Ahmed's Universe

Why Wall Street and the City are beyond salvation

2012-01-09T08:08:00.000-08:00

What about "Save the People?
After all, financiers have only
themselves to blame for the
crisis they inflicted on themselves
and the rest of the world

RIO DE JANEIRO
I have been a keen reader of The Economist for a good quarter-century. I have always loved their writing style and irreverent humor, even the rigor it often brings to its analyses. I am less keen when it unashamedly behaves as the mouthpiece of big business and banking giants, as it does in this week's cover story and leader whose title is the self-explanatory "Save the City."

In one of its headers The Economist wonders why “Strangely, California doesn’t talk down Silicon Valley”. Why would it? Silicon Valley companies produce computers and software that consumers and companies (often) love and use. What have the City and Wall Street offered ?(And how come The Economist doesn’t ask itself why “Not Strangely, the United States DOES talk down Wall Street”?)

The Economist claims that financial markets “funnel savings to their best use”. Oh, really? How can the subprimes be considered as best use? How can the real estate bubble be considered best use? How can the various pyramid schemes be considered best use? How can the taxpayer-bailouts be considered best use? How can the encouragement to governments to spend beyond their means and create the problems we are seeing now be considered best use? How can helping Greece to cook its books (as Goldman Sachs did) be considered best use? How can ruining millions and sending many more into unemployment while the pigs gorge themselves at the trough be considered best use?

Whichever way you look at it, financiers are parasites, living off the body they attack and sucking it dry until they move somewhere else. It is time we get rid of them. If the management of money is so critical to society, like defense, justice and the rule of law, then just as we do with these areas let’s nationalize/highly regulate it so that finance can truly serve the people and not the other way round.

The argument that Britain should hang on to this industry just because it is a big contributor to GDP is flawed: there are some countries where the mafia and drug cartels create as much wealth. Should we then legalize them? “But these are criminal enterprises,” you might say quite shocked. Well, someone prove to me that financial services companies are less criminal.

“China and India have underdeveloped financial markets; Britain has the expertise,” writes The Economist. If I have any advice to give these emerging economies it is to remain underdeveloped with respect to financial markets. They don’t need to import our current mess a few years down the road, with all those hedge funds and derivatives and CDO's which nobody understands. The reason nobody understands them is the point: the less consumers understand the financial products offered to them, the easier it is for the banks to fleece them.

As for "Britain’s expertise," the Chinese and Indians would be well advised to say, “thanks, but no thanks.” I remember when, at the height of the financial crisis in 2008, the governor of the Czech Central Bank was asked how his country escaped the turbulence. He explained that years back when those risky products appeared, Czech bankers came and asked him whether they should invest in them. "Do you understand what these are made of?" When they replied in the negative, the governor then advised them not to invest in products they didn't have a clue what they were about. And he was damn right as his country's bank sailed through the crisis.

Time to get back to basics and produce real products and real services that people really need.

(The blogger is currently in Brazil whose banking system, in spite of its being more regulated than the U.S. or British banking industry, has many faults, concentration being one of them. I am also worried at the high amount of credit being freely distributed at Shylock-like interest rates to new, undiscerning consumers. When the day of reckoning comes, and some bubbles burst, Latin America's largest economy will be in a lot of pain.)

Real crime, fake justice: Chirac gets 2-year suspended jail sentence

2011-12-17T05:33:00.000-08:00

After 25 years of obfuscation,
legal maneuverings and turning a
blind eye, a French court has finally
said it out loud: Between 1995 and
2002 France was ruled by a criminal.
But if you think you will see him behind
bars, don't hold your breath: the
French political class is making sure
that one of its most (in)famous
members is shielded from such a fate

PARIS
This week's ruling by a French court seems at first of quite earth-shattering importance: for the first time since World War II, a former French head of state is convicted of committing crimes (in this case misuse of public funds) and is sentenced to two years in jail. But look more closely and you realize that this judicial decision is as connected to justice as Alaska is to Madagascar.

The facts go back a good quarter century when Jacques Chirac was not yet president of France, just mayor of Paris (but considering how Paris is actually a midsize version of France, he was for all intents and purposes almost president.) In his Etat dans l'Etat which was his Paris fief, Chirac behaved like a medieval baron, hiring (especially for phoney jobs known in French as emplois fictifs where town hall positions were used to pay people who never carried out a single task for the city, but many for Chirac and friends), firing, using public funds as he saw fit with scant regard to rules and regulations. Why should he? He felt above such mundane things as the law. And subsequent events proved him right. It took decades for the law to close in on him, because the whole legal system in our Western pseudo-democracies is designed to punish harshly the small fry, while members of the elite remain scot-free. Among the examples used to shield Chirac from justice: while president, he made sure a new law on presidential immunity was voted so that he could remain literally above the law, even for crimes committed before he became president - and we make fun of Berlusconi who engineered laws to protect himself from zealous judges.

After Chirac left office in 2002, the Sarkozy government made sure his predecessor was left alone. Now, we all know that there is little love lost between the two men: Chirac tried every trick in the book to prevent Sarkzoy's ascent, as revenge for the "Dwarf" backing his opponent, Balladur, in a previous election. So why would Sarkozy care about Chirac's fate? If anything he should be happy to see Chirac in jail. Not really. These guys are smart, they know when it is better to put their rivalry on hold and think about higher things. Sarkozy has no interest in a judicial precedent, of having a former French president prosecuted and, God forbid, even convicted, since he knows he would then be the next one (read my blog on Sarko's own abuse of his position.)

So Sarkozy did everything he could to protect Chirac. First, he made sure that the case would drag as long as possible after Chirac left office (five years). Then, and this is one of the more shocking aspects of the Chirac case, the public prosecutor (who in this pseudo-democracy acts on order from the government - no prize for guessing whose orders) decided to drop all charges against Chirac. Now, that was too much in light of the overwhelming evidence as gathered by all the file seized and the witnesses heard. So, a seemingly courageous judge, egged on by pro-justice militants, said, "I don't care that you drop the charges, Mr Prosecutor, there is enough in this case to convict Mr Chirac." And so he did, to two years in jail. But, and here's the rub, he made sure it was a suspended sentence meaning Chirac would not actually have to go to jail.

Yes, you have heard right. If you are lowly riff raff and get caught stealing, you can be sure you will end up as a guest of the French Republic for a few years. But if you belong to the elite, no such worry. And then you wonder why people laugh derisively at the lofty motto of the state, Liberty, Equality and Fraternity. In France, as in all other pseudo-democracies, Lady Justice is far from blind: she has one eye open to recognize VIP's and be lenient towards them. And yet, one of the first decisions of the French Revolution was to abolish all privileges that the mighty had. Two centuries on, privileges for the elite still live on. Now, you understand, why the "system" made sure the case dragged for how long as possible, so that even if he were to be convicted, Chirac could claim to be too old and sick to serve his sentence. And yet, read the French papers and watch television, and the whole French political class is cheering and saying, "See, we have truly independent justice." They are elated that they have managed to protect one of theirs from the same fate most of them should know: jail.

The great French fable writer, La Fontaine, wrote in the 17th century that:

Selon que vous serez puissant ou misérable,
Les jugements de cour vous rendront blanc ou noir.

(Depending on whether you are rich or poor
Court rulings will acquit or condemn you)
Jean de La Fontaine, Les Animaux malades de la peste, 1678.

Lest you believe that my native country is the only one where double standards apply when it comes to justice, I have some enlightening news for you: the same thing happens in other Western pseudo-demcoracies where the rule of law is supposed to apply. In addition to Italy's already mentioned and notorious Silvio Berlusconi, Britain's Tony Blair and former US president George W. Bush should be in jail now for war crimes: didn't they wage a war which was found to be completely illegal (says the UN) and unjustified (say themselves after no weapons of mass destruction were found) but killed 100,000 innocent Iraqis (not to mention 4,500 American servicemen)? Shouldn't these two men, along with a host of Israeli prime ministers and generals, be now in the dock of the International Criminal Court in The Hague? No way, only Arab, Latin American, Asian and African rulers commit crimes, not Western ones. Funny, isn't it, that when it comes to individuals we find in all countries the same proportion of criminals, but not when we deal with politicians. In the West, politicians are angels. Yeah, right!

When Juppé, one of Chirac's underlings, took the rap
for his master, a judge sentenced him to jail. But
the two-tier justice system we have in France and
other pseudo-democracies meant that instead
of spending a single day behind bars Mr. Juppé
went to teach in a Canadian university for a
year (I didn't know Canada accepted criminals as
visiting professors) and after returning to France
he claimed back BOTH his old jobs as mayor
of Bordeaux and foreign minister. Whoever
created politicians left the shame gene out of them.
And as for us citizens who allow this to happen,
well, we have the rulers we deserve.

When Sarkozy succeeded Chirac one of his first announcements was that his administration would be "beyond reproach." A whiff of wrongdoing and you're out, he said to his ministers. Revolutionary, you'd think. Think again. Suffice it to say that the current Foreign Minister, Alain Juppé, a close aide to...Chirac, whose prime minister he even was at one point in time, was found guilty of the same crimes as his mentor in 2004 and given a (suspended!) jail sentence of 14 months. Yes, we currently have a criminal as a foreign minister. Even in the United States, hardly an exemplary country when it comes to the rule of law (think Guantanamo) and democracy (remember W's "election" in 2000?) any evidence (let alone court ruling) of wrongdoing would be enough to end a politician's career. Not in France, where the political class wears its proof of corruption as a badge of honor.

Speaking of America, remember that even there where the rule of law is supposed to prevail, Nixon was found to have committed crimes which led to his having to resign in shame and yet he was never bothered. His successor, Gerald Ford, in a behavior similar to what Sarkozy is doing now for Chirac, pardoned the Criminal-in-Chief thus ensuring he could spend the rest of his life enjoying the spoils of his crimes, in peace. Well, Ford owed it to Nixon who made him president. And I am not speaking here metaphorically: it was Nixon who made Ford president, not the American people since, as few people remember, Ford was NEVER elected either as president or as vice president: he was appointed by Nixon to replace his previous VP, Agnew, after the latter resigned over (already!) a corruption scandal. The fish rots at the head, as they say.

Interestingly, Ford's outrageous act came at the same time when Chirac became mayor of Paris and was starting to put in place the intricate web of patronage, corruption, phoney jobs (but real salaries and cost to taxpayers.) If he ever worried about whether he might be held accountable one day, he just looked across the pond and the unedifying example of the White House shenanigans, and just shrugged his shoulders saying to himself, "Nothing to worry about."

For a quarter century he was right. The wheels of justice grind slowly, if at all, when we are dealing with the elite. And yet, had justice done its job in a timely fashion, Chirac would have been caught in the 1980's and jailed (I doubt he could have claimed old age and bad health then) and we would have been spared his presidency which, by all accounts, was an utter failure. There are indeed many advantages to having an efficient justice system rather than the two-tiered parody of justice we currently have.

The struggle for equality, the rule of law, the principle that NO ONE should be be above the law, for a truly blind justice, continues.

Sailing away: Time for Britain to leave the European Union

2011-12-10T02:23:00.001-08:00

PARIS
I haven't read the British press following last week's milestone decision by European Union (EU) leaders to move towards a more federal system with financial and budgetary convergence between their countries in order to solve the debt-induced crisis, but I wouldn't be surprised to see the following headline: "Europe isolated as Britain votes NO to treaty changes." Once again, and probably more radically than ever, Britain stands alone with 26 countries (using the euro and outside the eurozone) forging ahead on a new pact, and she standing in splendid isolation, the cornerstone of her policy towards Europe for a couple of centuries. Except, of course, that as a middle-sized power Britain cannot afford it any longer

To understand the current situation, just imagine that your friends have recommended you to the neighborhood club and upon joining it you requested a few privileges. First, that you be allowed to bring not only one guest but two. Then, that your dues should be only half of what other members pay. Plus a couple of other such exemptions which, considering how important you are to your friends, they all accepted to get you in. Then, as time goes by, you start making more and more demands, for instance that the club be open longer hours to accommodate your personal schedule; that you be allowed to bring your own caterer as the food served does not please your palate and a couple more requests of the same ilk. At that point, the other members rightly fed up join in unison with a rude expletive, the meaning of which is that everybody would be better off with you outside the club than inside.

This is exactly where Britain and the European Union find themselves now. Facing the admittedly worst crisis the Union has had since its inception 60 years ago, when all bandied together to come up with a solution, Britain said, "If I don't get my own, deal I won't sign to this one." The answer from the rest of the Club was to politely ignore Britain and move ahead with their agreement, anyway.

Are we surprised? Not really. Ever since the European Union was born, Britain had pooh-poohed it, when not tried outright sabotage. First, when it was set up (as the European Community) in the 1950's, Britain refused to join. Then, when it saw how successful the club was, it begged to join and did so in 1973 as a beggar, rather than a founder, which meant it had to accept less good terms. Throughout the following decades, Britain kept on behaving in a most un-European way: Thatcher asked for a contribution rebate (the famous "I want my money back"); then they got exemptions on social issues; and, more pointedly when the single currency was formed, they refused to join. And last week, they asked for the unacceptable: exemption from financial rules. Considering that the current crisis is the consequence of lax regulations of financial institutions, this demand is completely crazy. Cameron claims that he wants to maintain the preeminent status of the City (London's financial district) which under the new rules might lose out to Frankfurt and Paris. This is a lot of hogwash: since Paris and Frankfurt will be subjected to the same rules as London, then we are talking about a level playing field. If London loses, then it means it wasn't competitive to start with, something the Tories, super-champion of competition should accept - but as we know they only accept competition when they are guaranteed to win. Also, last time I checked I thought Europe was operating as part of a single market (which the British always defend.) Now, Let David Cameron explain how we can have a single market without a single set of rules (never mind a single currency.) The truth of the matter is that the Tories are nothing more than the bankers' party and are determined to fight tooth and nail to protect the interest of their (pay)masters, even at a high cost to their own people and the rest of Europe.

With this latest rejection, the British have reached a crossroads. Their position will soon be untenable since at every EU summit, you'll have one set of meetings with 26 members making decisions and then calling the other EU member who will have little choice but accept, especially when it is about decisions where unanimity is no longer the rule. Britain's worst nightmare will become reality: there will be a two-tier Europe, a Tier 1 with all other EU members and a Tier 2 with Britain (unless in their self-delusion the British think that on their own they can be Tier 1, and all the rest Tier 2!) Permanently isolated an outvoted, Britain will find itself having to comply with rules it has had no say in their creation. How long will she put up with it?

I lived in Britain in the 1980s and since then have been a frequent visitor either on business or vacation and can claim to know the country pretty well. And one thing that still has not changed is their island mentality. I still hear many Britons when crossing the Channel saying "We're going to Europe," or "We in the UK do it this way, but in Europe they do it that way." The British have clearly psychologically never felt European. Will they ever?

So it is time the British (or, to be more accurate, the English) made up they mind. They have played obstructionist in Europe for too long, which is fine, if they have such a radically different view from Europe from all other 26 countries. I'm not saying their views are better or worse, right or wrong, but different. Then, David Cameron should do something that the so-called mother of democracies hates to do, ask the British people, in a referendum, what they want: be part and parcel of the European Union, not a mere free-trade area, with all that that implies, or keep their own views, maintain their sovereignty (or what remains of it) and therefore leave and make other arrangements.

These arrangements could entail:

- Negotiating a free-trade or special-partnership pact with the European Union (maybe like what is being offered to Turkey)

- Move closer to the US and Canada (maybe in a North Atlantic free-trade area) since they feel so much in sync with their "cousins" from across the pond

- Decide to focus on what Britain does best (media, culture) and become a high-value-add export oriented country which will allow it to survive alone outside the European Union.

Of course, there are risks involved. Britain trades more with the EU than any other country or bloc, so a realignment is not easy to achieve. At home, if the UK leaves the EU, it is almost certain that Scotland will split and apply for readmission as an independent nation, which would mean the end of the United Kingdom. The EU will also suffer a bit, as it loses an important economy and important population, but considering it has 500 million people, a 12% loss and corresponding reduction in GDP will not be insurmountable and anyway will be replaced by the arrival of new countries such as Croatia in 2013 and subsequent ones. An EU-less Britain is likely to suffer way more than a Britain-less EU.

Whatever the solution, it is crunch time for the British. Since EU rules do not consider ejection, please do us and yourself a favor and make up your mind, which you seem to have already done, and leave. It is always sad when a marriage comes to an end, but it is always preferable to end it sooner, and on amicable terms, than later and bitterly, especially when the house is on fire.

Acquisition #13: SAP's $3-billion cloud(y) adventure

2011-12-04T01:10:00.001-08:00

PARIS

Unless you are superstitious (which I am not since my grandmother always told me it brought bad luck to be superstitious) you will be thrilled with the news that the biggest HR software company in the world decided last weekend to buy SuccessFactors (SFSF), one of the up-and-coming web-based vendors, in this year's 13th M&A deal. Well, you might be thrilled at this acquisition until you start looking at the details.

Context and rationale of the acquisition

Although SAP is hardly a novice at acquiring other software companies (Business Objects is one such prominent example), their product and customer strategy has always been mainly of the organic variety until it showed its limits. And limits it has shown in two respects, the enterprise area and the newish cloud-computing business.

First, the enterprise area: SAP created the enterprise software and it therefore is quite embarassing that in one of the fastest growing enterprise areas, talent management, it has failed. Global companies running SAP as their HR system of record have repeatedly gone for the likes of SFSF and Taleo, deemed more in line with their talent needs than their incumbent HR vendor (Oracle and PeopleSoft do not fare any better in that respect, by the way. ) And many companies, such as US-based Kimberly-Clark, have simply moved the whole HR suite, if not their financials applications as well, to cloud-based Workday. This is bad for SAP (and the two members of the "SOP" triptych) since every customer that jumps ships means less high-margin maintenance revenue. And when you know that maintenance now makes up the lion's share of traditional ERP vendors' bottom line, it is not hard to understand the future is not very bright.

Second, the reason why corporate customers have been adopting best-of-breed systems is that they provide the needed functionality in a radically new way: on the web, rather than the good old implementation within their company's walls, with a new way of licensing, maintaining and upgrading the system (see my blog comparing the two approaches, "Old Versus New".) Like the other software dinosaurs as I call them, SAP could see the market changing tacks and had to do something to prevent the coming customer hemorrhage and its market irrelevance. So, taking a leaf from the book of its nemesis, serial acquirer Oracle, it decided that "if we can't beat'em, let's buy 'em."

Third, SAP's own efforts at building a web-based offering, Business ByDesign, has been, to put it charitably, far from successful. It has taken inordinately long to develop and customers have not been exactly running in a stampede to buy it.

Why SuccessFactors?
A good question to start with is "why SFSF?" There are other vendors in the HR space, even with a product footprint similar to SFSF's. Taleo is the most obvious name, but as a European company why didn't SAP look at vendors closer home? As I showed in my blog on M&A activities in HR technology, American vendors tend to buy other American companies and European software makers their counterparts from the same region, if not the same country. SAP could have acquired UK-based Lumesse or France-based TalentSoft (with their own issues of being privately owned,) or (also privately owned) Swiss vendor Umantis which brings the double advantage of being in the German-speaking area SAP dominates as well as the talent management partner of SAP's Business ByDesign offering.

