LICENSED FOR DISTRIBUTION

Magic Quadrant for Cloud HCM Suites for Midmarket and Large Enterprises

Published: 15 August 2017 ID: G00311577

Analyst(s):

Summary

HCM suites enable core HR, payroll, talent, workforce management and HR service delivery processes. Application leaders in entities with over 1,000 workers and emerging global needs that are pursuing a cloud HCM strategy should use this research to help identify vendors for further evaluation.

Strategic Planning Assumption

By 2020, 30% of global midmarket and large enterprises will have invested in a cloud-deployed human capital management suite for administrative HR and talent management, but will still need to source 20% to 30% of their HCM requirements via point solutions.

Market Definition/Description

Cloud human capital management (HCM) suites deliver functionality that helps organizations attract, develop, engage, retain and manage their workforces. These solutions support a variety of HCM capabilities (albeit to varying degrees based on the offering), including:

  • HR administrative functions (admin HR) — Include core HR (organizational and employee data, employment life cycle processes, transactional employee and manager self-service), benefits and payroll administration; may also include occupational health and safety, grievance tracking, travel expense management, or other areas.

  • HR service delivery (HRSD) — Includes direct access to policy and procedure guidance for employees and managers; may also include case management, knowledge base and digital document management.

  • Talent management (TM) applications — Include recruiting, onboarding, performance management, compensation planning, career and succession planning, learning and development, and workforce planning.

  • Workforce management (WFM) — Includes absence management, time capture, time and attendance evaluation, task/activities tracking, budgeting and forecasting, and scheduling.

HCM suites and their individual applications also provide reporting and data as needed by local and international regulations, and often include analytics and dashboard capabilities. Transactional employee and manager self-service have become embedded roles within these solutions, and the ability to support mobile access has also become a fundamental part of these offerings. With increasing frequency, we see the inclusion of tools and applications embedded within HCM technologies to infuse traditional processes with collaboration, and capitalize on approaches that leverage social channels in the workplace to enhance overall user engagement and productivity.

In addition, the need for a global HR system of record (SOR) continues to move down market. Already embraced by many larger enterprises, globalization is increasingly affecting midmarket organizations as well; the need to operate in multiple countries with diverse regulatory, data access and privacy requirements has become common. A robust and consistent repository of HR demographic, organizational and (often) talent data is viewed as necessary to remain both compliant and relevant in a very competitive business environment. As a result, this Magic Quadrant as delivered evaluates how well a given vendor can satisfy HCM functions for both large and midmarket enterprises and across multiple geographies, from both strategic and tactical standpoints. Clients with a limited worker presence outside their home region (of North America or Europe, for example) may get a more accurate representation of vendor capabilities by exercising one of the following options:

  • Use the interactive Magic Quadrant and set the Geographic Strategy criterion to its lowest weighting.

  • Review "Critical Capabilities for Cloud HCM Suites for Midmarket and Large Enterprises" ; this contains four specific use cases for organizations, three of which have a more limited regional focus:

    • Core HR plus talent HCM suite for larger global organizations (more than 5,000 workers)

    • North America midmarket HCM suite (1,000 to 5,000 workers)

    • European-headquartered midmarket HCM suite (1,000 to 5,000 workers)

    • North American administrative compliance suite for hourly workers (1,000 or more)

Cloud HCM suites have entered the market from many different directions, emerging via native development, acquisition or expansion into a suite offering from their roots in admin HR, WFM or TM.

This Magic Quadrant's scope reflects Gartner's definition of "postmodern ERP": a technology strategy that offers diverse options for automating and linking administrative and operational business capabilities with levels of integration that balance the benefits of vendor-delivered integration against customers' requirements for flexibility and agility (see Note 1).

Therefore, this Magic Quadrant features two types of vendor:

  • Vendors developing, selling and marketing a single integrated solution with a single user experience (UX), data model and code base. These vendors each receive a single dot in the Magic Quadrant graphic.

  • Vendors developing, selling and marketing multiple, distinct products. These offerings have workflow integrations, use vendor-supported integration technologies and are positioned as components of a "solution," rather than as stand-alone products in the vendors' portfolios. These vendors also receive a single dot in the Magic Quadrant graphic. We have incorporated any user feedback on these products' integration into their vendors' scores for the Product/Service criterion under Ability to Execute. We have considered the degree of market suitability of the portfolio in our assessment of the Market Understanding and Offering (Product) Strategy criteria under Completeness of Vision.

In recognition of the growing adoption of loosely coupled HCM and financial applications, this Magic Quadrant focuses solely on vendors that actively market cloud HCM suites on a stand-alone basis to midmarket and large enterprises. It does not cover vendors that sell HCM applications only in conjunction with broader financial or integrated ERP offerings (as is common among ERP suites for midsize enterprises). Such solutions prioritize financial functionality and integration over HCM capabilities, therefore deliver basic HCM functionality that is more suitable for organizations with fewer than 1,000 employees.

Because the many definitions of "cloud" that currently pervade the HCM market have led to much end-user confusion over current deployment models, this Magic Quadrant covers only vendors that deliver their solutions via either a shared community cloud or a public cloud — vendor-managed or in conjunction with an infrastructure as a service (IaaS) provider such as Amazon Web Services or Microsoft Cloud. This Magic Quadrant does not include vendors that sell only on-premises HCM solutions (although those that sell both cloud and on-premises solutions are included).

Gartner estimates that the overall market for HCM software (including both on-premises and cloud/SaaS solutions) reached $10.4 billion in 2016. We forecast it to grow to $11 billion by year-end 2017. From a revenue share perspective, 2017 will also see SaaS revenue overtake on-premises-based licensing and maintenance revenue. Vendors will push toward cloud adoption, and organizations staying with on-premises solutions will suffer from limited and more cumbersome innovation.

