SuccessFactors announced this morning that they have been granted a preliminary injunction in their continued lawsuit against Softscape.  Although the update represents an important victory for SuccessFactors, what really caught my attention is the reference to New Millenium Shoe, a Puerto Rican company that allegedly masqueraded as a potential SuccessFactors client in order to gain access to privileged information.  Even more bizarre is the statement by Softscape counsel that CEO Dave Watkins is also the CEO of New Millenium Shoe.

So here’s the latest track of competitive logic if you want to get a leg up on your fellow HR vendors:

1. Create phony woman’s shoe company with “big and beautiful” logo to cater to large sizes, thereby puzzling competition as to whether these are, in fact, from your own private collection;
2. Register for web demonstrations of competitor’s products, because what two person shell company doesn’t need to worry about succession planning and compensation management;
3. Cut and paste any bit of data you can muster into “Truth” presentation document while rubbing hands together and cackling at your own evil plan;
4. Distribute said presentation to all takers, especially competitor’s clients, since clearly a Gmail account rings of credibility and concerned whistle blowing;
5. Sit back and wait for competitor to file for bankruptcy, then swoop in like a band of flying monkeys to gain market share from disillusioned former clientele.

Simply brilliant…  

All joking aside, this lawsuit ensures that truth continues to be stranger than fiction.  I hope we see a quick resolution and can get back to helping HR executives with their talent management issues.

Let’s keep the conversation going. 

In an effort to spice up Inflexion Point, Shannon Flumerfelt and I will occasionally post a point/counterpoint on a particular topic.  This is an experiment so feel free to let us know if this is entertaining or useful.  Here are Shannon’s thoughts about my prior post FedPitch - How Would You Improve Federal Workforce Management.  Take it away Shannon.

Thanks Mark.  As FedPitch gets underway and ideas from the creative platform of the public square are assessed by a panel of experts, I am not sure the best “contestant” will win.  The reason for my apprehension is that while the FedPitch venue may be useful for idea generation, a “winner” has no possible way to operationalize itself.

In looking back two decades or so, corporate America went through this type of FedPitch approach when the conceptualization of learning organizations was first understood and generally accepted via Peter Senge’s The Fifth Discipline.  During this time, organizations began to understand that by creating cultures where ideas flowed vertically and horizontally, worthwhile innovations might be discovered.  In turn, it became common practice for executives to flock to retreats, for consultants to facilitate brainstorming sessions and for employees to engage in participatory processes.  Peter Drucker helped leaders to understand the value in socialization and interactions that promoted the sharing of tacit information, for example.    

The problem with many of these strategies is that fundamentally organizations do not naturally have the capacity to take a good idea from thought to action, from organizational intelligence to improved performance management.  For to do so requires organizations to the following work:

• Develop shared understandings of the essential ideas embedded in the innovation,
• Take commonly accepted actions on behalf of the innovation,
• Reengineer current systems and processes to accommodate the innovation,
• Develop new standards of performance based on the innovation,
• Evaluate continuously the quality of the innovation, and
• Improve the final deliverables of the organization based on the innovation. 

I do acknowledge that events such as attending retreats, corporate brainstorming and participatory processes are valuable as cultural tinkering initiatives.  But, to create something that is truly improved, more than events are required.  Engagement in a process of improvement is required.  And that work, including the six elements listed above, are much deeper and broader than orchestrating events that remain isolated from the daily work of the organization.

FedPitch, in essence, is nothing more than a singular event.  What is needed for change is an emphasis on process improvement instead.  If the federal government is just now getting to this point of hosting a brainstorming event, my eyeballs do roll back in my head thinking of the developmental work left to do in order to bring actual value added practices forth and eliminate waste by effective employee recruiting, induction, development and retention approaches.  Fundamentally, the problem with strategies such as FedPitch, are that any new ideas, even though they may be stellar, have no chance of being integrated into the current system.  With the fanfare of great performance, such ideas, unfortunately, will be left to die in a silo, just as the audience files out and the stage lights dim. 

Organizations such as Toyota, Danaher, and many others have deliberately used a different system for innovation.  This system, known as lean, allows for idea generation from stakeholders, not unlike FedPitch.  The difference in lean applications is that new ideas are deliberately placed into an organizational learning system that can work towards performance management improvement.  Lean process and production improvement systems eliminates the problematic dynamic of brainstorming as an event and makes it a part of the culture of the organization—a process.

