabilities in talent management systems?
Rowan: Vendors are almost always going to be ahead of consumption, but I do see the desire for [mobile capabilities]. Organizations are trying to deal with BYOD [bring your own device]. They can't fight the fact that folks are using these devices, so vendors are working on user experience and putting mobile closer to the drafting of capabilities. It used to be they would design first for the more traditional device and then figure out what made sense for the mobile device, [but] it feels to me as though more vendors are bringing the mobile experience in more closely to the beginning of their process. I do think buyers are responding to that.
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[As for] social, my [colleague] Cushing Anderson and I go to a HR senior executive event once a year and we proctor some sessions and talk about social. A little over a year ago it was like deer in the headlights -- people were still worrying about compliance. This year when [Anderson] went and presented some examples around use of social, the executives said, 'That's old hat -- we want what's next.' So there was a huge leap in the course of one year. Now, these are senior executives with fairly sophisticated large organizations [and] that [attitude] will not carry through to everybody. But HR executives who are on the leading edge of adoption are looking for more.
What about the impact of cloud?
Rowan: I think there's a lot going on with regard to the desire to move to cloud, not the least of which is the feeling that anytime there's a major upgrade from an on-premises vendor, it is expensive, lengthy [and] painful. [IT workers] see with their cloud-based applications that [upgrades] are much easier, there's less to think about, they're less costly, they happen more often, and they don't have to bring in a team of wizards to figure it out. There are [also] some real operational IT costs that can be minimized by going to the cloud. There are resources that you would be able to redirect or dispense with.
There are seven overall leaders in this year's report: Cornerstone OnDemand, Infor, Kenexa, (owned by IBM), Peoplefluent, Oracle, Halogen Software and SuccessFactors (owned by SAP). Do you think there will be even more next year?
Rowan: Well, as we talk about rolling out new capabilities around mobile, social [and] user experience, I think the market refreshes itself. Some will continue to start to strike out farther on their own, [and] it will correct. I don't know that there will be seven again next year.