Vendors with existing on-premises customer bases that are aggressively selling their cloud solutions (such as SAP and Oracle) are not only taking share from other vendors, but often cannibalizing their own on-premises revenue streams as well. They may also be losing some on-premises customers to cloud-only alternatives in this very competitive market. In the meantime, TM module uptake continues to show steady growth, whether from HCM suites, TM suites or TM point solutions.

As many vendors still have large on-premises installed bases that need to make decisions on how they will upgrade their HCM technology, Gartner expects that continued interest in cloud HCM suite solutions will drive considerable market activity for at least the next three to five years.

Magic Quadrant

Figure 1. Magic Quadrant for Cloud HCM Suites for Midmarket and Large Enterprises
Research image courtesy of Gartner, Inc.

Source: Gartner (August 2017)

Vendor Strengths and Cautions

Note that all mentions throughout this section to "customer satisfaction ratings" or "survey respondents" or "customer reference feedback" refer to an end-user survey performed in conjunction with this Magic Quadrant (data collected 3 April through 5 May 2017), where vendor-provided customer references rated various overall, functional, product and vendor customer relationship (VCR) criteria on a 1-to-5 scale (1 = Extremely Dissatisfied, 5 = Extremely Satisfied). All mentions comparing a vendor's customer reference feedback to "average" or "mean" refer to a calculated mean of the reference cohort relevant to this market (please refer to the Evidence section for more details on this survey). All reported vendor customer counts are as of June 2017, unless otherwise indicated.

ADP

ADP Vantage HCM is a SaaS solution targeted at North America-based multinationals ranging in size from 1,000 to 10,000 employees (although a few deployments are significantly larger). ADP reports that over 550 customers had selected its solution as of April 2017 (more than half being live), and that these customers track workers in more than 50 countries. In January 2017 ADP acquired The Marcus Buckingham Co. to bring to its clients a more scientific approach to engagement and performance, and the acquisition's StandOut solution is now an option for Vantage HCM customers. ADP is a Challenger in this Magic Quadrant.

Strengths
  • ADP has a long track record in outsourced payroll services and an unmatched global payroll presence, with 15 service centers providing direct support in 28 countries and 84 more via partners using ADP Streamline. It is a primary payroll partner option for many HCM suite vendors.

  • Customers can supplement Vantage HCM functionality with a broad set of ancillary ADP software and services for engagement measurement, compliance, document management, benefits administration, recruitment outsourcing and analytics/benchmarking. They can also leverage the ADP Marketplace of more than 170 partner applications integrated via standard APIs.

  • Continued investments in implementation and deployment as well as ongoing support processes have resulted in a notable improvement in customer reference feedback, with all vendor customer relationship (VCR) criteria above the mean.

Cautions
  • Since the release of Vantage HCM by ADP in 2013, customer adoption has not kept pace with that of many HCM suite competitors. However, the live customer base has grown large enough to improve the availability of references for prospects considering the solution.

  • ADP Vantage HCM currently lacks workforce planning capabilities.

  • ADP customer adoption of Vantage HCM learning, career development and succession planning lags that of many HCM suite competitors. This may indicate less-developed functionality in these modules.

Ceridian

Ceridian's 2012 acquisition of WFM vendor Dayforce initiated its entry into the cloud HCM suite market. Ceridian has rapidly added capabilities since then, and Dayforce HCM is used by more than 3,500 North American customers to manage their workforces in more than 20 countries (almost 3,000 customers were live as of May 2017). In 2016 Ceridian concluded an agreement with European HR software and BPO provider SD Worx to sell and implement Dayforce HCM in that region. The product is well-suited to North American organizations requiring tight integration of WFM to admin HR (including payroll and benefits administration), along with emerging talent management and global needs. Ceridian is a Challenger in this Magic Quadrant.

Strengths
  • Dayforce HCM is a natively developed, single unified solution spanning core HR, WFM, payroll, benefits and talent functions.

  • The robust WFM capability of Dayforce HCM (including labor scheduling and optimization) outstrips that of most HCM suite competitors, and rivals that of vertical industry point solutions.

  • Client reference satisfaction with Ceridian's enhancement request processes is well above the mean, and in the top third of vendors evaluated for this Magic Quadrant.

Cautions
  • Full support for TM is still emerging. There are no customers live on learning (recently announced) or compensation planning (recently enhanced), and succession planning was pushed from late 2016 to early 2018 based on customer preference for earlier delivery of the aforementioned TM modules. Ceridian's existing TM functionality is best-suited for midmarket companies, and may not satisfy the most complex use cases of large global enterprises.

  • While overall VCR satisfaction was at the mean compared to the overall reference sample, Ceridian references were less satisfied than average with initial implementation and deployment as well as handover from implementation to support. Ceridian has initiatives underway to improve implementation speed, cost and quality, which should help both of these areas in the near term.

  • Dayforce HCM deployments outside of North America are limited (except for stand-alone WFM implementations). This may affect the ability of prospects in other regions to find enough references similar to their size, industry and planned functional scope.

Infor

Infor has more than 15,000 employees supporting a broad range of ERP and HCM solutions. The vendor first launched CloudSuite HCM in 2015, and more than 150 customers have deployed one or more of its components in the cloud. Infor CloudSuite HCM's target market is healthcare, public-sector, service and retail organizations headquartered in North America, with more than 1,000 employees and over $100 million in annual revenue. Infor is a privately held company whose major investors are Summit Partners, Koch Equity Development and Golden Gate Capital. Infor is a Niche Player in this Magic Quadrant.

Strengths
  • Infor customer references are most satisfied with the core HR, payroll, recruiting and onboarding functionality of CloudSuite HCM, rating each above the mean satisfaction ratings of the overall cloud reference sample.

  • From an overarching product perspective, Infor references are most satisfied with the solutions' system admin/configuration/workflow and ease of use for professionals, employees and managers, rating these above the mean.

  • Infor's 2014 acquisition of PeopleAnswers provided predictive assessment and analytics capabilities that have been embedded into CloudSuite HCM's TM processes.

