Ventana Research Analyst Perspectives provide unique fact-based insights and education on business, industry and technology vendor trends. Each Analyst Perspective presents the voice of the analyst, typically a practice leader and established subject matter expert,  reporting on new developments, the findings of benchmark research, market shifts and best practice insights. Each Analyst Perspective is prepared in accordance with Ventana Research’s strict standards for accuracy and objectivity and reviewed to ensure it delivers reliable, actionable news and insights.  

Workforce Management for Human Capital Management

Historically workforce management has been centered on tracking time and attendance, absences and leaves. Organizations view the time and attendance system as the top priority to integrate with the payroll system; in our payroll management benchmark researchvr_Payroll_Management_06_what_to_integrate_with_payroll_management half (51%) of organizations called it very important. However, only one in five have integrated the two to streamline processes. So limited an administrative and operational focus does not contribute to improving worker productivity or manager efficiency. Moreover, such an approach can foster employee turnover and undermine worker satisfaction and loyalty. Our research analysis underscores that paying insufficient attention to the worker experience can degrade employees’ sense of accomplishment and in some situations also degrade the customer experience.

Of course, managing the costs and efficiency of schedule-, time- and pay-related tasks, including compliance, remains important. However, these tasks, as well as those above, can be more easily accomplished with advanced workforce management software. Used to full capability, it can manage this operational environment and help managers drive not just productivity but also the success of the organization while also engaging the workforce.

Out of necessity, workforce management software is evolving as an integral part of systems for business units and for human resources. Importantly, advanced workforce management systems typically include analytics that help management understand workforce performance; in our previous workforce management research 61 percent of organizations said that analytics is important to workforce management. For example, analytics applied to optimization of schedules can help organizations manage workers to their expectations. Analytics also is critical to optimize workforce performance and to enable members of the workforce to understand their contributions to the success of the organization. Furthermore, analytics can guide executives and managers to improve decision-making and rectify issues that could be leading to increased costs and be out of compliance with regulations. Many organizations, however, are not prepared to undertake these efforts; they still use an array of spreadsheets or tools that are not synchronized with real-time data from workforce management systems.

As organizations evolve, their needs for more efficient and engaging workforce management is transforming workforce management. We have begun to explore this category further in new benchmark research on Workforce Management for Human Capital Management. This new research will gather and analyze data on enterprises’ current workforce management practices, the software they use and their plans for the future. Here are some of the aspects we will explore.

The availability of next-generation workforce management systems (which include analytics) through cloud computing facilitates adoption of and access to these applications and the information they use. In our previous research one-fifth (19%) of participants expressed a preference to use cloud computing for workforce management, and we expect this percentage to grow as the attraction of deploying software as a service in the cloud influences buying decisions. For most organizations there is value in having the vendor manage the implementation and maintenance of the systems, and the ability to stay current in newer releases also is significant. Organizations are most concerned with time to value in new implementations and efficiency of their teams in using it. Depending on their needs and budgets, they can choose to deploy it in a single customer private cloud or a multitenant public cloud.

Likewise the proliferation of mobile applications for workers and managers in today’s workplace dovetails with the interests and proclivities of the increasingly younger workforce. Almost half (45%) of organizations in our previous research indicated that they will deploy such new applications to improve productivity. We expect the readiness of organizations to use mobile devices including wearables will further increase demand for advanced workforce management. The use of smartphones to access information about employees, payments and benefits and corporate policies makes it easier for workers to review and request changes to schedules; it is a key way to provide the flexibility demanded by workers who want to balance their personal and business lives. Organizations that do not embrace mobile devices for their workers and managers risk decreases in productivity and workforce engagement that could lead to increased employee churn.

Younger workers also are comfortable collaborating using social technology such as messaging, forums and open threaded dialogue on topics. Employers need to learn to interact with them accordingly to retain talent; at the same time, these methods provide an opportunity to further optimize workforce management by engaging workers in new ways. These innovations include assigning goals and rewarding achievement along with using new communication channels to resolve issues quickly, easily and interactively – more than half of organizations in our research identified these capabilities as important. As social forms of collaboration become part of the communication fabric, organizations can gain valuable feedback from workers and also provide coaching to increase their effectiveness. Efforts to improve the skills and competence of workers also can benefit from learning management and other systems that are accessible on mobile devices.

