Ventana Research Analyst Perspectives

I am happy to share insights gleaned from our latest Value Index research, an assessment of how well vendors’ offerings meet buyers’ requirements. The Ventana Research Value Index: Total Compensation Management 2023 is the distillation of a year of market and product research by Ventana Research. Drawing on our Benchmark Research, we apply a structured methodology built on evaluation categories that reflect the real-world criteria incorporated in a request for proposal to human capital management vendors supporting the spectrum of total compensation management. Using this methodology, we evaluated vendor submissions in seven categories: five relevant to the product experience ﹘ Adaptability, Capability, Manageability, Reliability and Usability ﹘ and two related to the customer experience ﹘ TCO/ROI and vendor Validation.

Having just completed the 2023 Ventana Research Value Index for Total Compensation Management, I want to share some of my observations about how the market has advanced since our assessment three years ago. For more than two decades, Ventana Research has conducted market research in a spectrum of related areas including Total Compensation Management (TCM) as well as broader HCM areas ranging from employee experience, learning management, workforce management (WFM) to payroll management and learning. We have also done research on the employee experience and candidate engagement. Our continuous research and analysis of the market for business applications and technologies guide our comprehensive approach to this Value Index.

Compensation management is the practice of strategically aligning worker pay with job roles, responsibilities and organizational objectives. It involves setting pay levels to ensure employees are adequately rewarded for their work while considering factors such as external economic trends, internal equity, budget constraints, tax regulations and compliance requirements.

Ventana Research recently announced its 2023 Market Agenda for Human Capital Management, continuing the guidance we’ve offered for two decades to help organizations derive maximum potential from workforce- and people-related technology investments and initiatives. In crafting this Market Agenda, we focused on three critical themes top-of-mind for both HCM vendors and buyers: Organizational resiliency, employee engagement and utilizing digital technology to derive deeper insights into the state of the workforce so that leadership can take action to promote retention and growth.

Compensation management is a key talent management process involving all workers and managers within an organization. Determining and providing the appropriate compensation for each person — whether it involves base pay, merit pay, or variable pay and incentives such as bonuses — is critical to being able to attract and retain productive members of the workforce, including full- and part-time employees, contingent workers and contractors. The complexities of compensation often prove to be a core challenge for human resources departments as they strive to keep the organization productive, satisfied and motivated while ensuring equitable and defensible pay practices across the entire workforce.

I am excited to announce that I have joined Ventana Research to lead our market coverage of our Human Capital Management expertise, including focus areas of Continuous Payroll, Employee Experience, Learning Management, Talent Management, Total Compensation Management and Workforce Management.

I recently attended an analyst conference held by Unit4, an enterprise resource planning vendor focused on midsize organizations in people-centric industries. The conference was intended to communicate the company’s strategy, product updates and roadmap. The meeting took place shortly after announcement of the availability of Unit4 Industry Mesh and the acquisition of Compright, which does compensation planning as well as in the context of the broad technology shifts affecting ERP applications.

I am happy to share insights gleaned from our latest Value Index research, an assessment of how well vendors’ offerings meet buyers’ requirements. The Ventana Research Value Index: Workforce Management 2022 is the distillation of a year of market and product research by Ventana Research. Drawing on our Benchmark Research, we apply a structured methodology built on evaluation categories that reflect the real-world criteria incorporated in a request for proposal to workforce management vendors supporting the spectrum of these requirements. Using this methodology, we evaluated vendor submissions in seven categories: five relevant to the product experience ﹘ Adaptability, Capability, Manageability, Reliability and Usability ﹘ and two related to the customer experience ﹘ Total Cost of Ownership/Return on Investment and Vendor Validation.

Workforce management processes and activities, a major focus of investment and optimization efforts for decades, have undergone a huge transformation in recent years. In our view, this is mostly a function of two significant trends: the explosion of technology innovation associated with the use of artificial intelligence, machine learning and embedded analytics in many areas of a business including a range of human capital management processes and operations; and a major reframing of the employer/employee relationship stemming from the now universal emphasis on elevating the worker experience. This was becoming more of a strategic focus across most organizations before the pandemic, but the past two years has made delivering a great employee experience an essential part of operating a business. In the absence of this, employees tend to become disengaged, and many will leave. The same can be true of the customers serviced by those employees.

