The Cloud HCM wars are set to be one of the most prevailing topics of 2012 and beyond. SAP’s acquisition of SuccessFactors and Workday’s forthcoming stock market floatation bear testimony to the importance of the HCM marketplace. So too does Oracle’s purchase of talent management and recruitment firm Taleo, a deal which was completed last month.
Oracle's Mark Hurd: the changing face of HCM and why we bought Taleo
Oracle of course owns PeopleSoft and has been aggressively promoting its own Fusion HCM offering to customers and prospects. But in an increasingly tough marketplace – and with Workday in particular proving a thorn in the side – the firm has been beefing up its HCM capabilities.
“Strategic talent management is no longer a nice-to-have investment,” says Mark Hurd, Oracle co-president. “It's a key driver of business success and financial performance. In fact, it's the number one issue for CEOs today. Many companies know more about their laptops than they do their people.”
Hurd argues that talent management is one of the last major business functions that has to be automated. “HR typically doesn't have the tools to provide the management information or the data to be able to benchmark results,” he suggests. “Only 25% of organisations today have HR-related KPIs, or key performance indicators. Companies that can make data-driven decisions deliver as much as 40% higher profitability per employee.”
He presents a number of ‘real world’ scenarios to illustrate his point. “First scenario, we're hiring aggressively to grow our sales force,” he postulates. “It's important to hire the right people the first time around, because every bad hire can cost you $500,000. Simple math, do 10 poor hiring decisions, costs you $5 million. And I've got to get them on board and productive as quickly as I possibly can. Positions not filled have a direct impact on my ability to deliver on my sales targets.”
Hurd’s second scenario focuses on talent retention. “Eighty percent of companies can’t even identify the top performers who are a flight risk, and they don't know if career plans are in place for those employees,” he warns. “As a leader, I've got to decide if I invest more in retention or recruiting for each function, big decision. Do I retain what I have? Do I recruit more? I need data. What's the tenure of employees in certain positions? Is their compensation right? Is there opportunity for them to advance?”
Then there’s pay and performance to take into account. “How much of an increase should I plan and pay for this year?” he asks. “I look at my goals, attrition rates and benchmark our compensation against the industry. I need to understand the impact of choosing a 3% or a 4% increase. Should it be the same for every geography? Should it be the same for every job category, every function in the organisation?”
The changing way of work
It’s a compelling set of rationales which is picked up by Steve Miranda. Senior Vice President of Oracle Development who adds: “The way we work has changed. Not only is the competition for top talent really increased, increased globally, our access to information, the number of devices we consume information has dramatically increased and changed, and really, the added importance of finding, recruiting, retaining and then effectively making the top talent effective has become very, very critical to the companies, not only as the Chief HR Officer or the head of recruiting in a company but really every manager throughout the enterprise.”
What this implies for the HRD function and for the technology to support that function is what Oracle is now focusing on, he suggests. Part of the solution lies in simplifying the HCM product overall and enabling HRDs to access its services through multiple channels, including mobile devices such as iPads and smartphones.
But it’s also about joining up disparate parts of the greater HCM lifecycle. “You need a much more connected process,” argues Miranda, “from finding the top talent, retaining the top talent, training the top talent and then having that life cycle of data feedback so that you will have a virtuous cycle of data to help you improve that process throughout, to simplify HCM and make HCM and every manager more effective.”
Then there are the ‘new additions’ to HCM strategic thinking, such as Social HCM – both internal and external to the organisation – and new analytical capabilities that enable not only retrospective analysis, but forward-looking predictive data to support decision making.
The key to all this, claims Miranda, is the combination of Taleo and Oracle which gives “ both perspectives, not only performance management that ties back into recruiting but has tight integration with HR so you get that closed loop functionality. And then on the back end, really, the Oracle products that we've had: engagement and retention, compensation, talent review and core HR.”
All of this is achievable through the combined forces of Oracle and Taleo, concludes Miranda. "We can start to accelerate the investment across all of these products by bringing what Taleo has done very, very well in their Cloud applications, in their Cloud service offerings with what Oracle's done well," he states. "Not only with the Oracle Cloud applications but to be able to really expose the broad set of Oracle applications and the Oracle set of technology and delivery capabilities to the Taleo customer base going forward."