Cautions
  • CloudSuite HCM combines aspects of several acquired technologies that have been unified on Infor's Java-based Landmark development platform. This is a work in progress, as payroll is currently being rewritten on Landmark, with initial availability expected in the first half of 2018.

  • Customer adoption of Infor's CloudSuite HCM modules beyond administrative HR has been limited to date. This may impact the ability of interested prospects to find references that have implemented a similar scope of functionality compared to their requirements.

  • From a product perspective, CloudSuite HCM references were least satisfied with the application's mobile support and reporting capabilities, rating these below the mean.

Kronos

Kronos is one of the largest vendors of global WFM solutions, and acquired SaaShr in 2012 as the basis for its SMB-focused administrative HCM solution, now known as Workforce Ready. The product has experienced strong adoption in SMB over the past five years (more than 2,500 customers and more than $100 million in revenue), and Kronos has concurrently built out its functional capabilities to address the needs of midmarket customers. As a result, Gartner estimates that approximately 15% of current Workforce Ready customers have more than 1,000 employees. The solution is best-suited for midmarket organizations with predominantly hourly workforces. Primarily implemented by North America-based organizations, 13% of the Workforce Ready customer base is headquartered in other regions. Kronos is a Niche Player in this Magic Quadrant.

Strengths
  • Kronos has made substantial investments to integrate to Google Cloud Platform for dashboards and analytics, to streamline reporting and enable a collaborative approach to analytics.

  • From a functionality perspective, Kronos Workforce Ready customer references are most satisfied with payroll admin, WFM and benefits admin, with the latter two rated above the customer reference sample means.

  • Of all the product criteria, Kronos reference customers were most satisfied with Workforce Ready's ease of use for professional users, rating it above the cloud reference sample mean.

Cautions
  • Given its SMB origin and recent entry into the HCM suite midmarket, Workforce Ready may not be suitable for organizations with more-complex TM and analytics requirements. Prospects should carefully compare these capabilities to their needs to confirm suitability.

  • Overall product satisfaction scored below the cloud reference sample mean. Kronos reference customers were least satisfied with the ability to customize or extend the application, mobile support and workforce analytics.

  • Kronos Workforce Ready customer reference satisfaction with overall vendor customer relationship criteria was slightly below the mean. References were least satisfied with enhancement request processes as well as initial implementation and deployment (the solution's rapid adoption is a likely contributing factor). Kronos has initiatives in place to address these issues over the next 12 to 18 months.

Meta4

Founded in 1991, Meta4 is a privately held company based in Madrid, Spain, with about 950 employees. It delivers the full spectrum of HCM suite functions to over 1,600 clients, which cumulatively have more than 18 million employees. Its PeopleNet solution is well-suited to organizations with 1,000 to over 30,000 employees and with substantial presence in Western Europe and Latin America, and a modest presence in North American. Meta4 is a Niche Player in this Magic Quadrant.

Strengths
  • Meta4 has an established presence and a strong track record in meeting the needs of midsize or large, complex and multicountry customers in Latin America and Western Europe. Forty-nine percent of its customers have more than 5,000 employees.

  • Meta4 PeopleNet's embedded competency framework facilitates integrated TM processes for entities with more-sophisticated needs. The product also includes an embedded help desk capability that is more robust than those of most other HCM suites.

  • Meta4's customer references ranked the vendor above the mean in enabling improved agility and scale for their HCM processes.

Cautions
  • Overall product satisfaction is below the cloud reference sample mean. Of all the product criteria surveyed, customer references were least satisfied with PeopleNet's collaboration capabilities and mobile support.

  • Although overall vendor customer relationship satisfaction is slightly above the mean, customer references were least satisfied with Meta4's support for additional deployments and upgrades as well as the experience through the sales process.

  • Meta4's size compared to the leading market vendors requires it to focus its sales, marketing and R&D investments on specific target markets rather than across all industries, geographies and customer sizes.

Oracle

Oracle delivers its comprehensive HCM suite, Oracle HCM Cloud, via a combination of internally developed applications on its Fusion technology stack and its acquired Taleo offerings for recruiting and onboarding. Gartner estimates that more than 1,600 customers have purchased Oracle's Global HR module as of May 2017 (over 1,000 are estimated to be live). The product is well-suited to multinational organizations that desire a global system of record for core HR and talent processes. Oracle is a Leader in this Magic Quadrant.

Strengths
  • Oracle HCM Cloud delivers leading recruiting and robust compensation planning, and customer reference satisfaction scores with these capabilities are well above the mean. Satisfaction with Oracle's newer learning management module as well as its longer-tenured performance management functionality is also well above the mean.

  • Customer reference satisfaction with overall product and overall vendor customer relationship (VCR) criteria is above the mean. Customers are most satisfied with HCM Cloud's social/collaboration capabilities and integration within the HCM suite on the product side, and with Oracle's after-sales care and account management for VCR criteria.

  • Oracle has continued to expand its functional footprint with additional Work Life Solutions (My Volunteering and Health & Safety Incidents) as well as a natively developed HR Help Desk Cloud, which incorporates knowledge base and chatbot capability.

Cautions
  • From a product standpoint, customer reference satisfaction with Oracle HCM Cloud was below the mean for ease of use for professional users.

  • Oracle customer reference satisfaction was also below the mean for product training made available.

  • Customer reference feedback to Gartner was limited for payroll, workforce planning and WFM, making it difficult to fully assess the adoption and acceptance of these modules.

Ramco Systems

Ramco Systems is headquartered in India and has more than 1,600 employees worldwide supporting a broad range of enterprise applications. Ramco HCM was first launched in 2002 as a premises-based solution, but has been rearchitected for cloud deployment on Microsoft Azure or Amazon Web Services. More than 200 customers utilize the cloud option (over 40% of the total customer base). Although more than 75% of the current customer base is headquartered in Asia/Pacific, Ramco reports increased adoption in Australia, the Middle East and North Africa, and has recently entered the U.S. market. Ramco is a Niche Player in this Magic Quadrant.