But clearly SAP wanted a vendor that would not compete too much with its own HCM solution while being global and large enough to help it increase its market share meaningfully. That left only two vendors of more or less equal size, Taleo and SFSF. Since Taleo had grown more organically than SFSF (even if it has acquired a couple of companies of its own) it was a closer fit to SAP's culture. However, when I looked at my HR customer database (what I call the WOW database -Who Owns What) I saw that there are more SAP HR customers running Taleo than SFSF. It therefore makes more sense to go after the company with fewer joint customers since it offers more cross-selling opportunities. The fact that SFSF was founded by Lars Dalgaard, a Dane, was an added bonus as SAP felt that a European senior executive would fit more easily in Walldorf. Only time will tell whether they were right on this point.

A more intriguing question is why SuccessFactors management was keen to sell (out?) Apart from the nice premium for shareholders, why would Lars Dalgaard want to become a mere senior executive at unexciting SAP when he was top dog with the company he founded? The answer is that with the number of acquisitions, and in a short period of time, SFSF bit off more than it could chew and found itself overwhelmed with the task of integrating disparate systems. With SAP it can find the people and financial resources to fix the integration issues which were threatening to bring down the company. Not to mention that now that it is part of a large and profitable company, SFSF's losses can be diluted in SAP's balance sheet with no need to answer the recurring, embarrassing question: "When will you become profitable?"

Overpaying for...

The acquisition is already starting with the wrong foot. In a volatile market, SAP could have bought SuccessFactors at a much better (i.e., lower) price than a whopping 16 times revenue. When Oracle bought PeopleSoft (PSFT) in the mid-2000's, an operation I was involved with, it initially offered $6bn, that's just twice what SAP has offered for SFSF. And yet, PeopleSoft had ten times more customers than SFSF (and I'm talking here only about PSFT HCM, to avoid being accused of comparing apples with oranges.) PSFT was profitable when SFSF is still losing money. PSFT was the undisputed #1 in HCM, and #2 in ERP, a global vendor when SFSF's global reach is limited, a leader in just a segment of HCM, and even in Talent Management it faces strong competition from Taleo. Oh, and we are talking about 2003 dollars, which means the deal's value in inflation-adjusted currency is even higher. If you want a more recent acquisition as a comparison point, Taleo's purchase of Jobpartners last June was at a reasonable 2x revenues (more information on the wave of consolidations in the above mentioned blog.) No matter how you slice and dice it, the amount paid by SAP is hard to justify and is evidence of how desperate SAP is to "do something."

...too many issues...

Once you start at looking at what SAP bought there is no way you can escape the fact that it will create more problems than it is likely to solve.

The pros: Let's start on a positive note. Now, SAP can claim with a straight face that it has a SaaS talent management offering, something they knew Career OnDemand was NOT (see my comments following the demo I attended at the HR Technology Conference in Las Vegas last October.) But looked at from a customer's perspective, what has changed? Customers will still have to interface SFSF with the HR admin features in SAP, regardless of who the owner is: the work will still have to be done until there is an off-the-shelf integration.

The cons: Integration nightmare. Even when there is full compatibility (meaning no feature/module overlap between the two offerings) creating a "seamless" integration (data, process, user experience) takes years. In this case, the complexity is compounded by the fact that:

(1) SFSF is itself busy integrating the various pieces it has bought since last year (For details see my above-mentioned post, "2010-2011: Two momentous years of consolidation in the HR space")

(2) What will happen to the still-unproven HR admin piece (Employee Central) SFSF had developed to compete with...SAP, among others? There are only three possible options:

- Will SAP kill it? Then how can it say it is moving to a cloud model?

-Will it keep it (maybe integrating it within its Business ByDesign cloud solution) and then compete with itself? That would be shooting itself in the foot as the cloud offering cannibalizes the old one.

- Will it then kill the old, on-premise SAP offering and move to the SFSF/Plateau offering? Unthinkable when you know there are thousands of customers on the on-premise offering, who have spent years and (for some of them) hundreds of millions of dollars to implement it. Moving them will not be easy, if at all feasible.

(3) the issue of overlapping offerings such as the Career OnDemand module I mentioned earlier or SAP's reporting functionality (HANA) which will compete with the one SFSF has bought from Inform, not to mention the two Learning applications both have (see below graph on the product overlap of the three vendors: SAP, SFSF and Plateau acquired last April by SFSF.) I am willing to bet the best sauerkraut in all Germany that come April 2012 when Career OnDemand is supposed to be released, nothing will come our way, and it will be quietly buried, acknowledging SAP's failure to evolve towards a true, organically grown SaaS model.

Contrary to SAP's claims, there is quite a lot of duplication in its new offering.
Sorting it out will be a big challenge for which SAP has little experience.
(For simplicity's sake I am identifying the major offerings based on
where they currently sit, SFSF or Plateau)

Sales/marketing issues: Integration between the two companies goes way beyond products. As experience shows, people buy from people. If SAP hasn't been able to make a killing in the TM space, it wasn't only because its offering wasn't on a par with the best-of-breed solutions, but also because SAP sales reps sell what they know best: traditional SAP software by stressing its engineering prowess. SFSF's culture is more start-up-like and its sales people know how to make the SaaS pitch which is different from the on-premise one. It reminds me of when Oracle moved from the database business into applications and couldn't understand why it wasn't as successful. Only when it realized that business applications are sold to CFOs and heads of HR and not CIOs, and that you have to talk business value and processes and not about the beauty of data clustering, did they start making some inroads. SFSF's marketing organization is also more attuned to the market's needs than SAP's gigantic machine. Expect some significant attrition from the SFSF ranks, especially when the jobs market improve.

...and little return

You might say in SAP's favor that since many of their customers were moving to SFSF, well, they might as well have the company in SAP's fold so that the revenue comes to SAP. First, considering the price SAP has paid, it will take at least 6-8 years for the transaction to be financially profitable. Second, this overlooks two facts: customer behavior and Talent Management (TM) as part of ERP.

Customer sentiment: many customers selected SFSF or Taleo, among others, because they wanted to move away from all the issues involved with what I call the software dinosaurs (see my blog from earlier this year, "Can software dinosaurs reinvent themselves as web-based vendors".) Now that SuccessFactors is being SAP-ized, customers may think twice before selecting that particular vendor (of course, SAP's hope is that the market will believe that the opposite is going to happen, that it is SAP which will be SuccessFactor-ized - but just look at the asymetry in size and you will have the answer to your doubts.) Actually, I already know of two companies (one of them a client) running SAP HCM and who were looking for a TM system; they had shortlisted SFSF and are now dropping it from the shortlist. Of course, two anecdotes do not a trend make, but it is worrying. It is far from assured that this move will protected SAP's installed base but one thing is already clear: non-SAP customers will be less inclined to adopt a TM system highly interlocked with a competing HR system.

This is talent management, not ERP: Considering SAP's $16-billion overall revenues, SFSF's $200 million are so puny that one can wonder how it will make any difference to the company's bottom line. In all fairness, compared to just SAP's HCM revenues, SFSF will add a not insignificant 20%, thus pushing Oracle further down the league table, but again at what price, assuming customers are not put off; and if SAP wants to become a SaaS vendor it will have to look beyond HCM. Even by adding SFSF's revenue to SAP's subscription revenue, it barely grows to a paltry 5% and of course you are mixing true SaaS with non-SaaS in a catch-all "cloud" category.

Even if SAP were to discard its traditional Jurassic-era HCM offering in favor of SFSF, which is as likely to happen as is Christmas to become a national holiday in Iran, SAP will need to keep on making many more and bigger acquisitions of SaaS vendors. I wonder whether there are enough companies out there and how SAP will be able to execute on so many acquisitions and integrations to become credible. At best it will become a dual-offering company, with all the cultural, strategic, and product schizophrenia associated with such a hybrid model. This muddying of the software waters is bound to create much confusion in the market (in addition, remember that SFSF comes with its own hybrid issues with the on-premise customer base from the legacy Plateau offering.) At least Oracle did the right thing after it bought all those different companies: it rationalized them all on the successor product, Fusion. What Oracle lacked in execution, it made up for (partially) in clarity. No such clarity is coming from SAP.

The only strategy that is likely to pay off in the long-term is to develop/acquire a true SaaS product (and not that half-baked on-premise + hosted offering) and then start moving customers to it. For example, build all new talent management + additional countries on this new SaaS product (SFSF -based or other) and tell customers that if they want to use the new features they have to move towards the cloud. Not only will that give customers an incentive to do so, but by reducing the numbers of customers SAP has to support on the on-premise solution, makes the business more profitable. This of course entails doing it not only for HR but for the whole ERP offering, a difficult, even risky, move fraught with many dangers, but some software companies (such as Ultimate in the HR space) have done it, so it is not a completely outlandish idea. So far, however, the noise from Walldorf does not seem to countenance such a move.

And the winner is...Workday, so far the only true SaaS company in the ERP+HR space, which sees a serious competitor taken out of the equation (even with SFSF, SAP's core HR offering remains an on-premise one, not in the cloud) as well as its SaaS-based approach vindicated by the day. Worse, the biggest strategic failure of SAP (and also Oracle) is that they don't seem to get that SaaS is not just a functional hole to be plugged with an acquisition: it is a radical departure from the old ERP business model. In the olden days, you were missing a decent CRM system? No problem, just buy Vantive or Siebel. If what you were looking for was a winning HR system, well, just buy PSFT. But you can't buy your way into the SaaS world: the culture, product architecture, selling, maintenance, upgrade, absence of need for hardware, it all is so different. You need to reinvent yourself completely. Somebody explain to me how giant SAP will do that by buying tiny SFSF.

SFSF, customers and the wider industry, would have been better off had SFSF been left to continue to develop as an independent company. It was on its way to a bright future. With its new HR admin module, and provided it integrated well the different pieces it had bought, it could have competed with Workday for the trophy of successor to PeopleSoft as HR vendor leader. Sadly, this was not to be. As the Jesuits' motto goes, Sic transit gloria mundi ("How the glory of the world passes.") For those more cinematically inclined, I am reminded of Marlon Brando's memorable line in the 1950s movie The Waterfront, where he expresses his frustration and disillusion at the prizefighter career that could have been his: "I coulda been a contender."

Most studies find that at least half of acquisitions fail to deliver tangible results and a decent ROI. Based on the above there is little doubt in my mind which half this acquisition belongs to. The only people that would gain from this acquisition (and are on cloud 9, if you'll allow me an easy pun) are SFSF stockholders who get an incredible 52% premium and advisors JP Morgan and Morgan Stanley who, as is their wont, encouraged the premium price, knowing that the higher the price paid, the higher their fees.

I would go further and say that, barring the swift adoption and execution on the from-on-premise-to-cloud strategy I outlined above, the only M&A operation involving SAP which would make sense is one where it is not the predator, but either the prey or an equal partner with one of the three following companies: IBM, HP or Microsoft. That may well be the only way SAP can credibly stand up to the Oracle threat. Everything else smacks of desperation, is evidence of limited strategic view and is more likely to fail than succeed.

Error 404: Oracle Fusion not found

2011-11-07T01:21:00.000-08:00

PARIS
As any experienced observer of our industry knows, the weaker the message a software company has on offer, the higher in the corporate hierarchy it has to go to deliver it. Oracle did not fail the tradition as a posse of vice-presidential bigwigs led by the head of its HCM development organization, descended a couple of weeks ago upon the City of Light (the home of yours truly) as part of their Fusion global roadshow.

The stakes are high. As soon as Oracle finalized its acquisition of PeopleSoft in 2005, it announced it was starting work on the successor product. Although I was among many chagrined by the demise of the jewel in our industry, I couldn't really blame Oracle: from a purely business perspective it didn't make sense to keep having several parallel products. Four years later, in 2009, there was still no Fusion on the horizon but Larry Ellison, rarely detracted by reality, famously announced that Fusion was going to be the SuccessFactors and Workday killer. More than two years later (almost six years after first announced) and with scores of Oracle and PeopleSoft customers defecting to SuccessFactors and Workday, where is Fusion?

When it was demoed at the HR Technology Conference in Chicago a year ago (see my post on it) release was announced for early 2011. Then it was pushed to the second quarter of 2011 and only in the summer was "something" finally made available.

First comment: the product is available for download, putting to rest any notion that it is SaaS-based. As anybody with a modicum of interest and knowledge in the matter knows, if you can install it on your server then it is NOT SaaS. Call it a hosted solution and the vendor an ASP or whatever alphabet soup you feel comfortable with, but SaaS it isn't.

Second, if I used "something" to describe the scope of what is available, it is not to belittle the hard work that went into it (and I know that many people did work hard on it), but it is an honest description of the functionality which is mainly based on compensation, one component of talent management, itself just one part of any overall HCM offering. Where is recruiting? (Wouldn't Fusion have been a great opportunity for Oracle to fix the double failure of its Oracle iRecruit and PeopleSoft eRecruit products?) And Learning/development? and Succession planning?

Who in their right mind would believe for a second that SuccessFactor has anything to fear from a product with such limitations? And as for Workday, they started work on their ground-breaking product at the same time as Fusion with $100 mn in seed money (Oracle makes profits in the billions), and a few dozen employees (Oracle has a cast of thousands working on Fusion - and, as few people know, this was supplemented by resources from Indian IT giant Infosys) and as of today it has not only delivered an entirely new HR system of record, two payrolls, strong talent functionality (even if missing some key parts), but also a financial management system. Where are the country localizations? The HR Admin, Payroll, Benefits modules may look good in demos (but what product doesn't?) but no company has selected them (let alone is running them) which is very suspicious.

To call Fusion half-baked would be very, very charitable. Rarely, if ever, in the history of software making have so many taken so long to produce so little. In less the time it took Oracle to present us with a Fusion embryo, Alexander the Great conquered the world. Now, that's perspective.

At last month's HR Technology Conference in Las Vegas, I ran into a senior Europe-based Fusion executive whom I had known for over a decade. As those who attended the event know, the South Pacific section of the conference grounds has many nooks and crannies. So, cornering my old Fusion pal into one of them, I managed to extract a confession from him.

"How many European Fusion early adopters do you have?" I asked.

"Larry will announce them tomorrow at Open World," came the less-than-assured reply.

"Come on, don't give me that marketing crap. We go back a long time. If anybody should know, it's you. For God's sake, you're based out of Europe. So, spit it out." For those who know me, I am nothing if not tenacious. All I got, though, was an embarrassed smile.Of course, the next day at Oracle's annual jamboree Larry in an uncharacteristically lackluster performance was long on vague customer numbers, but short on actual names, and none of them from Europe.

The Paris event, a few weeks later, didn't bring any new names either. Software vendors are rarely shy about trumpeting their customer wins, especially when attached to new products to which they lend the credibility needed to succeed on the market. Sometime they even overdo it - in Europe, think of SuccessFactors and Siemens, or Workday and Aviva, to use the two competitors Larry Ellison had singled out. If Oracle, which nobody by any stretch of the imagination would call a shy, timid or bashful company, cannot produce any European customer, then you and I can only come to a single conclusion: there isn't any.

I can't say this came as a surprise to me. The dozens of Oracle and PeopleSoft customers I have asked in Europe are all unanimous: we will not touch Fusion with a ten-foot pole. Can you really blame them? Functionality that is so limited that it verges on the absurd, the less-than-glorious development and customer-support track record, the realization that Fusion apps, and HCM within them, are just a tiny part of Oracle's portfolio and, even more seriously, the doubts about the strategy behind it.

As I said earlier, the strategy to rationalize all of Oracle's acquisitions into one single product made business sense. But does this strategy devised in the first half of the past decade make sense now when much nimbler vendors whose products have deeper functionality are churning out new releases on a quarterly basis and five years on we are still waiting for Fusion 1.0? Does buying Sun to provide hardware and software together (as Oracle's great slogan goes) make sense when companies are increasingly going to be renting rather than buying their software needs and will therefore no longer require any servers within their corporate walls?

Fusion, and Oracle, look increasingly like today's solution to yesterday's problems. The market has moved on but the big ocean-liner is proving hard to turn around. Actually, considering that Fusion is barely here, it would be more accurate to say that Oracle and Fusion represent tomorrow's solution to yesterday's problems.

I recently met one of PeopleSoft's historic European customers, banking giant Société Générale (SocGen), about their post-PeopleSoft project (SocGen was the first PeopleSoft Global Payroll customer in Europe, exactly a decade ago). When I asked one of their HR executives why not upgrade to the most recent version of PeopleSoft rather than go on a search for another system, the answer was: "Why be more Catholic than the Pope? If Oracle doesn't believe in PeopleSoft, why should we?" Then, half-teasingly and half in mock innocence, I asked the SocGen executive about the idea of becoming a Fusion early adopter. Her laughter is still ringing in my ears. If Workday does the right thing, it stands a very good chance of replacing PeopleSoft as SocGen's global HR system of record thus landing itself a major European reference.

If you think that SocGen is a one-off thing, think again: another major French bank, BNP Paribas (160,000 employees worldwide), after pulling the plug on PeopleSoft said, "Fusion? Thanks, but no, thanks." Then, adding insult to injury, BNP went to their pre-PeopleSoft vendor, HR Access. It is worrying for Oracle to have its next-generation product rejected in favor of one based on older technology.

And France is not the only European country where Oracle customers are dumping Oracle, rejecting Fusion and moving to Workday. In a recent interview in ComputerWeekly, the head of HR of UK-based insurance company Aviva, explained why he eliminated Oracle HR and selected Workday: "[with Oracle] when the CEO asked me how many staff we had in Europe, I could not tell him. It took weeks to find out. Now [with Workday] I can do that in 30 minutes." He then goes on to explain why he did not choose Fusion: "The technology was not there, Fusion was not ready, and its software-as-a-service model was not a true SaaS model." He also echoed a common complaint of Oracle customers that "communicating with Oracle was very difficult."

In several forums, I predicted that Fusion would not make any significant traction before 2015. So far, I have seen nothing to amend my analysis. And as for Mr. Ellison's claim of burying Workday or SuccessFactors, even after taking into account the typical hyperbole-prone statements so much favored by our industry, it is simply preposterous and betrays the fear that the reverse may well happen.

The jobs crisis hits home ― literally

2011-10-21T03:55:00.000-07:00

Rio de Janeiro police about to enter a favela?
No, their Parisian counterparts entering my
apartment building to confront a hostage taker

PARIS
For someone whose main activity deals with workforce management, the surreal situation I found myself in this week couldn't have brought any closer the main HR issue facing Europe and the United States: high and increasing unemployment figures.

Last Tuesday, close to 12 noon. I was in my home office, expecting a courier bringing me documents from a client when the phone rang.

"Sir," the courier's voice sounded stressed out, " I can't get to your apartment building, it's been cordoned off by the police."

"What? Why?" I asked, wondering if he got the address wrong.

"They say that some people have been taken hostages in the Pôle emploi office."

The Pôle emploi is the French government agency dealing with (un)employment and the local jobs center is indeed housed in my apartment building, a mainly residential complex that occupies a large block north of the Bastille area (see map below.) I had been working from my home office the whole morning and just like a cheated husband is the last one to find out about his situation, I had no idea something was amiss in my building. I put a jacket on and went downstairs.

At the main gate I saw several cops who asked me the way to the concierge. I explained they needed a special key to get there but I, as a resident had one, so I'd let them through. "But the concierge is not available now, it's her break from noon to 2:00 pm. What is that you want?" They explained that there was one man, clearly a desperate jobless fellow, keeping some people hostages (the things one would do to get a job) and they were wondering if there wasn't another way to get to the Pôle Emploi offices (they had amassed their forces at the main entrance, on Rue Pelée.

