The human resource management system (HRMS) market for large enterprises is a mature market. However, it is a not a market without innovation, as vendors try to leverage their core HRMS solutions (personnel, payroll, benefits administration, and employee and manager self-service) into new markets, including talent and workforce management, payroll outsourcing and multiprocess human resource outsourcing services, as well as new geographic locations (increasing the number of countries/markets with local regulatory support).

The overall market for large enterprise HRMS is bifurcated. Oracle and SAP have the largest customer license share (see Figure 1), especially among organizations with more than 10,000 employees. However, the 2,500 to 10,000 employee segment of the market has fewer clear leaders. This is also the segment of the market that has the most growth potential for core HRMS solutions. The "10,000 employee and above" segment is largely a replacement market.

It should be noted that the number of customers shown above do not represent the total number of customers using these solutions. Some customers will use multiple HRMS solutions (double-counted). Other customers may license the solution, but not implement it (shelfware).

Although there is broad adoption of core HRMS solutions, a number of trends are driving buyers to consider replacement solutions.

Many HRMS implementations focus on core HRMS functionality, augmented with self-service capabilities, to automate HR processes. Large enterprises buying new HRMS solutions want to move beyond automating the work of the HR professional by implementing applications that help the business better-leverage its talent and improve employee productivity. This more-strategic approach to managing human capital requires solutions that support talent management and workforce management, in addition to core HRMS and self-service.

Talent management applications include workforce planning, talent acquisition (including onboarding), employee performance management, career development, succession management, e-learning, compensation management and off-boarding (see "Talent Management Application Suites Can Enhance Workforce Effectiveness"). Workforce management includes labor scheduling; optimization, time and attendance; and leave management. Customers buying a new core HRMS solution typically prefer to buy talent management and workforce management solutions from the same provider. However, many customers find that the depth of functionality and maturity of these more-strategic applications is still not available from core HRMS providers. Therefore, many customers are augmenting their core HRMS solutions with niche solutions or emerging talent management and workforce management suites. We expect customers to consolidate these add-on purchases, as solutions from core HRMS providers become "good enough" (see "Unlocking the Strategic Value From Talent Management Application Investments").

Large customers are increasingly multinational in terms of the customers they serve and the employees they hire. The trend for these customers is to implement a single, global HR (personnel) system that is the employee system of record and that enables consolidated employee demographic reporting. Benefits administration is different from country to country (for example, in some countries, the government provides health and welfare benefits, whereas, in other countries, employers must provide benefit choices). So, the decision about whether or not benefits administration is part of a single, global, integrated solution with personnel administration will depend on the country in which that customer operates.

Similarly, the inclusion of payroll to make up a single, global HRMS solution (along with personnel and benefits) will also depend on the countries involved and the size of the employee population within those countries. It is typically an 80/20 rule. Eighty percent of the employee population resides in 20% of the countries/markets a customer operates in. For the 20% of countries that have 80% of the employees, a single, integrated core HRMS may be contemplated. However, for the remaining 80% of countries, payroll is most-likely outsourced (see "Evaluating the Use of One Provider for Global Payroll Outsourcing").

Oracle and SAP are the most global providers of HRMS solutions and compete strongly in most major countries/markets. All the vendors included in this MarketScope have recognized the global opportunity and have been expanding their operations as well:

• Fidelity HR Access is strong in France, but it also supports several other major European markets.
• Meta4 is strong in Spain, Portugal, France, and Latin and South America, but it has also started to expand into the Scandinavian, U.K. and U.S. markets.
• MidlandHR and Northgate HR are strong in the UK; however, Northgate also offers its solutions in Australia and, recently, in the U.S.
• Personal & Informatik (P&I) is strong in Germany, but it also supports most of the major Western European countries.
• High Line, Infor, Lawson Software and Ultimate Software are strong competitors in the U.S. market; however, Lawson has announced its new strategic human capital management (SHCM) solution, which will be its multinational offering (with France as the first European country supported). High Line also has strong support for Canada (it is based there), while Ultimate Software is just rolling out Canadian support.
• ADP is a unique case. Although it has a global presence, it has largely utilized local HRMS solutions (sometimes acquired from local providers) in those markets. For multinational customers, it has partnered with SAP for its GlobalView solution.