Strengths
  • All of the functionality delivered by Ramco HCM has been developed by Ramco except for learning content delivery, which is provided by partners (Skillsoft SumTotal and Sify Technologies).

  • Ramco customer references were most satisfied with the application's WFM functionality, rating it above the cloud reference sample mean. For overall product, reference satisfaction with the HCM suite's ability to integrate with other applications was also above the mean.

  • For VCR criteria, Ramco customer references were most satisfied with initial implementation and deployment, rating it above the mean.

Cautions
  • Customer usage of Ramco HCM functionality is centered on core HR, payroll and WFM; uptake of TM modules is limited at present.

  • Reference customer satisfaction with overall product criteria is somewhat below the mean. Customers are least satisfied with the application's social/collaboration capabilities, workforce analytics and system performance. Ramco has moved to address these issues, such as enabling optional integration to TrustSphere for messaging intelligence and increased use of in-memory processing to optimize payroll.

  • Customer satisfaction with overall VCR criteria is below the mean. References are least satisfied with additional deployments and upgrades as well as after-sales care. Ramco has recently moved from monthly upgrades to biannual in order to reduce customer disruption, and this may improve future customer reference feedback for these criteria.

SAP

Substantially enhanced since it was acquired in 2012, SuccessFactors is SAP's designated HCM cloud platform. Gartner estimates that more than 1,700 clients had adopted its Employee Central admin HR module as of May 2017 (more than 1,100 of which were live), which delivers 84 country localizations for HR, 41 for payroll and 16 for benefits. In late 2016 the vendor released the SAP SuccessFactors App Center to help customers more easily discover and purchase partner applications, which today number over 150. SAP SuccessFactors has also delivered 40 predefined Intelligent Services to facilitate event-based integration across SuccessFactors, SAP applications and beyond. The vendor is also in the process of transitioning SuccessFactors customers throughout 2017 to SAP's own Hana DBMS. The offering is well-suited to multinationals that desire a global system of record for admin HR and comprehensive TM processes. SAP is a Leader in this Magic Quadrant.

Strengths
  • SAP SuccessFactors has broad, deep and innovative TM functionality. A recent innovation is the embedding of capabilities to help detect, reduce and prevent bias in HCM processes and decisions.

  • SAP has an extensive global sales, implementation and support presence, as well as substantial and relatively even adoption of the SuccessFactors solution across all geographies. The vendor has also continued to invest in compliance-related capabilities to help customers meet increasingly complex country-specific data residence and privacy regulations.

  • SAP SuccessFactors offers options for customers to extend the application's delivered capabilities without customization, using either its Extension Center or SAP Cloud Platform (SAP's PaaS offering) tools.

Cautions
  • SAP customer reference satisfaction with the product's core HR, payroll and WFM functionality was below the cloud reference sample mean.

  • While overall VCR reference feedback for SAP SuccessFactors from April 2017 shows slight improvement over data collected in October 2015, customer satisfaction with these criteria (including implementation, ongoing support, additional deployments/upgrades and enhancement requests) are rated below the mean.

  • Customer satisfaction with product criteria in general for SAP SuccessFactors remained consistent from 2015 to 2017 and is below the mean, with customers least satisfied with mobile support (reference data was collected prior to recent co-development efforts with Apple), reporting and integration within the HCM suite.

Talentia Software

Talentia Software's HCM suite is part of a broader offering of enterprise solutions that include finance and corporate performance management. The HCM suite supports more than 3,600 clients, with workforces operating across 30 countries. About 20% of the customer base has adopted the public cloud offering. Talentia delivered enhancements to learning and performance management in June 2017. The product is most suitable for midmarket Western European multinationals. Talentia is a Niche Player in this Magic Quadrant.

Strengths
  • Talentia customer references are most satisfied with how the deployment of the solution enables reduced cost of HR operations and improved HCM process automation — both objectives scoring well above the cloud reference sample mean.

  • Customer reference satisfaction with career and succession management as well as learning are both above the mean. Talentia's June 2017 learning updates are expected to drive further adoption across the customer base.

  • Talentia's June 2017 suite updates also included enhancements to performance and goal management, including a Feedback module and a new set of online learning, action planning and informal feedback mobile app features for managers and employees. These are expected to improve customer reference satisfaction from current average ratings.

Cautions
  • Talentia reference customers are less satisfied than average with overall product criteria for its HCM solution, and were least satisfied with mobile support, social/collaboration capabilities, workforce analytics and product quality.

  • Overall VCR satisfaction is also below the mean of the cloud reference sample. Customers are least satisfied with after-sales care and account management as well as additional deployments and upgrades.

  • Talentia HCM has limited mind share and consideration from prospects outside the vendor's core Western Europe market.

Ultimate Software

Founded in 1990 and publicly traded, Ultimate Software has more than 3,700 employees located predominantly in North America. Its cloud HCM suite UltiPro had more than 3,300 clients in production as of March 2017 (more than 3,600 in total), and about two-thirds have more than 1,000 employees. Ultimate continued to build upon its strong foundation in administrative HR by making targeted acquisitions in 2016 (Vestrics for analytics and Kanjoya for machine learning/natural-language processing) to improve the fit of its solution for its target markets. The product is well-suited to midmarket and larger North America-based multinationals with a majority of their workforce in the U.S. and pockets of employees in other countries. Ultimate is a Leader in this Magic Quadrant.

Strengths
  • Ultimate has successfully built and maintained a very employee- and customer-focused culture that has helped drive consistent growth, high customer retention and numerous industry awards.

  • Overall VCR satisfaction remains well above the cloud reference sample mean. Ultimate customers are most satisfied with additional deployments and upgrades, experience through the sales process, and initial implementation and deployment.