The quiet and peace of Rue Pelée, just a stone's throw
away from the Bastille, shattered as an armed unemployed
man takes hostages in the jobs center office located
in my apartment building

"Oh yes, " I replied. "There is an entrance from Rue Amelot, but they don't use it anymore, so you guys can force your way through there." And the good law-abiding citizen I am took them there (# 2 on the map) and then retraced my steps back to the main gate on Rue Pelée (# A on the map). As soon as I came out I felt as if I I had stepped onto a movie set. The street swarmed with cops, elite forces clad like Robocop, it was closed all the way to the Boulevard Richard Lenoir and one of the cops said, "Sir, if you leave the area you won't be able to come back." I called the courier who was stuck beyond the police lines. Since I needed the documents urgently to prepare for a client meeting, I took the chance. Once I got the delivery from the courier I stood mesmerized by the BFM reporter describing what was happening within my building. There were other reporters and press photographers. (# 3, on the map)

"You know," I said to the BFM TV reporter Rachid Mbarki, "there's another way closer to the building, and the cops haven't closed it, why don't you go there?" I was stunned to hear the reply: he was happy to cover the news from a safe distance. Some other reporters, including one from AFP (Agence France Presse) though, overheard me and asked me to lead them. So I did my second good deed of the day, this time in favor of the free (if not courageous) press, and walked with them down boulevard Richar Lenoir towards Bastille and then right on Allée Verte which runs parallel to Rue Pelée. Right in front of my building there is a passage which allows the two streets to communicate and, although a policeman was stationed there not allowing access to Rue Pelée, at least you had a nice vantage point of the entrance to Pôle emploi to see all the action from up close. (# 4 on the map) At the same time the other BFM TV guy was at least several hundred yards away.

Since I couldn't enter my building from the Rue Pelée entrance, I decided to check whether the one on Rue Amelot, which runs along the Boulevard Beaumarchais was free. So I turned into Rue Amelot, walked up and miracle of miracles, no cops, the entrance (# 2 on the map) was wide open, even more surprising since it leads straight to one of the Pôle emploi side entrances where I found the cops I had led to still there. They looked scary in their Robocop attire ready to barge in should the phone negotiations with the hostage taker fail, or things go nasty. I passed them and entered my building from the inside thus allowing me to go back to my apartment.

I switched the TV on and it felt so surreal to see my street and building making the headlines. The hostage taker was an unemployed fellow who said he was desperate and was ready to use his gun if attacked. It felt like being in a movie, except that the movie was real and taking place right where I live. Well, I didn't have much time to muse further since I had to leave for a meeting at 2 pm. So I left from where I entered, the Rue Amelot entrance, once more passing Robocop & Co., but this time the police had finally realized there was a weak link and had stationed two officers at the entrance who gave me the same warning I was given two hours ago at the Rue Pelée entrance: "If you leave you won't be able to come back." When asked how much longer this circus was going to last, one of them shook his head seriously and said, "We've had situations where it lasted two days." Two days without entering my building! They must be joking. Well, I managed to fool them once, I'm sure I'll manage a second time, I thought.

When I returned after 3:00 pm, the standoff was still on. The whole two-block area was cordoned off , all the way to where the boulevards Richard Lenoir and Voltaire meet (top right angle on the map.) I had only one thing on my mind - how to get back into my apartment? Suddenly a stroke of genius hit me. The underground parking garage. Since the gate is locked and only opens when cars come in or out, maybe there won't be any cops there. I walked to Rue Amelot, and saw that the street had inexplicably not been closed, and apart from the two cops I saw on my out, there was nobody in front of the parking entrance (# 1 on the map.) A few minutes later, a car came out and before the gates closed I slipped in. From inside the bowels of the building I went to the basement area and from there one of the elevators took me to my apartment. I felt particularly proud of myself to have fooled the police security system twice in as many hours.

The drama stage. The double red lines indicate access closed by
police. Strangely enough, they closed all the way up where
Bd Richard Lenoir meets Rue St-Sébastien, but not much closer,
the Rue Amelot, from where I managed to enter and leave
unimpeded more than once

An hour later, the hostage taker surrendered. It turned out his weapon was a toy, "without even bullets" as my neighbor said. He just wanted to draw the attention of the nation on the plight of the unemployed, he claimed as he was being led away.

What to make of all of this? Three comments:

1. The economic crisis which is leading to such acts of desperation is not letting up as governments are unable to fix the debt crisis (see my post on it last March) and try to resort to misguided so-called labor reform policies (see another post on this topic from July 2010- nothing has changed since then.) Expect to see more of this kind of behavior, but please do it somewhere else, not in my building, or at least not when I'm in residence.

2. The police action showed a lot of incompetence (my fooling their security scheme twice is ample proof of that) and overkill. 150 men armed as if they were about to land on Tripoli for just one crazy fellow? Come on! And, just look at the map above: what sense is there in blocking traffic (and people access to their homes) two blocks away when at the same time Rue Amelot which has a direct entrance to Pôle Emploi is left completely free? Illogical!

3. The press didn't fare any better with that reporter from BFM TV insisting on remaining as far from the action as possible. Watch a video of him "reporting" from a safe distance. Now I understand the meaning of "armchair journalism".

4. For someone who spends part of the year in violence-ridden Rio de Janeiro, which I have known for eight years now, the whole affair was quite ironic: I never experienced in the Marvelous City anything remotely comparable to what I saw in the City of Light this week. Sometimes true violence happens where you least expect it.

Notes from a good conference in a tacky town

2011-10-07T07:51:00.000-07:00

Can you tell the original one (which I can
see from my Paris home) from the fake one
which graced the view from my Mandalay
Bay hotel room?

LAS VEGAS

In my book High-Tech Planet I called a chapter “The tackiest town on earth” because most of the action took place in Dubai. Now that I have been to Las Vegas I have to revise my judgment: Sin City wins top honors (at least the runner up for the title has the Persian Gulf as an exotic background.) Thankfully I was too busy inside the Mandalay Bay Hotel complex with the 14^th HR Technology Conference to wonder about the meaning (if any) of creating a surreal city in the middle of the desert or, to make an easy pun, wander about either.

One of the most eagerly awaited presentations was SAP’s debuting of its SaaS offering, Career On-Demand, the German software company’s reply to the smaller talent management vendors who have been eating its lunch in that market segment for the past half decade (but not available until Apr. 2012.) Although there was no doubt that its user experience was an improvement on R/3 (in itself not an insurmountable task), I felt underwhelmed by what I saw. Even the Fusion features which Oracle demoed at its booth looked better. (By the way, anybody saw the many Vegas cabs sporting “Oracle-#1 HCM” ads?) The LinkedIn import function in the new SAP product is good (but then other talent management vendors already offer it.) SAP is still playing catch up and it shows. On the last day, Merck explained in their presentation why they decided on Lumesse’s ETWeb system for their 100,000- strong merged companies’ performance management rather than SAP which they use as their HR system of record. Nothing I have seen so far is going to reverse the trend.

Speaking of Lumesse, on Day 1 of the conference, they announced their acquisition of Edvantage, a Norway-based Learning vendor (acquisisition #11 this year in my count.) This makes them the fifth talent management -TM) vendor to offer the full gamut of TM functions, and so far the only European vendor to do so. Another European vendor that attracted quite some attention was Meta4 which many people had already buried regarding the American market, and who is staging a comeback, or at least attempt #2. Considering their strengths there are few vendors who really deserve to succeed the second time round in the land of the second chance.

Workday was again the vendor that attracted the most attention. Unsure, though, whether that was due to the fun dance they performed in their booth. In my two decades in the HR system business I sure never thought that software updates would make great lyrics nor make bodies gyrate to a catchy tune. (You can watch here the video.) Their announcement of an alliance with NorthgateArinso (NGA) on multi-country payrolls was of more direct consequence to our business, though. Since many global customers are hesitating whether to replace their current HCM vendor with one that only covers two countries, and all of them in North America, this alliance was only a question of time before it was announced. After all, the only other possible suitors were Oracle or SAP, direct competitors to Workday. NGA is a good compromise: its SAP-based offering (whether hosted, on-premise or outsourced) offers more payroll localizations than any other vendor and the only issue now is the extent to which either vendor offers a decent out-of-the box connector to the other’s product (HR admin for Workday and the various payrolls for NGA). Let’s watch closely how their first joint customer AIG fares under this arrangement.

I was more than gratified by the 100-120 who attended my session on Expanding to Europe. Based on the number of HR executives who came to talk to me or contacted me afterwards, going global is increasingly becoming part and parcel of many HR projects.

No HR Technology Conference is complete without the vendor-sponsored parties. In spite of my 9-hour jetlag, I managed to drag myself to some of them on Monday night. I found the SilkRoad party quite cool, and the Cornerstone one friendly and fun (and quite young –some of their executives were not even born when some major products were launched.) I passed on the late evening’s big bash since by then all life had deserted me, and I barely managed to crawl back to my room.

One last word on the location: in comparison with Chicago the facilities were better, and the fact that we could stay on the premises was an advantage. On the down side, the Mandalay Bay has all the charm of a crowded mall, with the most dreadful hotel-elevator experience I have ever had (one day there was a long line stretching back into the lobby.) And, of course, Chicago is an amazing place with great architecture, culture and a true lake to breathe some fresh air. It is also more easily reachable for most US-based attendees and even more so for the many Europeans who came. After this interesting experiment in Sin City I definitely vote for the conference to go back to the Windy City.

(The original Eiffel Tower is the one on the left-hand side.)

2010-2011: Two momentous years of consolidation in the HR space

2011-09-26T05:59:00.000-07:00

PARIS
My interest and experience in M&A activities in the HR services and technology space go back to Oracle's long, hostile and headline-grabbing acquisition of PeopleSoft in 2003. I was involved in the transaction, especially with the preparation of the case before the European Commission which had tried to block the acquisition on anti-trust grounds. (For those interested, this episode was the inspiration for some chapters in my book, High-Tech Planet: Secrets of an IT Road Warrior.)

Small wonder then that since I went solo two years ago I have been asked to track the mating rituals of the companies that make up the supply side of our profession and some of my findings can be found here. Sure, we are still a quarter shy of the end of 2011 and many choice morsels have already been gobbled up and are being digested. But, after the summer lull, there could well be some interesting activity, as evidenced by last week's acquisition by ADP of Asparity Decision Solutions. After all, many software companies are awash with cash and the stockmarket drubbing we are seeing means that many target companies are particularly inexpensive. This being said I do not expect any new acquisitions through the end of the year to significantly alter my findings. Should that happen, I would post an update in January.

Data and methodology
I have tracked all the acquisitions in the HR services and software industry since January 2010 where either the acquiring company or the target were based in the United States or in Europe (the only exception was SuccessFactors' purchase of Australia's Inform.) Although I also have data on other regions of the world, I have restricted myself to these two regions since they represent the lion's share of the worldwide HCM market and M&A activity. The number of such deals was a neat 25, until ADP's latest move last week.

The first, general, comment that one can make is the surprising lack of any hostile operation. Apart from UK-based Sage and Dutch-based Unit4 slugging it out in early 2010 for the control of Polish ERP/HR vendor Teta, all acquisitions have been consensual affairs. The nasty PeopleSoft takeover by Oracle seems to be a thing of the past.

The average number of deals has been at least one per month (reaching in April 2011 a high-water mark with no less than 4 acquisitions announced in the same month, two of them by SuccessFactors). For this year we are already reaching 11 deals for just 9 months.

HR vendors are heeding Cole Porter's famous song Let's Do It and almost everybody is getting in on the act. Some, though, seem to relish it more than others especially SuccessFactors (2010's first acquisition was also the company's first in its history) and ADP. Apart from the latter, all are talent management vendors, providing further proof if necessary that this is still the hottest HCM market segment. (Actually some of ADP's transactions were aimed squarely at the talent management space.)

Number of acquisitions by vendor, 2010-2011
Source: Ahmed Limam

As befits the size of its home market, US companies are by far the most likely to engage in takeovers: 88% of the 26 acquisitions originated from a US-based corporation. However, when one looks at the nationality of target companies, European vendors are more likely to engage in cross-border acquisitions than their American counterparts, even if those are still in Europe (the only American company acquired by a European vendor in this period was Convergys by UK-based NorthgateArinso.) Of course, in absolute terms there are more European companies bought by US vendors than non-national companies by European acquirers (ADP and SuccessFactors with 3 and 2 cross-border purchases respectively are the most global of acquirers.)

A worrying development, probably due to the uncertain economic climate in 2011, this year has so far seen only 2 cross-border acquisitions versus 7 in 2010 which is hard to understand: the dollar may be weaker than many other currencies, but then it means that any investment will pay off handsomely and faster since the revenue will be booked in the stronger target company's currency. So why are American vendors so reluctant to engage in cross-border acquisitions? I can think of several European vendors who are just waiting to be snapped up, providing the acquiring company with, if not cutting-edge technology, at least a large market share and steady revenue stream. Asia and South America also have strongly established HR vendors who, in their fast growing markets, can deliver returns US (and European) companies are no longer used to.

A closer look at the average deal size shows little impact of the financial crisis, though. On the contrary, when we remove the unusually high value of Aon's Hewitt acquisition ($4.9 bn) which would skew the results and the transactions that included HR but went beyond (such as Infor's purchase of Lawson) we find that the average deal value almost doubled up from $66 mn in 2011 to $117mn. Two caveats are in order: many vendors (such as ADP) do not disclose the financial terms of their transactions and the 2011 figure is boosted by the $290 mn value of the SuccessFactors-Plateau linkup (other disclosed deals were way below the $100 mn mark.) The last quarter's performance will be crucial in either confirming this trend or reversing it.

Deals include ERP transactions where HR was one component
but undisclosed deals are not included.
Source: Ahmed Limam

Looking at the scope of the M&A transactions, we find that the three most popular HR areas or processes covered are: analytics, learning and core HR. The first two reflect talent management vendors expanding their offering from their niche offering to the full gamut of TM, while the latter (Core HR) shows that some talent management vendors are moving up the value chain and want to be considered as full-fledged HCM vendors. For comparative purposes I have separated out the various components of the talent management function: otherwise the TM function represents almost half of the full scope.

Source: Ahmed Limam

Finally, I found it worthwhile to study the rationale for the M&A activities. My definition may well be controversial since there are always several reasons why a vendor decides to go down the acquisition route rather than the organic one, and I may not necessarily share the official reasons offered or I may give them a different weight. There are usually five main reasons which of course tend to overlap (when ADP bought Byte in Italy last November it was to increase its European footprint at the same time as increase its number of customers in a key outsourcing market.)

to deepen vendor's offering: I include intelligence and social here, since these are not separate HR domains
to broaden it: case of Taleo buying Learn.com to add a new HR function which it did not have
to expand a vendor's country footprint (globalize)
to go full HR: I am including here private equity firms or ERP vendors wanting to expand their portfolio
to increase market share/customer base.

Major reasons for vendors to
acquire another HR vendor.
Source: Ahmed Limam

As the following graph shows, vendors are first and foremost interested in deepening their offering, that is adding higher-value features to their products, before broadening it. With one out of three deals involving two separate countries, it is hardly surprising that the second most important reason is to expand abroad. Although its pace is slowing down in 2011, globalization is still an unmistakable fact of the HR market and will continue in 2012. The question is whether it will be as strong as in 2010 or rather along the lines of 2011.

Another interesting question about 2012 has to do with Workday. Will the most scrutinized of HR vendors finally decide to enter the M&A fray (with the help of its freshly minted IPO) to buy its way into the recruiting or learning space or will it continue to look disdainfully on the whole exercize and carry on with its organic-growth strategy?

(Ahmed Limam will be in Las Vegas next week to attend the HR Technology Conference where he will present a session comparing the US and Europe in terms of HR and technology.)

Brazil Rising: Thoughts on HR, technology and an emerging giant

2011-08-19T05:49:00.000-07:00

SAO PAULO
This sprawling city of concrete and steel, the largest in all the Americas as well as the southern hemisphere, not to mention being Brazil's business center, is also home to one of the most congested roads in the world. In comparison, Los Angeles residents live in traffic heaven. The situation is such that many senior executives are whisked to work by helicopter (many skyscraper rooftops in São Paulo double up as helipads.) Attending CONARH, Latin America's largest HR event where I moderated a workshop on HR system usage, since my expenses policy did not include helicopter commuting, I decided to stay near the Transamérica Expo convention center where the conference took place thus allowing me to spend more time with Latin America's HR movers and shakers.

And what a difference it makes to be talking with Brazilian heads of HR versus their Northern Hemisphere counterparts. Whereas in the "rich" world (I wonder how much longer we'll be able to call ourselves such a thing) the talk is depressingly about crisis, uncertainty and layoffs with European and American HR directors behaving like rabbits caught in the headlights, here you would think you are on a different planet.

Last month Brazil created 144,000 jobs, higher than the 114,000 jobs created in the US whose population is 30% bigger than Brazil. And, even bigger difference, those Brazilian jobs were net hires, whereas the US had job losses of 60,000. Small wonder that whereas the unemployment rate in Europe and the US has been hovering around 9-10%, in Brazil it is down to a historically low 6%. And when you realize that in the US only less than 30% of companies are planning on hiring, in Brazil the figure is an astonishing 80%.

On most economic indicators the United States has been trailing Brazil
for the past few years and will be doing so in the foreseeable future

These figures were borne out by all the HR leaders I met. I do not recall a single one of them saying that they would keep their workforce at the same level this year and next, let alone downsize: every one was busy adding capacity. And that is the unofficial theme at the conference: labor shortages. Retail, manufacturing, services, banking (HSBC is laying offs tens of thousands of employees in the "rich" world but hiring several thousand in Brazil), hotels (Rio de Janeiro is trying to squeeze thousands of new hotel rooms in the narrow strips between mountain and sea before the 2014 Soccer World Cup and 2016 Olympics), oil and gas. Every head of HR in every industry is wringing their hands that they cannot find all the people they need, and when they do they lose them to the competition. This Brazilian War for Talent inevitably creates other issues: turnover with its attendant salary rises.

Traditionally, salary rises in Brazil have been dictated by government and unions through across-the-board rises to take inflation into account. While this still exists, it has been dwarfed by market realities: with demand outpacing supply, many employees go the highest bidder with Brazilian CEOs drawing now the highest salaries in all the Americas. At the lower end of the spectrum, the strong growth of he economy as well as cash transfers by the government (Bolsa Familia program) and major infrastructure projects has meant that for several years now, every month has seen tens of thousands of Brazilian employees joining the formal workforce.

The upshot of this virtuous circle is that payroll vendors are having a boon. And when I say payroll vendors that is what the Brazilian HR market has traditionally been largely about: Payroll and HR admin, functions whose complexities local vendors have learned to manage for decades when it was a reserved market. And God knows what a complex domain Brazilian labor laws are. In my experience, Brazilian payroll is among the most complex in the world (in the same league as Italy for instance); the list of standard reports and documents to produce or track is huge: employee contract, medical document, signing and stamping several others such as an alphabet soup of CTPS, CPF (for tax purposes), the national ID card (RG), voter's card, a social program called PIS. Some can be validated via an algorithm in the software, others cannot.

The potential for HR electronic filing is huge since many processes such as CTPS registering for new hires are still manual ones (Brazilians have an amazing love for paper; whether it is settling your hotel account or pay a restaurant bill, you will be flabbergasted by the number of forms and receipts that change hands, are signed, checked, calculated on before the process is over.) Things are changing, though, as there are currently discussions to automate many processes ("click contracts" for e-labor contracts) Time tracking, known in Portuguese as ponto eletrônico, was mandated by law meaning that almost 400,000 Brazilian companies will have to change this year both the hardware and software used to track when employees clock in and out (even for lunch) and create the relevant interfaces with HR systems of record.

