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I attended the 2013 Ceridian’s analyst day in Chicago to hear about and evaluate the progress the company has made over the last year and see the latest updates to its products since our firm
last commented on them. Last September my colleague Mark Smith assessed Ceridian’s workforce management product Dayforce. As well we selected Ceridian’s customer Guitar Center for the 2013 Ventana Research Leadership Award for Overall Business Leadership.
The analyst day started with a review of news highlights and financial progress for Ceridian over the past year. Ceridian generated overall revenue of $1.5 billion in 2102 (which was relatively flat against 2011 revenues, representing about 3% growth) and EBITDA of $448 million (11% growth over 2012’s $402 million result); Ceridian’s human capital management (HCM) business represents 63 percent of all revenue with $950 million and $197 million in EBITDA. Ceridian has more than 100,000 customers, most of which are midsize businesses; Ceridian’s primary target market is companies with up to 10,000 employees.
Ceridian made strong progress on the product front last year and was a winner of the 2012 Ventana Research Technology Innovation Award for Human Capital Management. David Ossip, CEO for Ceridian HCM, demonstrated the current release of Dayforce HCM during the event. The user interface of the new release is easy to navigate, and it integrates all of the HCM applications – payroll management, tax filing, workforce management and human resources –into one system. In addition, a powerful capability is the real-time calculation and rules engine that underpins the entire system. Using the engine customers can immediately see the broad effects of any changes, as the system calculates their impact (such as changes to pay rates or tax implications of an address change in HR) on the entire system as well as the individual employee’s pay. In addition, Dayforce HCM includes in-line analytics and reporting that help payroll managers and administrators track and audit payroll activities in real time within the system without having to print information or export it to ay third-party application.
In addition, the new release includes integrated employee self-service features that could increase employee satisfaction and reduce support questions to payroll administration. Among these features presenters demonstrated online employee pay statements, employee pay cards (for those without checking accounts) and direct integration to Ceridian’s HR and scheduling applications; this enables employees to make changes to their schedules and profiles that are directly updated into payroll. All of these features use the rules and calculation engine, so changes that affect an employee’s pay, such as bonuses, are immediately reflected in the online pay statement.
Our most recent benchmark on compensation management
revealed that many organizations are still not integrating their compensation and talent management systems but also that a growing number are beginning to plan for this; as the chart shows, those that have it today or are planning it over the next year add up to 40 percent of all organizations desiring an integrated system. We expect that such unified systems will continue to be more common.
In conjunction with the new release of Dayforce HCM, Ceridian reported a dramatic increase in implementations done by its professional services team. A speaker said the team is completing 40 to 50 implementations per month on the new platform and called this a tenfold increase over the four or five monthly implementations of last year. The reason Ceridian gave for this impressive increase was the design of the Dayforce HCM product, specifically its centralized nature, which simplifies setup. We will watch as Ceridian engages clients at this much increased volume how well the quality of product and customer service is maintained.
Ceridian also showed three applications scheduled for release in 2013. The first is released already, the Dayforce Touch time clock. This new device incorporates various features of competitive time-capture devices, such as RFID, a touch screen and biometric capabilities. It also offers photo capture at punch-in to validate the identity of the person and prevent “buddy punching.”
A second product, called Engage, takes social collaboration into workforce management and is an add-on to the Dayforce HCM 
platform. Its user experience works like the Facebook wall, showing activity streams of discussion on general topics, but it also has a rules engine that ties directly into the Dayforce HCM platform so users can perform tasks such as post shifts they want to trade with other employees and have the results take effect in the system. I think Engage could be an effective add-on product for Ceridian over time. In our research on next-generation workforce management the technology area in which most participants (70%) want new functionality for workforce management is collaboration. For more on this, read Mark Smith’s evaluation of the top priorities for the next generation of workforce management to learn other new innovations on the horizon for the future of workforce management.
Ceridian’s other product announcement was an upgrade of its recruiting product, scheduled for October. Speakers at the event said that recruiting is the strongest market need among Ceridian’s talent management customers. (It’s interesting that HR software provider Ultimate Software said the same about potential market opportunities in talent management.) This product upgrade was still in its early stages but will include a revised user experience for recruiters and functionality for applicant tracking in Dayforce HCM.
Having seen the company’s evolving situation, I conclude that faces Ceridian’s two large challenges in the coming year. First is to continue competing effectively with workforce management and many of the HR and talent management software vendors that many offer mature systems to the same market of less than 10,000 employees as Ceridian. Second is to continue the bookings and revenue growth to pace faster than competition for helping fund further innovation. After much internal change over the past year or so, including the acquisition of Dayforce, rebuilding the core product suite and adding several key members to the management team, Ceridian is now in a strong position with new product releases and early evidence on deployments and sales growth; its task is to keep on gaining momentum.
