Today was another inflection point for the talent management market and buyers of HR applications with the announcement that Kenexa is acquiring salary.com (NASDAQ: SLRY) pending shareholder and SEC approval. Kenexa is offering a cash-per-share agreement that should work to complete the transaction. More complicated will be figuring out how to retain the talent at salary.com; that company has been decreasing in sales and size of the organization over the last couple of years and has struggled to reduce operating expenses. Its recent quarterly SEC filing showed a loss of more than $5.5 million on $9.7 million of revenue. It’s obvious that salary.com needed to find a buyer fast or face closing its doors. In contrast, according to its most recent quarterly SEC filing, Kenexa generated a $1.1 million profit on $44.8 million of revenue.

Kenexa provides software, content and services for hiring and retention of workforces around the globe, along with its businesses in recruitment process outsourcing and employment branding and surveys. As I have tracked the company over the years, its major software focus has been on recruiting, onboarding and training, which has helped many organizations transform their human resources processes and workforce management. Kenexa’s clients include Aetna, Facebook, Lowe’s, Wal-Mart and other global organizations.

Kenexa has been busy rolling out a new platform and set of applications called Kenexa 2X. It needed to migrate its customer base in recruiting applications there and to bring additional applications to market for performance, compensation and other areas to compete against other talent management and HRMS providers. The company has put significant time and resources into rebuilding its cloud platform for software as a service. Recently Kenexa announced mobile device capabilities for RIM BlackBerry and Apple iPhone; the application is not yet available on the Apple App Store, which makes me believe it is not entirely ready. Generally the HR and talent management applications market has been slow to bring new capabilities to employees, managers and management on mobile technology, so this could be attractive. On the other hand, Kenexa has also brought forward new employee and manager portals, but the reality is that most organizations already have too many separate portals to navigate across and would prefer applications or components that integrate into their master corporate or employee portal.

For Kenexa this acquisition will fill a compensation software gap in its portfolio; although it markets such a product on its Web site, for practical purposes it does not have adequate software of this kind available today. Our vendor and product assessment called 2009 Value Index for Total Compensation Management did not include salary.com because the company and product were in transition, but it is still in our evaluation process for the rest of 2010. Our benchmark research on the competency and maturity of buyers for total compensation management found opportunity for vendors as most organizations still manage silos of compensation software in HR and each line of business and try separately to track incentives and rewards; few have integrated compensation to performance management software. In addition most continue their use of spreadsheets here and have not adopted dedicated software as we think they should for such a critical process. Kenexa was still evolving its performance management applications for appraisals and reviews, goals and objectives; it is likely to set these aside and utilize salary.com’s performance management applications.

Kenexa still lacks depth in workforce analytics, which as I have written is a critical part of a complete package, and though Kenexa claims to have an offering and talks about its success, that is nowhere to be found on its Web site. This is another area where it may acquire or license someone else’s analytics and business intelligence technology; Kenexa has to do something to compete effectively against other talent management providers including Plateau, Softscape, SuccessFactors, Taleo and now ADP, which recently announced its acquisition of Workscape. It is attractive that salary.com brings thousands of customers in compensation and performance along with a valuable library of cross-industry competency and role definitions that help organizations hire and benchmark the performance of their workforce.

Kenexa CEO Rudy Karsan stated in the acquisition announcement call that the brand, product, data and talent pool of salary.com will help his business. I would say that the software assets in applications are necessary for Kenexa to remain relevant in talent management, and utilizing some of the core competency and content should further boost Kenexa’s efforts. The rest will not help Kenexa get to market faster than its current R&D pace. As well as accelerating that pace it needs to add breadth and depth in workforce analytics and also planning, which is a new point of competitive differentiation in the market. The good news is that now Kenexa should be able to be more relevant to HR and hopefully other senior executives who care about their workforce. It is in a stronger position to convince them that dedicated applications can meet their evolving needs better than their legacy HRMS from the 1990’s.

Let me know your thoughts or come and collaborate with me on Facebook,LinkedIn and Twitter.

Regards,

Mark Smith – CEO & EVP Research

I have been doing research into customer relationship management (CRM), contact centers and analytics for seven years. Throughout that time some customer-related themes have remained constant: Companies say their top driver is to improve customer satisfaction; customer experience management (CEM) has overtaken CRM as a top priority; and companies still search for a 360-degree view of the customer (which now is often called “the voice of the customer”). For many companies these themes remain problematic. Most don’t really know how satisfied their customers are; many are not sure exactly what CEM is; and that 360-degree view of the customer remains elusive.

In my research into customer experience management, I discovered that the majority of companies rely on manual and thus subjective ways of determining customer satisfaction, such as contact center agents assessing how satisfied callers are with their handling of calls, flipping through completed customer surveys and “sensing” what customers are happy or unhappy about, or listening to a small selection of recorded calls. In reality customers are telling companies every day whether they are satisfied or not – the problem is that this information is tied up in call recordings and multiple kinds of written documents. Companies have vast volumes of documents: notes handwritten by contact center agents, e-mail messages, postal letters, completed surveys, instant messaging scripts and now comments posted on social media or other news sites and forums. If companies could unlock this information, they would find a fuller picture of their customers and their levels of satisfaction.