The important thing for customers to recognize is that no vendor, not even Oracle or SAP, provides local regulatory support for all countries/markets. It is important to decide on a global payroll strategy (that is, which countries/markets should include payroll integrated with the core HR solution, which countries/markets should outsource payroll and which countries/markets may need a different solution altogether).

As large enterprises look to move to a single, global HR solution, they often also re-evaluate their overall service delivery model. In the prior section, we discussed the impact of the payroll service delivery strategy on global, core HRMS requirements. However, payroll services should not be viewed in a vacuum. They should be considered as part of a broader, more-holistic view of HR services.

The trend for large enterprises is to standardize processes on a global basis, where possible, to drive cost savings and ease international mobility. One challenge is that some solutions focus on automating functional silos and are not process-driven. It is important to consider the support for flexible process configuration across functions/modules in the solutions to achieve desired cost savings. In addition to process standardization, these customers also leverage shared services as an organizing principle that enables them to achieve the cost savings around process standardization by eliminating (or redeploying) redundant resources that may have been required when there were multiple process variations.

In addition to shared services, multiprocess HR business process outsourcing (BPO) is an alternative way of standardizing processes and achieving cost savings. In this case, the BPO provider is responsible for standardizing processes and delivering the HR services at an agreed-to price. In many cases, BPO providers are not software providers. Therefore, it is common to see them leverage the HRMS software platforms of providers in this MarketScope to deliver to BPO services. Even if you consider outsourcing, it is important for you to understand the software platform used by your provider, because it affects (positively or negatively) how that provider can deliver its services.

In addition to BPO, software as a service (SaaS) is another alternative delivery model considered by large enterprises. The role of SaaS (and, more generally, hosted solutions) in the large enterprise HRMS market has been relatively limited. Gartner estimates that more than 85% of large enterprises have bought perpetual licenses and implemented their solutions on premises (the traditional model). Of the vendors evaluated in the MarketScope, only ADP, MidlandHR, Northgate HR and Ultimate Software host more than 20% of their customers. Ultimate Software is the only one of these providers that offers a SaaS solution as its primary offering.

We have seen SaaS-delivered solutions widely adopted in the small and midsize business market (below 2,500 employees). In addition, we have seen SaaS-delivered solutions widely used by large enterprises in areas such as e-recruitment and employee performance management (see "Hype Cycle for Software as a Service, 2007"). Also, many large enterprises have sensitive employee data hosted by payroll outsourcing vendors, such as ADP and Ceridian. Most large enterprise customers choose the best-fit HRMS solution before deciding on the delivery model. The best-fit solutions, especially for core HRMS, have largely been from providers that offer the traditional licensing and delivery model.

Ultimate Software has had success with its SaaS offering in the 2,500 to 10,000 employee segment of the market (it has few SaaS customers above 10,000 employees). Newer SaaS vendors, such as Workday and Emportal, promise large enterprises more choices. Gartner expects to see the use of SaaS-delivered solutions increase during the next three years as large enterprises look for alternatives through the normal replacement cycle or face major upgrade expenditures.

Gartner defines "large enterprises" as having more than 2,500 employees. In addition, we define an HRMS as a set of products that includes the following capabilities:

• Personnel administration
• Benefits administration
• Payroll

• Workforce planning
• E-recruitment
• Employee performance management
• Succession management
• E-learning learning management systems (LMSs)
• Compensation management

• Labor scheduling
• Time and attendance

• Employee self-service (ESS)
• Manager self-service (MSS)
• HR call center/service center management

• System administration/security
• Multinational support
• Integration technology
• Organizational hierarchy management
• Workflow
• Reporting/analytics

In this MarketScope, we included vendors that have more than 200 production (using a live system) customers — each of which has more than 2,500 employees –- using core HRMS functionality described. High Line did not meet this inclusion criteria, but we felt that it had enough installed customers, as well as a suitable solution for large enterprises.

