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.  

In the Digital Economy, the Customer Experience Is Critical

Advertising and marketers tell us we now live in a “digital economy.” That implies the economy is based on and depends on digital technologies. It certainly is true that many consumers, especially younger ones, have changed the ways they interact with each other and businesses; they are now more likely to use digital channels of communication, particularly email, websites, text messaging, instant messaging and social media. In this digital world, where customers can search globally for products and services and change suppliers instantly, it is critical for companies to focus on the customer experience.

Some years ago, customer relationship management (CRM) was supposed to produce better customer relationships and therefore more business. But CRM mostly managed internal marketing, sales and customer service activities and didn’t address the company’s actual interactions with customers. Customer experience management targets those interactions and focuses on influencing customer behavior. In simple terms the customer experience includes interactions between companies and customers, the outcomes of those interactions and critically how customers feel about the interaction and their willingness to have further dealings with the company. To succeed in the digital economy businesses thus need to understand how to deal most effectively with customer interactions and the customer experience.

Some aspects of the digital economy are well known. More people get their news online than from newspapers, and they shop for products the same way. Digital transactions are replacing many that used to be done by postal mail or in person. People increasingly use mobile devices instead of deskbound computers for activities ranging from email to social media, and mobile apps are invented to cover seemingly every conceivable thing. All of these changes impact the way customers do business, and they are ever less patient with old-fashioned, inefficient business practices.

Faced with the ubiquity of digital communications, companies vr_NGCE_Research_12_all_current_channels_for_customer_engagementcan’t just update their contact centers – they have to reassess their marketing, sales and service processes as well. And to be efficient they have to connect all these functions and all the channels of interaction. Our recent benchmark research into next-generation customer engagement reveals the breadth of these issues. As many as 17 channels of interaction are in play, and companies on average support seven. In addition research participants told us they expect the volumes of interactions to grow in all channels. Not surprisingly the smallest rates of growth are for postal mail (3%) and retail outlets (4%), and the highest rates of growth are for social media (30%) and Web-based self-service (25%). Regardless of growth rates organizations have to support ever more channels of interactions, and none is about to disappear.

vr_NGCE_Research_05_who_handles_customer_interactionsThe research also shows change in who handles customer interactions. The top five functions are predictable, led by contact center agents, but significant percentages of mobile workers (in 34% of companies), finance departments (30%), home-based workers (25%) and even HR departments (23%) are involved in handling interactions; the only business unit not interacting with customers is IT. The research also shows that this pattern is changing: 12 percent of companies said they expect in the next 12 months to add customer service outside the contact center and mobile workers, 11 percent expect to add home-based agents, and 10 percent expect to add marketing and other business units. This diversity of roles interacting with customers demonstrates that handling interactions and thus managing the customer experience are enterprise issues. To address them as such, companies face three big issues: integrating systems, managing multiple interaction channels so they appear as one, and providing consistent information regardless of who handles the interaction or the channel of interaction.

Not long ago I discussed some of the technologies organizations should evaluate as they work to provide customers with easy-to-use, personalized, in-context and consistent experiences, but technology alone cannot do that. I recommend six steps toward achieving optimal customer experiences in this digital economy:

  • Stop thinking of interactions as isolated, one-off encounters. Instead think of the customer journey as people moving from being prospects, through sales to becoming customers who need support through an extended range of interaction channels.
  • Customers don’t think in terms of marketing, sales and service departments, so connect these and other business units in a seamless, consistent experience. This applies wherever people are in the customer journey and within each interaction. Processes should flow across organizational boundaries, and for this to happen everyone must share the same data.
  • Rethink the usability of all channels of interaction, and redesign them with the customer and the interaction in mind. This applies to every channel: call flows, IVR menus, self-service Web pages, mobile apps, social forums, voice-activated mobile apps, virtual agents and any others that may develop going forward.
  • As people use more digital channels, it becomes harder to differentiate among companies. Thus content is the key, so think carefully about the design of your website, the attractiveness of email marketing approaches and other text-based interactions, and of course social content.
  • Employees are key, so prepare and treat them well. The best plans can go badly wrong if employees who execute them are poorly trained, unhappy or unmotivated.
  • Rethink the metrics you use to monitor and assess the success of customer-related activities. Our research shows that many companies still focus on internal operational metrics like average handling times and not enough on business-related metrics such as customer lifetime value.