I fear that the current realities of the federal workforce management system are aligned with the tenets of “American Idle” and that the scattershot approach to process improvement in the FedPitch initiative will ring true to that standard.  Instead, I offer the following idea.  Require the government to engage in deliberate and systemic process improvement based on lean thinking and applications and then filter the ideas of the public square from FedPitch into a continuous improvement effort for workforce management.  It is possible for federal workforce management to sing a different tune and become an “American Idol.”

Let’s keep the conversation going.

You’ll have 120 seconds.  No slides or written materials are allowed.  Company logos and paraphernalia are prohibited.  It’s just you, five prominent judges and hundreds of audience members in a tent on the National Mall in Washington, DC.  Your goal?  Come up with an innovative idea or approach to attract, engage, motivate, lead, develop and reward the nearly 2 million members of the nation’s federal workforce.

If this sounds like fun, go to FedPitch and submit your ideas.  FedPitch is an initiative coordinated by 13L in conjunction with The Council for Excellence in Government, Young Government Leaders, The Partnership for Public Service and American University.  

I, for one, intend to promote a concept or two and see if I “make the cut”.  In terms of reality shows, this one touches us every day.  Why not lend some mind share as the federal workforce struggles to reinvigorate and reinvent itself.  Sometimes it’s helpful to stop complaining and start becoming part of the solution.

Let’s keep the conversation going. 

A little over two weeks ago we posted on a growing challenge within the HR industry, namely one’s ability to assess which association (or associations) appropriately match the specific needs of your HR staff and leadership.  The interest in this issue was immediate, with over 150 senior HR executives contacting us within twenty four hours of posting.

In response, Inflexion is pleased to announce that we will be launching a formal research initiative to explicitly focus on the value and benefits that each of the leading HR associations bring to our collective market.    Initial segmentation shall be placed on the US market, including employers of all sizes and vertical market orientation, and shall be inclusive of both public and private sector entities.  

As more details emerge, we will gladly keep this audience informed of timelines, project scope and associated deliverables.  Should you or your colleagues be interested in this particular initiative, please email your contact information to associations@inflexionadvisors.com.  And thank you to those who have offered their assistance is bringing another market leading initiative to light.

Let’s keep the conversation (and innovation) going!     

Earlier this week we addressed a growing concern surrounding sustainability of HR vendors.  Issues such as financial solvency, management turnover, ongoing investment into product portfolios, backwards compatibility and support, legal action, and acquisitions (among others) can cause significant disruptions to both near and long term value propositions.  So how should one address these concerns, and does a system exist that can quantify the risk portfolio of an HR vendor prior to purchase?

The short answer is no.  Inflexion has yet to find an appropriate single source mechanism or formulaic that combines risk mitigation and sustainability with deep functional domain expertise.  That being said, we believe there is tremendous opportunity in the development and deployment of an impartial decision support tool to aid HR buyers in assessing these and other risk factors.  Several existing assets, if properly leveraged and supplemented, could help to solve some portion of this significant industry problem:

• Dun & Bradstreet:  This is perhaps the most obvious, as most large procurement departments will require a DUNS review prior to contract execution.  D&B will provide visibility into the credit risk of the provider, locations, ownership structure and financial solvency.  One can also get a sense of fraud, supplier codependency (i.e., does the contemplated contract mean you would represent a disproportionate share of ongoing revenues) and other helpful metrics.  However, it really addresses risk with no domain expertise, thus a great tool for procurement but less so for HR executives.
• CERT’s V-RATE:  The Vendor Risk Assessment and Threat Evaluation taxonomy was developed by the good people at CERT, the federally funded R&D center of Carnegie Mellon University.  CERT is widely known for being five to ten years ahead of the market (as was the case with now-renowned CMM model), and V-RATE is no exception.  This early-stage tool provides an important framework for not only assessing the “survivability” of your vendors solutions, but also helps to assess your organizations preparedness in dealing with anticipated and unanticipated vendor risk.  The goal is not to attain a single overriding score, but instead to capture all internal and external factors which may contribute to ones sustainability and likelihood of mission critical application.  If configured for the unique circumstances of HR, one could see great promise in this instrument.
• LexisNexis:  The Accurint line of products offers an interesting supplement for bankruptcy filings, liens, civil judgments, individual background checks on specific executives, licensing and Better Business Bureau reports.  It also can incorporate much of the DUNS data from D&B.  Again, a great toolkit for looking at that information which is publicly documented on a potential vendor.
• Analyst Reports:  Many industry analysts do some limited due diligence on sustainability, but most of their value comes from the ability to assess one’s position in the marketplace relative to competition, feature functionality, market penetration, globalization and likelihood of successful implementation on time and within budget.  These are all critical factors in your choice of providers, but still leaves a gap to be filled.

