What is important at conferences is the ratio of HR Executives to Vendors. A quick glance down the IHRIM attendance list showed about 5.5 buyers to vendors, which is an outstanding ratio for the vendors who exhibit at the event. Any event that maintains a 3:1 ratio is usually a good event to sponsor. Too many in our industry operate below the 1:1 ratio.
Performance Management hits its stride. For the last two years, aligning enterprise performance management with corporate goals has been one of the top initiatives for our members. But in reality, little EPM software was bought, compared to the demand. This finally changed in 2005 with approximately 250 deals being consummated in this short period of time. The industry leaders (with the most deals) include Successfactors, Authoria and Halogen.
Gone are the days of the $500,000 plus software deal. Companies are truly shifting to the asp model, thanks to the wide adoption and media coverage of firms such as salesforce.com. This means firms are willing to pay an upfront customization fee, (usually about 20-30% of a three-year deal) with a recurring monthly fee based on the number of users and functionality consumed. This has significant impact on customer loyalty and shouts a strong message to vendors with HR Executives saying, "We are not making a long-term commitment and a huge upfront investment." Many of the firms that initially did these deals are now re-evaluating their options for the monthly license model. This model is good for the industry long term as it encourages vendors to be very client focused, keep up with research and development and most importantly, keep in touch with their clients´ needs.
Kenexa files their IPO listing with some very impressive numbers and traction. With the Taleo IPO "ON HOLD," it is important that an industry leader emerge to set the market conditions. Kenexa is strong in that it does support a full talent management life cycle on a single integrated platform, whereas most of the other vendors struggle to integrate, and often purchase these point solutions to build out their product offering.
Kenexa´s integrated applications include:
Pre Hire:
- Applicant Tracking
- Phone Surveys
- Behavioral Assessments
- Skills Assessments
- Structure Interviews
Post Hire:
- Employee Surveys
- Performance Management
- 360 Multirater Feedback
- Analytics
Kenexa is also very strong in the RPO (they define it EPO) space, utilizing their own technology and best practices to offer a very competitive offering. As of March 31, 2005, they have a client base of approximately 2,100 companies, including approximately 90 companies on the Fortune 500 list published in April 2005. Their top 80 clients contributed 64.8% of their revenue for the three months ended March 31, 2005. Their clients typically purchase multi-year subscriptions which provide them with a recurring revenue stream. During 2004, their clients renewed approximately 89.6% of the aggregate contract value up for renewal during the period. Showing great growth and traction (revenue up 40% Q1 2005 vs Q1 2004) and growth in revenue from $24M (2002), $25M (2003), $34M (2004), HR.com estimates revenue at $55M in 2005.
With the PSFT client base in limbo, firms that offer an integrated suite to the F1000 client base have a significant advantage over those who only offer a Best-of-Breed point solution. Other firms building out suites include Recruitmax (Talent Acquisition, Performance Management, Assessment, Compensation Management, Onboarding and Vendor Management), Authoria (Benefits Communications, Knowledge Management, Performance Management, Compensation Management), Workstream (Talent Acquisition, Compensation Management, Performance Management, HRIS, Org Charting, Succession Planning...) . In the mid market you have players like HRSmart and Softscape.
CEO Breakfast: Three times a year we organize a CEO Breakfast in Boston. At the last meeting we had 29 CEO´s - all representing the HCM space - together to talk about building a world-class team. Based on some of the work of Patrick Lencioni, author of "The 5 Dysfunctions of a Team," we talked about:
- Inattention to results
- Avoidance of Accountability
- Lack of Commitment
- Fear of Conflict
- Absence of Trust
This methodology was validated by Tod Loofbourrow, CEO of Authoria; Deb Besemer, CEO of BrassRing; and Nicole Stata, Founder, President and CEO of Deploy, who have all used Patrick Lencioni´s work within their organization.
We are very interested in launching these CEO Breakfasts in NY, Chicago and the Valley. If you are a CEO and are interested in hosting the inaugural meeting in one of these cities, please send me an email at dmcgrath@hr.com.
A gem of a finding. Not too often do you go on a call and find a real gem. Such was the case last week when we met with Invoke in Boston. This software-based company is a market research firm on steroids. Their product can be used to bring focus groups together in a short period of time, while offering wider adaptability to showcase alternatives and more importantly find out why clients are buying. Often surveys do a good job at looking at data but are not flexible real time and never dig deep into why they would buy. This software eliminates the need to bring focus groups face to face, buy combing surveys, or message boards with webcasting platforms. It would be a good tool for product managers to show product prototypes, rate client needs and also build loyalty.
The great news is that for the first five months of 2005 there has been minimal funding into the HCM space. This means vendors with actual products can focus on developing their market share and not worrying about over funded new entities competing for mind share. Although we should all be aware that Dave is coming back ... Dave Duffield, the past CEO of Peoplesoft, is a true market maker and would be one individual who could reinvent the HR space. See his mission statement at www.davesnextmove.com, which states, "We are building the next generation of enterprise applications to address a fundamental paradigm shift in how enterprise applications serve the extended enterprise. We've taken a revolutionary approach to technology that includes open source, object-oriented techniques, XML, and web services. This next generation approach will result in applications that are highly adaptable, easy to use, and less expensive to deploy and manage."
Duffield has the cult following and the capital to do it. So stay tuned.