Ventana Research recently announced its 2022 Market Agenda for Human Capital Management, continuing the guidance we’ve offered for two decades to help organizations derive maximum potential from workforce- and people-related technology investments and initiatives. In crafting this Market Agenda, we focused on three critical themes top-of-mind for both HCM vendors and buyers: Organizational readiness, workforce resilience utilizing digital technology to increase retention, and advance worker skills for career development.

The pandemic has had many profound impacts on organizations and their workforces, particularly the need to manage workers differently. Fewer face-to-face interactions make it difficult to “read” employee sentiments and reactions, even with the assistance of artificial intelligence. Employers are faced with the challenge of managing engagement more closely given unprecedented levels of change in policies and corresponding practices.

In my recently published Analyst Perspective “Selecting an HCM System? Include the Tougher Use Cases in Evaluations,” I highlighted a few HCM systems use cases that have historically been under-supported across the vendor/product landscape. My view on “critical HCM use cases” is the same today as when I led global HR and HR technology initiatives: use cases flow from the business imperatives faced by nearly every organization and their associated workforce-related implications. These HCM business imperatives range from elevating organizational agility—which I define as the ability to rapidly respond to both potential business risks and opportunities with optimal workforce-related actions and decisions—to delivering a superior employee experience or “EX” which directly correlates with a great customer experience and therefore business performance, to continuously focusing on ways of improving employee productivity, as even modest productivity gains can translate into major value creation.

It’s no secret that many large organizations operate in a somewhat insular and siloed manner. This dynamic applies to corporate functions where value-creation from taking advantage of operational synergies could otherwise be quite significant. Historically, human resources and finance departments, for example, were among the operating areas known to closely collaborate only when absolutely necessary. Actually, the 1992 book, "Men are from Mars, Women are from Venus," comes to mind when I reflect back on how I needed to navigate around a lack of integrated HR/finance data and processes when I was a global HR practitioner, especially since this was often exacerbated by the use of stereotypes like "people/people vs. numbers/people." The combination of these factors clearly created a sense of disconnectedness between the two groups. And having different definitions for commonly used business terms — like headcount and labor costs — as well as different methods for measuring and reporting on these items didn’t make the situation more manageable. But that wasn’t the whole enchilada of operational challenges when linking HR and finance: You also had to account for different processing and reporting cycles and cutoff dates, which often created hours of agonizing reconciliation work for the respective teams.

One of the many things I learned while I was accountable for multiple HCM systems and tools deployments in my pre-analyst and advisor days relates to crafting what I referred to as a “winning business case.” In this context, I define “winning” as not just securing the funds, but actually realizing the expected benefits and ROI that underpinned the major elements highlighted in the business case. Critical to all this, as I came to learn after a couple of HCM systems implementations, was the ability to not only achieve but sustain adoption and usage.

The annual Ventana Research Digital Innovation Awards showcase advances in the productivity and potential of business applications, as well as technology that contributes significantly to the improved processes and performance of an organization. Our goal is to recognize technology and vendors that have introduced noteworthy digital innovations to advance business and IT.

"Configurable" has historically been used to describe the degree to which enterprise software, such as HCM systems, can readily adapt to a customer’s business and process requirements, ideally with no (or only modest) involvement from software experts or IT teams. The term will likely always have considerable value when evaluating HCM systems because, while not always top of mind with buyers, the level of configurability in applications is essential for achieving key strategic goals, such as elevating organizational agility. Configurability is the means, but when an enterprise can react or adapt to indications of potential business risks or opportunities with quick, decisive workforce actions and decisions, this is the true business opportunity in the configurability and flexibility equation. Organizational agility is one of the most reliable paths to sustaining competitive advantage. Think of the situation where a large consultancy has determined they can successfully bring a new service offering to the market. They must quickly and effectively execute a broad range of workforce-related activities including, in some cases, conducting a type of analysis or tracking some information for the first time. Their agility is clearly aided by having an adaptable HCM system.

Payroll management is one of the six major focus areas in the Human Capital Management research and advisory practice at Ventana Research. The umbrella term “continuous payroll” is used to connote the always-on nature of a modern payroll function and related demands of supporting technologies. It’s an appropriate term, especially considering that one of the most significant advances in payroll management in decades is “on-demand pay,” also known as earned wage access, which is as continuous as you can get.

