TECHNOLOGY VALUE MATRIX SECOND HALF 2014 WFM

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1 RESEARCH NOTE October 2014 TECHNOLOGY VALUE MATRIX SECOND HALF 2014 WFM THE BOTTOM LINE Human capital management (HCM) is continuing to see increased competition as customers expand aging solution deployments to include more functionality based in the cloud. As a result, workforce management (WFM) is seeing new interest from customers expanding deployments to include top-down labor management and analytics capable of translating to payroll and financial management. The Value Matrix looks at advances in usability and functionality by vendors in workforce management. Workforce management has evolved along three different development strategies, giving customers a choice in how they want to manage employees and deploy solutions. Payroll integrations. Payroll providers are crossing the line that kept them out of HCM by starting to offer WFM solutions to customers seeking to expand their initial payroll investments without changing to or integrating with a non-native solution. WFM-backed integrated HCM. Some vendors that began with native WFM have built workforce analytics engines as a means to branch out into other areas of HCM. While these vendors have continued their investment in WFM, they have diversified their development across more HCM functionality, realizing fewer breakthroughs in WFM. Native WFM analytics. Some vendors that began with WFM have remained focused on building out their initial solutions to provide the deepest base in workforce analytics and to drive the majority of new developments in this sub-market of HCM. WFM has also benefitted from the cloud as vendors pursue strategies that move customers to centralize workforce data and standardize solution configurations for consolidated solution support (Nucleus Research m108 Cloud delivers 1.7x more ROI, September 2012). WFM has had the longest timeline of development within HCM giving it the deepest, most developed range of functionality and analytics compared to talent management and core HR automation. In spite of this, much of the investment spotlight in HCM has shifted off of workforce management and onto other areas of HCM such as talent management that deliver a smaller return basis when implemented as a standalone Nucleus Research Inc. 100 State Street Boston, MA Phone:

2 way to manage the workforce (Nucleus Research o199 Talent management pays back $5.94 for every dollar spent, September 2014). Vendors in the Value Matrix are evaluated on their depth of functionality inclusive of payroll provisions, tax filing, time and attendance, compliance, scheduling, absence and leave management, and analytics. Vendors are also assessed on their usability including but not limited to the ease with which customers access and use solution workflows, the amount of training required to deploy the solution, customer reported rates of end-user adoption, and the universal nature of data accessibility across mobile, static, and terminal based access points. Leaders are focusing their efforts on developing workforce analytics to increase the accuracy and relevance of top-down labor management that looks at overall workforce productivity. These vendors are providing a means to use statistical analysis to identify areas of improvement. Leaders are also mounting their functionality on analytics engines to extend WFM data to operations management, increasing the return on investment (ROI) of customer deployments. During the time period covered by this matrix, WFM vendors have focused on: Developing predictive analytics based on a combination of trend analysis and recognition of data anomalies. Deepening WFM functionality to integrate concepts such as absence and leave with scheduling for adaptive scheduling inclusive of skill level requirements. Implementing WFM analytics as a basis for broader HCM deployments either through native functionality or vendor partnerships. Streamlining workforce management integrations with payroll for more productive data processing. Page 2

3 Usability October 2014 WFM VALUE MATRIX 2H2014 Facilitator SumTotal Systems Leader Ceridian Workplace Systems Peoplematter Workforce Software ADP Kronos Infor Paylocity Epicor HCM Paycom Paychex Paycor Core Provider Expert Functionality This Matrix reflects Nucleus's view of product advancement as well as how well vendors support workforce management complete with analytics and payroll processing. Vendors are working to centralized employee data in one location while workforce data to payroll and operations management through analytics. As business intelligence, analytics, and content management encroach on the relevance of workforce management, WFM vendors are working to reinforce the value of centralizing labor and operations information behind data analysis. Leaders in workforce management are focused on bringing workforce analytics to the front of the solution, enabling customers to engage and configure them with the least amount of technical knowledge necessary to comprehend the solution infrastructure. These vendors are constantly increasing the usability of their solutions while developing new areas of functionality and subfunctionality within the WFM framework. LEADERS Leaders in this matrix include Ceridian, Workforce Software, ADP, Kronos, and Infor. CERIDIAN Ceridian provides a full HCM solution backed by workforce analytics. The company also provides both automated payroll and tax filing native to the HCM solution with a separate payroll service bureau. The company s Dayforce HCM gives customers native, cloud-based capabilities that bring together core HR, talent management, and workforce management Page 3

