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Wednesday, May 26, 2010

How in-memory technology could affect HR applications

Returning from my first Sapphire in years (working for several vendors such as PeopleSoft, Oracle and Fidelity in a row wasn't the best way to get me an invitation to the world's largest business-software event) I feel like sharing some thoughts about what could be a game-changer  for HR technology. My deepest apologies if I use a cliché (I positively hate those pompous and vacuous "paradign shifts" and "game-changing" when not "disruptive technologies") but for the first time since Workday introduced its object-oriented architecture here's a technology that could truly enhance HR systems.

Sure, Workday (a direct competitor to SAP's Business ByDesign whose latest version also premiered at the event) already uses in-memory technology (IMT) but the fact that SAP has a much larger installed base of HR customers has the potential to bring this new technology to the masses more effectively.

First, if you wonder what IMT is, here how it goes: until now you saved your data (salaries, employee details, list of positions to be filled etc.) into separate disks in a database (such as Oracle, IBM DB2, Sybase just bought by SAP, Microsoft SQL Server or Informix -also an IBM platform-  to name the best-known ones) where they were safe and secure. Of course, such data were useless unless you could retrieve them as part of your transactional work (processing a payroll, hiring an employee) or analyzing them for better informed decisions (getting a report on training costs, for instance.) The problem was that retrieving, transacting and analyzing data in this architecture took time: days, sometimes weeks, which was an improvement on a a paper-based manual process but still frustrating. Enterprise systems in general, and HCM suites in particular, have struggled with the issue for so long, especially in the analytics space, that they had to resort to acquiring best-of-breed systems to plug what was an embarassing gap in their offering: SAP bought BusinessObjects in 2007 followed shortly by Oracle's acquisition of Hyperion. Oracle's move came after the failure of its business intelligence offering. Human Resource Intelligence (HRI), Oracle's BI application for its HR product, was not exactly a blockbuster and for good reasons: it was not real-time, had to be refreshed daily and the pre-delivered graphs could not be customized. As for SAP and its myriad offerings, datawarehousing this and dashboarding that, the addition of BusinessObjects didn't make their offering any more real-time.

Now, with memory chips becoming cheaper, faster and more powerful, a greater number of them can be put in servers' short-term memory, rather than databases, where they can be retrieved and manipulated faster and more easily.   Real-time HR is just around the corner. Some practical applications in the HR space could include the following:

1. Payroll: after all is said and done about strategic HR/Talent Management/People Management and other vocables to describe the nobler aspects of HRM, payroll is still the cornestone of any HR system, probably more so in tough economic times. Most companies when selecting a payroll, especially in an on-premise mode, spend a lot of the evaluation time on response times and benchmarking the shortlisted vendors. For a company with, say, 10,000 employees running a payroll (process run, prepayments, check writing, costing, archiving) can take several hours depending on configuration and complexity of payroll (special elements, retro-pay just to name a few). Cut that in half and suddenly the dreariest of HR jobs becomes, well, not exactly the most glamorous one, but definitely less taxing. And imagine what you can do with payroll simulation, a key requirement when negotiating wage raises with unions. Having literally at your fingertips the actual cost of, say, 1% increase gives you not only great leverage but undisputed hard facts on which to base your decision. Here speed is of the essence.

2. What-if analysis and modeling (and not only for payrolls) have long been one of the weak links of HR applications requiring the use of non-live systems which added to the length and complexity of the decision-making   process: how can you make up your mind on the size of the bonus to award your highest performers if you have only a vague idea of what the impact on the bottom line is?

3. Intelligence and analytics: taking the former issue further, why should one have to run specific reports and simulations on what are humdrums issues? Wouldn't it be much more efficient to have configurable queries on several HR aspects (see above diagram with HR KPI's) in a push mode where you see the result at best every time you refresh your analyrics page (or dashboard), at worse at no more than a click? You can't do that when every query means  having to query the database, and I'm not even talking here of the highly technical skills needed.

4. Reporting: after payroll,  much of HR's dullest work is putting together the innumerable (and constantly increasing) list of reports required by business and demanded by government. With ITM, why bother about putting them together and storing them when they can be pieced together on the fly? Your report on mid-managerial employees in the northern region making $100,000 a year is not available or was never pre-built? No problem.  You can now have it faster than an ad hoc tool could ever have helped you, even faster than some already configured, standard reports delivered by your vendor. If this is not a revolution, I don't know what is.

