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Brian Sommer's The Month in Brief - August, 2018

Brian Sommer Profile picture for user brianssommer September 4, 2018
Once a month, Brian cleans off his desk, empties his voicemail and recollects the zillion interactions he has with vendors, trade press and business publications. Here’s the roundup from August.

CEO News

August started off slow but eventually ended with a bang. The sudden departure of Sage Group PLC’s CEO came on the last day of the month.  Den Howlett knocked out a detailed piece about the news of Stephen Kelly’s departure.  While Den was publishing his take on the news, I tweeted this:

Editor's note: Den replied with 'Funny you should say that' referring to his speculation at the end of his Sage story. We love it when great minds think alike. ;)

ERP vendor, QAD, lost its co-founder this month.  Karl Lopker passed away on August 25. He and his wife Pam have run QAD for decades.  For more information on Karl, I suggest this piece by Enterprise Times.  I’d like to echo others by saying that Karl (and Pam) influenced a lot of early thinking on ERP/MRP.

Finance Accounting in the News

Let’s Use the Financial Accounting Tech We Already Have - An interesting piece in CFO magazine by Bain & Company partner Michael Heric.  Based on survey data, he advocates that more accounting groups should better utilize the technology they already have before falling in love with the newest, hot tech flavor of the month (e.g., RPA). I concur. I’d also add that more accounting groups should clean up the mess of systems they already have before bolting on more incremental technologies to this dog’s breakfast.

What’s Holding Back Digital Shared Services – This BCG article leaves you with plenty to ponder about the use of new technologies like RPA and how they’ll impact the back office. Lot’s of good stuff in this piece and something many finance and HR folks should read.

Vendor Briefings/News

ExponentHR - Dallas-based ExponentHR recently entertained a number of HR industry analysts. This was a kind of debutante (i.e., coming out) event for the company with regard to analysts.

What we saw was an HR product that provides payroll functionality to companies with 300-5,000 employees AND where the payroll itself has to deal with a number of complexities.  Their market is for companies who absolutely have to get payroll exactly right. One of their clients is a major NFL football team. They must withhold state and local payroll taxes everywhere the team plays/practices.  Other customers have difficult union agreements, overtime calculations, etc.

The software has workflow, analytics, employee self-service, benefits enrollment/management, compliance, onboarding, performance management and more.

ExponentHR has been around since 2003 and has sold its software mostly through word of mouth referrals. Over 45% of their business is currently Texas-based but the company is rapidly expanding across the country.  The heritage of the company is relevant as the founders had created an earlier company – a company that provided tax software for commercial enterprises.

In the coming months, prospects and customers will see a new UX and new functional enhancements. I’ll likely do a more robust review of the solution at that time.

Cornerstone - Cornerstone OnDemand (CSOD), an HRMS/learning technology vendor, announced its Q2 2018 earnings this month. CSOD has been making a number of adjustments over the last year. In November 2017, I wrote:

CSOD raised a $300 million block of capital from a combination of Silver Lake Partners (a technology investing concern) and LinkedIn. Yes, that’s the LinkedIn of Microsoft fame and the LinkedIn software firm with something like 500 million people’s employment history in their database.

One aspect of that financing deal was the convertible option on that debt. The price of the CSOD stock at the time of the deal was $37/share and the conversion option price was $42/share. Today, the stock trades around $52/share. Debt holders can exercise that option today and pocket a nice return. Obviously, the stock market and investors like the new strategic moves the company is taking.

Specifically, the market must like:

  • CSOD’s progress to Rule of 40 – According to Yahoo Finance, revenues have grown from approx. $122 million last year to $133 million now (approx. a 9% growth rate). This is in spite of a 60% decrease in one-time services revenues YOY. Operating income, from a GAAP perspective, went from approx. $-12 million to $-2 million over the same year. On the non-GAAP basis, operating income was $13.2 million yielding a margin of 10%.
  • Growth in new customer additions
  • Retention of existing customers

CSOD also announced several new chunks of functionality, specifically in the areas of recruiting and learning.

OneStream – OneStream’s a CPM/EPM vendor that recently briefed me. OneStream is actually used by one of my larger clients and offers on-premises and hosted cloud solutions.  The company’s founders are ex-Hyperion and Upstream executives.

Brazen tech

OneStream’s sales have been growing nicely recently (189% YOY) and customer preference for the cloud solution has grown from 20% in 2015 to 80% in 2018.  Their customer list is impressive and includes a significant number of very large, complex firms.

OneStream runs on a predominately Microsoft stack.

Brazen – Brazen is an HR technology vendor that provides smart chat/collaboration for job seekers. The goal of this technology is to use AI/RPA technology in recruiting where it makes sense and then have humans take it from there. For example, activities like scheduling interviews can be done via technology while the conduct of the interview itself should be done with a human being.

While that’s a simplistic example, recruiters can also use this type of solution to automatically answer any number of routine questions from jobseekers while the workflow can route the non-standard or difficult questions to real human beings.

The bigger value proposition for a technology like Brazen is its ability to improve the candidate recruiting experience.  And, in a tight labor market, every little bit of differentiation helps.

Readers should note Brazen’s customer list. It represents some of the largest, most complex and challenging firms I’ve ever encountered.  For innovative firms looking to introduce new digital technologies to Recruiting, this could be a great place to start.

Great stories this month

The Bionic CompanyThis Strategy + Business article by Everson and Sviokla is a short but important read for anyone contemplating new technology.  It made me think of all the other kinds of value we should be looking for when choosing to buy or build new technology. The authors discuss “Behavior Capital” (i.e., “the collection and modeling of data that tracks the behavior of people, companies, nature, and manufactured things”), Cognitive Capital (i.e., “the set of algorithms that represent the codified knowledge flows of individuals and the enterprise in a bionic world”), and other terms.

What struck me upon reading this is how poorly most ERP vendors would fare if prospects were to evaluate these technologies based on their value in creating or supplying these new kinds of capabilities.  I suspect we all need to re-evaluate what belongs in the business case for new enterprise software.

Digital Champions – Another Strategy + Business piece describes the differences between firms that have become digital champions in their industry while vast numbers of other firms in their industry are not. There are a number of great survey data points in this piece.

So How About Those Robots? – In this September/October Chief Executive piece, we read about the need to introduce robots into processes in a more measured, incremental manner so that a proper mix of humans and robots is achieved. Interestingly, going all-in on robotics may produce unwanted and unacceptable results.

Alibaba and the Future of Business This Harvard Business Review piece isn’t the typical digital case study. No, this one offers some solid advice for companies wanting to think, imagine and develop themselves into a digital firm. The focus on networks, platforms, data, etc. is the heart of this conversation.

For the month to come

In September, the volume of technology events ramps up markedly.  For me, I’ll attend functions with HR firm ADP and ERP vendor Infor. I might make it to an ITSM vendor event by Cherwell.

I’ll also be at the big HR Technology show in Vegas. While I am going there to speak, I’ve also booked a slew of briefings with vendors such as: Equifax, Sage, Appcast, Intrepid Learning, Saba, Zoho, Smashfly,  First Advantage, Entelo, PageUp, Ceridian, Viventium and more.

Note to HR vendors: I can’t schedule any more meetings in Vegas but I’m happy to do phone briefings.

SalesForce’s Dreamforce extravaganza is also this month.  While I won’t make it to Dreamforce the Diginomica team will be all over it. Missing Dreamforce means I’ll miss some side meetings with FinancialForce, Rootstock and others.

Time to get packing….

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