As in Spain, health and safety is a big issue in Brazil with a higher rate of workplace accidents than in the US. An HR manager for Petrobras, the Brazilian oil giant (whose IPO last year became, at $67bn, the world's largest) told me an anecdote about the accident rate on their platforms (2 or 3 major accidents per week!) He had a hard time when visiting one of their oil rigs to talk employees out of organizing a churrasco or barbecue, knowing Brazilians' love for grilled meat. Having accurate statistics and providing training are key to bringing the accident rate down to more manageable levels. (Another issue they have in the oil and gas industry is, of course, labor shortages, especially of technical staff.)

Faced with such complexities, but also due to the fact that for a long time Brazil operated as a closed economy and to a certain extent this continent-sized country still feels quite unique (it is the only country in the Americas to have its own language) it is small wonder that the HR software market has traditionally been the preserve of local vendors. The major ones are:

Totus: Brazil's answer to SAP, it has more revenues than many US software companies (should hit US$1 billion this year) and is even expanding abroad (Mexico and Portugal);
LG Sistemas (the largest HR vendor with a customer list which is a roll call of the best-known Brazilian companies, many global multinationals interfacing SAP HR to LG's flagship FPW payroll);
Senior (Vetorh product line) with a strong loyal customer base.

As mentioned earlier, the booming nature of the Brazilian economy is making recruiting an HR leader's daily headache. You might think that this is par for the course for emerging economies. Actually labor shortages are more acute in Brazil with 64% of employees reporting difficulty in filling vacancies versus only 40% in China and 16% in India, according to a Manpower survey. This situation is compounded by the fact that, because Brazilian employees tend to be loyal to their companies, luring them away can only be done by offering them higher salaries, which some are happy to take because companies are happy to offer them.

These developments have led the traditional payroll-cum-HR admin market to give way to an emerging talent management market segment. Salary cost escalation means that if you cannot continue to compete on salary alone, you will have to offer your employees something else to base their loyalty on. Enter career-development plans to give Brazilian employees a stake in both their company and their own professional life. Many HR managers who have been working on competency models have embraced whole-heartedly the various aspects of talent management, launching career-management and competency programs in their companies. Brazilians, who are among the most social and communicative people on earth, have taken to social media enthusiastically (with Orkut rivaling Facebook) showing that it is just a matter of time before tens of millions of consumers of social, mobile HR appear on the map.

The issue is that HR vendors are still slow in providing the relevant tools for that. (For Portuguese readers, I wrote an article on this issue last January and it was published by a Brazilian HR portal) Brazilian vendors, although beefing up their talent management functionality, are still caught in a payroll-HR admin time warp. Strong web-based vendors are yet to emerge. What about global vendors? you might wonder.

Global vendors SAP, Oracle, PeopleSoft, and ADP tend to be used by subsidiaries of (mainly US) multinationals, although the burgeoning number of Brazilian multinationals is also going with these vendors (note that they still tend to favor LG or Totus for their payroll, in spite of SAP having a Brazilian payroll.) Talent vendors such as Taleo or SuccessFactors have a token presence, usually through a local partner, and, like their ERP competitors, are happy to just work on extending the contract to local subsidiaries. At the conference I did not see a single representative from the global vendors, which makes you wonder about their business expansion plans. Considering the current economic climate in the the US and Europe, how can HR technology vendors ignore such a large, growing market as Brazil? With the Brazilian currency, the real, relentlessly appreciating versus the dollar (when I first came to Brazil seven years ago US$1 was worth over R$3, now it has come down to R$1.5, having lost half its value) this means that every customer in Brazil can now add significantly to a global vendor's bottom line. And starting in October, payroll taxes on certain industries such as software, will come down 20% (a move our deficit-ridden "rich" countries can only dream of.)

Every light is blinking green, an inviting green. The land of the four S's (samba, soccer, sun and sex) has every potential to add a four S (software) to its suit. What are global vendors waiting for? For a long time Brazil was known as the country of the future. It has finally become the country of the present, and it is a global vendor's market to lose.

(Ahmed Limam keeps a second home in Rio de Janeiro from where he monitors the Latin American market and provides consulting/advisory services in the region)

A five-tier approach to a multi-country payroll project

2011-07-20T09:46:00.000-07:00

PARIS
Although the bulk of the upcoming HR-technology projects deal with the various components of what goes by the name of talent management, by far the largest number of current HR systems still deal with good old payroll. Such a focus makes sense since you may decide to eschew compensating adequately your workforce, or recruiting them effectively, or training them in line with your company's objectives but there is no way you can avoid paying them.

With the pace of globalization showing no sign of abating most companies find themselves operating across several countries which brings to the fore the need to manage their workforce as part of a single HR system. Most multinationals have been doing just this for a good decade now: two thirds of them have a global HR system of record for all their employees from which they send the relevant data to other HR systems such as learning, time management, benefits and, primus inter pares, payroll.

Traditionally payroll has been managed via a local vendor, either outsourced or in-house, but in the last few years the proportion of large, global companies deciding to use a single, global payroll system (even if not necessarily on a single instance) has grown quite substantially. New vendors, purporting to deliver the Holy Grail of a true global payroll system, have appeared on the landscape muddying the waters of what can be done, what can only be dreamed of and what is pure fantasy.

I have spent a good portion of the past 15 years either implementing payrolls, helping end-user organizations select a new payroll system or, as part of the vendor community (especially now-defunct PeopleSoft and pre-Fusion Oracle) developing a global payroll. In my book, "High-Tech Planet", I describe the fun associated with making a business case for a global payroll.

Assuming you have decided to run your own payroll inhouse (versus outsourcing it in full or in some countries-but I will discuss this as well further below) and regardless of whether you want to do so with an on-premise system or a hosted (SaaS) one, there are basically five ways to go about it based on:

- Funding: Who will pay for it? Sure, ultimately you the customer will end up paying for it, but there are ways to go about it. The vendor can fund this out of its general licensing revenue or you the customer can pick the tab directly.

- Build: Usually he who pays for it builds it, but this is not necessarily always the case as a player (say, a subsidiary) can contract out to the development organization to do it.

- Support/maintenance: This is a key issue and again it is not always an easy decision, the builder is not always the maintainer.

-Ownership: Some of the prior issues will determine, and be determined by, who actually owns the localized payroll.

Having defined some of the key criteria and remembering what it means to have a localized payroll (if you have not done so, please read my post on the five pillars of a "glocal" HR system: http://bit.ly/eRqx5J) here are the five ways you can run your global payroll system. (And, yes, I know, my mind seems to work in fives, probably the remnant of a childhood spent using my fingers to count.)

Tier 1: The truly global payroll

SAP is the undisputed leader covering more countries
than several vendors put together. Vendors like ADP
whose offering is made up of disparate payrolls are not
included. The figure for Oracle, PeopleSoft refers
logically to each separate product line. Although
Workday currently has the same number of country
payrolls (two) than other vendors not mentioned here,
I am including them as I believe they will increase
that number in the coming years

This is the ideal situation. Your payroll vendor offers a localized offering for all of the countries you operate in, meaning they have built all the different aspects required to run a payroll in, say, the US, China, Argentina and South Africa (check that they comply with my five golden rules described in the above post). They built it from their Corporate Development organization, they support and maintain it (every time a rule changes you get a patch), they pay for it themselves out of the hefty license/support/usage fee you are paying. All you have to do is "just" implement the required software and you are in business. Perfect? Trouble-free? Not really. First of all, you have to remember that every vendor will have their own definition of the law and, surprise, surprise, that definition tends to be more limited than yours. So make sure you do your due diligence on that part when comparing the offering of different vendors, you may be comparing apples and oranges (I would recommend checking if they have product managers or development engineers in the various countries you want to cover.) Second, there are few, very few vendors that cover several geographies in this Tier-1 solution in a systematic way*, meaning that you will most probably have to resort to other solutions to complete the global model you need.

Tier 2: The half-baked payroll

HR software vendors are anything if not resourceful. If the Corporate Development organization for reasons I explained at length in my book, does not want to fund a localized payroll for some countries that are key to you, chances are that your vendor's country manager of, say, Nigeria or Thailand or Tunisia (assuming you are in contact with them), will tell you that they would fund it themselves and contract out to Development to build the required features. You can thus end up with a product developed by your vendor following their development guidelines, on their codeline, with their own people responsible for developing other parts of the standard product. For all intents and purposes, it sounds and feels like the Tier 1 solution, except that it ain't. First of all, once they've built and delivered it, Development won't touch it with a ten-foot pole. The subsidiary, sometimes under constant prodding from you, will have to finance it and if the local market does not warrant it (you were a one-off case) you may wait a long time for that statutory report on overtime pay required by the government of Brazil. And, of course, there is no guarantee that any new off-the-shelf release of the core HR system and payroll (Tier 1) delivered by the vendor will be compatible with this Tier-2 product.

Tier 3: The partner-built payroll

This is a variant of Tier 2 whereby, since Corporate Development doesn't want to have anything to do with the local payroll (either directly or indirectly, "hey, we don't even have time to build what we committed to"), a local partner is enlisted to replace Development. The great advantage here is that the partner, usually a local payroll vendor, knows the country requirements quite well since they have been developing their own system for a long time: they therefore have the knowledge, people and resources to develop the localized layer of rules, processes and reports that you need for countries X, Y or Z.

All they need to do is get trained on the core payroll engine, understand the global vendor's development guidelines and they can get you the country extension you wanted in a faster turnaround your global vendor could never dream of. Who will pay for this? you may ask. Well, it all depends on the relationship between the global vendor's subsidiary and the local vendor: sometimes there is a true partnership whereby they split the licensing revenue or the local payroll vendor gets royalties. (You will not believe how much frequent-flyer mileage I accrued traveling across several time zones and meeting countless payroll vendors to fix these issues) As a customer you need to understand the intricacies of such deals to ensure proper and speedy maintenance. Also, what happens if the local vendor bows out of the agreement? Will the global vendor's subsidiary pick it up as a Tier 2 solution? Will the global vendor accept to productize it and bring this local payroll into the standard product (make it a Tier 1 solution)? What about the compatibility issue with new releases of the global system? Since the global and local products will be on separate release schedules (and sometimes technology stacks) serious issues might arise.

Tier 4: The project payroll

If neither of the previous works, usually because as a customer you represent too small a market share for the vendor to get involved even at the local level through a partnership with a local vendor or by having the product financed by the subsidiary, you can still build the local extension as part of your implementation. Your own people can do it, especially if they have experience working with the vendor, know the tools well, especially the core payroll engine. Or your system integrator (SI) could do it for you, especially if, as is likely, they have experience implementing that payroll or even building out localized versions: and like all SI's they would love to do it for you, in exchange for fat, cascading consulting fees. A third option would be to use the consulting arm of your vendor to build it for you, on a T&M basis. The advantage of the latter is that it may minimize risks associated with such a project, if only because you can assume that as part of the vendor's organization they would know the product better than your own folks or an SI. Whatever the option of this solution, you the customer as the owner and funder of this solution will still be responsible for its support and maintenance. Tough decision to make, but well worth it if the country under consideration is a key one with many employees and user experience, analytics and integration issues demand a similar payroll be used for that country as for the other ones.

Tier 5: The third-party payroll

When all else fails, then you are left with only one solution: create an interface between (a) either your HR system of record or your global payroll (there are pros and cons to do either, I will discuss that in another post) and (b) either a local legacy payroll or, more likely, an established local payroll vendor's solutions for the countries where you do business. It could be either an ADP-like outsourced payroll or the myriad third-party payroll systems which, in spite of the global vendors' growing market share, still rule the roost all over the world and which your local team will have to install and use. If you're lucky, maybe that such an interface has already been built by your vendor. For instance, most of the ERP vendors (SAP, Oracle and PeopleSoft or "SOP") have built such an interface (goes by various names, Payroll Interface or ADP Connector) where, in a nutshell, they already map HR data (employee details, compensation, organization, contract, absence data etc.) to selected payroll systems. Just make sure you understand what is really covered and who will maintain such an interface. In some cases where the interface is too light (what I call a marketing interface rather than a true product one) you might as well build your interface yourself. Especially when the number of local payroll vendors is huge and there is little chance of your global vendor to have built standard interfaces to all of them.

It is noteworthy to keep in mind that when "SOP" vendors start localizing their offering they do it on a module-by-module basis, meaning that they first release a localized HR Administration system (contract types, national identifier, address format etc.) and only then (there can be a lag of several years between the two) the payroll rules (earnings, deductions, gross-to-net calculation etc.) In order to optimize a Tier-5 solution, you may want to check which of the vendors has the most localized HR Admin modules as this will help lessen the need to build such features prior to their use by a payroll interface.

One tantalizing thought is the extent to which a pure SaaS vendor (such as Workday) can meet the needs of large multinational companies since in a SaaS model the payroll sits on a vendor's data center and is accessed remotely by users. It is therefore hard to envisage how Tiers 2-4 solutions can be done with such a system. Could it be that a global payroll system will be hampered by SaaS? So far the jury is still out as there is no vendor that has yet come up with a SaaS-based multi-country payroll. This probably explains why Workday has been quite slow at expanding its country footprint and few members, if any, of its growing customer base are using its payroll outside North America. But if a true SaaS vendor manages to enhance its configuration options to the level needed to quickly build local payrolls and/or add new payrolls quickly to its standard offering, then it will truly revolutionize the oldest of HR functions.

*A list of how various global vendors fare in terms of HR and payroll localization is available from www.AhmedLimam.com\ Vendor Localization Footprint (excerpt -Google Docs sign-on may be required.) Please note that the Tier-4 description therein is somewhat different from the five-pronged approach presented here since the Vendor Localization Footprint report does not by definition cover the Tier-5 solution presented in this post.

A wedding in the Land of White Moors

2011-07-11T11:35:00.000-07:00

The groom (and blogger's brother) with his bride who is
dressed, hand-hennaed and bejeweled according to
centuries-old traditions

NOUAKCHOTT
Apart from the gift of life, I shall always be grateful to my parents for having brought me up in a multicultural family. And you can't get any more wildly multicultural than my family: my mother was born in Paris into a Romanian family and at age 2 was taken to the old country when WWII broke out. My grandmother left her daughter behind with her parents to go back to France (and my Hungarian grandfather.) Little could my grandmother suspect that the war would separate her from her daughter for 6 years and then the Communist-imposed Iron Curtain for another 12 years. Only at age 21 did my by-now Romanian-speaking mother go back to France where she met my father, an Arab from the large but little known country of Mauritania (if you don't know where it is located on the map, you'll find it in the northwestern corner of Africa, just south of Morocco - interestingly enough my father himself had a half sister, whose father was French, and she too was lost to her mother from her childhood until her mid-20's. You can call my family many things but boring isn't one of them!) I then grew up between France and Mauritania with summer breaks spent in Romania, in particular the northern region of Transylvania. Such varied cultures and languages helped me become more open to other societies and people, different ways of doing things as well as learn other languages more easily.

When my Mauritania-based brother asked me if I wanted to attend his wedding in the country known to locals in their Arabic dialect as Trab el Bidan or Land of White Moors, I enthusiastically accepted. So it was that last Thursday, after a 15-year absence, a 6-hour Air France flight from Paris disgorged me into the diminutive airport of Nouakchott, the largest city in the Sahara desert and Mauritania's capital. It was the day of the wedding and I had barely changed into the traditional men's garb (see picture below) when I repaired to the bride's family 's home in the northern sector of the sprawling city that is relentlessly expanding from the Atlantic Ocean into the desert in all three directions (the view from the sky with the bluish hues of the ocean and the dusty white of the desert makes quite a contrast.)

We were greeted by the bride's parents and shown into a large rectangular room decorated in the typical low mattresses and colorful woven-wool carpets where male relatives of the bride's and groom's were assembled. It was quite entertaining to play the recognition game, an uncle here, a cousin there, and a nephew, a handsome young man in his mid 20's and recently married himself. When I last saw him he was barely two years old and it was in dramatic circumstances: his mother, my older half-sister, had just committed suicide in one of the family's highest profile dramas. The women sat in a separate room but this segregation didn't last long as one of my aunts was too excited to stand the protocol and waved at me to join her outside where other aunts and female cousins, close and distant ones, joined me, hugging and kissing me with with full theatrics. After this breach with protocol I went back to the men, some of the elders shaking their hands while muttering in their beards something about how Moorish traditions are lost to people living in the West.

I later heard that there was another etiquette violation, this time courtesy of my father who brought his own cleric. According to tradition since the Day 1 ceremony (known in Arabic as 'aqd or contract signing) takes place at the bride's place, it is her family's cleric who should officiate. Maybe my father felt that our tribe, the Laghlal, who for centuries had vied with my future sister-in-law's tribe of Idewaali for the control of our joint town, Chinguetti, Islam's seventh Holy City, should assert itself in a show of tribal power politics. Anyway, things went smoothly, the cleric called on the representatives of both groom and bride to get closer to him, the conditions were read out ("the husband shall not raise his hand on his wife nor take another one, otherwise the marriage will become null and void immediately"), the audience were asked if they had any reason to object to the matrimony (I felt like raising my hand saying that as my younger brother, wasn't it bad form that he would get married before I did, but then thought otherwise) and the most noble son of the even noblest family of a greatest tribe got married to a lady who was no less grand in her titles than he was. Of course, as befits tradition, neither bride nor groom were present. A short prayer that involved our whispering verses from the Koran hands raised skywards followed and we then proceeded to partake of the meat, dates and drinks served on a cloth set right on the carpet, while steaming hot cups of tea were circulated around. As soon as the food was dispatched, everybody got up, slipped into their shoes and left the place leaving it to the female relatives who were going to celebrate throughout the evening.

According to Moorish tradition, the bride has to remain
unseen for three days. The smiling girl is the blogger's
(and groom's) sister, a management consultant based
in Brittany, western France

The next evening saw the wedding reception (known in Arabic as marwah) being organized in the palatial home of a cousin, in another neighborhood (which didn't exist last time I was here), closer to the ocean but as a safe distant since Moors (as Arab Mauritanians are known) have from time immemorial turned their backs on the salty body of water, even if fishing now represents one of the country's main exports. Day 2 was slightly different from the previous religious-cum-legal day with guests definitely on the younger side and men and women mixing and, to my utter surprise, dancing freely. But it is true that Mauritanians are unique among Arabs in that women are equal to men, they run their own businesses, work and travel freely, get married and divorce at a dizzying rate (a young cousin of mine who was there had already gone through a fourth marriage and counting), something unheard of in neighboring Algeria and Morocco where divorcees and widows are damaged goods with no hope of any further social life. And I'm not speaking of retrograde Saudi Arabia where they can't even show their faces or drive their own cars.

A thoughtful blogger watches
the proceedings

Once all the guests had assembled, my brother accompanied by male friends and relatives set out in a car convoy to pick up the bride at her family home. Amid a pandemonium of car horns being blown insistingly they arrived at the party where everybody was craning their necks to get a glimpse of the bride. They didn't see much as, according to tradition, the bride is to remain covered from head to toe, face unseen, for three days until the elaborate hair braiding is undone and jewelry that is part of it removed. The newlyweds had to sit under a dais for the whole evening without drinking or eating anything nor go the bathroom, while the rest of us drank and ate and danced. The music was provided by a Moroccan Sahara band who played a catchy mix of traditional and modern tunes. I could hardly believe my eyes seeing my aunts dancing the night away, with even more energy than younger girls. Highly entertaining was the parade of marriageable girls whose mother shamelessly pushed them my way, most of them close or distant cousins or from the same tribe: as in 1950's America, in this traditional society a girl's highest ambition is still to land a good husband, such weddings are golden opportunities for mothers to catch somebody in their spider-like web. Must say that some of the girls were stunningly beautiful.