So what’s the answer?  For the time being, leverage all the market intelligence you can capture.  Assess whether vendors in your domain of interest are being acquired, if venture firms are backing them, if IPOs are occurring, if lawsuits are flying or impropriety is dominating the space.  Leverage the tools we’ve listed and most importantly, talk to your peers and subject matter experts.  Until someone derives a more transparent mechanism of applying these instruments to the specific needs of our HR community, we must do the best we can with what we have.

Let’s keep the conversation going. 

Each year, Inflexion likes to take a moment to acknowledge the beginning of 16 business days of lost productivity. In 2007, we posted that an estimated $3.7 billion was lost due to the annual NCAA tourney, an amount that nearly every firm struggling in today’s challenging economy would love to recover.

Once again, we look to our friends at Challenger, Gray & Christmas for their estimate…..(imaginary drum roll please)……

 “With as many as 37.3 million workers participating in March Madness office pools and up to 1.5 million watching games online from their desks, it is a wonder that any meaningful work is actually completed during the last two weeks of March… (and) the annual distraction could cost employers as much as $1.7 billion in wasted work time.” - Challenger, Gray & Christmas 

Big numbers indeed, and the justification for this sum (found here) is somewhat complex but well documented.  I suspect this number may be conservative, especially given that CBSSports.com reported 1.4 million users watching 2.6 million hours of live action on their free streaming service in 2007.  Given that most of the early rounds take place during business hours, one can imagine extremely slow network speeds as your colleagues quietly cheer from the cubicle next door.  In an acknowledgment to at-work viewing, the site boasts a now infamous “Boss” button that triggers a fake spreadsheet so that one can appear to be diligently pouring over complex data.  Genius….

So what should employers do?  Most organizations do try to convey some official policy on the matter, but in my opinion, this is one time of year when stoking the fun fire can really help with low morale.  Every day workers are bombarded with news of layoffs, a failing economy, high gas prices and an unpredictable stock market, so why not focus on the fact the employees are adults who some levity while recognizing their corporate accountability.  Focus on getting the work done, not how or when it gets done.  It worked for Best Buy.

Good luck everyone, and let’s keep the conversation (and brackets) going.  

In a March 13th presentation to industry analysts, Convergys (NYSE: CVG) announced that they and Starbucks (NASDAQ: SBUX) have mutually agreed to terminate their human resources outsourcing contract.  

Convergys announced the Starbucks contract only eight months ago, with the anticipated scope of work to have included HR administration and payroll services for both US and Canadian employees, as well as benefits administration for Canadian workers.  Convergys had successfully completed their blueprinting process on time and budget when Starbucks elected to shift management priorities following the return of Howard Schultz as CEO.  Convergys does not expect the decision to impact 2008 or 2009 profitability guidance.

Said Starbucks about the decision:

 “The decision to discontinue the project was made based on the changing needs of the business and in no way reflects on the quality of the work Convergys has done for Starbucks.” (page 64- Convergys Analyst Presentation)     

This latest development comes less than three weeks after Wachovia announced their intent to take back a number of HR processes they had outsourced to Hewitt, an action followed by Hewitt’s Friday SEC filing which anticipates a charge between $16M and $23M as a result of the change.

Let’s keep the conversation going. 

Several months ago, my partners and I were solicited by an HR firm who intended to sell their company.  The founding partners had built value over their ten years in the market, largely leveraging their personal credentials as a means of entry into very large public and private entities.  These relationships had bloomed and the client base was solid.  However, the leaders were ready to retire and wanted someone else to take the helm and run with what they had started.  In our market, this happens more often than you might imagine, although the catalyst for transition is not always so benign.  

They are well over 2,000 firms in the US alone that offer some form of HR service provisioning, and measuring the sustainability and risk portfolio of those firms has been an oft-neglected part of the due diligence process.  By our calculations, over 175 HR vendors “left” the market in 2007.  Why such a dramatic number of exits?