The practical applications of IMT in the HR space are such that IMT is bound to deliver solid enhancements once the vendors get around how to market it. At Sapphire SAP was unsurprsingly mum on whether it would packaged with applications and/or the database and how it will be charged. But it is already clear that with this SAP has an edge over Oracle whose Larry Ellison ridiculed its nemesis and unsurprisngly so as he realizes that should IMT live up to its expectations his flagship database business could start declining, maybe even go the way of the dinosaurs. Small wonder that at the same time as Oracle is dismissing IMT it has quietly beefed up its offering  with what it calls IMT but is just a glorified cache applied to the database to speed up processing it time. Also important (but it wasn't mentioned by SAP at the conference - somebody clearly didn't do their research thoroughly, I surmise) is that from a competitive viewpoint IMT could damage Oracle who makes large use throughout its HRMS suite of so-called FastFormulas which are stored in the database. With IMT (or rather without since FastFormulas can't use it), the Oracle product (on whose code the next-generation Fusion HCM is being developed) will look decidedly dusty.

Whatever the respective competitive strengths of every vendor and their marketing tactics, and expect a deluge of hype as everybody jumps on the IMT bandwagon regardless of what they can really offer, one thing is clear: real-time HR is now for the first time about to become ...real.

Sunday, May 23, 2010

Are Social Networks The Next Big Thing in HR? Or just another tech bubble in the making?

It seems that unless you tweet and have followers or fans or friends in  MySpace, Orkut, LinkedIn, Viadeo etc. you just don't exist. Really? Or is this just the latest fad not worth wasting much time on? To answer these questions, it's worth remembering that many technologies originated in the consumer world before being ado(a)pted in the business arena. Just think of the internet itself  or smart phones  where the initial enthusiasm by consumers were met by frosty skepticism from the business world which then went on to become avid users of the same tools. Will the same happen with social networks such as Facebook, or microblogs such as Twitter that are all the rage outside the business world -but often during business hours to the chagrin of many HR heads? Or will they just peter off  like the unlamented Second Life? (Anybody remember those corporate avatars that were supposed to revolutionize everything from performance evaluation to training to recruiting?)

Based on what I hear and see from many customers, even here in Spain (not the most forward-thinking place you might think, but remember that it's here that one of the most innovative HR products, Meta4, was born) it seems that the question should be asked in the present tense: social networks (SN's) are already part and parcel of the business world, with HR applications found and evolving on a daily basis. Just to take one example, I know many people that spend more time communicating through SN's than good old email. LinkedIn (claiming over 50 million users), of which so many of us professionals make a copious use of to share information in a push fashion, is a much more efficient way to update your network on, say, a project you are working on than through a traditional email blitz, if only because you'll never have 50 million contacts in your email address book.

One concern that I hear from CIO's and heads of HR is that social nEtworking will lead to nOtworking with employees spending much of their working time updating their personal profiles and chatting with their friends. This is exactly the same argument I heard at the turn of the millennium when the new generation of HR systems came onto the market and could be accessed by a browser, especially the self-service components. Allowing employees access to the internet in order to access these applications meant they could also surf the internet and spend their time on personal email, when not on porn sites. The horror, heads of HR used to cry, refusing any internet access. To which I countered, "well, if you're afraid that your employees may use any opportunity not to do any work, you might as well get rid of the water cooler where they could hang around and chat, and you should also board up all windows lest your employees waste time looking at the traffic outside instead of working." Needless to say that I won the argument over the reluctant companies and the same argument can be used today. I would even go further and say that that famous expression of "empowering the employee" so much touted and so little used in practice, could actually be made more meaningful. Just as with your children, trust your employee to be responsible and they might behave responsibly.

So, what are some of the benefits that SN's can bring to business, in particular the HR world?

Branding: just as the first companies that adopted websites (yes, there was a time not so long ago when some  well-known corporate entities didn't have an internet presence) benefited from an aura of tech-savvy modernity which made them popular with young graduates, the same holds true with employers who use Facebook or Twitter. It gives them a street credibility that traditional media cannot easily provide. Photos, videos, forums, all contribute to creating a feel for what it is like working for a particular company.