Clarabridge tries to help them find the key. Its Clarabridge Enterprise technology can capture and extract text from documents from all the sources above, as well audio sources that have been transposed into text and, in the company’s latest release, text from social media. Clarabridge also has a natural-language processing engine that can analyze and make sense of text. It can spot words, phrases and combinations of words, combine these with other sources of internal data such as CRM and then use rules set up by the user company to classify the interaction as being of a certain type. It can use similar techniques to attach a customer sentiment score to the interaction – for example, by picking out predefined words and phrases and applying sentiment rules, it can find parts of an interaction where the customer is expressing positive or negative views (perhaps the bed was too hard, my room was very noisy, checking in and out was easy, or the staff was very helpful). Finally it can produce reports, dashboards, trend analysis and early-warning alerts that include the information different users want to see from the analysis.

Pickup up on where I highlighted the importance of unlocking customer voice through text analytics the demand was just beginning to pick up steam. Clarabridge’s latest release is aimed at the social media space. Among other things, social media have become a key source of customer information and sentiment. Customers no longer tell only immediate friends and family of a bad experience with a company; now they can use social media to tell the world about their bad (or good) experiences. All of this communication is of course outside the company’s control and so is often a truer reflection of customer sentiment than in-house surveys. The Clarabridge extractors can pull data from a range of sites and feed it into the classification and analysis tool. This gives companies the power to do two things: respond appropriately to the interaction and more importantly change the root causes of bad customer experiences; that might include changing the bed supplier, making sure VIP guests get quiet rooms or training contact center agents how to handle certain customers.

Clarabridge makes it easy for companies to access these capabilities; the product is available either for on-premises installation or as software as a service (SaaS). It also provides professional services to help companies get up and running, but customers I have spoken to said they quickly got the hang of using the application and setting up classification and sentiment rules, and are able to produce personalized outputs.

For me the first purpose of CEM is to change the way interactions are handled, including while they are happening. To do this companies need up-to-date customer information based on as much customer data as possible. It is evident from my research into customer information management that the bulk of customer data is in unstructured forms such as text. Customer service in the social media age is no easy task as I have already pointed out and tools like that from Clarabridge can help significantly. Clarabridge allows companies to unlock the value of information and use it to improve the experience and thus satisfaction of your customers.

Let me know your thoughts  or come and collaborate with me on Facebook, LinkedIn and Twitter.

Regards,

Richard Snow – VP & Global Research Director

The rapid evolution of business on the Internet has dramatically changed many organizations’ strategies for growth and profitability, especially those in the retail sector. I have written about the importance of analytics overall and in retail, but many companies are maturing slowly in using them to analyze electronic business and commerce. Data derived from analytics can enable them to manage the cycle from electronic merchandising and promotions to assessing interactions with sales categories and products and then to details of customer behavior and revenue. While there have been advancements in analytics of Web traffic, more is needed to be done to operate the Internet channel of retailing like those of “bricks and mortar.” As I have written about the evolution of Web sites to business sites (See: “Destroy the Website and Build Your Business on the Internet“), organizations need to invest in this business not just with people and processes but with the information and technology required to be successful. Our recent benchmark research into business intelligence found slight maturity and inadequate use of analytics to support retail. The research specifically discovered that the overuse of spreadsheets and lack of analytic capabilities are holding back organizations from maturing: Only 15 percent of retailers are at the highest Innovative level of maturity according to our Ventana Research Maturity Model.

Infopia provides software for planning and execution of e-commerce transactions with a product called Infopia Transact. Now the company has announced and introduced Enterprise eCommerce Analytics, which enables integrating e-business data for Web site traffic, sales and other activities into a single data model in which analytics can be applied to generate operational metrics. These metrics become the foundation for an interactive dashboard where multiple roles can interact and discover ways to optimize efforts. I like that Infopia provides all the basic reports and prebuilt dashboards in the package, which can be exported directly into Microsoft Excel. If your organization is struggling to perform analytics for profitability, customer lifetime value, order referral and other valuable metrics, they become readily available with this product.

Infopia makes it available through the rental model of software as a service (SaaS) and uses the tenets of cloud computing to make it easy for customers to get onboard and start using the product. This approach is growing in importance, as our research in the retail industry found: More than half of retail organizations will be assessing new approaches to help them with analytics and business intelligence (BI), and more than one-third are looking at SaaS. Infopia has addressed one of the difficult points of entry by making it easier to upload and integrate data sources into its underlying data model; the software handles the rest of the analytic processing to ease longstanding challenges in data integration that often required extensive technology consulting work.

In other approaches to retail analytics for e-business I have seen, some require significant expense and resources to implement on-premises and establish the data model and metrics while others turn out to be just BI tools available in the cloud computing environment. Infopia has built the model and metrics and the application interfaces on top of analytic technologies from QlikView; this base will enable Infopia to advance readily and utilize advancements like mobility for users who want to be able to access analytics from the convenience of their mobile devices. In addition Infopia has an experienced team with backgrounds and expertise in analytics.

Readily available solutions like these from Infopia can help retailers significantly improve their information and technology competencies and mature in the dynamic channel of e-business. Building a similar approach with traditional BI tools would take much longer; just as companies do not build their own e-commerce technology for online transactions, it is best not to build your analytics from scratch. Retail business leaders with support from IT should evaluate ways to get savvier with analytics for e-business. Infopia now needs to make itself more well known in the industry and communicate further about its new deployments and capabilities so those companies will consider it in new evaluations.

Let me know your thoughts or come and collaborate with me on Facebook,LinkedInand Twitter.

Regards,

Mark Smith – CEO & EVP Research