Visier CEO John Schwarz on the failings of big BI - and why HR analytics matter

Profile picture for user jreed By Jon Reed October 1, 2015
Summary:
I recently had the chance to ask Visier CEO John Schwarz about leaving the world of "big BI" to co-found his own workforce analytics venture. Our chat got interesting pretty quickly.

man-jumping-cliff
When an executive leaves the assurances of corporate life to start a venture from scratch, I want the back story. Take Visier CEO John Schwarz - I've been wanting to ask about his particular cliff jump for a while. Last week, I got the chance.

Schwarz was CEO of Business Objects when SAP acquired the company for €4.8 billion Euros in 2007. After the purchase, Schwarz continued with SAP. He served on the Executive Board before resigning from SAP in 2010. Schwarz co-founded Visier in 2010; their first product launched in 2011. Visier's cloud workforce analytics solution has gained traction, to the tune of five million employee records in their cloud system.

In a frank discussion, Schwarz shared why he started Visier, and how big BI vendors are falling short for today's business users.

Jon Reed: John, nothing in your bio predicted you'd break out and start your own firm someday.

John Schwarz: Well, I'm the product of the software revolution, as it were. I've participated in it, literally, from the first day when software became disconnected or unplugged from hardware and became a market unto itself. As you say, I've been associated, largely, with fairly big organizations from IBM to Symantec to BusinessObjects to SAP. Now for the first time I'm actually leading a company that was created by myself and a couple of my early associates.

Reed: Was the timing especially good to launch an analytics startup? Or did you just want a change of pace?

Schwarz: Both. When I was at SAP, and before that, BusinessObjects, we had a very large number of customers - something like thirty-five thousand customers globally. We built business intelligence technology for them, which we were very successful in selling. We were doing nearly two billion dollars of business a year. But when we talked to customers to understand their satisfaction levels, the answers that came back were dichotomous.

We heard from the IT people that what we delivered was very satisfactory. It worked, it was reliable, it produced the kind of results they were looking for. But when we talked to the end user, the business people who were ultimately IT's customers, they were very unhappy. The business people were not getting the answers to the questions that they needed. They were getting them too late, the data was wrong, the cost of getting to the answer was too high, and the technical skill that the business person needed to have to be effective with using the technology was simply beyond the scope of what most business people have.

Reed: And you thought you could address that IT-business gap.

Schwarz: The reason we founded Visier is to fix this problem. It's to get business answers to business people with no dependency on IT, no dependency on any services, no technology risk, and no need to understand technology. Simply get answers to questions - and that is what Visier aims to do.

Reed: But couldn't you have built business-oriented BI solutions at an established vendor, as many of them are trying to do today?

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John Schwarz, Visier

Schwarz: The advantage we have is that I don't have to drag thirty-five thousand customers with me. We started with a clean sheet of paper. We started with the ability to completely turn the world upside down.

Reed: When you left SAP did you know that you were probably going to be starting your own venture?

Schwarz: Yes, I actually left SAP to do this. We needed to start new and independent. It's the classic innovator's dilemma. If you're an SAP or Oracle or IBM - or any of these established firms - you have a business and revenue flow that the market expects you to maintain. If new technology shows up that undermines that business, it is very hard to make the switch to adopt it.

Does HR have an analytics problem?

Reed: Almost every line of business needs better analytics. What motivated you to focus on workforce analytics and HR?

Schwarz: Two things: one is that HR has traditionally been the least well-served function in any organization, so IT always focuses on sales and finance. Everything else comes next, and HR has typically been getting the short end of the stick. The second reason is that people, at least in developed economies, represent -on average - about seventy percent of all of the business costs of any organization in business.

If you cannot control, or if you don't understand what's happening, with seventy percent of your budget, it's very hard to run a good business. We thought we could help companies get their arms around what's happening with their employees and the cost of their employees. Then they can get better control of their budget.

Reed: Given that so many vendors are saying, "We can solve your analytics problems," you can probably differentiate by focusing solely on HR analytics.

Schwarz: Exactly. We're not selling analytics as such. Or planning, for that matter. What we're selling is a better understanding of your people, better management of your recruitment pipeline, retention of the people that you desire to keep, better management performance, and better utilization of compensation budgets. Just to give you an example: we believe that a ten-thousand employee company, which is an average enterprise-size firm, can save as much as ten to fifteen million dollars annually on the things I just described - if they have the analytics to do it.

How does HR claim a seat in the boardroom of the future?

Reed: An old friend of mine, Martin Gillet, an HR expert, was recently asking why HR doesn't have a seat in the boardroom of the future. How does HR claim a strategic role?

Schwarz: The fundamental issue is as follows: until 2010, or thereabouts, there were more people coming to the workforce than people retiring. The last sixty-year average is about 1.8 percent annual increase in the workforce population. Now, since 2011 or thereabouts, depending on what country you're talking about, that has flipped. We now have more people leaving the workforce than coming into it, in the first time in measured memory.

That dynamic drives two very bad problems. One is that you have to compete for the people you need much more aggressively, because they have many more opportunities than they used to. The second dynamic is that the GDP of any economy was driven, about half, by increasing productivity and half by more people producing. If you had, say, on average three and a half or four percent GDP growth, 1.8 percent of that four percent was driven by increased population. That is gone.

Reed: So is this HR's chance to claim a more strategic role?

Schwarz: That 1.8 percent has to be replaced by more automation. HR people are the only ones, I believe, who have the requisite, end-to-end perspective on the supply of people, retention of people, management of people, compensation of people, the skills of people, and the long-term organization structure. That's what gives them the right to be in the boardroom, because these questions have to be answered. But for them to answer these questions, they need the tools that allow them to do it. Most HR departments are completely bereft of that; they cannot get there. Therein, we believe, lies our opportunity.

Reed: But enterprise HR software has been around for a long time now. I can remember the rise of Peoplesoft in the '90s, and SAP adding their HR module later that decade. Now we have modern cloud HR products. I take it you feel this software falls short of elevating HR strategically?

Schwarz: The HR software that people have today is good at processing transactions, so if you are hiring somebody, we have software that enables the adding of an employee to the payroll. We have software that enables the recording of a performance evaluation or recording of the employee's opinion on a certain topic. These transaction systems that are part of ERP or HCM exist, and have existed, and they continue to get a little bit better year in and year out.

But we need systems that allow anyone in the organization to take a look at the entire employee lifecycle; from the time that the employee was a candidate for a job. to a point where they retire or leave the business. We need to understand not only that one employee across the entire historical lifecycle with the company, but the entire employee population across that lifecycle. We need to be able to draw inferences from employees' behavior or actions, from performance and business outputs, and use these inferences to drive compensation policy or to drive recruiting policy or location policy or outsourcing policy. These answers are powerful enough that it actually can be done in real-time - in the boardroom.

End note: Schwarz had more to say on the limitations of new, lightweight BI solutions, and how talent retention plays out at customers. I'll get to that in a concluding installment.

Image credits: Head shot of John Schwarz provided by Visier. Feature image: Sprung, Risiko © dipego - Fotolia.com.

Disclosure: Diginomica has no financial ties to Visier. SAP and Oracle are diginomica premier partners.