Other vendors considered for this MarketScope did not meet the inclusion criteria or did not respond to our requests for information:

• CGI/AMS (public sector)
• Mincom (mining — based in Australia)
• Munis (public sector)
• New World Systems (public sector)
• SCT (higher education)

• Ceridian
• Empagio
• Genesys
• Hewitt

• Cegid (based in France)
• DLGL (based in Canada)
• Frontier Software (based in the U.K.)
• Ramco (based in India)
• Sopra (based in France)
• StarGarden (based in Canada)
• Talent2 (based in Australia)

• Cort (now owned by NuView Systems)
• Emportal
• Humanic Design
• Integral
• Kronos
• Mangrove
• Microsoft
• PDS
• QHR Software
• Spectrum Human Resource Management Systems

One other vendor deserves special mention: Workday officially launched a little more than a year ago. It did not have enough customers to meet the inclusion criteria. However, based on our client inquiries during the past three months, it is gaining recognition quickly.

Overall Market Rating: Positive

Although the market for large enterprise HRMS solutions is largely a replacement market at this point, there is enough activity around process standardization/shared services and global rollouts to warrant a positive view of the market. In addition, many customers are looking to add talent management, workforce management and service delivery support capabilities on top of their existing core HRMS solutions. Customers often first look at these providers to understand if they can meet their needs before looking at niche or talent management application suite providers.

ADP is best-known for its payroll outsourcing services. For large enterprises, it offers four solutions:

• PayForce — This solution is targeted at customers that have payroll-specific needs and want a Web-based front-end with basic HR functionality to integrate with ADP's payroll services.
• Enterprise HR — This is the primary HR and payroll solution used by large enterprises in the U.S.
• HR Anytime — This offering has the same functionality (including self-service bundled with the offering) as Enterprise HR v5, it uses ADP's AutoPay payroll service only and it is offered only as a hosted solution.
• GlobalView — This solution is based on a partnership with SAP and is focused on customers that have multinational HR and payroll needs.

Enterprise HR is a Java Platform, Enterprise Edition (Java EE)-based solution that includes HR, benefits administration, self-service, talent management and workforce management (it resells Kronos Workforce Central, which it calls Enterprise eTIME). Most Enterprise HR customers are hosted by ADP (self-service is only available as a hosted offering). Enterprise HR provides solid, core HRMS capabilities, along with strong e-recruitment (through its acquisition of VirtualEdge) and workforce management. ADP Enterprise HR is best-suited to U.S. customers that want a well-integrated HRMS, along with outsourced payroll. Customers with multinational HR/payroll needs should consider GlobalView.

Rating: Positive

Fidelity HR Access is based in France and has built a strong installed base there, as well as in other Western European countries. It has a strong, competency-based, core HRMS solution that supports multinational use (used by customers in 52 countries). It is still evolving its talent management and workforce management capabilities. It provides the basics in those areas and is well-integrated.

The offering includes ESS and MSS capabilities, which have the standard functionality, now regrouped into a single entry point. It is built on Java EE architecture. In the next version, the solution will also offer in-line analytics (analytics that are integrated with data entry and not just part of a separate reporting solution) and some new functional concepts: guided HR processes, online HR content and contextual information management. Fidelity HR Access is best-suited to Western European-based multinational customers that want a strong, global HR solution that is process-centric with strong workflow capabilities.

Rating: Positive

High Line is based in Markham, Canada, and offers an HRMS targeted at customers in the U.S. and Canada. Its solution, Personality, has a strong Java EE-based, core HRMS solution. It has a strong integrated time and attendance functionality, along with basic workforce scheduling. In addition, Personality supports standard ESS and MSS functionality. In talent management, it offers standard functionality for e-recruitment, performance management, training administration and salary planning. Succession management and e-learning have minimal support.