I don’t think organizations can complete any of these steps if they don’t know their customers and their thoughts about the company. In all but the smallest companies, advanced analytics systems can produce a single, comprehensive view of customers that includes maps showing the customer journey and the outcomes of interactions. Our recent research regularly shows that most executives understand the importance of the customer experience in the digital era. Getting it right is harder than many appreciate, so I wish you well in your endeavors and look forward to hearing your views on this critical topic.

Regards,

Richard J. Snow

VP & Research Director


Oracle Demonstrates Innovation in Human Capital Management

 

The 2013 Oracle OpenWorld in San Francisco was unique in several ways. Against the background of the America’s Cup yacht races on the bay, which Team Oracle won in an amazing comeback, this VR_tech_award_winner_2013was the first year in which OpenWorld dedicated a separate track to the full aspects of human capital management (HCM). This emphasis helped to demonstrate Oracle’s increased commitment to HCM. That and several important innovations in the company’s Oracle HCM Cloud product suite led us to select Oracle as winner of this year’s Ventana Research Technology Innovation Award for HCM. (For some background, see my colleague Mark Smith’s assessment of Oracle at its analyst day last spring.)

The overall theme of OpenWorld is that Oracle addresses business issues and opportunity, and this was evident in the HCM track. In their keynotes for the track, Chris Leone, senior vice president of applications development, and Gretchen Alarcon, vice president of product strategy, covered the strategy, the current state of the Oracle HCM products and the future roadmap. Their presentations showed that Oracle has a strong commitment to and understanding of the HCM market and the current trends within it. The picture they drew was of Oracle as a market leader with a great deal of resources available to compete effectively both to gain new customers and to help existing PeopleSoft customers advance and migrate to Oracle Human Capital Management Cloud.

In the presentations, the Oracle HCM team showed how these products can meet the needs of organizations looking for standard core vr_bti_br_technology_innovation_prioritiesHR applications as well as those that have next-generation HCM technology requirements. Oracle has learned from its competition and centered its HCM message around cloud computing, specifically in terms of the capabilities of the Oracle Human Capital Management Cloud. Speakers differentiated its HCM Cloud by offering more flexibility than some competitors, allowing customers to stay one release behind if they wish. From HCM Cloud, the presenters branched out to three areas where the company is focusing development: mobile access, social collaboration, and big data and analytics (counted as one). All of these are top technology trends explored in our business technology innovation benchmark research and first ranked priorities with Analytics being the highest in 39 percent of organizations.

In the area of mobility Oracle’s major enhancement is improvements to Oracle Tap that appeared in release 7 of HCM; this native mobile application for Apple and Android smartphones and tablets is generally available now and provides an intuitive, feature-rich mobile experience for managers and executives.  Oracle Tap integrates talent management information, such as employee profiles, goal attainment and key performance indicators, with Oracle Taleo Recruiting Cloud Service in one mobile application. It also includes an intuitive org chart called a “spinner” that uses a set of concentric circles to show any person in the organization and their relationships to others in the organization. Beyond Oracle Tap, Oracle’s presentations and demos emphasized mobility, insisting that this is an important component of the products.

On the social collaboration front Oracle demonstrated how it is embedded in current Oracle Human Capital Management Cloud applications. To provide collaboration and social media capabilities withinvr_socialcollab_factors_driving_use_of_social_media the HCM suite, Oracle begins with the established Oracle Social Cloud infrastructure, which provides standard services that each of Oracle’s HCM applications can use. To that end, several of the presentations showed HCM applications with embedded discussion threads. Two major releases in social media were announced at the show. First, the next release of Oracle Taleo Social Sourcing Cloud Service is integrated into the Oracle Taleo Recruiting Cloud Service product and enables recruiters to use social media channels and social networks of fellow employees to market open positions. This functionality is important because it moves Oracle from offering only applicant tracking toward recruitment marketing, a direction that I see as increasingly important. Social sourcing products such as these help companies identify new talent pools, one of the top factors driving use of social media in companies according to our benchmark research on social collaboration and human capital management. Even so, I think that Oracle needs to do more in recruitment marketing; there are compelling new technologies on the market that help improve candidate flow and market more effectively to internal networks. I look for further progress here.