  • Reference customer satisfaction with overall product criteria is well above the mean. Ultimate customers are most satisfied with product quality, ease of use for professional users, reporting capabilities, and ease of use for employees and managers.

Cautions
  • Customer satisfaction with UltiPro's HTML5-based mobile support was Ultimate's lowest-rated product criteria, and was well below the overall cloud reference sample mean. Ultimate has responded to this issue by developing native Android and iOS mobile apps that were made generally available in summer 2017.

  • From a functionality perspective, reference customers rated UltiPro's current WFM modules below the mean (UTM for basic time and attendance needs and UTA for more complex requirements). Ultimate is developing a new WFM solution that will ultimately replace both modules, with general availability planned for 2018. Gartner estimates that it will take Ultimate 18 to 24 months to fully build out the new module to meet complex WFM requirements; full conversion of existing customers will take several more years.

  • Ultimate updated its learning solution in 2017 via a new reseller agreement to integrate Schoox's LMS with UltiPro. While more than 155 customers have already selected the new UltiPro Learning offering as of June 2017, the integration is new and Ultimate has just begun implementation and support. It will likely take some time for all internal processes to be put in place.

Workday

Founded in 2005 and publicly traded, Workday's SaaS HCM suite was first implemented in 2007. Gartner estimates that more than 1,600 organizations had purchased Workday HCM as of April 2017 (of which more than 1,000 were live), and that the customer base operates in more than 200 countries in total. Workday is best-suited to multinationals that predominantly manage their HR processes globally — with moderate regional or country-specific process variations. Workday is a Leader in this Magic Quadrant.

Strengths
  • Workday continues to differentiate itself from its competitors in the large global enterprise HCM suite market by deploying all of its HCM functionality on a natively developed application, with a single security model and user experience.

  • Reference feedback on overarching product criteria indicates that customers are most satisfied with Workday's system admin/configuration/workflow capabilities, product quality and integration within the HCM suite.

  • Workday reference customers were also most satisfied with the application's core HR functionality, giving it the highest average rating of any vendor evaluated in this Magic Quadrant.

Cautions
  • Workday delivers core HR, benefits administration and posthire TM (except learning) as a single module. Usually, customers must pay for all functionality regardless of how long it takes them to deploy processes globally.

  • Released in September 2016, Workday Learning enables the vendor to offer a complete set of TM functions. More than 100 customers have already purchased the solution, but customers should expect two to three years of additional development before it is able to satisfy the most complex learning use cases.

  • Workday's prospects should take into account the vendor's premium pricing approach in most markets and the substantial upfront switching costs, as they develop project estimates for return on investment and total cost of ownership.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added

The following vendors have been added to this Magic Quadrant based on meeting the updated inclusion criteria:

  • Infor

  • Kronos

  • Ramco Systems

Dropped

No vendors were dropped from this Magic Quadrant.

Inclusion and Exclusion Criteria

To be included in this Magic Quadrant, a vendor had to meet all of the following criteria:

  • Deliver core HR administrative transaction support and reporting/analytics capabilities plus at least three talent management functions (recruiting/onboarding, performance management, career/succession management, learning, compensation and workforce planning), or a combination of workforce management and at least one talent management function.

  • Deploy its solutions on either a community cloud or public cloud (subscription-based private cloud is not acceptable).

  • Have at least 100 customers, each with more than 1,000 employees, in production with core HR, and at least one talent management function on either a community cloud or public cloud.

  • Actively market, sell and implement HCM suites on a stand-alone basis, regardless of any additional bundling with ERP suites or other applications.

  • Provide evidence of market momentum, documenting at least 20 net new deals during the previous rolling four fiscal quarters — each with more than 1,000 employees — purchasing core HR and either two or more TM functions or one TM function and workforce management.

  • Show evidence of customer adoption by providing Gartner at least 10 customer references with more than 1,000 employees in production with the HR administrative transaction support and reporting/analytics capabilities, plus at least one additional module (either talent or workforce management).

  • The vendor must be regularly identified by Gartner clients and prospects as a notable vendor in the HCM market.

A number of vendor products did not meet all of these criteria and were therefore not included in this Magic Quadrant; however, their offerings do meet many customer requirements and could also be considered in an evaluation of HCM suites. "Market Guide for HCM Suite Applications" contains additional profile data for 24 solutions from 19 other vendors in addition to the 11 participants in this Magic Quadrant.

Evaluation Criteria

Ability to Execute

Gartner assesses a cloud HCM suite vendor's Ability to Execute by evaluating the products, technologies, services and operations that enable it to be competitive, efficient and effective in the market, and to positively impact revenue, client satisfaction and retention, and general market reputation. A provider's Ability to Execute is judged on its success in delivering on its promises, using the following criteria:

  • Product/Service. This includes the vendor's capabilities in admin HR, TM, WFM and HRSD (see the Market Definition/Description section for the detailed list of functions). These areas are assessed for functional breadth and ease of use; how well the vendor integrates the components is an important additional factor. Reporting and analytics receive considerable attention, because they have been major customer concerns. The architecture, delivery models, and use of mobile and social capabilities are also rated. The focus is on the vendor's current functionality, although enhancements and/or new modules on the verge of general availability are also taken into consideration.

  • Overall Viability. Key aspects of this criterion are the vendor's ability to ensure the continued vitality of a product, including support for current and future releases and a clear roadmap for the next three years. The vendor must have the cash on hand and consistent revenue growth during the past four quarters to fund current and future employee burn rates, and to generate profits. The vendor is also rated on its commitment to the specific product being evaluated, and the ability to leverage it to generate revenue and profits in the cloud HCM suite market.

  • Sales Execution/Pricing. The vendor must provide multicountry regional and/or global sales and distribution coverage that aligns with its marketing messages. It must have specific experience and success in selling cloud HCM suite solutions to HCM buying centers; this includes deal management, partnering, pricing and negotiations, presales support, and the overall effectiveness of the sales channels.