Dancing the night away, Mauritanian-style

We thus spent the rest of the evening under a starlit sky, dancing, laughing, gossiping, flirting, eating, drinking, bursting into sudden exclamations of recognition ("oh, my God, it's you!") until jetlag got the better of me and it was time to go to sleep. I discreetly slipped out, avoiding the hundreds of hands to shake, hugs to give and foreheads to kiss if I had taken formal leave of everybody. As I pulled away in my rental car, I couldn't help but be amazed at how centuries old traditions are still being kept alive by the cell phone-toting, Chanel #5-smelling, Mercedes-driving and Rolex-carrying descendants of nomadic Arabs who a millennium ago came from distant Arabia, some of them via Spain and Sicily. In an an era of all-out globalization, this is no small feat.

(For those curious to read more about Mauritania, there are unfortunately no titles I know of in English. In French I highly recommend Le tambour des sables (Drum of Sands), the splendid memoirs of a French colonial administrator, Gabriel Feral. Odette du Puigaudeau's account of her travels through the Land of White Moors in the 1930's (Pieds nus à travers la Mauritanie) is a great, authentic read. More recent titles include Nouakchott: Au carrefour de la Mauritanie et du Monde, by an academic (2009) and Bienvenue à Nouakchott (2011) by French spy/thriller writer Gerard de Villiers who has sold 150 million copies of his books mainly in the French-speaking world.)

The Arab Spring comes to Europe - Time for technology-enabled Democracy 2.0

2011-06-16T13:32:00.000-07:00

As luck would have it I arrived in Madrid on June 12,
the very last day of this two-month-old grassroots
movement occupation of the Puerta del Sol square.
But as the sign says, "we are not going away,
we are moving to your conscience."

MADRID

While in Madrid on business, I took the opportunity that I was staying downtown to visit the nearby Puerta del Sol camping ground of the Indignados or "Outraged Citizens." These are the protesters who have taken over the Spanish capital's main square and, just like the Cairenes did in Tahrir Square earlier this year, the Madrilians are making themselves heard, rejecting a political-cum-economic system which has left the youth with a staggering unemployment rate of 45%. Most analysts forecast that it will take Spain a decade to get back to where it was prior to the crisis.

What a far cry from the three years when I lived in Madrid in the mid-1990's when the square, the heart and pulse of the city, was mainly congregated on for festive occasions such as New Year's Eve, to gulp down as many grapes as you could while the clock would chime the twelve strokes of midnight. The clock is attached to the building which houses the Madrid regional government whose president, Esperanza Aguirre, clearly irritated at these noisy neighbors, said on TV, " If people aren't happy with the current political parties, they should constitute themselves into a new party and run for office at the next election." Sounds reasonable except that Ms. Aguirre, who belongs to the Conservative People's Party, is just not getting it.

The issue issue is not whether it's party A or B which is in power, or a third party, it's the whole political system which is being challenged by citizens who realize that the old system might have had its use in the past but clearly it is now broke as it can't deliver the goods and therefore needs to be jettisoned. The same message is being broadcast every evening on Bastille Square, down the street from where I live in Paris, by fellow protesters who use the same slogan: "Real Democracy Now." The financial meltdown and its aftermath of debt-related and construction boom-to-bust crises have brought home the realization that the political system is no longer here to serve the interests of the majority but those of a well-off minority (the bankers who creates the mess and demanded that average taxpayers bail them out) and a privileged group of self-serving politicians. (You can read a post I wrote a few months ago on what the debt crisis really means.)

A placard held by a woman protester in the Puerta del Sol encapsulates people's outrage: Crisis? Robos! (Crisis? Theft!) it loudly claims. How come that jails are full of people whose crime is "just" to have pushed or consumed drugs when those who are responsible for sending millions into unemployment, emptying the retirement nest eggs of millions more and almost destroyed the livelihood of entire countries, how come that those bankers and their regulators are still allowed to walk around free? How come that while millions are still hurting, losing their homes and seeing their living standards plummet, that banks are reaping billions in profits and awarding their executives indecently fat bonuses? How come that the political class, supposedly voted into office by citizens to represent them, perpetuates itself in power and does nothing to alleviate the majority's suffering while clinging to its privileges and that of its sponsors, mainly in the financial industry?

How else can you explain that billions of dollars' in taxpayers' money were handed over to the banks when they made losses, but their profits are still being kept by the few? Citizens' sense of outrage with the public losses/private profits arrangement is understandable. It reminds me of the pre-revolutionary situation in France when over 95% of the wealth was in the hands of less than 5% of the population (the aristocracy and the clergy) and yet they were exempt from paying taxes, a "privilege" reserved to the poor. Small wonder that when the economic crisis became more acute people rose up and overthrew the old political system. Small wonder that two hundred years on, their descendants are going back to where it all began in July 1789 and protesting at a similar situation: privileges for the few and hardships for the many.

The reason the political system has become so dysfunctional is that it is based on representative democracy (or RepDem, for short) invented in the 18th century. While there is little doubt that it has served the West well for two centuries, it is no longer fit for the 21st century. Much of the gridlock in the US political system can be ascribed to the Americans' absurd adherence to the principles edicted in the Constitution by aristocratic gentlemen farmers wearing breeches and wigs. Direct Democracy (DirDem for short) was not practical when England, France, and even more so the United States, were large countries with big populations scattered all over the land. How could you summon all of your country's voters in your capital to vote on a policy or a leader? So we had to settle for a proxy: smaller and more manageable constituencies would vote for a congressman/Member of Parliament/deputy and send him (then there was no "her") to the capital (Washington, London, Paris) to represent our interests. Except that two centuries on, as the current crisis shows all too clearly, that "representative" represents other interests and when those conflict with the voters' it is clear to all whose interests prevail.

Look at Obama, about to become a brilliant failure. He is a politician who came to power through a grass-roots movement. On Inauguration Day he announced (and signed) the closing of Guantanamo Bay camp, a blot on America's conscience, where hundreds of men have been kept in jail for a decade without any due process of law, no trial, let alone any conviction, a complete violation of the lofty principles those bewigged 18th-century gentlemen bequeathed to the nation. Also, Obama supporters expected tougher regulation and sanctions on those who, through their greed, fraud and incompetence, provoked the crisis. On the foreign-policy front, Obama promised a new dawn for the Middle East by promoting democracy and putting pressure on Israel to pull out from occupied Palestinian lands.

And what did we get? Zilch. Guantanamo is still shamefully open for its ghastly business; the Middle East peace process has resulted in neither peace nor a meaningful process, Obama caves in to the pro-Israeli lobby; Bahrain has instituted a reign of terror against its Shiite majority to America's silent acquiescence; and as for bringing the bankers to account for their (mis)deeds and reforming the system that produced the crisis from which the US is still reeling, two words summarize the situation: full impunity. In case you think I am exaggerating just read this report on the financial crisis by nobody else than the U.S. Senate or the one published by Stanford University. Both show unequivocally that the financial crisis was largely criminal and yet none of the perpetrators has been made to pay for their crimes. Could it be that after the "military-industrial complex" of Eisenhower's days we have now entered the age of the "political-financial complex"?

Today outrage spread to the cradle of Western democracy with thousands of Greeks battling police in Athens while protesting against those who put them in that situation: the rent-seeking and maximizing elite. The Socialist Prime Minister George Papandreou's offer to form a national unity government with the Conservative opposition is not going to change much since it is exactly the same situation I alluded to earlier: Party A or Party B will not change anything. They have both been in power and turned a blind eye, when they didn't actively encourage, the behavior that led to the current mayhem. In Barcelona, Spain's second city, what Gore Vidal would call the ruling class has resorted to tactics which we associate more with the Arab dictatorships in Libya and Syria than a Western pseudo-democracy: planting plainclothes police as violent elements in an otherwise peaceful demonstration of the Outraged Citizens, in order to sabotage and delegitimize the movement. You can watch the video on YouTube (comments in Catalan.)

So, enough of describing the disease which we are all aware of. What can be done? The RepDem political system has shown its limitations and is increasingly losing its legitimacy as people lose faith in it. Citizens are no longer willing to elect a politician and then give them carte blanche for four or five years since that will just entrench them and their moneyed sponsors. What is needed is to move to a DirDem system.

If, as I said earlier, in the 18th century it already was not feasible to gather all voters in one place, in the 21st century it is even less so. But is it? Maybe physically, but what about virtually? Technology, which has become so pervasive through every nook and cranny of society, can help bring people together in ways unthought of before ― in many countries now you can fill your income-tax return, and pay your taxes, online. If internet is good enough for my taxes, why can't it be used to get my opinion as a citizen and my vote? Why can't I vote directly on proposed laws? a privilege hitherto reserved for an elite that has done such a dreadful job of it. Any citizen should be able to suggest an initiative or law through a Facebook-like tool where its pros and cons could be discussed by the electorate at large (your user name would be your unique national identifier such as Social Security number, with maybe some biometric identification to prevent voters from selling their votes.) Such discussion of the proposed laws through comments would enlighten and enrich the political process and at the end of this debating process (akin to a political campaign) all interested voters could cast their vote online and, if a majority supports the initiative it becomes law. No more need for parliament or congress, half of which (the upper chambers) were completely useless anyway as they just served to provide cushy jobs for the well-heeled (case of the Senates in many countries such as France and Spain; in the case of the British House of Lords it is just indefensible that almost 100 members of this body are there just because they inherited the seat from some distant ancestor.) As for the other half (for example, the Chamber of Deputies in France) they often tend to just rubber-stamp whatever decisions the executive branch has decided on.

With technology we can get rid of the political middleman who served only his interests or powerful interest groups and lobbies, rarely the average citizen. This disintermediation process which has radically changed many businesses (brick-and-mortal travel agencies and bookstores are on their way out as people buy directly from producers such as publishers and airlines) can be applied to politics as well. With the legislative branch technologized out of existence and the people finally regaining what has been until now a nominal sovereignty, we can shift our attention to another class of politicians: those in the executive branch of government, whose function will be maintained since somebody will have to implement laws and administer policies.

Bringing executive-branch politicians to heel is even more important since elected parliaments have anyway always be supine and deferring to the unelected administration of the day. One typical example in this pseudo-democracy that France is can be seen through the use of décrets d'application whereby a law, although voted on by the people's "representatives," cannot be enforced until the government has decreed so. As an HR person I have always been shocked that the law voted on by the elected French Parliament in 2006 on anonymous CV's is still not enforceable (and therefore not adopted by companies) because the unelected government has yet to give it its stamp of approval And you call this a democracy?

The same technology used to bypass lawmakers can be used to keep executive-branch politicians and officials in check. For one thing, not only presidents and prime ministers (I'd call them "Chief Executive") could be elected directly online but also any citizen would be free to run for office (with, of course, some conditions such as the number of certified friends they would have on Facebook to make the process manageable.) Why should politics be reserved to professional politicians? I don't remember who said that "the business of politics should be everybody's business" but they were damn right, and a public social media allows just that. For efficiency reasons, the members of a cabinet or administration would still be chosen by the Chief Executive but confirmed by the people (the way the US Senate confirms ambassadors and other officials) after hopefully vigorous online hearings. This should help weed out incompetence, nepotism and dishonesty, because, and this would be a marked departure with RepDem practice, at any moment citizens would be able to recall any official, starting from the Chief Executive down. That carte blanche given for several years to politicians to do as they please would thus be a thing of the past.

By the same token, every policy (war, taxes, budget etc.) will start with an online discussion and end with a formal vote where citizens sign off on it ― or not! By the way, if you think this is a novel approach, a little historical perspective is in order. In Republican Rome, during Cicero's time, decisions by the Senate were then read out on the Field of Mars to gathered citizens who would then vote them up or down. If it worked for ancient Romans, why can't it work for us int he 21st century?

Debating society's ills in central Madrid.
I was impressed at how peaceful,
well-organized and disciplined
the protesters were

Finally, technology is only an enabler as I have discussed in so many of my posts, articles, presentations and speaking engagements (mainly in the business arena.) There are also other cultural symbolic measures that can be taken to keep politicians and public officials on their toes and remind them that they are supposed to serve the people, and not the other way round. To go back to ancient Rome, when a general was granted a triumph after a big victory, he would parade through Rome in full glory but there was a slave standing next to him and whispering repeatedly in his ear, "Remember you are mortal." Our politicians need a similar type of reminder: You are here to serve the people.

I have always been flabbergasted by the total lack of accountability of politicians in our pseudo-democracies. When you give instructions to your cleaning lady, you can pretty much expect her to carry them out as well as show some respect to you. Same thing with your employees at work. Why? For a simple reason: you are the one who have hired them, you are the one describing their duties, paying them a salary and if you are not happy with them you can always fire them. That's why you usually tend to get from them what you need. But not with politicians. You are the one hiring them, because you vote them into office; you give them their job description, by choosing their political program over their adversaries' (I almost wrote partners in crime); you pay their salaries through your taxes; and you can fire them when you vote them out of office. And yet politicians behave as if they were the boss and you the employee, or the servant.

I would therefore suggest some symbolic changes to remind politicians who the real boss is and that the word public servant should mean what it means. One way would be to have direct access to them ―say, one day a week. Every public official from the Chief Executive down to a small-town mayor, should set aside a day a week where any citizen can come and talk to them. Since obviously it would not be feasible to see all citizens, the lucky visitors could be selected on a first-come, first-served basis or, after signing up online, be selected at random. Then, during the meeting, the citizen could ask any question they want, have access to any document (why did you pick this supplier? what was this expense for?) and film with their smartphone the whole proceedings to be posted then on YouTube for the whole electorate to view, post comments on and, if they feel like it, initiate a recall procedure.

I can already see my detractors shouting down my proposals on the grounds that they would lead to chaos, demagoguery and populism. If you ask people whether they want their taxes raised, you can be sure they would vote it down. Ask them if they want welfare spending to be raised and you can expect them to click yes enthusiastically. How could you then ever be able to balance a budget? True, DirDem could lead to some messy outcome, but then many governments have been running deficits for years (the French government has NOT presented a balanced budget for over 30 years!) DirDem can't be worse. And then, I am pretty sure that most people would rather live with a mess of their own than one imposed on them by self-serving politicians and greedy bankers.

Other critics might point out that in Europe many legislative and executive functions have moved one level up to the European Union institutions. My proposals are even more valid since most people, not less national politicians (who see the mote in somebody else's eye) have always decried "Europe's" democratic deficit. For issues that are a country's responsibilities (for instance taxes or labor relations) only national voters would participate in the Facebook-like voting system. For issues that are dealt with at European level (including the appointment of European commissioners) all European voters would participate. And as for the European Parliament it will join the national ones in the graveyard of history.

This is the longest blog post I have ever written, and I doubt I will soon be able to match its length. But then the stakes described here are higher than any other I have tackled in my one-year-old blog. My sincerest hope is that it would generate a lot of positive debate to fix what has become an untenable system. I still have confidence in my fellow humans and believe that many of my ideas make sense and, if implemented, could solve many of the current issues in our 21st-century polity.

What do you think?

PeopleSoft vs Workday - Old vs New

2011-05-25T02:46:00.000-07:00

ROME

While in the Eternal City to evangelize European HR leaders on the joys of a modern HR system at a Talent and Mobility Conference, I was asked by the Head of HR of an Italian bank running PeopleSoft and considering alternatives to present to their board of directors the pros and cons of PeopleSoft versus Workday. Here is the takeaway I left the board members with at the end of my presentation:

PeopleSoft has thousands of customers − Workday a few dozens.

PeopleSoft runs the whole gamut of HCM − Workday has yet to plug some big holes in its product scope (global payroll, recruiting, learning.)

When PeopleSoft grew and went international, it took Europe by storm − Workday is taking much longer to establish itself in the US and even longer overseas.

To run PeopleSoft will cost you several hundred dollars per year per user − Workday will cost you a fraction of that.

When you meet a fellow PeopleSoft user and discuss your respective projects, you are comparing apples and oranges as many are either on Release 7.5, or 8.3 or 9.0 − Workday customers can have a more meaningful discussion as they all are on the same product release.

You buy PeopleSoft − you rent Workday.

You install PeopleSoft on your computers − you access Workday over the internet.

To meet your requirements you can (and sometimes have to) customize PeopleSoft to your heart’s content - and your system integrator’s great financial satisfaction − configuring Workday may be enough.

You upgrade PeopleSoft every two years − you get a regular update from Workday several times a year.

PeopleSoft HCM is part of an ERP offering itself just another of several other business applications belonging to Oracle whose sprawling portfolio includes hardware and its flagship database system − Workday is first and foremost an HCM system branching out into the ERP world.

Both PeopleSoft and Workday are the brainchild of one of our industry’s legendary and visionary leaders, Dave Duffield − he built the former in his middle age and the latter as he nears his sunset years.

PeopleSoft is the past; Workday is the future.

A slide from my presentation summarizing the pros and

cons of a traditional, on-premise system versus

a modern "cloud"-based software delivered as a service

Can Infor's acquisition of Lawson deliver on great HR technology?

2011-05-03T05:16:00.000-07:00

PARIS

The compulsive blogger that I am is going to be quite busy with the dizzying speed of M&A activity in the HR technology space. In a lively LinkedIn discussion (registration is required) it was reported that serial acquirer Infor, which last week bought Lawson, had great plans to consolidate its multiple offerings, maybe à la Oracle Fusion. My first reaction was, “Yeah, right!” since Infor’s business model has never been premised on innovation or consolidation. Just consider the history of its multiple acquisitions:

1. Anael HR: this one is my favorite as it exemplifies the amazing M&A movement in our industry. It was developed (along with a payroll product called Sysper) in the 1980’s by a French company called Presys (itself the resulting merger of two small IT companies) which in turn was bought by UK-based ERP company JBA in the late 1990’s (which also bought a small French HR-cum-payroll vendor called Logi-Soft). Anybody remembers JBA? They were quite big in the 1990’s (I attended their users' conference at their Birmingham, UK, HQ and it was quite impressive) but then they just vanished into thin software air. Then, when the 2000 dotcom bubble burst, JBA was sold to Canadian company GEAC. Anael was an AS/400 offering that targeted construction and staffing companies, although I recall they also had a Windows version that came from the Logi-Soft product. The functional scope was basic HR and payroll, no workflow (at least when I saw it a decade ago), English was limited to payroll and there was no multi-currency (even though it was already part of a global offering!)

2. In 2005, private equity firm Golden Gate Capital bought GEAC and breaking it up moved its ERP products to Infor (one of its companies) which thus found itself with two HR systems : French Anael and Canadian SmartStream. SmartStream had tried to expand in Europe – I remember meeting several of GEAC executives in the late 1990’s/ early 2000’s and they swore to me they were going to take Europe by storm. Well, I guess they found a way around perjury since SmartStream never went “continental.”

3. Infor also has Infinium, a run-of-the-mill self-service offering they sell in the US though I’m not sure what payroll/HR system it runs off of. Maybe the previous, though for the life of me I can’t see US companies running Anael HR which is still part of Infor’s active portfolio.

4. Now, with last week’s acquisition of Lawson, Infor finds itself with three "new" HCM products: Lawson HCM, recently acquired Enwisen and whatever is left of Movex, the Swedish AS/400-based product Lawson had bought several years ago and which was a limited payroll and HR system targeting the retail and manufacturing industries. When I was an analyst/consultant with CXP in the second half of the 1990's both Movex and Anael were demoed to me and, truth be told, I was underwhemed. It does not seem that things have improved markedly since then.