Driven by the evolving nature of talent and challenges to retain it, advanced workforce management now has capabilities to address spectrum broad range of human capital management needs. Using it senior management can gain greater insight into the workforce in action while improving the work experience and complying with relevant policies and regulations. Most organizations will find that investment in workforce management can be justified by its ability to ensure compliance with regulations regarding the Affordable Care Act, the Family and Medical Leave Act and a growing variety of locally established worker rights mandates.

Employers are recognizing the value of a new generation of workforce management systems in enabling organizations to meet requirements beyond managing schedules, absences and time off. For example, one-third (34%) of those participating in our payroll management research said they plan to deploy new workforce management software by the end of 2016. Almost half (47%) said they are not satisfied with their current product’s functionality. Workforce managementVentanaResearch_NGWFM_BenchmarkResearchas it is evolving addresses concerns common to all industries and will play a key role in tomorrow’s human capital management. Finance and operations management should examine the benefits it will deliver by bringing more efficiency into their processes, in particular ensuring a more engaged and longer-tenured workforce that contributes to financial profitability.

Implementing this new generation of workforce management will require an in-depth understanding of the options available and the people, processes, information and technology issues that must be addressed. Our new Workforce Management for Human Capital Management benchmark research will examine advances in the three years since our previous research was published. I believe that workforce management has a stronger role to play in efforts to achieve operational excellence and customer satisfaction and that the benefits organizations can realize from using these applications can be significant. Please look for upcoming announcements of how you can participate in and learn from this cutting-edge research.


Mark Smith

CEO & Chief Research Officer

Evolving to the Next Generation of ERP Systems

The enterprise resource planning (ERP) system is a pillar of nearly every company’s record-keeping and management of business processes. It is essential to the smooth functioning of the accounting and finance functions. In manufacturing and distribution, ERPvr_Office_of_Finance_01_ERP_replacement also can help plan and manage inventory and logistics. Some companies use it to handle human resources functions such as tracking employees, payroll and related costs. Yet despite their ubiquity, ERP systems have evolved little since their introduction a quarter of a century ago. The technologies shaping their design, functions and features had been largely unchanged. As a measure of this stability, our Office of Finance benchmark research found that in 2014 companies on average were keeping their ERP systems one year longer than they had in 2005.

Recently, however, we have seen signs of change. The evolutionary pace of technologies that shape the design of ERP systems has been accelerating over the last couple of years. In addition to the cloud there are in-memory computing; analytics and planning integrated into transaction processing systems; mobility; in-context collaboration; and more intuitive user interface design. While ERP vendors generally acknowledge these innovative technologies, our research and conversations with ERP software users indicates that they are just beginning to make their way into product design and thus far have had little impact on the market.

Then there’s the buzz about “consumerized” ERP and other business applications – fresher designs that look and interact with the user like consumer software such as mobile apps on smartphones. Established screen layouts and process designs often are legacies of technology limitations that no longer exist. In addition, increasing numbers of users don’t want or need to interact with their business applications through desktop or laptop computers. Support for mobile devices has become common, but gestures and other new user interface conventions that expand and improve the ways in which users can interact with their system on other devices such as laptops are a likely future capability, especially as touch screens become common on all devices. Voice interaction, a potentially powerful advance, is still in its infancy. Notifications and approvals increasingly will be accessible from wearable devices and mobile technology watches. Since all business is collaborative, we expect in-context collaboration capabilities to evolve rapidly to improve productivity in every business function, enabling greater responsiveness to customers and speeding the completion of core processes.

