People Systems Grow Closer

After years of hype, true integration of talent-management applications is drawing near.
David McCannOctober 28, 2011

Vendors of talent-management software have been touting their supposedly integrated “suites” of applications for years. But they’re finally closing in on a meaningful level of integration, experts in the field say.

Most vendors started out with a single application that addressed a particular people-management need, such as talent acquisition, performance management, learning management, compensation planning, succession planning, and long-term workforce planning. As the years went by the vendors added capabilities, whether by acquisition or organically or a mix, but generally each one’s most-robust offering continued to be its original one, and little true integration was achieved.

It was a human-resources mini version of the compartmentalization scenario that enterprise resource planning (ERP) systems were designed to address, letting financial, production, and supply-chain management systems talk to one another. That, of course, is still a work in progress. But in the HR space, just within the past two years “the reality and the pitch are finally starting to come together,” says Thomas Otter, a research vice president at Gartner.

Katherine Jones, an HR technology consultant with Bersin & Associates, agrees that “HR technology vendors are trying very hard to fill in the gaps,” though there is still work to be done. For example, say a company wanted to send one group of managers to an executive MBA program and another group to its own corporate learning center, aiming to see which would perform better in the long term. Doing that well would require a certain level of integration among performance-management, learning-management, succession-management, and possibly compensation-management applications.

“There probably is no technology today that can do that,” Jones says. “But I think we will get there.”

It would be a big plus if, when going down that road, vendors looked at not overwhelming HR professionals with data. “They need to know the difference between information and data. Either the vendor will have to be really smart about synthesizing data so it is informative and can inform a decision, or we’ll have to teach HR people to be much more analytic in looking at raw data, which I suggest that we never do.”

There are three components to integrating systems, says Otter. One is simply a product integration, where you can get a number of solutions from one vendor for a single price. Many vendors today provide that. Then comes integration from an end-user perspective, where everything looks like it’s part of the same application, providing ease of use. Somewhat fewer vendors provide that, though it is still fairly common. Finally there is integration of the applications’ underlying data models. That is where the room for improvement still lies.

“Providing integration at the design level is the first prize,” Otter says. “Long term, the vendors that do that — and it’s on the way — are going to have an edge on those that don’t.” He cites Cornerstone OnDemand as a vendor that is building its product suite organically. “Just because you acquire a company doesn’t mean its product is integrated with yours.”

Oracle and SAP tout the integration of their talent-management solutions with their ERP systems. Other major competitors in the field include SuccessFactors, Taleo, and Lumesse (until recently StepStone Solutions), according to Otter.

They generally are making great progress in “playing in each other’s gardens,” he says. For example, SuccessFactors, which started out with a performance-management application, is doing a good job of making its recruiting and compensation tools competitive, and recently acquired Plateau, one of the top learning-management vendors. Taleo, which began with a recruiting tool, has acquired its way to an extremely broad lineup of talent-management offerings.

Senior finance executives are likely signing off on the subscription-based contracts to use the systems, whose pricing is based on the number of employees a company has. Enterprises using one of the major vendors may pay between $100,000 and a few million dollars a year, says Otter.

Regardless of price, it’s an important purchase, he adds. “Your people are usually your most-expensive charge, and these systems give you transparency and knowledge into their value.”