4 in a single solution with a central employee record and rules engine. Customers using Dayforce HCM s WFM capabilities (Dayforce WFM) can optimize their workforce using Ceridian s analytics and reporting to understand the efficiency of current labor allocations relative to potential returns on labor investments. The solution s analytics let customers achieve reduced costs and realize increase productivity (Nucleus Research o116 Ceridian Dayforce Workforce Management ROI Case Study: Guitar Center, June 2014). Ceridian s origins in workforce management and top-down reporting have allowed it to branch out into full HCM based on WFM analytics. Dayforce HCM integrates WFM with core HR automation and, as of July 2014, document management increasing compliance levels and data visibility for understanding the dynamics of the workforce. As development of Dayforce HCM has expanded following its acquisition, Ceridian has invested in building a big data analytics engine to underscore use of its solution components for HRIS, talent management, and payroll. The solution s workflows are based on the original WFM framework and are consistent across the different modules, reducing confusion and enabling customers to easily deploy the entire platform at once. Nucleus expects Ceridian to develop its analytics base as it continues to promote Dayforce HCM as a one-stop-shop for all HCM functionality needs inclusive of WFM. Ceridian already connects WFM data to operations through business intelligence, connecting labor to the processes and business environments it impacts. As the company builds out its HCM functionality from its WFM base, Nucleus expects that it will continue to deepen its workforce management functionality and extend the HCM data further into operations management. Ceridian s singular architecture will provide an opportunity to consolidate operations management into a single solution platform for customers to consolidate legacy solutions into a single platform. WORKFORCE SOFTWARE Workforce Software s EmpCenter provides time and attendance, staff scheduling, absence and leave, labor analytics, and fatigue management. The solution is geared toward reducing the risk of compliance costs for labor regulations but goes beyond to determine benefits spend due to labor scheduling and to perform labor analytics for scheduling optimization around leave data and employee shift management. The company s analytics engine extends to all core functions engaging the individual solution modules to facilitate labor reporting built into the manager outcomes such as when a manger is trying to determine the best staff arrangement to fill scheduling gaps without overworking employees or running into cost risks such as overtime. Workforce Software has been developing the usability of its solution based on the needs and technical knowledge of the end user. While WFM solutions tend to be technical in nature with drag-and-drop configurations for specific dashboard views, Workforce Software has been more focused on developing a usable mobile UI that extends to all technology types and that requires little effort on the part of the user to configure and Page 4

5 engage. As a result, the solution requires relatively little training in deployment compared to some competitors while delivering the same level of analytical competency in scheduling, labor management, and reporting. Nucleus expects that Workforce Software will invest in further development of the capabilities of its WFM analytics engine as it seeks to gain more of a foothold relative to competitors such as Kronos and ADP. While the company s capabilities are deep, it will likely shift its focus away from its UI to build up its functionality around more predictive management capabilities, cost forecasting, and skills assessments for resolving labor problems spotted as labor data anomalies. ADP ADP s software, services, and outsourcing provide customers deep workforce management functionality developed off of ADP s extensive payroll provisions. The company s origins are in payroll provisions and it has created a model that other payroll providers have used to expand beyond their original service offerings beginning with workforce management. ADP provides its solution packages in configurations for small, medium, and large organizations centered on workforce analytics and compliance. ADP s solutions include: RUN. Payroll, tax filing, and basic workforce management for small companies. Workforce Now. Payroll, tax filing, and workforce management centered on partner integrations between ADP Payroll Services and Kronos Workforce Ready, and ADP Payroll Services and Kronos Workforce Central for mid-sized companies. Vantage HCM. Payroll, tax filing, and enterprise workforce management for large companies. GlobalView. Integrated payroll, international compliance, and SAP services as a backend environment for large, global companies. ADP is continuing its push to deliver compliance-based support through payroll and workforce management both domestically and internationally. In May of 2014, the company s global delivery extended to more than 100 countries amidst a greater corporate shift to focus on the mid-market and to provide higher levels of solution integration. While ADP remains focused on compliance risks in payroll, the company has also maneuvered to extend analytics and application-based support to mobile devices, increasing end-user adoption and facilitating deployment for cost management. ADP s compliance capabilities also extend to recruiting with features for screening and selection that include background checks, drug testing records, and I-9 compliance management. ADP s commitment to compliance is catching up to competitors who have expanded out of payroll and tax compliance to focus on other areas of risk including documentation in key areas of talent management. ADP is investing in providing customers with expanded capabilities to minimize future risks based on real-time data and analytics in addition to Page 5

