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Tel: +1 617/613-6000 Fax: +1 617/613-5000 www.forrester.com TECH CHOI CES Includes a Forrester Wave EXECUTI VE SUMMARY Kronos oers a good human resource management systems (HRMS) product that is aligned with its market-leading time and labor solution. Te product is well-suited for medium-size US companies via a licensed, on-premise deployment model, and Kronos has recently begun to oer a SaaS version as well. Te Workforce Central HR/Payroll product has good depth in personnel record management, compensation administration, and payroll but has less depth in recruiting, performance, and talent management. TARGET AUDIENCE Application development professional, business process professional, chief information ocer KRONOS IS BEST SUITED FOR MEDIUM-SIZE COMPANIES USING TIME AND LABOR Kronos acquired its HR/Payroll product a few years ago to complement its market-leading Workforce Central Time and Labor solution. Architectural dierences have limited its ability to seamlessly integrate the two products at the UI and code level, but Kronos has achieved signicant integration at the database level, enabling a single instance deployment. Kronos has approximately 400 customers managing a total of 500,000 employees in its HR/Payroll system versus about 30 million managed in the Workforce Central time and labor products. Te company has strong nancial viability, with revenues in excess of $600 million. Forrester evaluated Kronos current oering and strategy for HR management systems against approximately 92 criteria (see Figure 1). Te product has good overall breadth of functionality, as well as depth in core transactional areas, including personnel, payroll and compensation administration, and, of course, market-leading time and labor. Like most products positioned for the midmarket, performance and talent management functionality, as well as recruitment, are limited to the basics. Usability and self- service functionality are adequate but not compelling. Te product is an especially good t for buyers that: Are current Kronos Workforce Central time and labor customers. Kronos has carefully aligned the HRMS oering with its agship Workforce Central Suite. Tis means that Kronos customers can leverage process and data integration to a signicant degree, including feeding time or gross pay data to payroll and avoiding duplication of employee records. Companies with signicant numbers of hourly workers will get the most benet from this product integration. September 28, 2006 Kronos Is A Strong Performer In HR Management Systems For The US Midmarket The Forrester Wave Vendor Summary, Q3 2006 by Paul Hamerman with Elisse Gaynor Tech Choices | Kronos Is A Strong Performer In HR Management Systems For The US Midmarket 2 2006, Forrester Research, Inc. Reproduction Prohibited September 28, 2006 Are medium-size US-based companies. Te inherent scalability and functional sophistication of the solution is not sucient to appeal to Kronos large enterprise customers. Large customers tend to run Workforce Central Suite on the Oracle database versus the Microsof-centric architecture for the HR/Payroll product. Te solution is best for US companies in the 500 to 5,000 employee range and has been primarily deployed as an on-premise licensed solution. Kronos very recently introduced a hosted subscription model for the solution, which may help increase traction among small to medium-size businesses (companies with six to 999 employees). To see how Kronos stacks up against 10 other competitors, see the Forrester Wave evaluation of the human resource management systems market. 1 Tech Choices | Kronos Is A Strong Performer In HR Management Systems For The US Midmarket 3 2006, Forrester Research, Inc. Reproduction Prohibited September 28, 2006 Figure 1 Kronos Workforce Central HR/Payroll Evaluation Overview Source: Forrester Research, Inc. Kronos oers good functionality in workforce planning, requisitions, sourcing, applicant tracking, and onboarding. This functionality is contained within the core HRMS functionality as a fully integrated module. Workforce Central enables maintenance of detailed applicant and employee records and is fully position-based. Minimal support is provided for international assignments. Kronos Workforce Central HR/Payroll oers a good compensation management capability, including planning, analysis, market value comparisons, and distributed administration of salary and bonuses. Kronos supports multiple benets plans and programs, automated enrollment, and eligibility screening based on user-dened criteria. The payroll capability supports automation of the entire payroll process, including garnishments and retroactive pay adjustments. Localization is currently only available for the US. Kronos Workforce Central provides best-in-class time and attendance and labor management functionality, including source to gross calculation involving complex work rules and a labor scheduling solution based on constraint-driven optimization. Kronos has done a very good job integrating the HRMS product with the Workforce Central Time and Labor solution. Kronos has a reasonably good capability for performance management using cascading goals. The solution supports training management but has gaps with respect to learning, talent management, and succession planning. Employee and manager self-service functions are relatively complete, but the portal front end is limited in exibility and content capabilities. Risk management capabilities are adequate but not robust. The application tracks and reports accidents, injuries, and incidents but does not support the administration of workers compensation claims and payments. Workforce HR, which is Microsoft-based, is less scalable than the enterprise-oriented time and labor solution. Usability is rated average in the HRMS product and is not fully consistent across products. The application is very exible from a conguration standpoint, incorporates some open standards (e.g., XML), and has improving reporting and analysis capabilities. HR/Payroll is delivered in English and is currently localized for the US market only. Kronos partners with SAVVIS to deliver customized hosting services. The SaaS subscription model is a new oering for the vendor. Some payroll-related outsourcing services are available through partnership with Ceridian. Kronos Workforce HR/Payroll is relatively easy to upgrade. A complete portfolio of maintenance services