  • Market Responsiveness and Track Record. This refers to the vendor's ability to respond, change direction, build alliances, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness as this market has developed during the past seven to 10 years.

  • Marketing Execution. This criterion assesses the clarity, quality, creativity and efficacy of programs designed to deliver the vendor's message to influence the market, promote its brand and business, increase awareness of its products, and establish a positive identification with the vendor's product or brand in the minds of buyers. This mind share can be driven by a combination of publicity, promotions, thought leadership, word of mouth and sales activities.

  • Customer Experience. This criterion assesses relationships, resources and programs that enable customers to be successful with the products and services offered. This includes feedback from active customers on generally available releases during the past 12 to 18 months. This can also include the existence and quality of such customer resources as ancillary tools, support programs, the availability of user groups, service-level agreements, and others. Sources of feedback also include vendor-supplied client references and their responses to a targeted survey, conducted in conjunction with this research and covering a series of product and vendor-customer relationship criteria (see the Evidence section); Gartner inquiries; and other customer-facing interactions taking place at Gartner and industry conferences.

  • Operations. This criterion assesses the ability of the vendor to meet its goals and commitments. Factors include the quality of the organizational structure — the skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

The relative weighting assigned to each criterion is shown in Table 1.

Table 1.   Ability to Execute Evaluation Criteria

Evaluation Criteria

Weighting

Product or Service

High

Overall Viability

High

Sales Execution/Pricing

Medium

Market Responsiveness/Record

Medium

Marketing Execution

High

Customer Experience

High

Operations

High

Source: Gartner (August 2017)

Completeness of Vision

Gartner assesses the Completeness of Vision of cloud HCM suite vendors by evaluating their ability to successfully articulate their perspectives on current and future market direction, to anticipate customer needs and to meet competitive forces. A vendor's Completeness of Vision is also judged on its understanding and articulation of how market forces can be exploited to create new opportunities for itself and its clients, using the following eight criteria:

  • Market Understanding. This refers to the vendor's ability to understand buyers' needs and to translate those needs into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance them with their added vision. We specifically looked for how vendors described the integrated market and opportunity for their cloud HCM suites as a whole, not merely that of the component products.

  • Marketing Strategy. This criterion assesses whether the vendor has a clear, differentiated marketing strategy with a set of messages that appeals to HR organizations and leaders, and that is consistently communicated throughout the organization and externalized through the vendor's website, customer programs and positioning statements.

  • Sales Strategy. The vendor should have a strategy for selling cloud HCM suite software that uses the appropriate network of direct and indirect sales, marketing, service, and communications affiliates, and that extends the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Key elements of the strategy include a sales and distribution plan, internal investment prioritization and timing, and partner alliances.

  • Offering (Product) Strategy. The vendor should demonstrate a vision for application functionality across the breadth and depth of the cloud HCM suite. We focus beyond the functional scope listed in the Ability to Execute section, placing additional focus on the vendor's vision for the use of mobile technologies, advanced analytics, relevant social use cases, integration and ease of use, as well as support for process transformations enabling the digital workforce. The product strategy can be a combination of organic development, acquisition and/or ecosystems. For ecosystems, close attention is paid to the quality and support of third-party partners. For those that acquire functionality, we pay close attention to integration strategy and roadmaps.

  • Business Model. Vendors need to have clear business plans for how they will be successful in the cloud HCM suite market. These business plans should include appropriate levels of investment to achieve healthy growth during the next three to five years.

  • Vertical/Industry Strategy. The vendor should have a strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including verticals.

  • Innovation: Vendors must show a marshaling of resources, expertise and/or capital for competitive advantage or investments in new areas (such as advanced analytics, machine learning, diversity and inclusion, engagement measurement and worker wellness), user experience improvements or new access methods (such as tablets, smartphones, smartwatches or other wearables).

  • Geographic Strategy. We examine the vendor's strategy to direct resources, skills and offerings to meet the specific needs of regions outside the location of the corporate headquarters — either directly or through partners, channels and subsidiaries — as is appropriate for that geography and market.

The relative weighting assigned to each criterion is shown in Table 2.

Table 2.   Completeness of Vision Evaluation Criteria

Evaluation Criteria

Weighting

Market Understanding

Medium

Marketing Strategy

High

Sales Strategy

Medium

Offering (Product) Strategy

High

Business Model

Low

Vertical/Industry Strategy

Low

Innovation

Medium

Geographic Strategy

High

Source: Gartner (August 2017)

Quadrant Descriptions

Leaders

Leaders demonstrate a market-defining vision of how HCM technology can help HR leaders achieve business objectives. Leaders have the ability to execute against that vision through products and services, and have demonstrated solid business results in the form of revenue and earnings. In the cloud HCM suite market, Leaders show a consistent ability to win deals, including the foundational elements of admin HR (with a large number of country-specific HR localizations) and high attach rates of TM, WFM and HR service delivery capabilities. They have multiple proof points of successful implementations by customers with workforces deployed in more than one of the main geographic regions (North America, Europe, MENA, Latin America and Asia/Pacific), in a wide variety of vertical industries and sizes of organization (by number of employees). Leaders are often what other providers in the market measure themselves against.

Challengers

Vendors in the Challengers quadrant are larger than the vendors in the Niche Players quadrant. They have developed a substantial presence in one market, but are not able to execute consistently or equally well in all geographies. They understand the evolving needs of an HR organization, yet may not lead customers into new functional areas with a strong functional vision. Challengers tend to have a good technology vision for architecture and other IT organizational considerations, but may not have fully won the hearts and minds of HR and IT executives. The Challengers in this Magic Quadrant began in the North American payroll services market, but have taken different approaches to add the capabilities (functional, technical and organizational) needed to compete in the broader cloud HCM suites market. Their relative inability to execute consistently across the full range of cloud HCM suite functionality for large and complex global enterprises is primarily what separates these vendors from the Leaders.