The other major step in social media for Oracle is the announcement of Workforce Reputation Management. This new product will provide a way to track key social metrics about employees such as influence, clout or influence and to provide behavioral incentives via gamification to improve online reputations, which my colleague Robert Kugel provided some perspective on. On the whole, I think Oracle has a good approach in both collaboration and social media. Using Oracle Social Cloud to socially enable the HCM applications provides uniformity in the user experience and will help people better connect the social information.

For big data Oracle announced two upcoming products that will help differentiate it in the market. One, part of the Workforce Schedule product, is a predictive modeling tool that can map future performance and chances of attrition based on a model that uses approximately 120 elements. This tool also includes what-if capabilities and scenario management based on Oracle’s core strength in analytics and big data; it should be useful for HR leaders. In addition, Oracle has taken the large set of Oracle Taleo recruiting data (which Oracle claims encompasses 15 percent of all U.S. hires in 2013) and created a recruitment benchmarking tool, Big Data Benchmark Modeling. Oracle’s differentiator here is that this is not survey data but actual statistics cut from its data, giving it a more factual basis. Recruitment and HR managers can use it to see how well their recruiting programs are doing relative to industry KPIs. These tools are similar to some of the big data tools I have written about. Oracle is one of the few vendors that understand and sell core big data applications and hardware and is in position to take advantage of that for HCM. I should note that the recruitment tool is more of a benchmarking tool than a strict big data tool.

It is clear from the general sessions in the HCM track that Oracle has made strong investments in its products, and improving its value to its customers. While I don’t see this as a mission accomplished on the HCM products, it is important progress. Competitors like SAP have strong products in cloud-based HCM, have socially enabled many of their products, and have intuitive embedded analytics; in addition many best-of-breed solution vendors have innovative products in their own areas, so Oracle needs to continue to stay on the path of innovation. It is equally important to be able to implement and support those products for customers consistently and as promised.

A couple of Oracle HCM customers at OpenWorld told me that Oracle is making strong efforts to ensure successful implementations of the Oracle Human Capital Management Cloud products. One of the same customers also said that it learned important lessons during the implementation, specifically that it is important when using a deployment partner to make sure that the Oracle account team pairs you with a knowledgeable implementer. Oracle HCM Cloud is a relatively new technology, and apparently not all partners as yet have the expertise required to ensure the implementations happen on schedule and meet customer requirements.

Oracle’s investment in cloud-based human capital management has been impressive thus far, with technology solutions in the core HR areas, payroll and talent management; workforce management is scheduled with release 8, coming in the first quarter of 2014. Investments in new technologies such as big data, social collaboration and mobility will help its products appeal to more customers than its conventional ERP human resources applications would have. If you have not looked at the Oracle HCM Cloud applications, which are available on-premises or in cloud computing, they are worth considering in your organization’s evaluation process.

Regards,

Ventana Research


Workday Bolsters Human Capital Management

In the past year Workday has been making efforts to improve its human capital management (HCM) suite focused directly on the core human resources management systems and talent management software. In my previous analyst perspective about Workday I looked at its mobile capabilities for HCM. These additions, in concert with the enhancements discussed here, offer useful improvements. I have also noticed changes in the HCM market that impact all large competitors in it, including Workday. Before discussing these changes, it might help to summarize the company’s past three major releases.

vr_HCA_02_key_benefits_of_human_capital_analyticsWorkday Release 20, which came out in September 2013, added a Big Data product to Workday’s current HCM and financial suites. This advancement can help HR use range of analytic discovery capabilities on big data that can exploit value from HR and external data. Workday provides a set of prebuilt templates companies can use to quickly analyze questions most commonly asked of the human resources department by management, such as who might leave or who the best performers are. In addition, Workday Big Data Analytics, which was launched with Workday Release 20, offers basic tools to import and analyze structured and unstructured data, allowing users to go beyond the packaged templates. Taken together these two tools and templates allow companies to see value quickly and encourage them to invest in skills needed to work with the data in ways that answer questions specific to their business.

The big data capabilities can benefit companies that invest in them. Organizations need to better understand the relationship between investments they are making in HCM software and business outcomes. In our research into big data analytics the most-often named benefit of big data analytics is better communication and knowledge sharing but if you look at our research in human capital analytics the top benefits are improve efficiency and productivity (61%) and engage and retain more of the workforce (52%) which indicate part of the opportunity and challenge for Workday to ensure it meets the HCM value of big data for HR. To be successful in human capital analytics will require more linkage from its big data analytics and its workforce planning and analytics and ensure these offerings are intuitive and provide guidance for HR professionals and not just present easier to read reports and charts.