High Line is a smaller, but financially sound, vendor that has had success in industries with complex, core HRMS requirements, such as the public sector and healthcare. It is not a well-known vendor by Gartner clients, nor widely used by larger enterprises (10,000 employees or greater). High Line is best-suited for U.S. and Canadian customers that want a well-rounded HRMS solution.

Rating: Promising

Infor, based in the U.S., has many core HRMS solutions in its portfolio, including Infinium, Masterpiece, Geac E Series, Geac M Series, SmartStream and Anael. In addition, it offers Infor HCM Workforce Management (formerly Workbrain), Infor HCM Talent Management (formerly Boniva) and E-Recruitment (via a partnership with First Advantage). There are a variety of architectures supported in these applications. Some are mainframe-based (such as Geac E Series and M Series), some run on the iSeries platform (such as Infinium), some are Java EE-based (such as Infor HCM Workforce Management and Talent Management) and some are .NET-based (such as SmartStream and Anael).

Integration between the core HRMS solutions and Infor HCM Talent Management and Workforce Management is a work-in-progress. Infor will focus on Anael as its global, core HRMS solution. In addition, Infinium will continue to be an important vertical market (or iSeries-specific) solution. Gartner believes that the other core HRMS solutions (Masterpiece, Geac E Series, Geac M Series and Geac SmartStream) will continue to be supported, but customers should expect limited new functionality to be developed. Overall, Anael and Infinium have solid, core HRMS capabilities. Infor HCM Workforce Management has best-in-class functionality, while Infor HCM Talent Management is a promising talent management solution. 

Infor has good financial flexibility, but it carries a proportionately higher level of debt ($4.5 billion) compared with its largest competitors (SAP, Oracle and Microsoft). Gartner believes that, in the current financial market, this may limit Infor's strategic flexibility compared with these major vendors. Infor is best-suited to customers that want a best-of-breed solution approach for core HRMS and workforce management, especially from a single vendor.

Rating: Promising

Lawson Software is headquartered in the U.S. and Sweden. It has two main product lines: S3 (targeted at service-centric industries) and M3 (targeted at product-centric industries), which came through the Intentia merger. Its human capital management (HCM) solution, part of S3, is focused primarily on U.S. customers (although there is some use in Canada and the U.K.). In October 2007, Lawson announced an additional product offering, called Strategic Human Capital Management (SHCM), which includes a global HR foundation, talent acquisition, performance management, succession management and compensation management capabilities. It has four beta customers (including Lawson) using SHCM in three countries. It plans to expand the early adopter program to eight to 15 customers through the first half of 2008. Lawson expects general availability sometime during 2008.

SHCM was built on Lawson's Landmark, a model-based development environment that enables business analysts to create the specifications (objects, interactions, rules and so forth) and the tools to generate application code. SHCM will coexist with, and be integrated with, the S3 and M3 product lines. S3 HCM version 9 has strong core HRMS functionality, solid ESS and MSS, and improved recruiting capabilities. SHCM is the future for Lawson's HCM products (although not for everything — for example, payroll).

U.S.-based customers that want a strong, core HRMS, along with self-service, can continue down the S3 path. Customers that want multinational HR capabilities (focusing on North America and major European countries initially) along with stronger, integrated talent management functionality should consider SHCM.

Rating: Positive

Meta4 is based in Spain, and its HCM solution has a strong presence in Spanish- and Portuguese-speaking countries, as well as in France. It has also expanded into other markets, including the U.K., Scandinavia and the U.S.

In the 1990s, Meta4 was a visionary vendor. It was the only vendor to offer a global HR solution, built on an object-oriented architecture, with a strong competency foundation, and integrated (although somewhat lightly) with content and knowledge management. However, in the early 2000s, Meta4 did not show the same leadership on more-recent trends, such as talent management. Today, Meta4 has regained its visionary place by leveraging some of its past success (for example, object-oriented architecture and competency management) with improving talent management and new developments, such as a rich Internet application (RIA) and Web 2.0 technologies.