Visionaries

Visionaries are ahead of most potential competitors in delivering innovative products and/or delivery models. They anticipate emerging/changing market needs and move the market ahead into new areas. Visionaries have a strong potential to influence the direction of the cloud HCM suite market, but are limited in execution and/or demonstrable track record. There are no Visionaries in this Magic Quadrant, predominantly due to the greater importance placed on the execution (including cost-effective and reliable delivery of standardized processes) of admin HR functions that are, by their nature, more limited in innovation. In addition, much of the innovation in HCM has taken place in niche TM and analytics applications; these capabilities have been adopted over time by the cloud HCM suite vendors, but many have had to focus on the threshold of what is "good enough" for their target segments so that the benefits of an integrated solution are able to overcome feature/function gaps. Only the Leaders (two of which have also been designated as TM suite Leaders) have been able to consistently deliver strong vision in this market.

Niche Players

Niche Players offer cloud HCM suite functionality, but they may lack some functional components, may not show the ability to consistently handle deployments across multiple geographies, or may lack strong business execution in the market. Niche Players may offer complete portfolios for a specific vertical, but are unable to fully support cross-industry requirements for several HCM functions — such as WFM, recruiting or learning in TM, or many HR localizations in admin HR. They may have an inconsistent implementation track record, or may lack the ability to support large-enterprise requirements or complex global deployments. Despite the issues described, in many cases Niche Players can offer the best solutions to meet the needs of particular HR organizations, considering the price/value ratio for the solution and their relative strength in specific groupings of countries within a region. These vendors may win component deals or multifunction evaluations in a specific region, but are not consistently winning the whole suite across multiple regions.

Context

All vendors included in this Magic Quadrant sell and support admin HR functions with the option for the customer to utilize functional capabilities for payroll, benefits, TM, WFM and HRSD. The extent of support for country-specific HR regulatory requirements and common practices (as well as their actual implementation experience in countries) varies by vendor. They have customers that are successfully using their products and services.

However, this is not an exhaustive list of all providers, because many other regional and/or vertical industry specialists did not fully meet our inclusion criteria. Other vendors have substantial customer bases that have deployed their solutions on-premises and are now making the transition to full cloud HCM suites; these vendors were also excluded from this Magic Quadrant, but are profiled in the "Market Guide for HCM Suite Applications."

Regardless of the provider you're considering, ask yourself, "Will this vendor enable more-effective support for HCM processes across my organization?" and "How well does this vendor align with our HCM technology strategy?" In many cases, an HR organization must evaluate not just a vendor's direct product offerings, but also the ecosystem of providers that can fill in whatever functional gaps the considered vendor on the Magic Quadrant may not offer.

Use this Magic Quadrant as a reference for evaluations, but explore the market further to qualify the capacity of each vendor to address your unique business problems and technical concerns. Depending on the complexity and scale of your requirements, your shortlist will be unique. This Magic Quadrant is not designed to be the sole tool for creating a vendor shortlist. Use it as part of your due diligence, and in conjunction with discussions with Gartner analysts and companion research notes, such as Gartner's "Market Guide for HCM Suite Applications" and "Critical Capabilities for Cloud HCM Suites for Midmarket and Large Enterprises." Placement of a provider in the Leaders quadrant is not a representation by Gartner that the provider is necessarily the best fit for every buyer's needs.

Market Overview

The core human resources management system (HRMS) market (predominantly on-premises) had matured by 2005, and most innovation had shifted to TM point solutions as well as emerging TM suites. However, a number of disruptive innovators bringing cloud admin HR capabilities to market — combined with growing frustration over the difficulties of integrating disparate HCM solutions — resulted in a desire for suite solutions that could support a wider range of HCM processes within a single user experience, data model and reporting platform.

This report evaluates the vendors that have achieved critical mass in deploying cloud HCM suites for midmarket and large enterprises.

Key findings:

  • Primary objectives for adopting cloud HCM suites include many familiar themes, but also show the drive toward standardized and automated HCM processes as well as improved reporting and metrics. We asked 129 customer references to indicate their top objectives in implementing their cloud HCM suite solution; the following were cited by 60% or more of the respondents:

    • Improved quality of reporting and people information (88% selected)

    • Improved HCM process automation (78%)

    • Standardized HCM processes (78%)

    • Reduced cost of HR operations (73%)

    • Improved quality of service to internal customers (66%)

    • Improved HR performance metrics (62%)

    • Globalized/consolidated HCM processes/single system of record (60%)

    • Increased workforce efficiency/effectiveness (60%)

    (The Appendix shows these objectives by mean satisfaction rating and satisfaction ranking.)

    While the references achieved a mean satisfaction rating of at least 4 on all of these objectives, process automation and consolidation had the highest mean satisfaction. It is also interesting to note that reduced HR process cost was fourth most popular as an objective, but last in mean satisfaction. This indicates that customers tend to forecast savings from these projects that are often more difficult to achieve in the reality of the implementation.

  • The critical components of a cloud HCM suite are in the eye of the beholder. However, while the strategy most commonly considered is "core HR plus TM," some industries have focused on an "administrative compliance suite" — particularly those with a high concentration of hourly workers. This is because of the criticality of robust WFM functions linked to core HR, payroll and benefits in a single user experience. Even within the broader "core HR plus TM" strategy, organizations may separate out prehire TM functions (recruiting and onboarding) or learning management from posthire TM capabilities (such as performance, goals, career and succession management) based on their unique organizational context.

  • Even if "all in one" is the strategy, functional and geographic adoption is usually incremental. While there are multiple case studies of "big bang" cloud HCM suite implementations (both multifunctional and multigeographical), phased implementations are the rule rather than the exception, and occur in the following major forms:

    • First deploy admin HR functions (along with WFM if needed), followed by enabling of TM processes according to the organization's HR process calendar (for example, rolling out performance management for first-quarter performance appraisals for the preceding year, talent reviews for second quarter, compensation planning and succession for the third quarter).