5. In addition to these seven HR products, there may well be other HR products tucked away in the sprawling Infor offering (I think they have a time-tracking system as part of their ERP or manufacturing software.)

It is therefore quite uplifting to hear that, like St. Paul on the road to Damascus, Infor has suddenly seen the light and is planning on bringing about big changes in their offering. This is all the more surprising since, as I described it above, nothing in Infor's record suggests it has ever been interested in innovation or consolidation. Infor, in its business model, is similar to Sage which, in some geographies, has more revenue than giants Oracle and SAP, because it has a multitude of products it sells, often through resellers, to different segments of the mid-market with little product innovation. Investing little in R&D and selling to many makes you profitable. Why would Infor want to change this model and go down an unknown road? Have they stumbled upon a unique vision? I have yet to hear it articulated. Do tigers shed their stripes and sprout feathers? With all the innovation coming only from SaaS and talent management vendors, our industry is in sore need of a next-generation HCM system. Could Infor deliver that? To quote another saint, Thomas this time, “I’ll believe it when I see it.”

Abolish the monarchy or reinvent it?

2011-04-30T01:00:00.000-07:00

Let's hope for Catherine Middleton
that she escapes the fate of the three
Catherines Heny VIII married (out
of a total of six wives) :

he divorced one (Catherine of Aragon),

beheaded another (Catherine Howard)

with the last one, Catherine Parr,
surviving a similar fate only by the
King's timely death.

PARIS

Unless you've been living on planet Mars for the past couple of weeks, you are unlikely to have missed yesterday's wedding of the heir to the heir to the British throne. The occasion has sparked some lively debate on the monarchy's future and I was surprised at the disappointing quality of The Economist's column on the topic.

I remember an excellent article they wrote a good 15 years ago called "An idea whose time has passed" which made cogently the case against the monarchy. Last week's column, on the other hand, is one of the worst I’ve read in The Economist in a long time. Although I don’t disagree with its main tenet, abolishing the monarchy, the arguments used are so convoluted that Bagehot does a disservice to the republican cause. With people attacking the monarchy this way, the House of Hanover (a.k.a Windsors) is safe for another three centuries. In theory I would always prefer a republic to a monarchy for the simple reason that why should the highest post in the land, that of head of state, be reserved to a single family? In a truly democratic and egalitarian society anybody should be allowed to reach that exalted position.

All the talk about modernizing the monarchy is simply absurd: how can you "modernize" an institution created in and for the Middle Ages? Its idea has just passed its time. The only way to "modernize" the monarchy is surely to abolish.

Now, to the real world. Monarchies fall only in periods of crisis: war, revolutions and other political/social upheavals. There is no case of a peacetime “pensioning off” of the royals since, at least in European monarchies which are democratic societies, people realize that the royal family does little harm and therefore why fix what ain't broke? Instead of bothering about who should be on the throne (with limited political power) or even whether there should be a throne in the first place, people realize that there are a lot of other more serious issues to deal with: unemployment, global warming, reforming bankers –now here’s a group of people who should head straight to the guillotine and yet our so-called democracies dare not touch them; maybe they are the true royals, our undisputed masters. And when a democracy does go to the polls to decide whether to keep the monarchy, in the only recent case (Australia), they said “no.” And for good reason. Look at the French model which isn’t one: the French president is for all intents and purposes an elected monarch who wields enormous power (proportionately even more than the US president) and yet we can’t say that the French are better off with him (we have yet to have a “her.”)

And why should the alternative to the current monarchical system be a republic only? One can be creative and use an intermediate system which would be more in consonance with the country’s political and institutional history. For instance, why not make the queen or king an elected position? The much-beloved (by the British and tourists) pageantry, coronation and titles will still be maintained but any British citizen could aspire to the position which they will hold for life (just like judges and some other officials in many republican democracies.) This life term wouldn’t be a democratic issue since the monarch would not hold executive power, the Prime Minister would continue with his functions.

Actually, if it sounds like a novel idea, historically it isn’t. As recently as the 18^th century, Poland chose its kings this way. Polish kings came to the throne not through inheritance but because they had been selected by the Diet (Polish parliament.) Actually, the Poles didn’t even show too nationalistic a streak as they would cast the net wider and along with representatives from prominent Polish families include European candidates. Thus in the 16^th century Henry of Valois, brother to the King of France, was elected king of what for most people then was faraway Poland. Now that would be a great way for Britain to enhance its European credentials. And who knows? A couple of centuries from now latter-day Britons may well wonder how retarded it was to reserve the crown to a single family.

Can outsourcing providers deliver innovation in technology?

2011-04-20T11:49:00.000-07:00

ATLANTA
They say that remarriage is the triumph of hope over experience. Something similar can be said about outsourcing corporate functions such as Finance or HR. Why would you ask another company to take over your recruitment or your payroll, if you were happy with them in the first place? And what are the chances that this HR outsourcing (HRO) provider would be more successful than your own folks who, after all, are located physically within the walls of your company as well as know its culture, and over whom you have stronger control as employees than over a vendor?

The rationale for outsourcing , and which has made it grow over the past decades (even if taking into account the slowdown of the last couple of years) is well known: it can bring about substantial cost reductions while at least maintaining the same quality level (the famous “your mess for less”) thus allowing management to focus on its core business without the distraction of overseeing other departments, their workforce or the IT systems that underpin the corporate processes that are being outsourced. More recently, however, access to expertise and innovation have become key reasons for companies to go down the outsourcing road.

But is this faith in their HRO provider’s ability to provide access to innovation, especially when IT-based, warranted? To provide an answer we have to distinguish between the "old" or "all-or-nothing" outsourcing and the "new" or "à la carte" outsourcing.

"All-or-nothing" (or traditional) outsourcing refers to the first HR functions to be historically outsourced, usually payroll and benefits where all the tasks from from data entry to process running to reports are managed by the vendor. In this case most of the IT innovation is done behind the scenes with the customer rarely aware of how innovative the proprietary systems are. And to a large extent why should they care? As long as the gross-to-net is calculated correctly and payslips and deposits are produced on time, the existence of innovative tools is largely immaterial to end users. What if the payroll software does not have a wizard and makes the creation of earnings and deductions a nightmare? Well, since payroll processing is the provider's responsibility and a customer's contact with the system is limited to the few times a month when HR data (compensation, new hires, absences, benefit enrollment) are updated and sent from the master HR system to the vendor's payroll there is no reason for the client to worry about how innovative such a tool is, unless employees find the self service transaction to check their payslip online so horrid that it works as a disincentive - something extremely rare.

Things are quite different with the new forms of outsourcing (what I'd call "à la carte outsourcing") where, with the HR function moving more into strategic HR or talent management, the system (a) touches on many or all of your employees but also (b) in a quasi-permanent fashion. A recruitment tool may not be used much by HR (since it’s outsourced ) but it will be used extensively by hiring managers ( admittedly a minority within your employees) AND, since applicants can come from inside as well as outside the company, then everybody in the company becomes a user of the system. And since one can update one’s skills or apply for a new position at any moment, then the system is on permanent use by most or all employees even if the process is managed by an outsourcing provider.

In the case of HR/talent management, where usage frequency and number of users touched by the system can be more important, as well as the fact that those are functions not systematically outsourced, the traditional HRO providers have scrambled to come up with a new offering, usually through acquisitions. Thus ADP, the industry's behemoth, has embarked on a shopping spree aimed at plugging the various holes in its HR offering such as recruitment with VirtualEdge or compensation with Workscape, about which I wrote a post last summer. If Workscape is considered as one of the best compensation tools (especially in the US), it is still unclear what value the integration with ADP's other products brings. And Workscape's performance management was simply ignored in favor of the Cornerstone OnDemand partnership: if ADP prefers to resell a partner's product rather than its own, then don't expect much innovation to come from it. As for VirtualEdge, it was never considered a star product and since its acquisition it seems to have become a Cinderella application. Little innovation is therefore expected to come from it either.

The Indian giants (Wipro, Infosys, TCS and new kid on the block Genpact) are just happy to use whatever platform their customers have and so far have not developed or acquired any other system of their own. Accenture and IBM use a similar approach enriched with strategic consulting and reengineering, but do not innovate on the technology front since they, too, use standard package tools. Actually IBM even got out of the HR software market when it sold HR Access to Fidelity which, after almost a decade with it, has yet to deliver cutting-edge HR technology whether as an outsourcing provider or a software vendor (you can read here my post last year on Fidelity and its HR services.)

NorthgateArinso (NGA), the challenger for the HRO leader's spot, has also gone down the acquisition road. Based on their record they are as much of a serial acquirer as ADP, but most of the HR software companies they have bought have joined their software portfolio more for their country-specific functionality than for their HR-rich content. However, another evolution of their offering, SAP-based euHReka, is a different story. Here NGA has innovated by enhancing the SAP product quite substantially with context-and role-based actions and by reducing the number of screens, something that customers used to the cluttered SAP screens and poor navigation can only appreciate. (A client once complained to me that to create an employee in SAP they had to go through an amazing 12 screens!) Sure, some of the enhancement have been for the vendor's own benefit rather than the customer's (such as multi-tenanting SAP so as to be able to run several customers on a single instance), but the creation of an additional user layer which has brought much improved self-service capability has turned the SAP product into a more user friendly system, something it had never been accused of before. Sure, this is not on a par with the usability excellence of a Sonar6, or even of a Workday, but those SAP customers who have upgraded from their own SAP implementation to euHReka have definitely gained from it.

Unfortunately this latter example is a rare one: outsourcing providers seem to be happy to buy software vendors (when they do) just for the customer base and to be able to tell their own customer, "Hey, look, we too have a talent management offering" (even if limited in depth and breadth) rather than to foster truly innovative features. Don't expect the next revolutionary social HR, mobile HR or user interface to come from these quarters. Maybe that an outsourcing company is too different a business to understand how to make software, even if they had been using some since Day 1.

To be fair to the vendors, one must point out that many customers do not have particularly innovative HR practices to start with (many of them wouldn't have gone down the BPO road in the first place if they had) and therefore don't pressure their vendor to be more innovative. But for those forward-looking and -thinking companies, and which have't been burned out by experience, hope for innovation may well lead them to a third marriage with another provider. Let's wish them "third time lucky".

(The blogger was in Atlanta attending the Analyst and Advisor Summit held by Northgate Arinso. It was also the blogger’s 20^th anniversary of his graduation from the nearby University of Georgia.)

Shakespeare and the debt crisis

2011-03-26T15:52:00.000-07:00

PARIS
In Shakespeare's most famous play, Hamlet, one of the characters, Laertes, is about to embark for Paris and receives from his father some wise advice:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

Hamlet, Act I, Sc. 3, 75-77.

Had our rulers heeded this sound advice proffered by the Bard half a millennium ago we would have been spared the disastrous budget crisis which many countries are suffering from. So many pixels have bounced on our screens on this topic that I feel I must bring my own contribution to the debate.

There's something wrong when people's livelihood is directly decided upon by the financial markets' diktats: cut people's wages and pensions so that you can repay us, bankers and bondholders tell our governments who fall over themselves to accommodate their (and our) true masters. Aren't these modern-day Shylocks (another Shakespearean reference) fat enough? or are they so greedy that they won't stop until they have sucked us dry?

If the weight of debt has become so intolerable that governments can't pay their loans back, well, then don't. I can hear some of my detractors shriek that debts are sacred and should be honored. This is disingenuous and pure hogwash (if hogwash can ever be considered as pure.) Every day companies and people go bankrupt and their creditors don't get paid, why should government be different? After all, the interest rates charged by bondholders reflect the risk they may not be paid: a country deemed solvent (such as Germany) can borrow at a low interest rate, a very risky one such as the PIGS (Portugal, Ireland, Greece and Spain) have to pay much higher rates because they are deemed a riskier investment. So, investors have already been largely repaid by the bigger amounts they extract from governments. Isn't that enough? If I decide to invest in a bakery and customers don't show up, I lose my investment, right? Will anybody come and rescue me? Certainly not the government. That's the purest expression of the market, and I have no problem with that. Why then should bankers and bondholders, who are much wealthier than I, be spared this basic tenet of capitalism? They made a bad investment and should suffer the consequences remembering Shakespeare's words: "loan oft loses itself."

Of course, the consequence for governments is that after they default they will be unable to borrow money in the future. Well, that doesn't strike me as a bad thing at all. After all, wasn't the crisis precipitated by borrowing in the first place? I would argue that we should remove the cause of the problem, and the problem will be solved. As any household knows it's never a good idea to borrow, at least for a long period of time. Sure, when you face an emergency (an unexpected health bill, or a house renovation or student fees for your children) I can understand that you should borrow on an exceptional basis and pay back as soon as you can. But keep on borrowing and pay your debt through even more borrowing and we all know how it will end: in tears. "Never a borrower be," said the man from Stratford.

Now, in my first paragraphs I've been very critical of the financial markets, especially bankers and bondholders, and their responsibility in the current crisis. But intellectual honesty dictates that a big mitigating factor be acknowledged: they have not forced governments to borrow. Criticizing bankers for being leeches and greedy is like badmouthing Dracula for hanging around the blood bank. What else do you expect? But the point is that they haven't held a gun to government's head in order to force them to borrow. Governments have willingly thrown themselves into this vicious cycle which, like its private-consumer variety, is now ending in tears.

Why do governments borrow? If for exceptional reasons, such as a war, a natural disaster, or economic crisis such as a recession, that would be fine. But look at France, a country that has been blessed with no natural disaster in living memory, nor a war for 60 years, and just a few mild recessions. Why then has the French government been unable to balance the books for over 30 years? Yes, you've read right: the French government has been spending more than it's earned since the 1970's, and tears time has come: wage freezes, longer retirement date, cuts in valuable public services such as education, health (I still cannot understand why we are spending €60 billion in defense with no threat from any of our neighbors.) Look around you and most other governments in Europe are in a similar situation (at least, Germany had to pay for the huge one-off cost of Reunification; what has the French government to show for its big debt?)

They say that one should not waste a good crisis. Let's hope that our rulers finally heed the great Will's words that "borrowing dulls the edge of husbandry" and enforce a very simple and common-sense principle: if you cannot have the means of your ambitions, then have the ambitions of your means. If this precept is good for my family, it should be good for the government.

The unbearable dullness of the Academy Awards

2011-03-08T06:11:00.000-08:00

RIO DE JANEIRO
One of life's greatest mysteries is how come that Hollywood, which churns out some of the best entertainment for the world to consume, consistently fails with the annual Academy Awards presentation. The show is a long, tedious, boring affair that drags on for hours. I stopped watching it in the last millennium as I could think of other "pleasures" to inflict on myself, for example corporate PowerPoint presentations (which unfortunately come minus the glamour of Tinseltown.) News reports keep apprising me of how right my decision was, with last week's presentation no marked enhancement on the usual fare.

To make matters worse, the winners are often largely undeserving with some choices utterly puzzling, so we cannot even give the Academy the mitigating circumstance of having picked the truly best, to make up for the horrid show. The prizes (also known as Oscars), awarded by the somewhat grandiosely styled Academy of Motion Picture Arts and Sciences, aim at honoring "outstanding achievement in filmmaking" as its mission statement says. Well, as you could tell from last year's two main contenders (dreadful Avatar and pointless The Hurt Locker) "outstanding" is not exactly the word that comes to mind. In the runup to the Oscars last week I watched some of the most nominated movies and candidate for top honors.

Christopher Nolan’s Inception was interesting, even intriguing in its major concept: can we control people’s minds through their dreams? What about interferences by people’s projections, fantasies and traumas? And dreams within a dream? This attractive idea is served well by impressive sound and visual special effects but in the end it fails to deliver as it is basically all a pretext to just one action stunt after another. Disappointing.

The same adjective applies to The King’s Speech, the winner for Best Picture, Director, Actor and Original Screenplay. The British movie clearly tries to capitalize on the Queen precedent: take royalty, the British variety never ceasing to fascinate, mix the big historical events with an intimate look at the players and you have a crowd pleaser. What was astonishing in The Queen because never done before (along with a brilliant script, assured direction and first-rate performance by Helen Mirren) becomes a bit déjà vu here. Or, to be more accurate, déjà entendu when you hear hackneyed lines such as “These doctors are idiots” – “But they’ve been knighted” – “Which makes it official.” Or “It’s Ma’am as in palm not as in ham” (actually used in The Queen), the marbles trick used in My Fair Lady etc. The desire to humanize the royals at times is absurd: who would believe that the Duchess of York would go on her own to visit a doctor or that she tucks her daughters in bed without the help of a nanny. I almost expected her to start fixing scrambled eggs for her husband in the morning.

Now, I know that films, even based on true events, don't have to be a copycat version of reality, but at least they should have some credibility to them. Who would believe that the father of the Queen of England played the penguin (especially when seeing how stuck up she turned out to be) or that he would use a full range of expletives such as the F word? The latter apart, everything about the four- member Royal Family seems to come straight from a Disney movie (did they produce it?- I checked and the answer is no.) Again such a stark difference with The Queen, which showed that you can express admiration for the monarch while being critical. Sorry, although The King’s Speech is a well made, amiable movie with fine performances, The Queen was definitely a superior movie and this is just another example of the Academy's famous failures at recognizing great cinematic achievement. (It also clear that after Charles Laughton in The Life of Henry VIII in the 1930's, Katharine Hepburn as Eleanor of Aquitaine in the 1960's, Judy Dench as Elizabeth I and Helen Mirren as her 20th century namesake and successor, playing a British monarch gives you a leg up over your Oscar competition.)

The Social Network, another of the major nominees, with a great storyline (sorry for my lack of modesty, but the way they depicted Facebook's founder was very similar to the Silicon Valley CEO I describe in my book, High-Tech Planet). The dialogue at the beginning was quite brilliant and I felt it was a better movie than The King's Speech and therefore should have won.

Actually the best movie-watching experience of these past weeks turned out to be neither of these three but two excellent productions from the 1940's and which I had never seen before. The first one is a 1946 film noir by Richard Siodmak: The Killers, starring Burt Lancaster in his first role and a dazzlingly beautiful Ava Gardner, truly one of the most beautiful animals to have graced the silver screen. Based on a short story by Hemingway, which must have been substantially adapted as I always found the great man a powerful bore, it has all the ingredients of the genre: femme fatale, crime, corruption and unexpected ending, all woven together brilliantly. The other one, The Man Who Came to Dinner, a delightful comedy with Bette Davis in a surprisingly smaller role than usual, was made in 1941, an amazing 70 years ago, and is more enjoyable than most of last year's productions.

These two movies are proof again that only a handful of movies a year are worth spending time on and that if you want quality cinema, then go back to the oldies. As I always tell whomever cares to listen, it is much more satisfying to see a great old film than a mediocre new one. 2010, like 2009 before it, will not remain as a vintage celluloid year.

(Now I can go back to Carnival revelries, today being Mardi Gras is the last day of the annual Rio bacchanalia.)

Arab Revolution - Phase 2: Pharaoh Falls

2011-02-12T08:54:00.000-08:00

BOGOTA
Even from the other side of the world there is no escaping the momentous news, which explains why for the second time in a row I am posting on political developments in the Arab world. Last time, a month ago, when I wrote on the Tunisian uprising which ended the dictatorial rule of Ben Ali, I predicted that Egypt, the heart of the Arab world, would be next. Last Thursday I emailed an old friend of mine: "This is the end of the game for Mubarak. Following his refusal to leave power, the Egyptian people will mount an even bigger rally and protests after Friday prayers in now world-famous aptly named Liberation Square and there is no way the military will allow him to stay. So by next week, and maybe even this weekend, he'll be gone." I was gratified to see I was right: the next day, as the weekend started, Hosni Mubarak, the last pharaoh, the absolute ruler of 80 million Egyptians for 30 decades, resigned in ignominy and fled to his home in the Red Sea resort of Sharm-al-Sheikh probably on his way to Saudi Arabia where, like an elephant cemetery, dictators retire to die.