PeopleNet 8 will transform the user experience of Meta4 applications, which will be designed around a dashboard-styled interface, and start to integrate Meta4 with external elements, such as Google widgets. Improved and highly accessible end-user reporting and analysis tools also become part of this new interface. HR and organizational management (including self-service) will be the first modules in PeopleNet 8 released in 2Q08. Meta4's PeopleNet is most appropriate for multinational customers that want a strong, core HRMS solution; improved talent management capabilities; and the ability to leverage emerging desktop paradigms.

Rating: Positive

MidlandHR is based in the U.K. and has a solid, core HRMS solution called Trent for customers in the U.K. and Ireland. It has basic talent management and workforce management capabilities that are well-integrated with the core HRMS and are delivered through Web-based self-service. It is a process-driven solution with workflow management functionality. In addition, Trent is built with the Uniface toolset and supports Windows and Unix servers, along with Oracle and SQL Server relational database management systems. It also makes heavy use of XML to support integration.

Midland offers a range of options to customers, from on-premises implementations, to hosting, to payroll outsourcing, to managed payroll services. It is a smaller vendor compared with most in this MarketScope, but it has a good financial foundation. Midland has plans to expand its multinational support, but it is currently best-suited to U.K. and Irish customers that want strong, process-driven, core HRMS functionality.

Rating: Promising

Northgate is based in the U.K. On 21 December 2007, it agreed to be acquired by the private equity firm Kohlberg Kravis Roberts (KKR) & Co. Northgate has done many acquisitions since 2000 to grow its software and services business, and has achieved reasonable financial results. With the acquisition by KKR, Gartner expects Northgate to continue to acquire more companies to grow its global software and service capabilities.

Northgate has two main HRMS offerings. ResourceLink is its main HRMS offering, supporting the U.K. and, most recently, the U.S. markets. Arinso, which Northgate acquired, offers a multinational HRMS platform called EuHReka, based on SAP's HCM solution, to provide BPO services. Northgate has a full spectrum of offerings, from on-premises implementations to full, multiprocess HR BPO. This is one of its major differentiating points from most other providers (it is a leading payroll outsourcer in the U.K.).

ResourceLink is a Java EE-based solution that has a strong, core HRMS solution (including solid multilingual support). It has all the expected ESS and MSS capabilities. In addition, ResourceLink has basic functionality for talent management and time and attendance. ResourceLink is best-suited to U.K. customers that want a strong, core HRMS solution with the option to outsource payroll to a single provider. It is still new to the U.S. market, so it would be best-suited to customers that want to be early adopters (and have a strong presence in the U.K.). EuHReka is best-suited for customers that want a multinational HRMS solution, along with multinational payroll (or multiprocess HR) outsourcing services.

Rating: Positive

Oracle has three HRMS product lines targeted at the large enterprise market: E-Business Suite (EBS), PeopleSoft Enterprise and J.D. Edwards EnterpriseOne. Oracle also is developing a next-generation solution called Fusion Applications. Although the first release of Fusion Applications is scheduled for 2008, Oracle has yet to provide a clear road map for what functionality will be available when. Oracle's plan is to take the best thinking in PeopleSoft Enterprise and Oracle EBS and create a new solution that is a superset. For example, EBS has functionality called Generic Hierarchies, which is used for reporting. PeopleSoft Enterprise has a similar construct, called Trees, which is used not only for reporting, but for other purposes, such as security. Oracle plans to include functionality comparable to Trees in Fusion Applications. EnterpriseOne is used by customers primarily as part of a broader ERP solution, while EBS and PeopleSoft Enterprise are used stand-alone and as part of a broader suite.

PeopleSoft Enterprise is typically Oracle's lead product for customers looking to buy an HRMS solution — if they are not already Oracle application customers. It has a strong, global, core HR solution, including benefits administration, along with payroll support in approximately 21 (including consulting solutions) countries/markets around the world. It has strong ESS and MSS offerings with multinational support. PeopleSoft Enterprise is one of the few offerings to include a help desk solution for HR service centers (HR HelpDesk). In addition, PeopleSoft Enterprise has integrated talent management and time and labor management capabilities. There has been strong adoption by customers in e-recruitment, employee performance management, and time and attendance. Oracle EBS also has a strong, global, core HRMS solution, with payroll support in more than 31 (including consulting solutions) countries/markets globally. It also has strong ESS and MSS capabilities, as well as integrated talent management and time and labor management. EBS has shown strong customer adoption in e-recruitment and compensation management.