    • Phased implementation by geography is often driven by critical business need (for example, the lack of HR automation in a region) or the desire to more rapidly achieve cost, data consistency or process standardization objectives.

    • Advanced capabilities are often piloted in a subset of the employee population as a "control group," to gain experience with the solution before broader deployment takes place.

    • Practically speaking, many organizations have existing point solutions in place and want to let those contracts expire before moving those processes to the cloud HCM suite module. This may result in a one- to three-year lag for each major function to move to the suite.

  • Global payroll remains elusive. The participants in this Magic Quadrant vary in how they approach the delivery of payroll capabilities: some provide localizations for multiple countries; others focus on direct payroll processing for their country of origin and supplement with a variety of country/regional partners and/or global payroll aggregators. Consistent, cost-effective global payroll with full visibility to actual payroll costs remains one of the thorniest issues for the modern enterprise to solve.

Appendix

Table 3.   Top Objectives Driving the Purchase of Cloud HCM Suites

Objective

Percentage Selecting

Mean Satisfaction (1-5)

Satisfaction Ranking

Improved quality of reporting and people information

88

4.37

6

Improved HCM process automation

78

4.54

1 (tied)

Standardized HCM processes

78

4.51

3

Reduced cost of HR operations

73

4.04

8

Improved quality of service to internal customers

66

4.40

4

Improved HR performance metrics

62

4.16

7

Globalized/consolidated HCM processes/single SOR

60

4.54

1 (tied)

Increased workforce efficiency/effectiveness

60

4.38

5

Source: Gartner (August 2017)

Acronym Key and Glossary Terms

HCM human capital management
HRSD human resources service delivery
SaaS software as a service
SOR system of record
TM talent management
WFM workforce management

Evidence

Gartner's 2017 Human Capital Management Suites Customer Reference Study — 189 total vendor-provided references for 22 products from 20 vendors (data collected 3 April to 5 May 2017). A cohort of 129 cloud/SaaS references with 1,000 or more employees was analyzed for the Magic Quadrant rating process. All mentions of "survey data" and "reference client survey respondents" throughout this document therefore refer to this study, unless otherwise noted.

Respondents were asked questions spanning HCM business drivers, implementation experiences, deployment scope, and current and planned functional adoption. They were also asked to rate satisfaction with their vendor's offering on a 1 to 5 scale (1 = Extremely Dissatisfied, 5 = Extremely Satisfied) for the following key areas, all of which were combined with insight from Gartner client inquiries taken from 1 January 2016 to 30 June 2017 to inform the customer experience scores for each vendor.

Product Satisfaction:

  • Product quality

  • System performance

  • Ease of use for professional users

  • Ease of use for employees and managers

  • System administration/configuration/workflow

  • Reporting

  • Workforce analytics

  • Mobile support

  • Social/collaboration

  • Integration within the HCM suite

  • Integration of the HCM suite with other applications

  • Ability to customize or extend the application

  • Documentation with the solution

  • Training made available

Vendor-Customer Relationship Satisfaction:

  • Experience through the sales process

  • Initial implementation and deployment

  • Handover from implementation to support

  • Ongoing communication and support

  • Additional deployments and upgrades

  • After-sales care

  • Account management

  • Enhancement request processes

Product Functionality Satisfaction:

  • Core HR (administrative HR)

  • Payroll

  • Benefits administration (U.S.)

  • Benefits administration (global)

  • Workforce management

  • Recruiting

  • Onboarding

  • Performance and goals management

  • Career and succession management

  • Compensation management

  • Learning management

  • Engagement measurement

  • Worker wellness

  • Workforce planning

  • Workforce analytics

Overall (Driven by Gartner Peer Insights):

  • Overall experience with this vendor

  • If you had to run the same project again, how likely would you be to use this vendor?

  • Would you recommend this product or service to others?

  • Overall rating of evaluation and contract negotiation with the vendor

  • Overall rating of integration and deployment

  • Overall rating of service and support

  • Overall rating of product functionalities

Customer references were also asked to pick all of the objectives they wanted to achieve when implementing their chosen HCM suite, as well as indicate how successful their implementation was in meeting those objectives on a 1 to 5 scale (5 = Very Successful).

The list of objectives included the following:

  • Reduced cost of HR operations

  • Improved HCM process automation

  • Improved quality of reporting and people information

  • Improved quality of service to internal customers

  • Improved HR performance metrics

  • Standardized HCM processes

  • Globalized/consolidated HCM processes/single system of record

  • Improved agility and scale

  • Improved HCM application user experience

  • Increased employee engagement

  • Increased workforce efficiency/effectiveness

  • Better business outcomes

  • Support more-innovative HCM processes

  • Other

Customer references were also asked to indicate all of the key factors that drove their decision, picking from the following list:

  • Strong services expertise

  • Product functionality and performance

  • Breadth of services

  • Pre-existing relationships

  • Product roadmap and future vision

  • Overall cost

  • Financial/organizational viability

  • Strong consulting partnership

  • Strong customer focus

  • Strong user community

  • Other

Note 1
Postmodern ERP and the Nexus of Forces

Postmodern ERP describes the deconstruction of suite-centric ERP into loosely coupled applications that are indifferent to the source of process provision, taking into account the Nexus of Forces (see below) opportunities and driven to be business-agile. The concepts and benefits of an ERP are preserved where it makes sense to do so, but there is no automatic quest for on-premises, a single instance, a single megavendor or for operational efficiency (for example, preintegrated capability) over business agility (see "2015 Strategic Roadmap for Postmodern ERP" — refreshed in August 2016).

In 2012, Gartner introduced IT advances — described as the Nexus of Forces — as the convergence and mutual reinforcement of mobile, social, cloud and information. The consumerization and democratization of IT drive this convergence and reflect a technology-immersed world (see "The Nexus of Forces Is Creating the Digital Business" ).

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.