6 managing real-time problems through trend analyses. As a result, ADP is on its way to providing a comparable range of functionality to other leaders such as Ceridian while staying true to its knowledge base in workforce management and payroll. Nucleus expects that ADP will continue to reshuffle its solution modules to promote greater levels of native integration between its compliance-based HRIS functionality and its payroll provisions. While ADP continues to be one of the payroll providers of choice, its commitment to respond to the needs of the mid-market, shifting away from putting the enterprise market first, shows promise toward greater competition in the SaaS WFM market. KRONOS Kronos provides Workforce Central (WFC), targeting enterprise customers, and Workforce Ready (WFR), targeting small to mid-sized businesses (SMB s). Both solutions have deep functionality in time and attendance, absence management, workforce analytics, and scheduling, and Workforce Ready provides basic core HR processes including payroll and benefits administration through the integration of SaaSHR. Both solutions have access to the cloud with Workforce Ready being deployed as a cloud application suite and Workforce Central being deployed in a hosted environment. Workforce Central can be implemented as a standalone WFM solution or integrated with partner solutions such as SuccessFactors or ADP to achieve an integrated suite that spans WFM, talent management, core HR, and payroll. WFC delivers a powerful and capable analytics engine and the solution comes packaged for different industry verticals with a rigid but intuitive user interface (UI) that extends to mobile devices and can be implemented in the cloud. WFC engages Kronos s analytics engine to automate complex administrative tasks and to provide workforce analytics embedded throughout user dashboards to guide decisions. Workforce Ready provides SMB s with a cloud-based solution that uses data-driven analytics to automate back-office tasks for HR and management. The solution includes workforce management, integrations for payroll, benefits, training administration, and performance and compensation management. The integration of SaaSHR s functionality consolidates labor analytics onto a single employee record for each employee so HR can manage compliance risks, identify areas of productivity improvement, and control labor costs. Workforce Ready extends to mobile devices as well increasing the flexibility and configurability of the solution and driving end-user adoption. In June 2014, Kronos also announced the release of travel and expense compensation management for WFR, adding to the cost management and payroll compliance capabilities already offered by the platform. Kronos s analytics are accessible and easy to use with analytical reports focused on workforce management as a means to reduce costs of operations and manage productivity. Page 6