Organizations that are looking for a single solution for payroll management, human resources management, workforce management, benefits management and tax and payment services may find Ceridian’s offerings a good match. Ceridian has deep experience in this space, and its product direction shows promise in the coming year. If you have not looked at Ceridian or Dayforce HCM, we recommend doing so.
Regards,
Stephan Millard
VP & Research Director
Saba held its annual People 2013 customer and analyst conference recently in San Francisco, with approximately 700 customers in attendance. At the conference the company provided analysts a perspective on its progress over the last year and its product roadmap. My colleague Mark Smith wrote about Saba’s acquisition of Human Concepts 
last year; today Saba says it has 31 million users and 2,100 customers, including names such as Yum Brands, ADP, Proctor & Gamble, Intel and Five Guys Burgers and Fries. The analyst event featured speakers from NetApp and Kaspersky Labs, who discussed how their use of Saba products helps their companies achieve their development and business objectives.
The conference launched with several presentations by key executives discussing Saba’s vision and direction for 2013. Interim CEO Shawn Farshchi discussed the changing nature of work and technology. He said the next generation of employees is a learn-by-doing generation, and, being native to social technologies, wants to use social technologies seamlessly throughout their workday. Our benchmark research on social collaboration and human capital management found that the top two ways organizations are using social media are for identifying new talent pools (81%) and improving their competitive advantage (75%).
Shawn Farshchi and Jeff Carr, president of Saba global field operations, closed by described the three key elements of Saba’s technology vision: the People Profile, a single source of information for employees; People Process, the different processes that make up standard HCM activities; and People Engagement, the social tools across the platform that engage people at every step to be more collaborative.
Saba’s product strategy for 2013 focuses on a new cloud-based social learning and talent management platform called People Cloud, whose core elements are learning management, performance management, development planning and succession planning. People Cloud also includes one the industry’s more advanced sets of learning and development social tools, which interoperates with each of the applications to help users collaborate with one another. Saba’s social tools won our 2012 Technology Innovation Award for Business Collaboration. To compete with other human capital management offerings, Saba has developed technology and reseller partnerships with several vendors. Specifically, Saba has a certified cloud connector to Workday Release 18, which lets People Cloud interoperate with Workday’s HR management and payroll system, and a reseller agreement with Kronos, which enables the company to offer a workforce management solution as part of its solution.
Saba rounded out the session with an announcement of a major new release of its enterprise learning and talent management product. Improved capabilities in Release 7 include a new user experience across the application, a mobile learning app (detailed in one their blog posts) and an improved testing and assessment engine. In the discussion surrounding this release at the conference, Saba reiterated its commitment to support enterprise customers who use this platform for 2013 and beyond.
While at the conference I got a demonstration of People Cloud. The product has most of the same capabilities as enterprise learning and performance product, with well-thought-out social collaboration capabilities. For instance, a Facebook-like wall lets users 
“follow” coworkers and see all the content they contribute. A feature called People Quotient scores each user based on how often content that user posted is forwarded and commented on by others in the system; those who have content commented on or forwarded more frequently are scored higher. Other features include a help system that guides users step by step through to the process of executing a given task, as opposed to just listing the steps out in help documentation. This could scale much better for system training in some cases than the classic training offered for many enterprise systems. Other features include Google-like predictive search that covers social and structured content and allows users to share items they find with other users. Overall, Saba’s People Cloud product includes a strong set of social features which, combined with the core learning and talent management capabilities, make it a strong offering. These advancements are part of unifying social collaboration with talent management which our research finds that the value is knowledge sharing (49%), collaboration (37%) and learning management (34%).
Saba faces some operational challenges despite its strengths in product and innovation. The first of these came to a head on March 1 when Saba announced a change in leadership. Saba’s CEO and founder Bobby Yazdani stepped down, and COO Shawn Farshchi stepping in as interim CEO, likely as a result of the financial restatements of the prior period results currently underway. This is a hard chapter for all involved. Yazdani helped foster a culture of innovation, and Shawn Farshchi will now try to move Saba’s people and products toward a strong future.
Overall, Saba Software provides one of the human capital management industry’s leading learning and talent management products blending in social collaboration as part of the applications. Its plan for 2013 focuses on areas where it can differentiate the company from other vendors. Its challenge is to continue to advance its product roadmap and educate new customers while addressing the operational challenges that the next few months will bring. Saba’s products and new technologies are well worth evaluating as organizations look at human capital management systems to help them achieve their business goals.
Regards,
Stephan Millard
VP & Research Director
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