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Stuart Lauchlan

Head of Editorial At Sift Media

Read more about Stuart Lauchlan

Analysis: Oracle – Why we bought Taleo


The cloud human capital management application wars are set to be one of the prevailing technology topics of 2012 and beyond.

SAP’s acquisition of SuccessFactors, Oracle’s purchase of talent management and recruitment firm Taleo, which completed last month, and Workday’s forthcoming stock market flotation all bear testimony to the importance of the HR marketplace to software vendors these days.
Oracle, of course, also owns PeopleSoft and has been aggressively promoting its own Fusion HCM packages to customers and prospects. But in an increasingly tough market – and with Workday, in particular, proving a thorn in its side – the supplier has been spending time and money on beefing up its HR capabilities.

Mark Hurd, Oracle’s co-president, explains: “Strategic talent management is no longer a nice-to-have investment. It’s a key driver of business success and financial performance. In fact, it’s the number one issue for CEOs today. Many companies know more about their laptops than they do their people.”

But he argues that talent management is one of the last major business functions that has yet to be automated.

“HR typically doesn’t have the tools to provide the management information or the data to be able to benchmark results,” Hurd suggests. “Only 25% of organisations today have HR-related KPIs, or key performance indicators. Companies that can make data-driven decisions deliver as much as 40% higher profitability per employee.”

Retention or recruitment?
He also presents a number of ‘real world’ scenarios to illustrate his point. “First scenario: we’re hiring aggressively to grow our sales force,” Hurd postulates. “It’s important to hire the right people the first time around because every bad hire can cost you $500,000. Simple math, do 10 poor hiring decisions, it costs you $5 million.
But it is also important to get new hires on board and being productive as quickly as possible as unfilled positions have a direct impact on the organisation’s ability to hit sales targets, he points out.

Hurd’s second scenario focuses on retaining talent. “Eighty per cent of companies can’t even identify the top performers who are a flight risk and they don’t know if career plans are in place for those employees,” he claims.

But both HR and business leaders simply have to decide if they want to invest more in staff retention or recruitment. “Do I retain what I have? Do I recruit more? I need data. What’s the tenure of employees in certain positions? Is their compensation right? Is there opportunity for them to advance?” Hurd questions.

There are also issues such as pay and performance to take into account, however.

“How much of an increase should I plan and pay for this year? I look at my goals, attrition rates and benchmark our compensation against the industry,” he says. “I need to understand the impact of choosing a 3% or a 4% increase. Should it be the same for every geography? Should it be the same for every job category, every function in the organisation?”

The rationale is picked up by Steve Miranda, senior vice president of Oracle Development, who adds: “The way we work has changed. Not only is the competition for top talent really increased, increased globally, our access to information, but the number of devices by which we consume information has dramatically increased and changed.”

This means that finding, recruiting, retaining and ensuring that top talent is effective has become “very, very critical to companies – not only as the chief HR officer or the head of recruiting in a company but really every manager throughout the enterprise”, Miranda says.

Greater HCM lifecycle
As a result, he believes that part of the answer to the problem lies in simplifying HCM applications and enabling HR directors to access them through a range of channels, including mobile devices such as iPads and smartphones.

But, in his view, it is also about joining up currently disparate elements of what Miranda describes as the greater HCM lifecycle.

“You need a much more connected process, from finding the top talent, retaining the top talent, training the top talent and then having that life cycle of data feedback so that you will have a virtuous cycle of data to help you improve that process throughout, to simplify HCM and make HCM and every manager more effective,” he argues.
Then there are the ‘new additions’ to deal with such as internal and external social HCM and analytical capabilities that not only provide retrospective insights into data, but also enable forward-looking predictive information to support decision-making.

And the combination of Taleo and Oracle gets the balance right, attests Miranda, because it gives “both perspectives – not only performance management that ties back into recruiting but has tight integration with HR so you get that closed loop functionality. And then on the back end, really, the Oracle products that we’ve had: engagement and retention, compensation, talent review and core HR.”

So that’s the theory behind the vendor’s Taleo acquisition, but how is it likely to make itself felt to HR directors in practical technology terms? In part 2 of this analysis, Taleo’s head of products, Jason Blessing, will explain exactly what we are likely to see emerging on a desktop, tablet or even smartphone near you….

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Stuart Lauchlan

Head of Editorial At Sift Media

Read more from Stuart Lauchlan

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