vr_Office_of_Finance_20_finance_prefers_on-premisesDespite the growing popularity of cloud-based systems, the  issue of where ERP systems should reside is not settled. The cloud is likely to account for a substantial portion of the market. But it’s useful to remember that even though our research shows that resistance to cloud-based ERP is ebbing and that cloud ERP vendors’ sales have been growing faster than on-premises vendors, the cloud still has a small share of the installed base. A significant challenge for vendors of multitenant software as a service (SaaS) is that the key benefit is also a constraint. Because buyers configure the features and capabilities rather than customizing the core code base, implementations can be faster and less expensive. In issuing new releases or modifications to the software, the vendor makes those changes to the code that everyone is running, either immediately or after a grace period. This requires far less work for the customer than having in-house IT personnel update on-premises versions and patches.

The constraint, however, is that the software cannot be customized. As I’ve noted, the primary barrier to making ERP software more configurable is the inherent complexity of the business processes the systems manage. ERP systems must be able to handle the specific needs of users, which can differ considerably from one industry to another and even between specific micro-verticals that might span multiple business units in a range of industries, locations and jurisdictions. If the software cannot be configured to meet the customer’s feature, functionality and process requirements, and if the customer cannot adapt its operations to these limitations, a cloud-based product isn’t a feasible solution. Many manufacturing and product-centric businesses have found it difficult because their requirements are often too specific and diverse. Unlike with on-premises software, there is no option to customize multitenant SaaS offerings to the needs of a single customer unless the vendor is willing to make the necessary changes to the core code base and the timing of those changes is acceptable to the customer.

Some new supporting technologies will enhance the business value of ERP applications as companies adapt their business processes to take advantage of new capabilities. For instance, in-memory computing platforms and big data likely will change how organizations – especially in finance and accounting – work with computers. Processes can be executed faster, and transaction processing systems can include analytic capabilities. Increasingly, ERP vendors will incorporate performance measurement and monitoring as well as building optimization functionality into business processes.

In-memory processing promises a much more interactive experience while big data management will underpin the sophisticated use of analytics to develop actionable insights, alerts and performance measurement from the masses of data accumulating in ERP systems. Mobile technologies, ubiquitous among the new generation in the form of smartphones and tablets, will drive demand for the availability of on-the-fly analytics and dynamic planning to enhance forward visibility and deepen situational awareness to guide transaction processes. Similarly, the emerging Internet of Things (the network of physical objects embedded with electronics, software, sensors and connectivity to enable objects to exchange data with other connected devices) extends the possibilities for expanding the ERP system’s capabilities in automating the handling of physical assets and the associated record-keeping, analysis and process management.

It’s not just technology. Users of ERP systems are changing, and this is shaping ERP system design. Fresher screen designs and reduced screen clutter are some of the initial improvements. The demographic shift taking place in the ranks of senior executives and managers, from the baby boom generation to those who grew up with computer technology, is creating demand for software that is both more capable and more usable. Soon, to be competitive, ERP systems will have to deliver three major improvements: lower total cost of ownership, a better user experience and greater flexibility and agility.

Despite these growing demands concerning how it works, though, buyers’ expectations for what ERP software should do haven’t changed much so far. But change almost certainly will accelerate over the next five years. Companies’ selection processes are driven largely by their experience with the last generation of products and the pain points they experienced. They view these systems as notoriously time-consuming and expensive to set up, maintain and modify. Indeed, in our ERP research only 21 percent of larger companies said that implementing new capabilities in ERP systems is easy or very easy while one-third characterized it as difficult.

Unlike in the shift from mainframe financial and manufacturing management applications to client/server ERP, this time the larger incumbents will be less vulnerable to disruption. One important reason is that their large maintenance revenue streams provide greater development firepower compared to upstarts. Nonetheless, all vendors will be challenged in the market if they fail to evolve to meet the expectations of a new generation of executives and users. Smaller ERP vendors, whether mainly on-premises or cloud-based, will need to invest in enhancing their software at a faster pace than has been necessary over the past decade.

