Tuesday, February 16, 2010

Two (dare I say "transformational") Opportunities for HCM Solution Vendors

While HCM solution vendors have made great strides in thinking more holistically and strategically about Talent Management from the customer perspective, there are still some important areas for moving the ball forward -- if not considerably downfield. Many HCM vendors are now trying to figure out if they want to tackle these challenges head-on, or “stick to their knitting” – i.e., do what they do best.

Two such areas garnering more attention from HCM vendors these days, including understanding the ROI proposition and other implications for their business, are (1) productizing “what-if” modeling and analysis capabilities … and (2) demonstrating that their solutions are transformational.

As covered a bit in previous blog posts, an area ripe with both challenge and opportunity for HCM solution vendors is productizing “what-if” modeling and analysis capabilities, given that the HCM processes they are focused on are not defined in a generally standard way. Compensation Planning and Workforce Planning, for example, are not like Recruiting, which perhaps has 70-80% commonality across organizations. Add-in the fact that these capabilities generally lack finite boundaries, and you have a situation where vendors need to figure out how to provide enough capability (vs. specific functionality) to be very valuable / actionable -- without frustrating customers with too much complexity and confusion about when to stop modeling and analyzing!

Another interesting question facing many HCM vendors is how to take the notion of ROI one (or two) steps further and actually seek to demonstrate that their solutions are either directly transforming businesses, or “allowing customers the space” to focus on transforming themselves through other means. In shorthand, we’re talking about changing the nature of a customer’s business --- not just “how” customers do things (e.g., to save money), but “what” they do to enhance the value they deliver to their own customers and the markets they serve --- and in-turn, dramatically grow their business.

When IBM many years ago decided to undergo one of the biggest enterprise transformations in history (going from largest computer hardware provider to even larger professional services provider), one would think they relied to some extent on the HR function (and their tools) to determine the feasibility, optimal timing/pace and tactics, and all likely people costs to achieve that.

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