Many organizations are having a difficult time selecting what they believe to be the “best fit” HCM system for their particular strategic workforce goals and priorities. This is due in some cases to the very different evaluation lenses or criteria used by IT and HR teams involved in the process. The former tends to emphasize technology-specific selection considerations such as whether the system meets well-defined usability, performance and reliability criteria such as number of clicks needed to navigate, speed of database calls or system uptime thresholds, respectively. In contrast, many users from HR and other non-IT departments seek freedom from “IT dependency” in influencing the way the system presents itself and meets their business requirements, also referred to as the system’s configurability by end-users. This is the essence of the Adaptability evaluation dimension in Ventana Research’s Value Index market reports.

There is a sea change happening in the Human Capital Management systems market. Historically, the predominant orientation of human resources departments has been about mission and goals from an employer’s perspective, spanning areas such as regulatory compliance, workforce costs, efficiency and effectiveness levels, and actions needed to improve skills and overall impact. This rather one-sided focus is now in the rearview mirror of many successful organizations. There’s a new orientation or operating lens as it relates to the enterprise’s workforce: “What does a worker need to be extremely effective but also have a high-quality ̶ if not positively memorable ̶ experience at work?”

The joining forces of two sizable companies, in this case totaling over 12,000 employees, can be expected to elevate both business risk and business opportunity. The risk side of the ledger typically impacts employees and customers. Employees become distracted or have their productivity dip until they know exactly how they will be impacted and what is changing, or even leaving voluntarily. Similarly, a segment of existing and potential customers view a merger as a net positive down the road but face fear, uncertainty and doubt about when those benefits will be achieved. Delays can lead both employees and customers to hitch their wagons to other horses as it were.

Many of us who have operated within the human resources profession or been involved in strategic initiatives aimed at placing the workforce at the center of competitive advantage (aka human capital management endeavors), thought we were at least conversational about predictive HCM tools. We were aware that industrial and organizational psychologists have, for decades, been creating skill- and personality-based assessments using predictive algorithms that stood up to rigorous testing, and how tools such as the Hogan or Myers-Briggs tests became industry standards.

Simply defined, an “HR-M&A lifecycle” is the sequence of critical workforce and HR-related activities and decisions that span due diligence through business integration after an M&A event is announced. Until recently, these potentially game-changing events were not the province or focus of HR technology offerings. This is due in part to HCM systems that, historically, were designed primarily to automate and optimize typical HR/HCM processes and events that occur throughout the year, to better understand and drive employee engagement, productivity and retention, and to mitigate workforce-related compliance risks.

Even the most casual observer of HR Technology trends and associated vendor marketing themes will have noticed that the notion of “putting people first” has become ubiquitous as a way for vendors to distinguish themselves. This has become a double-edged sword. Customers ultimately benefit from the intense competition to add functionality that supports this claim, resulting in richer and more robust offerings. The downside, as is the case when any core plank in vendor value propositions becomes ubiquitous, is that buyers are increasingly challenged by differentiating whose “people first” claims are more supported by product capabilities and plans. Also difficult to discern is which product will translate into tangible business improvements within their unique organizational context.

Ventana Research recently announced its 2021 research agenda for Human Capital Management, continuing the guidance we’ve offered for two decades to help organizations derive maximum value from workforce-related technology investments and initiatives. In crafting this research agenda, we focused on three critical themes top-of-mind for both HCM vendors and buyers: Organizational agility and resilience, worker productivity, and leveraging artificial intelligence and machine learning as broadly as practical.

This analyst perspective (presentation) covers how Compensation Management, related enabling technologies and data strategies continue to evolve, particularly in the context of prominent business issues facing all organizations today.

Economic dynamics and market pressures during a black-swan event can wreak havoc on efforts to effectively manage revenue operations and pricing for business continuity. For many organizations, environmental changes disrupt the methods by which these essential business processes are managed can be disrupted, damaging the revenue streams that create profitability. The array of pricing strategies and related promotional tactics across channels for configure, price and quote (CPQ), digital commerce and subscription management can challenge the best of organizations. Leadership must examine the agility of pricing management to determine if they have ability to make and manage changes to determine the effectiveness of decisions. This requires visibility into revenue operations and selling channels, which in turn requires programs, processes and technology designed to meet the needs of what is called price and revenue management (PRM).  

Over the past several months, I have discussed a wide range of topics that organizations must consider and appropriately prioritize to maintain business continuity during periods of upheaval. But sometimes it’s important to take a step back and reflect on a critical and recurring theme: experiences. The array of experiences across the workforce and business processes both inside and outside of the organization are an essential part of an organization’s success. Leadership must give these experiences the attention they deserve, and this requires visibility into operations and the tools to measure effectiveness, especially during black-swan events. Fulfilling this objective requires the programs, processes and technology designed to meet the needs of what is called experience management (XM).