What does this purport for the region, the world and US foreign policy? Well, much has been written, said, pontificated, hollered about by more knowledgeable people than I, so I don't need to expostulate at length. I would just like to lay to rest some myths.

Myth # 1. A lot is being said about the respect in which the Egyptian armed forces (which are taking over during a transition period) are held. Well, if respect it is, it is the respect spawned by fear, not admiration. What is respectable or admirable about the Egyptian army? Abroad, they waged war against Israel three times, and were defeated three times. At home, they have been the backbone of the dictatorship for decades. Mubarak himself was a general, as have been all Egyptian presidents since the military (yes, they again) overthrew the monarchy in 1952 in what was a coup and not a popular uprising. How ironic that they got rid of King Farouk because he was too subservient to British interests (the power of the day) and they ended up just doing America's bidding.

Myth # 2: Don't believe a single word of all the lofty talk of Obama and Clinton about "the voice of the Egyptian people". Until this week they were backing newly appointed Vice-President Oman Suleyman to take over a vaguely defined transition. But Suleyman is as bad as Mubarak: as head of the intelligence services he has overseen every repressive policy of the last decades including torture, brutal crackdown, censorship, arbitrary arrests, rigged elections and stifling dissent. How can that be a change? Well, it isn't, and that's what America was/is after: to keep the same regime in place under a veneer of pseudo-democracy so that it can continue to implement America's policies in the region. But Vox populi, vox dei. Sometimes you just can't go against the people when they rise in their millions.

Myth #3: The free and responsible media. Yeah, right! I was mesmerized by CNN's coverage which turned shrilly anti-Mubarak referring to him as the dictator at the height of the protests. And yet for decades you never heard anything like that. Had the Egyptian people not risen against the oppressive regime, CNN would have been glad to continue reporting on "Egyptian elections won by the president's party" and leave it at that when it was obvious that last November's elections had been rigged beyond belief. But that didn't seem to bother CNN unduly nor the US government who was quite happy as long as their buddy stayed in power. It was mind-boggling to hear US Vice-President Joe Biden refer to Mubarak as "not a dictator" and this ...as recently as two weeks ago when he was sending his armed thugs against peaceful demonstrators. Just like French minister Frédéric Mitterand protesting on TV channel Canal+ Sunday program that "Ben Ali is not a dictator" when his police was shooting his own people, and five days before he was to flee. The hypocrisy and duplicity of both mainstream media and politicians are seemingly endless. (Do I need to remind my readers about the New York Times endorsing Bush's Iraq war?)

Myth # 4: The Arabs are happy with their lot and never rise up. True, the last major Arab uprising was almost a century ago, in 1916 when they rose against their Turkish overlords in what was to be known as the Arab Revolt (with the help of legendary Lawrence of Arabia) and would lead to the creation of the modern Arab states that we know today and which are in deep crisis. Tunisia then showed the way and the Egyptians were so shamed by this little country to have done what they hadn't dared do that it galvanized them into taking their fate into their own hands. After all, don't Cairenes call their city Umm-ad-Dunia, center of the world? How could they fail where a small Arab country succeeded, they the heart of the Arab world, its most populous country?

Three more points are worth mentioning:

- Technology and especially social media were instrumental in mobilizing protesters and getting the word and pictures out. When Zuckerberg created Facebook in his dorm room several years ago I guess that if he never suspected it would quickly be worth billions of dollars, it is a safe bet to say that it never crossed his mind that it would have such political impact in countries on the other side of the globe. In the tug between the immovable object represented by Mubarak and the Egyptian protesters' irresistible force the latter won because it has Facebook on its side.

- US foreign policy in the region is in complete disarray. It tried under Bush to foment democracy (or so it pretended) for nothing. So when Obama came to power he soon went realpolitik accepting Arab autocrats (but then did he really ever want that to change?) and, bang, Arab democracy explodes in his face. It is too early to make a definite judgment, but I believe that the maturity and commitment of the Egyptian people have shown that they will not accept anything less than a free society and democratically elected leaders. And representative government in Egypt means that US policy (especially as regards Israel) will never be the same, because "Egypt will never be the same again" in Obama's words.

- So, who's next? As (bad) luck would have it, the longest ruling dictator in the Arab world, buffoon Qaddafi (he came to power two months after Armstrong walked on the moon, that is 42 long years ago) just happens to be wedged between Tunisia and Egypt, the two countries which have just chucked their dictators. You can bet that the Libyan dictator is not getting much sleep these days. And today Mahmoud Abbas, the Palestinian president, announced presidential and legislative elections for next September. Considering that his term ended in January 2009 and he decided to stay on without bothering to ask his people how they felt about it, not too soon you might think. And yet CNN has yet to call him a dictator nor does the US administration criticize him for not being elected. Algeria is another low-hanging fruit with its explosive mixture of emergency laws, repressive gerontocratic single-party government and economic. The Saudi king who rules like a medieval monarch supported Mubarak to the hilt until his last moments in office understanding very well what it would mean for his family's shocking and continuing control of a major and wealthy Arab country if Egypt went democratic. Another same-name Middle Eastern monarch, Jordan's Abdallah II, would be well advised to stop appointing the Prime Minister and leave it to elections to decide the makeup of a government. Of course, that means that the Palestinian majority in his country and probably the Islamists would come to power, something the US (as a sponsor of Israel) would hate to happen. But isn't democracy about letting the people choose freely their leaders, whether you like them or not?

- A lesson for US foreign policy is to accept Islamist parties, realizing that (a) the US can't anymore force its will on the Arabs, an ancient and proud people (b) that just like not all Socialist governments in democratic Europe or Latin America mean rabidly anti-American policies, some Islamist parties such as the Muslim Brotherhood may well turn out to be people the US can do business with (along the lines of the AKP government in Turkey.) And remember, most of these opponents of the US became so only after the US engaged in anti-Arab policies. Be more friendly to the Arabs, and the Arabs will be friendly to you.

Finally, to close my thoughts on this truly remarkable and historical achievement, let me share with you three jokes making the rounds in Cairo.

1. Why did it take Mubarak three decades to appoint a vice-president? − Because he couldn't find anybody as stupid a he is.

2. Where does the $1.5 billion in US military aid to Egypt go? − Half is spent on military equipment and half on black dye for Mubarak's hair.

3. As Pharaoh-Mummy Mubarak lies on his (political) deathbed, his counselors gather by and tell him: "Excellency, the Egyptian people are here to bid you farewell." − "Farewell?", the dying man says, "but where are they going?"

After the Tunisian Revolution, which Arab country is next?

2011-01-15T07:26:00.000-08:00

PARIS
In the late 1970's, I was a teenager spending part of the summer in my mother's hometown in Romania when the inhumanity of the Communist regime of the self-styled Danube of Human Thinking, Nicolae Ceausescu, hit me. The paucity and bad quality of goods in stores; the weird cat-and-mouse game we had to play in Bucharest when staying with a cousin so that the resident man from the Securitate (Ceausescu's answer to the Gestapo) wouldn't see us spending the night with her (yes, you've heard right, my mother, as a foreigner, was not allowed to spend the night at her cousin's house!); my great-aunt spending time in jail, after the Communists took over, because she had grown up in France where her sister (my grandmother) still lived thus making her a dangerous counter-revolutionary and Western agent; my mother not being allowed to inherit the house built by her grand-parents (because she was born in Paris and had left Romania); nobody allowed to travel abroad - it all struck me as too weird and inhuman to last. "Maman, this can't go on. Sooner or later the system will collapse," I exclaimed. My mother shook her head and replied with a sad voice, "Look around. Has any Communist regime that has taken over ever lost power? Why do you think your grandmother insisted that I go back to France?" It was true that at the height of the Cold War the Communist-bloc dictators seemed unassailable.

And yet, at the end of the next decade, while pursuing my master's degree in the United States, I was mesmerized by a scene on my TV screen, a scene I never thought would happen. In December 1989, during a speech at the soon-to-be-renamed Revolution Square in Bucharest, something unthinkable took place: Ceausescu, who among his self-granted titles used "Genius of the Carpathians", was booed by thousands of Romanians. Yes, the docile Romanian people who had put up like sheep for decades finally said, "That's enough, we can't stand this anymore. Go!" and rose against the tyrant. Vox Populi, Vox Dei. Three days later, on one of my most memorable Christmas Days, the hated dictator and his wife Elena were executed. Justice and democracy had finally come to long-suffering Romania. But too late for my great-aunt who had died a few years before of a lung disease contracted while in Communist jails.

In the next two decades democracy would soon conquer all of Eastern Europe, Latin America (with the exception of the Castro-engineered hell in Cuba), many Sub-Saharan African countries, part of East Asia including Chinese Taiwan. Only one region held out: the Arab world. From the (Persian) Gulf to the (Atlantic) Ocean, as the phrase in Arabic goes, feudal monarchies, military-backed single-party regimes and presidents-for-life hold sway, impervious to the winds of freedom blowing all over the world, and often actively aided and abetted by Western democracies (now that is an irony.) It was absurdly claimed that Arabs were not wired for democracy, that Islam was the reason, forgetting that many Muslim countries such as Turkey and Indonesia had embraced multi-party democracy quite successfully, some of them even electing female rulers. But Arab countries were still the exception. No velvet revolution there, sheepish Arab citizens just seemed willing to accept their sad lot forever.

When my father's home country of Mauritania, where I spent part of my childhood, elected Sidi Ould Cheick Abdallahi (who went to school in France with my parents) as president in 2007, I held my breath: could that tiny country teach the Arabs a lesson? In Arab League meetings, "Sidioca" (as he was familiarly known) was the only Arab leader freely chosen by his people and you could tell it grated on his colleagues. And you could hear the collective sigh of relief from Arab rulers when 18 months later Sidioca was overthrown in a bloodless coup by a general who wanted to be top dog. Things were back to normal.

So when Tunisians started rioting a couple of weeks ago (almost 21 years to the day after the fateful event in Bucharest) about their economic conditions, neither Arab rulers nor the Tunisian regime's Western backers worried too much. Nothing that a good crackdown, censorship and a few deaths can't fix. And yet day after day, week after week, the ranks of protesters kept swelling as the nature of their demands grew: from lack of employment opportunities to disgust with corruption and, as the death toll rose, to outrage at the killings perpetrated by the police and, finally, demands that President Zine El Abidine Ben Ali, whose 23 years' reign had turned the country into a police state, step down. Then last Thursday, with the whole country in full uprising, I saw on Al-Jazeera TV Ben Ali speak in Tunisian Arabic, to be better understood by a majority of his subjects, that " I have understood you, I will not run again in 2014." My first reaction was, "I don't think you will because you'll be gone well before that." I knew then the game was up for him and it would be just a matter of months, maybe weeks, before he was consigned to the bins of history.

I was wrong. The next day the dictator who had run Tunisia with an iron fist for so long fled the country. Vox Populi, Vox Dei.

The Tunisians had achieved something unique in the Arab world: for the first time an Arab ruler was overthrown not by the army, or a foreign invasion, or a coup, but by the people themselves. For the technology person I am, I was gratified to see that this was also the first digital revolution on record. Tunisians, especially the youth, made great use of Twitter to coordinate rallies and protests, used their iPhones to make pictures of what was happening and posted them on Facebook. With the government preventing foreign reporters from entering the country and covering the events, most of the images we first saw were amateur videos. Tunisians filmed themselves making their own revolution and shared it with the world.

I bet you anything you want that no Arab ruler slept comfortably last night. Most of them are feeling quite edgy, and several must be shaking in their boots. The military-backed FLN party-run regime next door in Algeria is wondering whether its days are counted. Ominously there were riots in Algiers at the same time as in Tunisia, but they were quickly subdued (for the time being?) The Tunisian case, however, shows that any insignificant event can turn into the sparkle that will ignite a full conflagration (in Tunisia it all started with a college-educated street vendor setting himself to fire in protest at lack of opportunities and heavy-handedness by the police) and that no matter how long a people has been cowed there comes a moment when they conquer the fear, break their shackles and there is just no stopping them.

Tunisia's other neighbor, Libya to the east, whose buffoonish dictator has (mis)ruled it for 40 years, could be the next domino. But the biggest prize for popular overthrow of a dictatorial regime would be the country next door: Egypt. This ancient land shares many traits with the situation in Tunisia: heavy-handed security apparatus, corrupt regime, a pauperized majority and a relatively well-educated youth who have been watching with fascination the events that their fellow Arabs have shaped in Tunisia. The current Pharaoh, Hosni Mubarak, who has maintained himself in power for an incredible 30 years (yes, you've read right, he came to power in 1981 when Reagan was president and Gorbachev had not even come to office!) through repression, rigged elections (like Ben Ali in Tunisia he claims at every election an improbable score of 90 to 99%) and support from the United States government. And once Egypt, the heart of the Arab world, falls, the other Arab countries will follow through. History is on the march and it is exhilarating to watch it.

(Tunisia also broke another record. Yesterday at noon Ben Ali was still president, in the evening his Prime Minister had officially taken over only to be succeeded this morning by the Speaker of Parliament. Three presidents in less than 24 hours, that must be a world record, even better than the three presidents Argentina had over ten days back in the early 2000's.)

Can software dinosaurs reinvent themselves as web-based vendors?

2011-01-11T06:19:00.000-08:00

PARIS
Lou Gerstner, IBM's legendary CEO, famously claimed that "elephants can dance" when describing his amazing success at turning Big Blue from a hardware-cum-software company into a services group. This feat is, however, quite unique and cannot be easily replicated. In a recent Linkedin discussion of the HR Technology group, claims were made that traditional software vendors such as SAP or Oracle can turn their offering from on-premise systems (ERP) to web-based ones, also known by the acronym SaaS.

First, let's get the issue of terminology and acronyms out of the way. I've always hated the ERP term, so typical of the IT industry to throw unintelligible acronyms at every technological innovation. Most laymen would just stare at you blankly if you told them they needed an Enteprise Resource Planning to manage their business functions in an integrated way. Why not call it Integrated Business System (IBS)? Wouldn't this letter combination be as good as any, with the added advantage of actually meaning something? (The rational French translate ERP as PGI- Progiciel de Gestion Intégré or Integrated Management System) Now that a new IT model is taking root, guess what? We need a new, incomprehensible acronym to befuddle people even more. And thus was SaaS born to refer to software that instead of being installed in your own computers within your company's walls, is accessed to, and your data saved, online (just like Hotmail versus Outlook.) But why call it Software-as-a-Service, when web-based or online software does the job as adequately and more meaningfully? But the IT industry wouldn't be what it is if it spoke in plain English. Maybe we are subliminally implying that the older, on-premise systems were software-as-a disservice? In which case it would make sense to me. (According to another buzzword and misnomer, often used in conjunction with SaaS, these applications are supposed to reside in a somewhat magical world called The Cloud. Nothing could be further from the truth as these applications are dished out by servers parked in data centers grounded on terra firma.)

With this off my chest, let us get back to whether the traditional software vendors (or dinosaurs to remain with an animal-kingdom image) can reinvent themselves by embracing this brave new world of SaaS. The first question that many people will ask is whether that is an issue at all. Surely, there will always be companies that would rather own their HR system (or other business software) than rent it, won't there? Well, if you look at the evolution of IT, not really. Why bother having huge inhouse data centers with legions of IT specialists when you can have somebody else bother about it and you just pay as you use it, like a utility? Actually the comparison with utilities is spot on. When electric power came about, most companies had their own generators. But when power transmission prices came down it was easier to be far from the source and then companies realized they could sell their surplus power to other companies. From then on it was a short hop for specialist companies to produce and distribute power. Who now in their right mind would want to have their own power generator?

Some defenders of the software ancien régime will press the point that with your own product installed within your company's walls you can customize it to your heart's content, something you can't do with a web-based application. Let me remind you that (just like with electric power) initially companies built their own business applications before realizing it was more cost-effective to buy it from a software vendor. The buy-vs.build debate was won by the package-software firms who won the resistance of the home-made lobby who led a rearguard battle to keep IT inhouse as the only guarantee that "all our requirements can be met."

The arrival of SaaS heralds another sea change in IT summarized by the phrase I used in the earlier paragraph: "Why buy it if you can rent it?" Configuration capabilities will win over customization defenders. And even if the traditional-software vendors, as befits an incumbent industry, still make out the lion's share of the business-application market, the trend is unmistakable: a growing number of HR system projects are now implemented through a SaaS model. The minority is soon going to be a majority. The question is therefore no longer whether old software companies should or want to test SaaS waters , but whether they are capable of doing so with a modicum of success.

In the Linkedin discussion I alluded to in the opening paragraph, it was claimed that the flagship product of one such dinosaur, Oracle EBS, in its release 12 variety had morphed into a full multi-tenant product. For you laymen, a multi-tenant system is one where many different companies can be managed in a single instance of the system, something that traditional software vendors never bothered to do since they sold their products to a single customer. However, now that consumers (of the corporate variety or not) do NOT want to own the system, but are happy to access it online, it becomes vital to be able to provide it to many users at once. This issue of multi-tenancy actually predates the rise of SaaS since to be able to provide outsourcing services on traditional ERP systems (oops, sorry, integrated management systems) required such a feature and yet Oracle never managed to develop it until now. But has it?

To add to my list of bestial metaphors, can a zebra really shed its stripes? Can an old dog learn new tricks? I doubt it. Oracle's DNA was in the database business which explains why it never managed to become the leader in the applications business thus obliging it to resort to buying the leaders in the various business software spaces (PeopleSoft in HR, Siebel in CRM/marketing, Hyperion in analytics.) But even there it remains a traditional, on-premise vendor. As Naomi Bloom, our grande dame of HR software, quite rightly said, no amount of functional enhancements can change that fact. The SaaS business is radically different from the traditional software one. Let's consider the just two points:

1. Even if Oracle has managed to add an extra layer in EBS 12 to allow storing data across several companies, that doesn't make it true multi-tenant. What about cross-customer processes? Can Oracle EBS truly launch a single payroll process for several customers at once? Produce reports? So far, the only ERP partner that has had some success in multi-tenanting an old system is NorthgateArinso with their SAP-based platform, euHReka. (All outsourcers who did not build their own platform are struggling with this issue, from Fidelity to the big Indian BPO powerhouses.)

2. Even if Oracle were to truly multi-tenant its offering (a big if, knowing that most of their R&D resources are focused on Fusion), there is more to SaaS than just a multi-tenant model. The existence of multiple versions, for one thing, precludes it being considered as a true SaaS offering.

If you look at the emergence of SaaS vendors, all have been products that were designed from the start as such (Workday, Salesforce etc.) Jurassic vendors such as SAP and Oracle are not nimble enough in their business models and product architecture to reinvent themselves as true SaaS vendors. There is a reason, after all, why dinosaurs who once roamed our planet as its undisputed masters disappeared: they share many traits with these old software vendors - big strong bullies who couldn't adapt and had to make way for humans, a much smaller species. Our software dinosaurs can tweak their systems any way they want, it will not make them a true SaaS offering. It is more likely to end up as a turkey since it will be nothing more than lipstick on a pig- and I shall stop this software bestiary at this last four-legged image.