Recruiting: again, just as the internet thoroughly revolutionized the recruitment process with most ads migrating from print media to corporate career websites and the likes of Monster, corporate Facebook accounts help companies reach millions of "fans" with job ads as well as tap into an ever-larger pool of passive applicants (Facebook claims over half a billion visitors, equivalent to being the 3rd largest country on earth) It is estimated that by next year at least one out of 10 jobs will come from SN's and already in the US close to half of proespective employers look for detailed information about their candidates on SN's.  Every day thousands of ads are posted on LinkedIn in forums which allow fine-grain targeting almost impossible to dream of in any other media, nor even online job boards: since people visit SN's more frequently than their disparate profiles on several job boards (when they have them there), their SN profiles are updated more frequently. Also, because SN's, especially the professional ones, are richer in features, recruiters can get a good idea about a candidate without having to examine thir résumé in detail. Twitter and its real-time nature can make posting job vacancies and applying to them literally a matter of a few seconds. A recruiter at Yahoo (who has a presence on Facebook "Yahoo-Europe-Jobs" for instance) told me the other day how they posted a position on Twitter and one of their 400 followers replied and it was a perfect fit. Once the sourcing is done via these 2.0 tools the more traditional process can resume. Never has the recruiting cycle been shortened so fast to reach so many. I believe that as far as recuiting is concerned, we have reached "the end of history" to use Fukuyama's famous phrase since it is hard to envisage any other technology that would shorten the process further. Finally,  by cutting the middlemen, employers can reduce the cost of recruiting by cutting on headhunters' fees: an increasing number of  jobs are actually never advertised anywhere else but on SN's,

Collaboration and virtual teams: as the world economy becomes more integrated, the risk is all too real of global corporate behemoths turning into clusters of regional or even local work groups where information is hoarded and efforts are endlessly duplicated. SN's allow such employees to collaborate in ways that email and static document-sharing tools (such as SharePoint) could never do. When a particular product or service wins kudos in, say Latin America, but managers in Europe or Asia aren't aware of it, they tend to try several times expending valuable resources, time and energy before duplicating it with resulting profit losses. Also, and probably as important, is the ability to make faceless corporations appear more human and, among other consequence, encourage inter-group mobility. An employee in the US would be encouraged to apply for a job in, say, Brazil if they already know their future manager and have collaborated with them on some projects.

Career management: one of the major failings of HR systems is that creating a career path to be offered to an employee was always prospective: "based on your experience, skills and wishes you could move from position X to Y to Z in so many years."  As we know, the future has the unpleasant habit of never happening the way it was planned and many of those career plans built at great pains remain largely theoretical. A tool like LinkedIn or Viadeo which holds data on millions of professionals can aggregate data it holds to show the actual paths offered to certain professions. For example, in order to become a senior product manager with a software vendor, you need to be a consultant for a couple of years, then a presales person or marketing manager before reaching your goal. Since this is based on reality, it is a much more useful tool to employees and employers on whom it serves as a healthy sanity check, than any of the other prospective career paths.

Like all new technologies, SN's have their detractors who tend to over-emphasize the following issues:

- What about privacy issues and confidential data? Actually these are two separate issues as privacy deals more with the employee and confidentiality with the employer. Most SN's, especially the private ones such as Facebook, allow privacy settings that can restrict the amount of information to be shared. Of course, users have to be aware that the default settings are usually the least restrictive ones. And the more garrulous they are, the more informed corporate recruiters will be. As in many other instances of life, somebody's poison is someone else's food.  Concerning the confidentiality of corporate data, there is little doubt that the more opportunities there are to share info the more risks there are for some undesirable leaks to happen. But here again, nothing that good discipline, clear messages and responsible employees cannot fix. And of course, if you're worried that some unethical behavior will out, well, just make sure that unethical behavior doesn't happen in the first place before shooting the messenger.  The best way to avoid that the world hears about your shenanigans is simply not to have any.

- Private or public SN's? Some of the confidentiality issues can also be fixed by having an SN within the corporate firewall, just the way intranets came about. Actually the better tools you offer your employees, the less likely they are to go outside. This being said, a mix of the two is possible with private SN's used for certain functions (e.g., recruiting) while career paths and collaboration will be mainly carried out through corporate SN.

