This winter we launched our second annual Talent Management Systems Customer Satisfaction research. Now, after surveying more than 1,500 organizations over the last two years, we have a very deep understanding of how this market has evolved. We will be continuing this research on an ongoing basis, so if you are interested in participating please register at our website and you will get information on the program.
(Research members can download the entire study, and it will be available for purchase in a week or two. In the meantime, you can download the executive summary here, which is available at no charge)
Highlight of Market Leaders
Let me briefly highlight the final results. Our methodology involves a detailed survey which analyzes 18 different areas of satisfaction – in the areas of product, service, support, and partnership. We also look at "net-promoter" scores (a customer's willingness to recommend a vendor, spend more money, and extend their contract) – and we correlate all this data against a variety of factors like company size, maturity, scope of implementation, etc.
We then take all the data and evaluate leaders in three market categories: mid-market (companies with fewer than 5,000 employees); enterprise (companies with 5,000-10,000 employees), and global enterprise (companies with well over 10,000 employees and global implementations).
In each of these three segments we named two sets of vendor leaders: the "segment leader" – which is the vendor which clearly scored the highest in the aggregated ratings; and then the "segment outperformers" – which are the vendors who beat the averages in their segment.
Each vendor is only scored in one segment, and that segment is determined by looking at the average size of customer who responded to the survey.
The results are as follows:
- MidMarket Leader: Halogen Software
- Enterprise Leader: SuccessFactors
- Global Enterprise Leader: Technomedia
- Market Outperformers: Learn.com (midmarket), iCIMS (enterprise), Stepstone (enterprise), Plateau (global enterprise), and Taleo (global enterprise).
What this should tell you is that these companies are all "overdelivering" on the customer promise. For more detailed information on all the findings and ratings by area, please read the detailed report.
What does this research tell us?
The Talent Management Systems Market is Maturing but Still in Major Transition
During 2010 more than a dozen different companies were acquired or merged: Taleo acquired Learn.com, Peopleclick merged with Authoria, SuccessFactors acquired Infohrm and Cubetree, Softscape was acquired by SumTotal, Stepstone acquired Mr. Ted, ADP acquired Workscape, Kenexa acquired Salary.com, and Lawson acquired Enwisen.
All these consolidations are taking place because the market has become very big and very hot – over $3 Billion and growing at over 15% per year. We can expect more consolidation and new players to enter in 2011.
Despite this growth, our research shows that more than half all organizations do not have an integrated talent management strategy yet – so much of this software is being purchased as a change agent, enabling the company to redesign its existing talent practices.
- The recruiting industry, for example, is undergoing a massive shift toward social-network based sourcing and recruiting. Talent acquisition software, which was originally designed to track resumes, is now being used to help companies design and manage a social recruiting strategy, as well as to standardize hundreds of steps in the global recruiting and onboarding process. (Danfoss is going through this with the Stepstone platform.)
- Performance management and compensation strategies are undergoing continuous review. Companies often purchase a new system and use this as motivation to redesign the entire process. (ADM is going through this right now.)
- Succession, career development, and talent mobility programs are under major flux in companies. Today companies are rebuilding their career models, engaging more deeply with contingent and alumni, and developing new programs for global mobility. Talent management software can aid in this effort, but many of these programs are not in place yet. (Most of our clients are going through this right now.)
- Social and informal learning is now critical to all new L&D programs. New LMS platforms help companies embrace social and collaborative learning in a more complete way, but they dont "design" the solution.
What our customer satisfaction research shows clearly is that the software platforms are now far ahead of organizations' processes. That is, companies are buying these systems to not only automate, but also to re-engineer. So what we find in this research (and our ongoing consulting is focused in this area), is that customers of these systems are not at all unhappy with features – they are most in need to long-term support, service, consulting, and strategy.
The Market is still Uneven in Customer Satisfaction
The second thing you find from this research is a wide variation in satisfaction among vendors and systems. This is not a market for the faint of heart: vendors who succeed have to be very good at engineering, product design, consulting, support, and service. They must aggressively manage their product to keep it current and modern.
The vendor satisfaction ratings vary widely. Without naming names here, let me mention that on a five point scale, one vendor's average ratings for "total satisfaction" were as low as 2.4 (the lowest), and another as high as 4.6 (the highest). This means that you, as a buyer, are undergoing quite a bit of risk in selecting one of these systems.
What seems to cause low levels of satisfaction? Let me highlight a few of the "gotchas" our research found:
- Customers of products which were acquired by other vendors are unhappy. In most cases, these products are not maintained well. It also means that the vendors who purchase other vendors have to work very hard to maintain these product platforms – otherwise these customers simply change vendors. You as a buyer want to buy a product which is very "mainstream" for your market – the vendor should have hundreds of customers in the same industry and size as you.
- Customers of ERP-related products are far less happy than those with pure talent management suites. The ERP-based talent management products (Oracle, SAP, Lawson, etc.) are far more complex and difficult to implement. If you buy off on an ERP-driven solution (and only around 15% of the market is planning on going this way), you must accept the fact that you will need far more consulting and a much longer implementation plan. And you are very likely to be missing many of the newest features for years to come.
- Customers of LMS and talent acquisition products are less satisfied than those with performance and succession systems. The reasons for this are fairly simple – these are older application areas and they actually have more "legacy" features and the product sets are aging. Both the LMS and Talent Acquisition market are going through a rebirth. Talent Acquisition is rapidly shifting toward candidate management and social network-based recruiting and onboarding. The LMS market is rapidly shifting toward social learning, collaboration, and knowledge sharing features. And these new feature sets do not replace the core needs for applicant tracking and learning administration – they are "added on!"
- Smaller vendors tend to deliver higher satisfaction than larger vendors – but only when they are very focused on a single market. The market leader in satisfaction, Halogen Software, is a mid-sized company which stays laser focused on its mid-market clients. So you do not have to buy from the "biggest" to get a great product and great support.
- Strategy and internal alignment is critical to success. The biggest driver of success is something which goes far beyond the products themselves: it is your own organization's ability to build a long term strategy, a team of process experts to design your talent strategies (using best practices like you read about in our research), and seasoned expertise in change management, communications, and training. Talent management is NOT a "systems problem" – it is a "management" problem. Every talent management process you design must be owned by management (not HR) – so highly effective systems rollouts focus very heavily on training and enablement of the line organization.
Customers want Partners, not Products
The final point I want to make in this article is that this market has shifted away from "tools" toward "solutions." These systems are no longer automation tools – they are powerful, data-rich platforms which must integrate with many other sources of data and applications. Not only will these systems connect to your HRMS and payroll applications, they will connect to lots of third party content, assessments, social networks, collaboration tools, and security applications. So you want a solution, not a product.
The biggest driver of "willingness to recommend" a vendor is not product features, but rather a vendor's ability to truly understand your business problem, provide consulting and advice, and deliver an ongoing relationship with support, communications, and bug fixes. These "partnership" capabilities stress some vendors' business models. They all pride themselves on being SaaS applications – but in reality they must deliver a configurable platform and the support that goes with it.
If you are re-evaluating or selecting your first talent management system, I greatly encourage you to read this research. The detailed report will be out soon, so please download the executive summary and contact us if you have any questions.