Oracle EBS and PeopleSoft Enterprise are well-suited to large, complex, global organizations that want a strong, core HRMS solution with promising talent management and time and labor management capabilities.

Rating: Strong Positive

P&I is a German-based vendor that targets midsize to large companies (between 100 and 10,000 employees). Eighty percent of its 3,700+ customers are based in Germany, but it is one of few vendors that offers a true multinational solution, including payroll, that has relatively broad local regulatory support in Europe. Eighty percent of P&I customers have fewer than 1,000 employees. P&I has reseller relationships with ADP (in Germany, Switzerland, Czech Republic and Austria) and LogicaCMG (in the Netherlands). P&I's LOGA is a strong multinational HRMS solution with basic talent management and workforce management capabilities. In addition, LOGA has a solid, graphical workflow management environment. It is a three-tier client/server architecture for professional user functionality (the payroll and reporting engines can be installed on separate servers), along with Web-based ESS and MSS.

P&I is a smaller vendor, but it is in a good financial position. P&I LOGA is best-suited to midsize to large European-based multinationals looking for strong, core HRMS capabilities.

Rating: Promising

SAP's HCM solution is part of its ERP 6.0 solution. It has a strong, global, core HR and benefits management solution, along with payroll support in approximately 60 countries/markets globally (around 80% directly from SAP and around 20% from partners). It has solid, multinational ESS and MSS functionality. SAP HCM also has solid workforce management capabilities, especially time and attendance (which is well-integrated with the rest of the ERP suite).

SAP has put specific emphasis on improving its talent management functionality. We have seen the most significant adoption to date by customers in recruitment and employee performance management. SAP's HCM solution is built on its NetWeaver platform, which provides a robust and scalable architecture. One of the challenges SAP customers have faced is the ability to take on new releases from SAP frequently and the impact that those changes have on customer environments.

SAP is delivering enhancements to SAP ERP 6.0 through a concept it calls "enhancement packages." Enhancement packages can be turned on, optionally, via the switch framework. Early customer feedback has been positive. Reports claim less complexity of implementation projects. SAP anticipates greater adoption by customers as the third wave of enhancements hit the market in early 2008. SAP's ERP HCM 6.0 solution is well-suited to large, complex, global organizations that want strong, core HRMS solutions with promising talent management capabilities.

Rating: Strong Positive

Ultimate Software is a U.S.-based vendor that targets the U.S. and, more recently, Canadian midsize to large companies (between 200 and 15,000+ employees — although it has customers as large as 48,000 employees). UltiPro 9.6 was the first release to support Canadian payroll, and it expanded language support to include Canadian-French and Spanish. Ultimate Software offers UltiPro as an on-premises, as well as a SaaS, solution (Intersourcing). Growth of SaaS customers has outpaced on-premises customers to the point where 52% of the customer base is using Intersourcing. In 2007, 80% of new customers selected Intersourcing.

UltiPro is built on a .NET platform. It is a strong, core HRMS solution. The HR module can be used to support multinational customers, but may require some customization. It has added talent management capabilities through acquisitions. It acquired the rights to its e-recruitment code from First Advantage (formerly Projectix). In addition, it acquired RTIX, a U.K.-based vendor of employee performance management and succession management solutions. The functionality in both solutions is solid for their target markets, but integration (front-end and back-end) with the core HRMS solution is still a work in progress. Ultimate has partnered with Infor to resell its HCM Workforce Management (formerly Workbrain) solution for time and labor management delivered via an SaaS model.

Ultimate Software is best-suited to U.S. and Canadian customers that want a strong, core HRMS solution, along with solid talent management and strong time and labor management capabilities that will become better-integrated over time.

Rating: Positive