- Another IT project to embark on? No, thanks. And anyway, why should HR own this? One answer for both: most of the data for SN's is already available in corporate IT systems, mainly from HR systems (members' names, careers, roles etc.) thus reducing the need for a costly implementation.

In summary, my feeling is that there are undeniably hurdles to be overcome, but they seem to me more like growing pains than serious reservations. One challenge, though, that would have to be fixed and which would  could tilt the success-or-failure balance one way or the other is the existence of tangible benefits that SN's bring. I've seen some SN's, especially private ones (that is, within the corporate firewall) where the communities of members are no more than glorified email-based distribution lists or document-sharing tools. In that case one could just rely on the older technology and save one's time, energy and resources in the implementation of the newer system whose return on investment is so limited. So far, I'd say that the jury's still out but the outlook is promising. Who knows? SN's could be the last opportunity for HR to show a lasting relevance before it slides into irreversible oblivion replaced by other business function and outsourcing outfits.

(I prefer the term Social Networks to Social Media, as the former emphasizes the holy grail of effective collaboration, sought for so long and rarely attained, whereas the latter seems to suggest a one-way communication tool)

Friday, May 14, 2010

Looming Clash of Titans: SAP Acquires Sybase

We, independent consultants/advisors, like to exaggerate our importance and claim a prescience mere mortals rarely display. I try not to fall in this trap (at least not too often) but I cannot avoid remembering a discussion I had with an SAP executive a couple of weeks ago. To counter Oracle's rise in the enterprise-software business, I asked her, what was SAP waiting to give the Redwood Shores-based competitor what  we French call "la réponse du berger à la bergère" and move into the database business. She shook her head saying that SAP liked to focus on its strengths and would remain happy to be the #1 business-software vendor, nothing more.

As if to prove her wrong (maybe she knew but wouldn't say, or maybe she wasn't in the loop - a distinct possibility), SAP has just announced it was buying Sybase for $5.8 billion. Officially this move is not aimed at Oracle but means to increase innnovation and extend SAP's access to mobile users. But in reality it is a defensive move against Oracle which has been treading on SAP's corporate-software toes since 2005 when it initiated its strategy of acquiring large software vendors. SAP's claims that its organic growth would be sufficient to counter Oracle's strengthening position soon sounded hollow and the Walldorf-based giant, taking a leaf from Larry Ellison's book,  decided to go on the acquisition path by buying Business Objects in 2007. That move was too timid as Oracle swallowed one big company after another and the product-maintenance confusion followed by the leadership shakeup, as Leo Apotheker left after barely one year as sole CEO, didn't help SAP's fortunes.

Things took a turn for the worse, from a competitive standpoint, when the German company's nemesis, Oracle, made a bold move by acquiring Sun, thus entering an entirely new market: hardware. Playing the ostrich was no longer a viable option and the Sybase acquisition will help rebalance the field a little bit as SAP will now compete directly against Oracle in more than just one market segment. It is clear that IT vendors' game is to branch into different segments of the IT business to become a Swiss-knife company able to provide its customers with software, hardware and services. It is clear that we are entering an increasingly ferocious stack war.

So far, Oracle still has a headstart over SAP and, if the past is any indication to go by, we can expect some shrewd moves from Larry Ellison, probably in the services space. So expect some strategic decision to be made by the SAP side next year or in 2012 at the latest. What I think would make sense would be for SAP and IBM to merge: IBM is strong in services/consulting, SAP (created by former IBM'ers, let's not forget) created the corporate-software business; both are actually close partners. Sure, now the two of them compete in the database space but that should not be an issue since (a) IBM's DB2 business is more of  a legacy one, the only one IBM retained when it decided to exit the enterprise-software business and focus on services; (b) Sybase and its mobile footprint make a more cutting-edge complement than a competitor (even if  overall Sybase is considered a bit dusty); (c) since in the database league tables Sybase ranks a distant fourth after Oracle, IBM and Microsoft, a merger of SAP and IBM should not raise serious objections from anti-trust regulators;  (d)  the two will compete more effectively against Oracle which, with its acquisition of Sun has become a serious  competitor to IBM which therefore need to make a move soon.

Yes, the more I think about it, the more an IBM-SAP linkup makes sense. If it happens, you read it here first.