7 Kronos continues to be the go-to solution for workforce management and analytics with some customers using platforms such as Ceridian s Dayforce HCM opting to stay with Kronos for WFM. Kronos is well positioned to be a partner of choice for underlying analytics and workforce management, and Nucleus expects that the company will continue to lead innovation in the WFM arena as a means to solidify its value as an integration partner and analytics platform. INFOR Infor Workforce Management provides time and attendance, scheduling, and absence management and connects to Infor HCM and Financials for financial management and business intelligence to connect labor analytics with operational management. Infor has stood by a quantitative approach to HCM and has grown through acquisitions giving the company a cloud and analytics based solution packaged for industry specific needs. Infor Workforce Management connects to Infor s analytics engine delivered through the company s ION Business Intelligence platform that also supports other Infor solutions including ERP and CRM. ION acts as a virtual warehouse for big data that analytics can plug into to support business decisions as they happen. Infor s central data enables it to share WFM data generated in Infor Workforce Management with Infor s ERP and CRM platforms, giving customers combined solution capabilities on one data platform supported by one company. The integrated base presents some challenges in terms of usability but the company is developing a common visual interface through its Hook and Loop strategy. Nucleus expects that Infor will continue to deepen its analytical capabilities to generate a platform between its single data set for all solutions, providing one database for all activities. Infor will also likely continue to pursue deeper functionality in WFM analytics while blurring the lines between analytical processes to conform to human versus mechanical workflows. In spite of this, Infor will likely see its analytical value potential shift to fall in line with the potential of its other solution platforms as the value will likely see larger increases when combined with Infor s other solutions. EXPERTS Experts in this matrix include Epicor HCM and Paycom. EPICOR HCM Epicor expanded into the HCM market with the acquisition of Spectrum Human Resources. While Epicor HCM offers core HR automation and performance management, the bulk of its functionality is in workforce management with time and attendance, absence management, scheduling and approvals, and labor hour and regulatory compliance. The solution is backed by workforce analytics and lets HR track, manage, and analyze Page 7

8 employee data for improving staffing productivity. The solution can be deployed hosted, on-premise, or in the cloud and connects with Epicor s other ERP-based solutions. Epicor s acquisition of a WFM-backed HCM solution expands its efforts to deliver complete operations management inclusive of labor data and reporting for financial analytics. The HCM solution integrates with customer payroll providers, and offers position control and budgeting to manage headcount and to track employees in multiple positions relative to available funding sources. The platform s focus on financial management helps customer optimize their labor costs relative to total operational budgets further integrating labor management and analytics into the productivity and efficiency measures of the overall organization. Nucleus expects that Epicor will develop Epicor HCM to provide an analytics engine branched off from its core analytics giving customers the option of deploying Epicor HCM standalone or integrated with Epicor s ERP solutions. Nucleus also expects that Epicor will bridge its ERP functionality over to the HCM solution to provide a stronger analytics base for further development of the solution. PAYCOM Paycom provides time and attendance integrated with payroll processing, payment delivery, and data packaging. The company has expanded into WFM from payroll analytics centering labor management on financial management and optimization. Customers using the solution can retroactively manage shifts through time approvals, leave requests, and payroll data management. Paycom s foray into the WFM arena has been limited to time and attendance giving the company a limited view into the needs of workforce analytics. As a result, HR is forced to engage the analytics side of the solution through the payroll reporting, managing the labor force after shifts have been tracked and time stamps have been entered. The limited capabilities of the WFM side of the solution mean that customers need to retroactively manage labor spend and shift data in the process of managing the labor force. Nucleus expects that Paycom will continue to be a payroll provider of choice while exploring the potential of further fleshing out its workforce management capabilities rather than focusing on higher levels of usability. Being a payroll provider of choice particularly for mid-market customers also means that Paycom will likely be considered as an integral payroll player in the development of solution ecosystems. As the company develops more capabilities within its core areas of payroll and workforce management, it will likely also integrate with ERP and analytics solutions for wider operations management capabilities. Nucleus expects that the extension of Paycom to work with other platforms will enable it to scale and retain customers as they grow. Page 8