Better late than never! Vargas Llosa receives the Nobel Prize for Literature

2010-12-25T04:55:00.000-08:00

The blogger's personal collection of Vargas Llosa books

PARIS
Exactly twenty years ago, while doing my master's at the University of Georgia I visited a childhood friend of mine who was teaching French Literature at the University of Virginia in Charlottesville and, while book browsing in a bookstore, one of my favorite hobbies, he recommended buying La tia Julia y el escribidor by Peru's greatest writer, Mario Vargas Llosa (MVL.) Although I didn't speak Spanish then I said, "why not?" and bought it. Little did I know that less than four years later I'd be living in Spain, learning the language and finally getting to read the first Spanish book I bought. And boy was I in for a treat: switching between the daily life of an 18-year old writer-to-be, clearly modeled on the author, and between stories that seemed to have nothing to do with the main storyline, I was fascinated by the power of his writing, the sights, sounds, emotions, family drama of living in Lima, Peru, and beyond that Latin America. And when I reached the "aha" moment, when the link between the seemingly disparate stories and Varguitas' life is suddenly understood, it was quite an epiphany.

Ever since that moment I was hooked on MVL's writing. Not only the comedies such as La tia Julia or the brilliant satire of Pantaleon y las visitadoras (the description of a brothel business run by the government for its military, couched in bureaucratese language is hilarious) but the more politically engaged ones such La ciudad y los perros or La fiesta del chivo. The latter is one of the best books, novel or non-fiction, ever written on power, in particular the autocratic variety: it dissects the mechanics of a dictatorship and how a tyrant, in this case infamous Trujillo in the Dominican Republic, manages to hold his power on a whole country for so long. A fast-paced historical novel, it is a fascinating read which I'd recommend to anybody interested in Latin America, politics and fine writing. Read it and you will understand more about autocratic power than any lengthy academic tome. (A decade later I would find myself lost in thoughts across the Presidential Palace in Santo Domingo reflecting on the people and events described by MVL)

With such a record, it had been a mystery to me that the Swedish Nobel Prize Committee could still ignore such a giant. But, then, have they not ignored Marcel Proust, Franz Kafka, James Joyce, Jorge Amado and Graham Greene? And have they not awarded the coveted prize on unknown writers such as last year's Herta Muller, a German-Romanian I had never heard of - and being half Romanian myself I should. Or Le Clezio, a French writer also unknown to me: yes, although I was born in France with French as my first language and a voracious reader of the country's literature I had never heard of this winner of the Nobel Prize for Literature a few years ago. And I'm not mentioning the countlesss other obscure ones, nor the puzzling choice of Barack Obama last year as the recipient of the Nobel Peace Prize: not only had he done nothing noteworthy in the pursuance of peace but he's managing two wars (true, he didn't start them, but neither has he brought them to an end yet.) You get my drift: awarding a Nobel prize is a hit-or-miss thing and I was gratified that this year was a vintage one with unanimous applause for the choice of MLV.

The only debate now is which of he or the other great Latin American writer, Colombia's Gabriel Garcia Marquez, is the greatest? One can say that MVL is more intellectual while Gabo's language is more poetic, but also that if you were to pick one single book of each writer, Garcia Marquez will win with One Hundred Years of Solitude which is one of the best novels of the 20th century and is therefore a more uplifting read than any single book written by MVL. However, if you look at the overall output, MVL has written more satisfying books than Gabo. So it's probably either a draw, or a slight advantage to MVL.

At the glittering ceremony in Stockholm this month, MVL made an acceptance speech that is already considered a classic. A PDF is available from the El Pais website. For non-Spanish speakers let me translate (approximately) some highlights of a profoundly intelligent, humanist, courageous, beautiful and emotional speech entitled "In praise of reading and fiction."

   Flaubert taught me that talent is a stubborn discipline and long patience...If I were to call up all the writers in whose debt I am, their shadows would throw us into darkness...Just as with writing, reading is a way of protesting against the inadequacies of life...We invented fiction in order to be able to live the many lives that we would like to live while we only have one....

   Literature creates a brotherhood inside human diversity and hides the frontiers that ignorance, ideology, religion, language and stupidity put up between men...I never felt I was a foreigner in Europe, nor in reality anywhere else. In all the places where I've lived I felt at home. I carry Peru in my guts, because that's where I was born, grew up, was trained, and lived those childhood experiences which molded my personality and created my vocation: there I loved, hated, enjoyed, suffered and dreamed....Peru is the whole world in a smaller format. What an extraordinary privilege for one country not to have one identity because it has them all...

   I hate all forms of nationalisms because they make a supreme value of the pure random circumstance of one's birthplace...

   I was 11 when I lost my innocence and discovered loneliness, authority, adult life and fear. What saved me was reading, reading good books, taking refuge in those worlds where life was exciting, intense, one adventure after another, where I could feel free and become happy again. And it was the fact of writing, in hiding, the way one yields to a shameful vice or forbidden passion. Literature stopped being a game. It became a way of resisting adversity, protesting, rebelling, escaping what was intolerable, it became my reason to be alive...

   It has always fascinated me to imagine the uncertain circumstances in which our ancestors, barely different from animals, having recently developed speech to allow them to communicate among themselves, started, in caves and around fires, during nights full of danger - lightning, thunder, beast grunts - to make up stories and tell them to one another. That was the crucial moment of our destiny, because in those groups of primitive beings hanging by the voice and imagination of the storyteller, started our civilization ...

   That is why, we have to repeat it incessantly until we convince the new generations: fiction is more than entertainment, more than an intellectual game that makes your sensitivity more acute and develops your critical sense. It is a vital necessity for civilization to continue to exist, renew itself and preserve the best of our humanity...And because a world without literature would be a world with neither desires nor ideals, a world of robots shorn of what makes a human truly human: the ability to grow out of themselves into somebody else, somebody molded from the clay of our dreams.

(All of Mario Vargas Llosa's books have been translated into English. I am using here the original Spanish-language titles since that is how I know them but here are some English-language titles: La Fiesta del chivo was translated as The Feast of the Goat and La tia Julia y el escribidor as Aunt Julia and the Scriptwriter.)

The pros and cons of being an IT early adopter

2010-12-13T07:12:00.000-08:00

PARIS
One of the trickiest issues faced by a company about to select a new business software (HR or otherwise) is the early-adopter dilemma. Imagine that you have a favorable view of your IT vendor, probably because of a long association or due to a great rapport with your account manager whom you have come to trust over the years. When a new need emerges (say, you are expanding into a new country and need to manage and pay the local workforce) you naturally turn to your vendor who had already provided you with a payroll engine and the "legs and regs" (local rules in our HR tech jargon) for your home country.

Like all IT vendors, yours will tell you through an enthusiastic sales rep, "no problem, can do." Except that there is a little snag: that local payroll is still being developed (if work has started on it at all) and there is no customer live...yet! Actually they are offering you the great honor of being the first customer, or "early adopter" in softspeak. In plain English, they want you to be their guinea pig.

If you have followed a strict software-selection methodology (such as the one I advocate) you'll probably pause for thought: Shall I do this? Can I trust them? If nobody's bought it yet, or they haven't developed it, maybe there is a good reason for it. This is not an academic question: Oracle, to take one example, developed in the early 2000's a French payroll and failed to get a first customer to use it since the market had serious doubts about the quality of the product. Not even Oracle France was willing to "eat their own dog food" as the phrase goes!

The above are all valid questions and don't let your account manager brush them off as if they were insignificant specks of dust. Not weighed carefully, these issues may well make all the difference between success and failure in your software project.

If you've had a long association with the vendor and like your account manager, shouldn't this be enough? These are helpful points but should not sway you unduly: after all, the account manager can leave the next day and be replaced by an indifferent or incompetent executive. (That is if they are replaced at all - I've seen customers left with nobody to manage the relationship for years!) And just because your vendor was good at one offering is no guarantee that they will be good at another one: many recruitment vendors have lousy learning features and vice versa.

On the plus side, there is one key advantage which the vendor's sales rep will probably be trumpeting high and low: as a first customer, you get to drive the direction of the product, ensuring your needs are covered. "Your requirements, your whole requirements, nothing but your requirements," your account manager will be waxing lyrical (and commercial.) And who can deny the appeal of having a customized product built as a package system? Doesn't it sound like the best of both worlds?

Maybe, unless the vendor is less than forthcoming with you and is using you just to test the waters. You need to be convinced that after the initial release the product will not be shelved, as it has happened with several products under so-called "controlled availability." Sure, there is no guarantee of eternity in the IT industry (just ask PeopleSoft customers), but you need to factor that in as part of your due diligence. In particular make sure that the vendor has done their market research adequately and that they're in it for the long haul so that, should the first customers trickle in at a snail's pace, the vendor will still stick by the product and not fold it after a couple of disappointing sales quarters.

One thing to check is the vendor's historical credibility. Are they close to their customers? Have they consistently developed according to plan ("the roadmap" in our lingo.) Is this new product of theirs a key area for which you can expect them to make every effort to be successful, or is it just one among a huge portfolio? If the latter, then the risks are definitely higher. And look at yourself in the vendor's larger business scheme of things: are you a major customer? You don't have to be a global one, but be clear eyed as to the place you occupy in your industry or geography. To remain with another example of a French payroll (successful this time), are you like Société Générale, a major company, in a major industry in a major market? If yes, then chances are that the vendor (in this case it was PeopleSoft and the first country extension of their new Global Payroll) will go to great lengths to deliver as promised. (For how to deal with a software vendor bent on reneging on their commitments - apologies for hawking my book - you may find useful Chapter 7 "Going 'Glocal' " of High-Tech Planet: Secrets of an IT Road Warrior, on the politics of arm-twisting to get what, after all, you've been promised and have already paid for handsomely.)

Another criterion you may want to take into account is the fact that there is a difference between being asked to be a guinea pig for for a new product covering a mature function (such as the abovementioned payroll) and one which deals with a newish area, such as onboarding. In the former case, the market requirements are generally well-understood and the only doubts are about the vendor's ability to translate them into bytes and pixels. In the latter, the risks are multiplied by the still fuzzy understanding of what will be automated. In particular, pay attention to the internal resources the vendor is committing to the product.

Although personally I don't believe in the concept of co-development between a vendor and a customer (there should be only one development organization, and its place is within a vendor's walls since that's their business) you as a customer should be quite vigilant about what goes on within those walls. Otherwise you may come to regret having traded the peace of a "laggard" for the excitement of an early adopter. The software graveyard is littered with the bodies of early adopters who ended up being the only adopter.

Lula wins "third" mandate but is it for "presidente" or "presidenta"?

2010-11-05T03:47:00.000-07:00

The blogger in the World Heritage Portuguese
town of Oporto the day Dilma Rousseff was
elected. Even the Brazilian community
in Portugal voted for her in similar
proportions as back home

OPORTO
When Ronald Reagan ended his second term with high approval ratings, since the Constitution prevented him for running for a third one ("an infringement on your right to choose your leader" the Gipper told he American public) he campaigned for his heir, his vice-president George H. Bush, who duly won the election. It was said then that was Reagan's third electoral victory. This week's victory by Dilma Rousseff as Brazil's first female president, can be considered even more so as Lula's victory (he is on record as saying during the campaign that "my enemies [from the PSDB party] will not defeat me" as if he were on the ticket - which, in some fashion, he was). It was his astonishingly high approval ratings (over 80% after eight years in office, something Obama can only dream of this week that saw him repudiated in the mid-term elections) that allowed him to pick his successor. Dilma (according to Brazilian usage, celebrities, especially politicians, are referred to by their first name) had never run for office, let alone won any, and although a competent administrator, was not a political force in her own right - unlike neighboring Argentina's Cristina Fernandez who, before succeeding her husband as president, was a powerful senator. It is a testament to Lula's popularity and charisma that, first, he imposed Dilma on his Workers' Party as their official candidate and, then, campaigned relentlessly for the Brazilian people to vote for her. But Brazilians are more politically mature than one might think, and they forced Dilma through a runoff before giving her the presidency. And her share of the vote (56%) was much less than Lula got in 2006 (60%) itself slightly less than he got in 2002 (61%). The trend is unmistakable: it reminds me of the Socialists in Spain in the 1980's/90's. Under Gonzalez they had an overwhelming majority which shrank and shrank until they became a minority having to resort to an alliance with regional parties (from Catalonia and the Basque country) to remain in power before the opposition finally got a majority of the vote.

My prediction: in 2014, provided the economy is still purring along (when I look at the 80% real estate price increase in Rio de Janeiro's posh neighborhoods, I wonder about a bubble in the making) and the World Cup is not a disaster, Dilma may scrape through with just over 50% in a second round of voting. 2018 will see the opposition come back to power, never a bad thing after almost 20 years of same-party rule.

In the meantime a first controversy awaits Dilma: will she be known as "Presidente" (the masculine form in Portuguese) o "Presidenta" (the female version)? (Also, I have yet to see her referred to as "Dona Dilma" the usual form for Brazilian first ladies from the days of the monarchy until now.) One of Brazil's most respected newspapers has already made up its mind: the Folha de São Paulo has decided it will be "A presidente", but Dilma in her first speech after her victory referred to herself as "presidenta." (In France we might have a similar issue in 2012 if a woman runs for president, many people, especially conservatives, insisting that a female leader is "Madame le président"; in the Hispanic world the feminine is used: Cristina Fernandez in Argentina is known as "la presidenta" as Michelle Bachelet was in Chile.) When linguistics and politics meet, things rarely remain dull.

Who Will Inherit PeopleSoft's Crown?

2010-10-19T05:59:00.000-07:00

PRAGUE
Spending a few days in the fairytale Czech capital where I presented the DOs and DON'Ts of HR technology projects at the HR Directors' International Summit, I was surprised by how many of the 150 attending HR leaders asked me which vendor I saw most likely to inherit the mantle of HR technology leader now that PeopleSoft is slowly but steadily fading into the sunset. Here is my list of pretenders to the crown of industry leader.

The official heir apparent, Fusion, touted by Oracle as the successor product, can safely be ruled out since it has yet to be born (meaning it hasn't been shipped), has no customers live on it and from what has been shown at various events and leaked, is missing many ingredients of a global Human Capital Management-HCM (payroll, localizations, recruitment). Could the other ERP behemoth, SAP, take over? Its qualifications are indeed stronger as they include a higher number of customers around the world and a proven HCM system which, for all its faults (overly complex, not particularly user friendly, expensive) is now well established. However, to be recognized as the undisputed HCM leader as PeopleSoft was for a good decade, requires to be a visionary and trendsetter, something nobody has ever accused SAP of being - and let's face it: most SAP customers don't choose it for its HR offering, but usually for other business functions such as Finance and Manufacturing and then adopt HR which SAP still gives the impression of having developed as an afterthought.

What about the latest kid on the block: Workday? Although they are still missing recruitment and learning modules and are pretty thin on the localization front, they have unmistakably provided the kind of innovation not seen since the PeopleSoft days. And I'm talking here not only about their SaaS architecture (nobody has ever tried a SaaS payroll before) but also about their unique customer orientation which has all the marks of transforming the industry. However, it's still early days to say whether this promising young prince has come of age to claim the crown.

These three previous contenders are all ERP vendors (or integrated business systems to the layman.) What about HCM-only vendors? After all, when PeopleSoft came to the market it was an HR-only product which, even after it morphed into a full-fledged ERP, remained its flagship product. Could the new king come from the rank of pure HR players? In the US, Ultimate and Kronos, while established vendors with solid products, cannot be seriously considered as they fail on both the talent-management front and globalization. Neither can Lawson, too, whose half-hearted attempts at becoming a global vendor have been met with matching results.

Could it be that the next leading HR vendor would come from the Old Continent? After all, this is where SAP hails from. Spain's Meta4 was once upon a time close to being anointed as official heir with a revolutionary object model, full HCM offering, various localizations, a visionary knowledge-management approach. It had all the makings of a king in waiting until it f(l)oundered on a string of acquisitions, buyouts, management shakeouts from which it never recovered, happy to live off its established customer-base maintenance. IBM's high hopes in France-based HR Access never materialized  and it sold it off to Fidelity which, eight years on, is still unable to develop it in its own home market of the US (Meta4 wasn't more successful there, either), and it remains mainly a payroll provider with limited HCM functionality and an old technology focusing on some European geographies.

What about outsourcing vendors? Taking a (smaller) leaf from the Oracle book, ADP has been beefing up its offering with various acquisitions, but it still remains to be seen how it will all play out and for the time being the Grand Old Lady of Roseland can only be considered as a long, long shot in the race to the top.

Casting our net wider in our search for this elusive king maybe that some talent-management vendors, the fastest growing segment of the HCM market, could grow into a mature HCM offering with all the thought leadership required to become the industry's leader. There are indeed some amazing products in this space. Will New Zealand's Sonar6 show that the sun indeed rises in the East? Although its performance product is one of the most innovative (with a truly impressive user interface) and the company one of the most creative around, it is way too niche to ever blossom into a full-fledged HCM offering, the key prerequisite to be considered as the leader. Only integrated talent-management vendors have the wherewithal to reach the throne, or at least the steps leading to it. Taleo? Could be, if it manages to integrate successfully its newly acquired learning offering and decides to develop an HR administration module. Will it bring something altogether new to the industry?

And here's the rub: none of these HCM suite/integrated talent-management vendors has really brought knock-out innovation, with the exception of Workday on the delivery model and, to some extent, customer relations. Here are some ideas that current or prospective vendors could consider:

1. What about a vendor that will rearchitect their offering, or build a new one, around a new HR data model that will bring a new way of managing employees, organizations, jobs and positions? Provide the flexibility and depth of functionality along with the ease of use required by 21st-century companies?   Will SuccessFactors, a clear leader in the talent-management space (but still without a learning system) develop such a product that would be a marked enhancement on the old data design of "SOP" (SAP, Oracle and PeopleSoft)?

2. What about bringing to the market a full HCM solution built along the lines of a social network? Just like when PeopleSoft introduced release 8.0 with a full internet interface: since most people were used to working with a browser why not give them an HR tool based on such an interface, was the thought then. Following the same thought process, wouldn't it be great to have an HCM solution that looks like Facebook or LinkedIn? After all, many key HR processes such as recruitment or career paths, are better done now using social networks than any other tool. (I'm not talking here about the collaboration features slapped by some vendors on their offering more for show than for substance, but of a full-fledged social HR)

3. Or a user experience ( à la Sonar6, say) or quality of service/support that will at long last reconcile vendors and users? There is little doubt in my mind that whoever manages to reinvent the long-broken dialog between software provider and users will be offered the crown by legions of enthusiastic customers disillusioned by years of poor service and lousy support.

4. What about open-source HR? So far, the only vendor that has gone down that road with some visibility has been OrangeHRM, but it still remains a very confidential offering and success for this model is far from assured. Or using Google features (such as Google Search Appliance) for a recruitment tool whose database is the whole internet: after all, most CV's are now available for anybody's perusal on the web. Wouldn't it be great to just enter some key words in your Google search box and you get a list of relevant candidates?

5. Maybe "mobilizing" HR: with a workforce increasingly mobile, maybe the market is ready for the first fully mobile HR offering. Again, as with social networks, I'm not talking here about redesigning a few screens so that users can fill their timesheets or do their expenses on their iPhone or Nokia (something which already exists), but having the full application written for smartphones. Just as people are spending more and more time on social networks so are they getting glued to their cell phones (even accessing the former through the latter.) What would be better than to give them the HR tools they need on their device of choice?

6. Anything else that my limited cognitive abilities have yet to envision?

It is obvious that an indisputable leader has yet to emerge and convincingly claim PeopleSoft's crown. The King is dead, long live the King...if we can find one!