Product Spotlight E05: Oracle Human Capital Management (HCM)

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In this 5th exchange (E05) of Product Spotlight, we host Shaakun Khanna, Vice President and Head for SaaS & HCM Applications Alliances for Asia Pacific, at Oracle Corporation. In his current role, Shaakun is responsible for the overall go-to-market strategy and business growth of Oracle’s Human Capital Management Cloud applications in the Asia Pacific region. We quiz him on the preparedness of Oracle Cloud HCM to serve new-age Human Capital requirements, the enablement of key partners, and lots more!

P.S.: As the name states, this dialogue series is focused on a product/suite on which our analysts receive enquiry calls from end-user clients. We host the Product Managers and quiz them on features, roadmap, and more.

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Greyhound Research: Thank you for making time. We appreciate it. Before we get into the nitty-gritty of the HCM stack and how Oracle is approaching the market, let’s first talk about the industry at large. The last three years have been very defining. While at one end, COVID impacted workstyles alongside the megatrends of the gig workforce, at the other, there was a series of layoffs alongside fresh hiring. So, to begin with, give us a sense of how these waves of change impact your customers. And on the back of that, how is Oracle changing the product roadmap to fit these new world needs? Also, how far are these changes reflective of the trends in the Indian market? 

Oracle: Sure! So, as you rightly said, there have been many changes. Initially, we thought it was just a temporary reaction to the environment, but four or five fundamental things have become permanent. First, we all know that the way of work has completely changed.

Whether an organization has embraced flexible working or not, how we operate or deliver the work has fundamentally changed. Offices are gaining new meaning and new rules. Therefore, the work enablers must change.

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Again, irrespective of the philosophy or policy of an organization, flexible working is a must-have today. And it is not just a matter of HR policy but impacts business continuity. Therefore, understanding how it affects the overall technology investment, including HR technology, is critical. Pre-pandemic, many of our customers used to say that your applications were too sophisticated, and I don’t know whether my HR systems and processes are mature enough to imbibe them. That suddenly changed overnight because nobody and nothing was over-sophisticated anymore. That is a critical aspect driving both the development of our applications and the innovations we are introducing. At the same time, it is accelerating the speed at which organizations embrace the latest and the best HR technology.

The second piece is about changing employee priorities. Human beings are adaptable, and we adapt whenever an external change occurs. Today, organizations have policies not only about flexible working but also about where a person is based. Earlier, we had metro and non-metro cities, but now, there are far more implications than that. It is around the days and the time of the day when people choose to work and, therefore, how the whole attendance paradigm must be relooked at. It is estimated that about 55-60% of organizations’ HR policies had to evolve. Therefore, that same must reflect in the technology as well.

The third significant implication of these recent times is that the shelf life of the skills has dramatically reduced. Earlier, pre-pandemic, a skill had about a five-year life. Today it is a sub three-year life. People are talking about a 30-month or a 20-month shelf life per skill. I think this is a very, very critical one. It is now a fundamental imperative for an organization to upskill people at a very rapid pace. Secondly, it’s the ability to identify what these skills are. Today, our problem is not whether people can learn quickly or not. Our more significant issue is what it is that you should be learning. Most organizations are failing today to predict the skill requirements of the future. And I think technology, specifically artificial intelligence, and machine learning, plays a vital role.

With all these changes, HR technology has become very central. Those lacking state-of-the-art HR systems were the worst impacted organizations during the pandemic’s early onset. This is because a simple feature like tracking vaccination was critical at that time. At Oracle, we could offer all our customers a free add-on application within three days because Cloud-based technologies allow you to do that. So, these are the three or four things that have fundamentally changed. Because of this, how we work is changing, and how HR technology is designed and deployed is also undergoing a sea change.

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Greyhound Research: You mentioned the change in DevOps cycles. Can you give us a clear example of how the change in the DevOps cycle has helped you introduce a new feature or functionality ahead of the plan?

Oracle:Our DevOps cycle was always ahead of the game. I’m proud that the pandemic or its distress did not trigger our change. We were the first company in enterprise-grade SaaS to introduce a 90-day upgrade cycle. This means that every 90 days, we release a new version. In the old on-premises days, a version launch was planned every three to five years. Today, we are talking about every 90 days.

So first, it means that we, as an organization, need to have a comprehensive roadmap and investment to bring up newer features every 90 days. Secondly, that roadmap keeps on changing based on specific requests. I’ll give you an example. We had this forward-looking investment that we wanted to make in employee well-being. And there was a particular part of our application that we were developing to track employee well-being. If you remember, before the pandemic, about a year ago, mental well-being and physical well-being were becoming central to HR priorities. So, we had proactively started developing that, and we had a roadmap.