9 CORE PROVIDER Core providers in this matrix include Paylocity, Paychex and Paycor. PAYLOCITY Paylocity s workforce management serves as a bridge from the company s payroll system to human capital management. The solution has considerable strength in tax filing and payroll provisions with workforce management capabilities for time and labor consisting of web time management, and enterprise time and expense tracking including scheduling, job costing, and approvals. The solution engages WFM functionality from the standpoint of payroll cost management. It channels time and attendance directly into the employee pay and pay management capabilities, eliminating the need to toggle between payroll and workforce management data sets for scheduling and cost optimization. Paylocity bridges the gap between payroll and workforce management by centralizing workforce data on payroll outcomes. While the solution does not provide as deep functionality as other WFM vendors, it provides an entry platform for customers to branch out from their initial payroll deployments into WFM and entry level human capital management. Nucleus expects that Paylocity will continue to deepen its WFM capabilities while largely maintaining its current level of usability. The existing demand in WFM and HCM for integration with operations management will likely begin to extend to smaller businesses, increasing pressure on companies like Paylocity to integrate or develop new capabilities. While demands for new development will likely be slower in coming from small to mid-sized companies, Nucleus expects that it will drive Paylocity to a faster rate of functionality development than usability development evidenced by this payroll provider s expansion into other areas of HCM beyond WFM. PAYCHEX Paychex provides payroll and taxes, HR management, employee benefits management, and accounting and financial resources. The company is primarily a payroll provider but it also gives customers automated expense management, applicant tracking, and payment disbursement reducing financial liabilities associated with payment tracking and increasing productivity in the transition between HRIS data and payroll. Unlike other WFM vendors considered, Paychex does not actually engage in direct WFM functionality from the standpoint of employee time punching and schedule optimization, but the company s automated accounting and financial management can take HRIS data and optimize labor spend from a financial analytics standpoint. As one of the vendors bridging the gap between payroll and WFM from the payroll side, Paychex provides entry-level value to customers looking to automate payroll compliance and provisions but not yet ready to engage a fully automated WFM solution. As a result, customers can get their feet wet with WFM functionality and understand the basis and benefits of WFM functionality without committing to a full solution complete with training Page 9

10 requirements and per-employee-per-month additional costs. As other payroll providers such as Paycom and ADP are continuing their advance on direct WFM provisions, Nucleus expects that Paychex will likely stay on the payroll optimization side as an entry point to WFM functionality and a future integration partner for customers who will start with automated payroll and branch out to an HRIS as they grow. PAYCOR Paycor provides automated payroll processing, HR management, time and attendance, reporting, and workers compensation management. Like Paychex, Paylocity, and Paycom, Paycor comes at WFM from the payroll side having automated payroll data processing and payment distribution and bridging it to labor data collection. Most WFM providers that began in workforce management partner with payroll providers and Paycor took advantage of the opportunity to learn from the available WFM functionality developments provided by vendors such as Kronos to provide customers with WFM and payroll capabilities provided by one vendor. Paycor s WFM capabilities are provided through a partnership with Infotronics s Attendance on Demand solution, and provide customers with time and attendance, compliance reporting, and scheduling. The company largely caters to larger small sized business and the mid-market providing initial levels of functionality for workforce optimization. The companies served by Paycor are on the precipice of being ready for a full HRIS or integrated HCM solution, but are looking to enter into automated labor management while maintaining native, automated payroll provisions. Paycor provides an easy entry point to the market by serving as a payroll provider of choice that customers can stay with while leveling up to integrated labor management. When a customer becomes big enough to outgrow Paycor s functionality, they can move to implement an HRIS while remaining with Paycor as an integrated payroll provider, or implement additional, external HRIS capabilities while retaining Paycor for payroll and WFM. Nucleus expects that Paycor will continue to develop its WFM capabilities for as it capitalizing on a market share not currently well-served by WFM vendors. As a result, the company will likely make smaller inroads into the market segment such as developing more dynamic scheduling capabilities, without being a direct leader of new functionality affecting the entire WFM market. FACILITATOR Facilitators in this matrix include SumTotal Systems, Workplace Systems, and Peoplematter. SUMTOTAL SYSTEMS In August 2014, Skillsoft announced the acquisition of SumTotal Systems. The acquisition combines Skillsoft s learning management capabilities with SumTotal s Talent Expansion Page 10