• Acquisitions: HR departments are attempting to limit the number of vendors with whom they contract directly, creating a Darwinian opportunity for those in prime position to gobble up niche providers via acquisition or subcontracted relationships.    
• Management Churn: One of the most amusing activities is to walk the floor of an HR conference and see where your old vendors and colleagues are currently employed.  Expectations for performance - especially among publicly traded HR vendors - have driven boards and investors to switch CxOs at a surprisingly high rate.  A dramatic example is the HR Outsourcers, with Keith Strodtman of Ceridian as the longest tenured president among his HRO peers.  
• Financing: With such broad competition, it takes a significant capital investment to sustain parity in feature functionality, geographic coverage, sales, marketing, support and thought leadership.  Many cannot afford to compete, and short of securing significant investment, are forced to either hunker down or enter a fire sale.
• Lawsuits: An issue that is top of mind given recent events with SuccessFactors and Softscape, lawsuits can lead to financial ruin in the HR market.  Buyers are risk adverse and do not want to bet on a losing vendors, especially in market with such tight budgetary constraints and limited room for failure.  These distractions can often paralyze sales efforts and create a self-fulfilling prophecy of loss, regardless of who wins or loses.
• Timing: We have the good fortune of seeing a great number of emerging vendors who have a tremendous amount of value to offer their HR buyers.  However, gaining access in such a noisy environment can be quite difficult, and often times the value proposition is lost in light of a senior HR executive’s need to fight an immediate set of priorities that distract from potentially longer term ROI.  

Inevitably, a vendor with whom you associate will fall victim to one or more of these issues.  The potential disruption to HR service delivery is significant, and later this week we’ll talk about what can be done to measure vendor sustainability preemptively.

Let’s keep the conversation going. 

This should be the title of the battle between talent management vendors SuccessFactors and Softscape.  

Yesterday morning, SuccessFactors filed a lawsuit against Softscape citing claims of “false advertising, trademark infringement, computer fraud and abuse, defamation, trade libel, intentional interference with prospective economic relations, and unfair competition.” The claims come from a 40-page PowerPoint presentation that was routed to a number of SuccessFactors’ clients under the title of The Naked Truth, the contents of which were intended to undermine confidence in the firm.  SuccessFactors’ complaint (see it here) provides a relatively compelling read for a legal document, with all the intrigue of a well produced drama.  IP addresses were tracked.  Trademarks were stolen and misappropriated.  And if you concur with the latest press announcement, even Softscape’s general counsel confirms the culpability of the management team.  A great discussion on this topic is occurring over on Jason Corsello’s Human Capitalist blog, so please jump into the fray if you have an opinion.   

My surprise comes not from the fact that sales people use every trick at their disposal to secure victory, but instead comes from the lengths that Softscape allegedly went to in orchestrating this campaign.  I won’t pretend to be judge and jury, and thus think opinions should be weighed carefully, but if this in fact proves to be true, it would represent a brazen attack on the credibility of a growing industry.  Competition in the HR space has always been fierce, but winning under the guise of another’s destruction never carries the day.  

Let’s keep the conversation going (and the blood-letting to Hollywood).

For the next several weeks, we will be taking a hard look at the litany of industry and member-based HR associations and consortiums.  This will include:

• SHRM (The Society for Human Resource Management);
• IHRIM (The International Association for Human Resources Information Management);
• CLC (The Corporate Leadership Council);
• HCI (The Human Capital Institute);
• HR.com;
  
• HROA (The Human Resources Outsourcing Association); and
• i4cp (The Institute for Corporate Productivity)

Our intent is to highlight the strengths and weaknesses of each as we consistently receive requests on the relative merits of these and other industry bodies.  Perhaps as important is an understanding of the role vendors play in shaping the agenda, positioning, sustainability and governance of these groups, an issue often overlooked in our industry as either necessity or design.  There are over 200 HR-based associations in the world, so if you would like us to add to our list, please feel free to let us know by either posting here or emailing to blog@inflexionadvisors.com.

Please accept our apologies for the time gap between posts. Inflexion intends to return to a more frequent blogging schedule effective immediately. We’d love to blame it on the election, daylight savings, gas prices or the weather, but since our client phone has been ringing at 3 o’clock in the morning, it’s Inflexion that picks it up!

Let’s keep the conversation going.