But when the pandemic hit, we realized that the most significant gap in the market today is an application that can help organizations provide health and well-being, specifically in the context of COVID, and it was an immediate requirement. So, we fast-forwarded the introduction of our well-being module. We not only deployed it, but we also offered it to all our customers free of cost. And in terms of their ability to deploy, on average, it took about two to three days of work, which they could do themselves. In addition, this module could help organizations do multiple things like track COVID cases and vaccination, and it was almost real-time. So, this is an excellent example of how we could do something that was the need of the hour and triggered by the macro environment changes.

Greyhound Research: 90-day cycle is an impressive one. But the missing link in these frequent upgrade cycles is how feedback is passed on from users to product teams. There’s still a significant lacuna that we see. This is not just with Oracle, and it’s an industry-wide problem. How do you fill or bridge that gap between the users and the product heads because the feedback loop has to dovetail into the product cycle?

Oracle: I’m glad you’re saying it is an industry lacuna. Nobody has been able to crack it. But we are perhaps the best. I don’t have competitive data there, but 80-90% of the features, functionality, or innovation we introduce is an outcome of the customer feedback we get from communities. It’s a very simple thing that we follow. Hundreds and thousands of requests come in; some are the need of the hour, some are regional, and some are stress-induced because of certain metrics. So, we look at the data, and we look at where the priorities are emerging.

The other thing we have is a Partner Advisory Board. We take a lot of input and feedback from many of our partners who are very closely working with our customers, the basis on which we define our product roadmap. Almost 80-90% of inputs come from customer feedback. So, we are not proactively innovating because of ideation. We are actively innovating because of customer inputs and feedback.

Greyhound Research: In the Indian market, we have seen the emergence of Darwin Box, Zing HR, and others that have established a footprint. And this is not just in SMBs, but even in large enterprises. In some of the very large enterprises we work with, we see both Zing HR and Darwin Box making their presence felt in a very prominent way. How is this impacting your business and your product roadmap? 

Oracle:Competition is always good. The two companies you mentioned are from India, and we feel pleased when Indian companies make a dent. That said, as far as making a dent in the enterprise space is concerned, I disagree with you. Maybe our definitions are different. I’m taking some time to ensure I’m not criticizing because we are proud of what our fellow Indians have accomplished. But at the same time, those products are not an apple-to-apple comparison. They could be packaged better, there are issues around complexities and scalability, and these organizations will take a while before they can address these issues.

Today, these two companies and every other company would have a proud logo of a very large, sophisticated company that they can mention. One such example is a large Indian conglomerate, which was also in the news for other reasons recently. This conglomerate has multiple businesses across multiple industries. Interestingly, one of the newcomers you’re talking about also did a lot of PR around how that large conglomerate is embracing its product. But the reality is it was one small company of that conglomerate.

I’m saying that when it comes to complex organizations, for example, the Tata Group, across all their group companies, they use Oracle HCM today. I’m not authorized to give you the exact names and numbers of Tata Group companies using us, but I will tell you it is in the high double digits. So that means Tata Group prefers us. The second is the Adani group, which across their companies, uses us. So, when it comes to large, complex businesses, I think the newer brands will take a while before they reach there.

The other piece is around the scalability of the technology. Remember, Oracle is the only company of size and stature with the complete stack. Everything is Oracle, whether the data center, hardware, or software. But when software with multiple integrations is hosted on a third party, there are scalability and managing complexity issues. That said, change is the game’s name, and you will have enough examples where Oracle has replaced a different player, or another player has replaced us.

In the Indian market, Oracle’s dominance is growing and increasing in the companies that matter. Not just in terms of the number, size, and scale, but as more and more companies move to Cloud, Oracle HCM continues to lead the market.

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Greyhound Research: Often, our clients struggle with the entire premise of the Human Capital Management stack lending to organizational competitiveness. It’s always about making the business case because you may get a full feature functionality, but the in the end, it’s only the 10-20% used from the stack. So, stack usability and its impact on organizational competitiveness have been a massive struggle for clients. Another pain point is the annual payouts that run into multi-crore rupees for using the Oracle HCM stack. Ultimately, the thought process is that it’s a non-business critical application, and the investment does not always translate into organizational competitiveness. How would you help solve this? 

Oracle: Ironically, HR technology is still bought today as a tool of automation rather than developing a competitive advantage. And I think that’s where the market misses the point. So often in our sales cycle, I feel unfortunate when pitted against other products. There is a feature functionality comparison because the people deciding often don’t even know what this functionality means. So therefore, to your point of how HR technology can increase competitiveness, I think there are just five things that organizations need to understand and understand how that technology brings that to life.

The first is a business’s ability to attract the right talent at the right time. Oracle Recruiting Cloud uses learnings from our marketing engine to help organizations develop a compelling employer brand and meet the candidates where they are. The key is to attract candidates just the way companies attract customers. That’s the kind of intelligence that we are building in this system. Unfortunately, many recruitment heads will not ask us for this.