Business planning is an essential part of an organization’s focus on its future performance and overall potential because it ensures continuous operations, even in black-swan events. Planning across the entire organization needs to be a critical priority and leadership should give it the attention it deserves. In challenging times, a focus on execution tends to take hold — this is not unreasonable but in focusing on satisfying immediate customer and workforce needs and putting out fires, business leaders too often forget that forward-looking continuous planning is essential to achieving desired outcomes. Fulfilling this objective requires technology designed to meet these needs for every business process in the organization.  

The employee experience is about more than just the technology an organization uses. While it’s certainly important that an organization provide convenient and efficient systems, the employee experience is much broader than this. People want to feel valued, productive and that they are doing meaningful work; people desire a line of sight into career growth and how the organization supports it and they want to be treated fairly.

Here are some insights on Ultimate Software drawn from our latest Value Index research, which provides an analytic assessment of how well total compensation management vendors’ offerings address buyers’ requirements. The Ventana Research Value Index on Total Compensation Management 2020 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Ultimate Software and six other vendors in seven categories, five product-related (adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on total compensation.

Here are some insights on SAP SuccessFactors drawn from our latest Value Index research, which provides an analytic assessment of how well total compensation management vendors’ offerings address buyers’ requirements. The Ventana Research Value Index on Total Compensation Management 2020 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated SAP SuccessFactors and six other vendors in seven categories, five product-related (adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on total compensation.

Here are some insights on beqom drawn from our latest Value Index research, which provides an analytic assessment of how well total compensation management vendors’ offerings address buyers’ requirements. The Ventana Research Value Index on Total Compensation Management 2020 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated beqom and six other vendors in seven categories, five product-related (adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on total compensation.

Here are some insights on PeopleFluent drawn from our latest Value Index research, which provides an analytic assessment of how well total compensation management vendors’ offerings address buyers’ requirements. The Ventana Research Value Index on Total Compensation Management 2020 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated PeopleFluent and six other vendors in seven categories, five product-related (adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on total compensation.

Here are some insights on Workday drawn from our latest Value Index research, which provides an analytic assessment of how well total compensation management vendors’ offerings address buyers’ requirements. The Ventana Research Value Index on Total Compensation Management 2020 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Workday and six other vendors in seven categories, five product-related (adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on total compensation.

Here are some insights on Oracle drawn from our latest Value Index research, which provides an analytic assessment of how well total compensation vendors’ offerings address buyers’ requirements. The Ventana Research Value Index on Total Compensation Management 2020 is the distillation of a year of market and product research efforts by Ventana Research. We evaluated Oracle and six other vendors in seven categories, five product-related (adaptability, capability, manageability, reliability and usability) and two concerning the vendor (TCO/ROI and vendor validation). To arrive at the Value Index rating for a given vendor, we weighted each of the seven categories to reflect its relative importance in an RFP process, with the weightings based on data derived from our benchmark research on total compensation.

Compensation management is a critical part of human capital and talent management processes. Organizations must determine and provide the appropriate compensation for each person — whether it involves base pay, short or long-term incentives, cash or equity-based compensation — to attract and retain productive members of the workforce. However, the complexities of compensation can make it difficult for human resources departments to keep employees productive, satisfied and motivated.

Roughly half of my more than 30-year career in human capital management was spent as a line manager responsible for HR technology strategy, selection and deployment. I learned a number of lessons during these years — some just in time, some after the fact. If I had to identify one common thread that unites these insights, it would be that inadequate attention to change management is an ROI-killer on these strategic initiatives every time.

The early days of my career were spent in HR and payroll systems inside brokerage houses and investment banks. The first CHRO I reported to thought the best way to develop a plan for automating payroll management was for me to run the function’s day-to-day operations. I had no previous experience in payroll but it was a good call, as the trenches of any operations area typically reveal a cornucopia of automation opportunities. Then again, it was a different time; back then the words strategy, decision support and employee experience were rarely heard in a payroll department.

Over the last two years, investments in digital technologies such as artificial intelligence (AI) by nearly every major provider of HCM systems and tools have transformed the HR technology landscape. Many of the investments have gone into developing distinctive product capabilities, particularly capabilities that rely on machine learning technology.