The ERP software market is poised for the first significant transformation since the 1990s and is the rationale for our new benchmark research we will conduct on this topic. A combination of new technologies and changing user demands will drive changes in system design. The result will be systems that are easier to use and easier to modify to suit the needs of customers. A new generation of users will demand software that makes doing their jobs easier, supports their ability to collaborate and work with the system anytime, anywhere. Change is coming slowly, but the landscape of ERP a decade from now will be very different.


Robert Kugel
SVP Research

IoT Invigorates Operational Intelligence

The emerging Internet of Things (IoT) extends digital connectivity to devices and sensors in homes, businesses, vehicles and potentially almost anywhere. This innovation enables devices designed for it to generate and transmit data about their operations; analytics using this data can facilitate monitoring and a range of automatic functions.vr_oi_goals_of_using_operational_intelligence_updated

To perform these functions IoT requires what Ventana Research calls Operational Intelligence (OI), a discipline that has evolved from the capture and analysis of instrumentation, networking and machine-to-machine interactions of many types. We define operational intelligence as a set of event-centered information and analytic processes operating across an organization that enable people to use that event information to take effective actions and make optimal decisions. Our benchmark research into Operational Intelligence shows that organizations most often want to use such event-centric architectures for defining metrics (37%) and assigning thresholds for alerts (35%) and for more action-oriented processes of sending notifications to users (33%) and linking events to activities (27%).

In many industries, organizations can gain competitive advantage if they can reduce the elapsed time between an event occurring and actions taken or decisions made in response to it. Existing business intelligence (BI) tools provide useful analysis of and reporting on data drawn from previously recorded transactions, but to improve competitiveness and maximize efficiencies organizations are concluding that employees and processes – in IT, business operations and front-line customer sales, service and support – also need to be able to detect and respond to events as they happen. Our research into big data integration shows that nearly one in four companies currently integrate data into big data stores in real time. The challenge is to go further and act upon both the data that is stored and the data that is streaming in a timely manner.

The evolution of operational intelligence, especially in conjunction with IoT, is encouraging companies to revisit their priorities and spending for information technology and application management. However, sorting out the range of options poses a challenge for both business and IT leaders. Some see potential value in expanding their network infrastructure to support OI. Others are implementing event processing (EP) systems that employ new technology to detect meaningful patterns, anomalies and relationships among events. Increasingly, organizations are using dashboards, visualization and modeling to notify nontechnical people of events and enable them to understand their significance and take appropriate and immediate action.

As with any innovation, using OI for IoT may require substantial changes. These are among the challenges organizations face as they consider adopting operational intelligence:

  • They find it difficult to evaluate the business value of enabling real-time sensing of data and event streams using identification tags, agents and other systems embedded not only in physical locations like warehouses but also in business processes, networks, mobile devices, data appliances and other technologies.
  • They lack an IT architecture that can support and integrate these systems as the volume and frequency of information increase.
  • They are uncertain how to set reasonable business and IT expectations, priorities and implementation plans for important technologies that may conflict or overlap. These can include business intelligence, event processing, business process management, rules management, network upgrades and new or modified applications and databases.
  • They don’t understand how to create a personalized user experience that enables nontechnical employees in different roles to monitor data or event streams, identify significant changes, quickly understand the correlation between events and develop a context in which to determine the right decisions or actions to take.

Ventana Research has announced new benchmark research on The Internet of Things and Operational Intelligence that will identify trends and best practices associated with this technology and these processes. It will explore organizations’ experiences with initiatives related to events and data and with attempts to align IT projects, resources and spending with new business objectives that demand real-time intelligence and event-driven architectures. The research will investigate how organizations are increasing their responsiveness to events by rebalancing the roles of networks, applications and databases to reduce latency; it also will explore ways in which they are using sensor data and alerts to anticipate problematic events. We will benchmark the performance of organizations’ implementations, including IoT, event stream processing, event and activity monitoring, alerting, event modeling and workflow, and process and rules management.

As operational intelligence evolves as the core of IoT platforms, it is an important time to take a closer look at this emerging opportunity and challenge. For those interested in learning more or becoming involved in this upcoming research, please let me know.


Tony Cosentino

VP and Research Director


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