is provided, and the vendor is clearly focused on customer service and retention. References were good. Stang and recruiting Personnel management Compensation Benets Payroll Time and attendance and labor management Performance and learning Employee and manager self-service Risk management Technology International Hosting and outsourcing Customer experience CURRENT OFFERING Tech Choices | Kronos Is A Strong Performer In HR Management Systems For The US Midmarket 4 2006, Forrester Research, Inc. Reproduction Prohibited September 28, 2006 Figure 1 Kronos Workforce Central HR/Payroll Evaluation Overview (Cont.) Go online to download additional in-depth data and scores for this vendor and other vendors included in this Forrester Wave evaluation. Source: Forrester Research, Inc. The Kronos vision leverages its market-leading position in Workforce Management. It has recently begun to develop a strategy for strategic HCM. The product development strategy road map is not as specic or as aggressive as some competitors. Kronos has a strategy to promote an open, scalable, and congurable Web-based architecture that allows customers to implement, extend, maintain, and upgrade. It also promotes the use of a variety of user interface devices to access the applications. The strategy is primarily oriented to the agship time and labor management solution, however. Kronos invests over $60 million annually on research and development. This is approximately 10% of revenue. Kronos has several strategic alliances it leverages to diering degrees. Most notably, it partners with Citrix, Hewlett-Packard, IBM, Microsoft, Oracle, SAP, and Sun Microsystems for technology and platform support. Product strategy and vision Technology strategy and vision R&D Strategic alliances STRATEGY With steadily increasing prots and revenues, and a balance sheet with $140 million, the company is extremely viable nancially. Kronos has among the fewest live HRMS customers (400+) compared to key competitors in this evaluation, but has shown steady growth since acquiring the solution. Kronos currently has 68 oces worldwide and more than 600 employees who do implementations and consulting. Financial viability Installed base Delivery footprint MARKET PRESENCE Tech Choices | Kronos Is A Strong Performer In HR Management Systems For The US Midmarket 5 2006, Forrester Research, Inc. Reproduction Prohibited September 28, 2006 SUPPLEMENTAL MATERIAL Online Resource Te underlying spreadsheet for Figure 1 is available online. Te spreadsheet includes more detailed data and scores for this vendor. Tis detailed data and scores for this vendor are also available online through an Excel-based vendor comparison tool that provides detailed product evaluations and customizable rankings. The Forrester Wave Methodology We conduct primary research to develop a list of vendors that meet our criteria to be evaluated in this market. From that initial pool of vendors, we then narrow our nal list. We choose these vendors based on: 1) product t; 2) customer success; and 3) Forrester client demand. We eliminate vendors that have limited customer references and products that dont t the scope of our evaluation. Afer examining past research, user need assessments, and vendor and expert interviews, we develop the initial evaluation criteria. To evaluate the vendors and their products against our set of criteria, we gather details of product qualications through a combination of lab evaluations, questionnaires, demos, and/or discussions with client references. We send evaluations to the vendors for their review, and we adjust the evaluations to provide the most accurate view of vendor oerings and strategies. We set default weightings to reect our analysis of the needs of large user companies and/or other scenarios as outlined in the Forrester Wave document and then score the vendors based on a clearly dened scale. Tese default weightings are intended only as a starting point, and readers are encouraged to adapt the weightings to t their individual needs through the Excel-based tool. Te nal scores generate the graphical depiction of the market based on current oering, strategy, and market presence. Forrester intends to update vendor evaluations regularly as product capabilities and vendor strategies evolve. ENDNOTES 1 Forrester evaluated human resource management systems (HRMS) vendors across 92 criteria for both the multinational enterprise market and the US midmarket. We found that SAP and Oracle (with its E-Business Suite and PeopleSof products) were clear Leaders for multinational enterprises. For US-based companies with minimal international workforce requirements, Ultimate Sofware and Lawson were Leaders. A notable trend, particularly in the midmarket, is the increasing acceptance of sofware-as-a-service (SaaS), which is the primary delivery model for Ultimate Sofware, as well as for Strong Performers Automatic Data Processing (ADP), Ceridian, and Employease. Infor Global Solutions (Infor), Kronos, and Sage Sofware (Sage) are also Strong Performers in the US midmarket but oer primarily on-premise sofware solutions. Sage, with its Abra product, oers the most cost-eective sofware solution among the products evaluated Tech Choices | Kronos Is A Strong Performer In HR Management Systems For The US Midmarket 6 Forrester Research (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice about technologys impact on business and consumers. For 22 years, Forrester has been a thought leader and trusted advisor, helping global clients lead in their markets through its research, consulting, events, and peer-to-peer executive programs. For more information, visit www.forrester.com. 2006, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, Forresters Ultimate Consumer Panel, WholeView 2, Technographics, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each gure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinions reect judgment at the time and are subject to change. To purchase reprints of this document, please email resourcecenter@forrester.com. 40411 for companies with fewer than 1,000 employees. In this relatively mature sofware category, customers should look for a solution that is compatible with their overall ERP strategy or opt for a SaaS mode of delivery for transactional needs, potentially supplemented by best-of-breed solutions for strategic HR processes. See the September 28, 2006, Tech Choices Te Forrester Wave: Human Resource Management Systems, Q3 2006.