Workday Release 21 came out in January 2014 and made major improvements to the Web browser user interface. It simplifies navigation and makes the application more intuitive to use. As with other human capital management applications, Workday’s new user interface utilizes design principles of consumer applications such as Google+ or LinkedIn, providing cleaner screens and graphical elements to cue users on where to find information quickly. Technologically this release moved the Workday user interface base from Adobe Flex to HTML5. This followed other Web-based applications moving in this direction; HTML5 offers more responsive design capabilities.

Workday Release 21 also improved application usability was primarily in its Performance Management application. It enables managers and employees to execute performance reviews on mobile devices. This will appeal to the increasing number of organizations that adopting mobile devices for HCM. According to our research on human capital analytics, one-third of organizations currently use mobile devices for talent management and roughly half (52%) are planning to adopt it in the future. As I have written in previous perspectives, product usability is a leading buying criterion for most HR applications, and mobile capabilities are increasingly part of that requirement. Workday is smart to continue to focus on usability within the suite and will need to demonstrate why they are simpler and faster than others in the market and their own previous releases.

Finally, Workday Release 22, which debuted in May 2014, features a new recruiting application. Workday Recruiting focuses on delivering applicant tracking capabilities within the recruiting process. Other HCM vendors have added similar features in the past 12 months. (I wrote about this trend in an earlier analyst perspective.)

vr_socialcollab_most_important_workforce_metrics_updatedWhile Workday Recruiting is fairly standard in terms of core functionality, the release includes a mobile capability as in Workday 21, which makes the application more usable for a significant percentage of people in talent management tasks. In addition, the recruiting application includes robust analytics including a dashboard to track important metrics. Templates in both Workday Big Data and Workday Recruiting can track metrics important to recruiters and the company overall. Two of our research projects, on social collaboration and human capital management and human capital analytics, find that employee retention and engagement are among the five most important recruiting metrics.

As we look ahead Workday and others will need to invest is in functionality for sourcing and recruitment marketing. While Workday has several partnerships with vendors such as Jobvite and Broadbean, applicant tracking vendors should make it easy to use these partners’ tools so customers gain the information they are seeking without feeling like they are managing multiple applications. Workday will also need to invest further into video interviewing technology like that from its partner HireVue, as leading vendors which offer applicant tracking applications and candidates can personalize their resume and interactions with HR and hiring managers. The use of video is important to HCM across the spectrum of manager and employee needs from learning, performance reviews to work scheduling and collaboration.

Looking at these releases in a larger context, I see Workday’s value proposition as twofold: first, a single complete HCM suite that provides market-leading functionality to drive more efficient processes and workforce productivity, and second, competitive total cost of ownership by offering it all through cloud computing. The three recent releases deliver on these value propositions, adding several pieces of competitive functionality on the HCM suite. Workday is missing a complete compensation management set of capabilities like that found in other HCM suites which is becoming increasingly important to integrate with payroll, performance management, recruiting, succession and overall employee retention efforts. But to fulfill on delivering the HCM suite Workday will have to make critical decisions in regards to the gaps it has and where it works with partners still makes sense. This becomes more important as going forward Workday will also be competing with their partner’s for both mindshare and products in the places they don’t partner. For example, Workday is partnering with Kronos for offering a complete workforce management offering as it only offers basic time and attendance tracking along with time-off capabilities but Kronos has its own HR, payroll and recruiting applications as part of its workforce management suite. In addition the partnership with Cornerstone OnDemand for learning management is another example where Workday is competing in its focus for providing its talent management applications in the cloud.

But as I said at the beginning of this perspective, I believe the HCM market is beginning to resemble the consumer applications market. Large vendors such as Oracle and SAP, and mostly midmarket focused vendors including Ceridian and Ultimate are all investing in cloud HCM suites and seeing results from doing so. In addition, cloud-based partners like Cornerstone OnDemand offer competitive, and in some cases stronger, functionality in some aspects of talent management. In sum, strong functionality offered on a cloud platform is becoming table stakes. Differentiation will now is likely to come from ease of use, intuitive applications and customer relationships with clients. Workday appears to be aware of this evolution and is investing in it, but the company will need to rationalize the reality of its partnerships and its product suite to provide better clarity to its customers and the market.

Regards,

Ventana Research


 

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