11 and SumTotal elixhr that provides core HR, workforce management, and talent management on a single source platform based on WFM analytics. SumTotal s solutions integrate with Microsoft SharePoint for social collaboration, learning and onboarding, and extend to mobile devices to deliver learning content. The mobile capabilities also include features for payroll and benefits, recruiting, compensation, learning, succession planning, and workforce management. The acquisition by Skillsoft will likely terminate collaboration with Microsoft SharePoint for learning an onboarding while potentially preserving the partnership for social collaboration. SumTotal s elixhr will also likely be expanded following its initial consolidation of Sumtotal Systems s functionality into a single platform with single employee records that integrate with ERP, CRM, and other HR systems for comprehensive, operational management. Nucleus expects that while the expansion will bring Skillsoft s learning management system onto the ElixHR WFM analytics base further investment will be made in developing SumTotal s analytics to provide a platform for further functionality and data integration. As a cloud-based platform, SumTotal elixhr provides a streamlined user interface and is partnered with SnapLogic to integrate with several external partners including Workday, Salesforce.com, and SAP. The company connects SumTotal elixhr s analytics to data sets provided by integrated solution platforms, translating different data sets to a common language for analytics and reporting on a single platform that eliminates the need to remove and replace existing solutions. The common platform reduces implementation requirements and appeals to companies with heterogeneous solution environments. SumTotal Systems is focused on developing solutions that challenge the notion of employees as capital, while remaining focused on cost and performance optimization for managing the big picture of labor performance and cost optimization. Nucleus expects that as SumTotal Systems settles into a new brand identity under Skillsoft, it will expand on its value proposition that is current situated on providing integrated HCM functionality through internal solution rewiring and external integrations that fit into existing deployment environments. WORKPLACE SYSTEMS Workplace Systems provides workforce management in the cloud including schedule management, attendance management, forecasting, advanced scheduling, and business intelligence and dashboards. The company s solution is centered on schedule optimization taking into account labor costs through payroll integrations and accounting for employee availability through direct social engagement. Customers using the solution can manage their shift allocations relative to the needs of the workforce while optimizing their labor spend and productivity around peak levels of demand. Page 11

12 Workplace Systems is focused on providing a solution implementation that minimizes disruptions to the work environment and that maximizes the ability for managers to account for employee work-life balances. The company does not require change management processes for implementation and does not require collection of historical data for forecasting models. The solution engages the workforce from deployment using the Schedule Management and Attendance Management modules in test locations prior to deploying across the enterprise to generate a sample data set for analysis and enterprise-wide forecasting. Workplace Systems s analytics are dependent on using key locations as a model for enterprise-wide deployment, creating a uniform approach to labor management and schedule optimization. As a result, customers taking advantage of the solution to date have a limited amount of scalability they can achieve before they will have to transition to a larger solution or apply regional hubs to their workforce management in order to effectively manage the workforce. Consequently, large companies deploying the system may end up with multiple systems of record based on different management and optimization profiles on a hub-and-spoke system. Nucleus expects that Workplace Systems will hone its optimization model to incorporate a centralized analytics platform that recognizes the most challenged environments and that uses the common problems from that location to map out models for the rest of the enterprise. The analytics model differs from other WFM solutions on the market giving Workplace Systems an environmentally optimized solution for regional operations management. Nucleus also expects that Workplace Systems will invest in developing higher levels of usability while continuing to develop new functionality that keeps managers out of the back office. The company will likely continue to provide capabilities for managers to match demand cycles to scheduling and to actively account for employee schedule requirements both inside and outside of the solution. PEOPLEMATTER Peoplematter provides a mobile-optimized workforce management solution aimed at the mass-market service sector including retail, big box retail, hotel chains, and fast food outlets. The company s workforce analytics are more basic compared to more established vendors such as Kronos but the company provides the shift and hourly-based service sector with a deep level of compliance management and reporting. Similar to Reflexis, Peoplematter s industry focus limits its analytics development in terms of market reach but gives it one of the deepest understandings of the challenges facing its tried-and-true customer base. While Peoplematter s value proposition may be targeted to its industry, the company provides retail and hospitality with a means to manage labor spend, to manage legal compliance in payroll, benefits, and employment, and to reducing the costs faced in these areas by an industry dependent on low-skilled, highly regulated, and often unionized jobs. Page 12

13 Nucleus expects that Peoplematter will engage both its WFM base and its understanding the retail sector to develop its platform for other industries as it seeks to take on larger customers. Peoplematter has a strong base in managing labor spend and shifts from the standpoint of compliance and its analytics capabilities, already optimized for mobile reporting, have high potential for expansion and extension into contextual labor management and predictive analytics in scheduling. Page 13