(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:
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 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:
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.
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Josh Bersin writes on the ever-changing landscape of business-driven learning, HR and talent management.
His favorite topics include strategic talent management, creating high-impact learning organizations,
and how organizations drive business change and competitive advantage through talent strategy and technology.
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