The other thing is time to onboard. How can you quickly onboard these people? Research shows that the first 90 days have a very strong bearing on the longevity of a particular employee in the organization and their productivity. So, onboarding is critical. Again, because of our seamless integration across the Fusion stack, which is our Fusion ERP, the kind of onboarding experience that Oracle Fusion customers can bring in is phenomenal.

The third is how you can engage them. Remember, we just talked about how employee priorities are changing how work is done. So, how do you engage them? Again, I will not say we are the only one because you and I can have a difference of opinion, and we don’t have time to get into the complexities, but our ability to offer full functional working from anywhere, which means any location and on any device is unparalleled. And therefore, it’s part of the engagement. We have also revamped Oracle Learning Cloud, which is as good as any other Learning Experience Platform (LXP).

And lastly, it is about retaining those people. Again, a significant competitive advantage comes from employee retention. Today, we have predictive analytics built into the system, which uses machine learning algorithms to predict the people who can leave. Not only that, but it also goes up to the extent of telling what you can do if someone wants to leave. Will a promotion help to retain him? Or will it be monetary? Or will it be a location change?

So, I believe these five things give a customer a competitive advantage via HR technology: the ability to attract, quickly onboard, engage, upskill, and retain employees.

Greyhound Research: They say what gets measured gets done. How are you enabling your partner ecosystem to talk the same vocabulary and essentially help translate data points to tangible outcomes for the consumption of the HR Head? 

Oracle: Again, a very interesting question. One of the things that we realized was that our product became very advanced and ahead of the game, but in the process, we could not educate all our stakeholders at the same speed.

Today, much of our time and energy is invested in talking to our partners. When I say our partners, we were earlier only talking to our Oracle practice people. Now we want to speak to the financial advisory partners. We are proud that hardcore influencers or advisors, like BCG and VCs, are now part of the Oracle Partner Network (OPN). Many of these people did not know about the state-of-the-art capabilities of our product, not just the HCM stack but the entire fusion stack. So yes, we are putting much effort into engaging and educating the partner ecosystem.

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Greyhound Research: Do you have pre-baked frameworks that help these partners translate data to outcomes? I ask because there ought to be a starting point that is easy enough for these partners.

Oracle: The fact that most of our partners have working relationships with customers for PeopleSoft or other applications, there is a lot of innovation that our partners are driving. With one partner, for example, we have this powered methodology that takes the customer to a SaaS environment and, in the process, also redesigns and re-evaluates their processes and policies. Then other large partners, the Big Fours and Global SIs, all have their IP. So, we are now in that zone where most of our large, significant partners have designed their IPs.

We also introduced a new program within our OPN, our Oracle Partner Network, specifically for our SaaS partners, what we call the Expertise. Every partner needs to now develop and publish the Expertise. If you go to the OPN portal, you can find out which partner in which region has what expertise. Expertise means people certified by Oracle University on the Oracle Partner Portal. So, if I’m an engineer with one of these larger SIs, I need to go and enroll for it, complete my certification, and then get tested on it. Since I mentioned the shelf life of skills, the expertise is only valid for 18 months. So, every 18 months, the partner must refresh the expertise, including implementing a project minimum in the last 12 months. And not only implementing but successful implementation, whereby the customer is a public reference.

Greyhound Research: Let’s move on to the next question on architecture choices. The fact is that there is concern around vendor lock-ins. We’ve done a fair amount of advisory on OCI and witnessed a deep-rooted concern within the technology and the business teams. Also, there’s another parallel thought process – using best-of-breed software and a pearls-of-string approach, thanks to APIs, is the way forward. As a result, nobody ends up going end-to-end with one stack across global markets. Considering that, please talk to us about how you are working with your large customers. They probably will want to consider a different L&D, payroll, or lead management software simply because they don’t want to get locked into one Oracle stack.

Oracle:The single-stack story is not new. The world has talked about it for the last five or seven years. Last three or four years, particularly because, like Oracle, other players also became mature with their complete platform. So, if you typically look over the last four or five years, nobody had a complete stack when the products matured. And therefore, customers also were hesitant because you would not have the best of everything. That is changing dramatically. That is point number one.

Secondly, this whole piece concerns seamlessness, integration, and employee experience. While on the one side, many customers want the pearls-of-string design, and many others say we want one stack, even if that means we must change our process. So, I think the world is divided there. The third thing specifically, some of it also gets driven by the organization.

So far, our go-to-market also was kind of pillar driven. This year, we are also changing our go-to-market, whereby we will have people who will go and talk to the customers about the entire platform. For example, in my earlier org structure, one person would go to you as a customer and talk to you about HR, and the other one will talk about ERP. So even though we had a single product, we took it to the market as three different products. Now, we are changing that as well.

Lastly, I think COVID has taught us that there is a lot of robustness in the IT infrastructure, which is sustainable. It’d still be a couple of years before the world can decide on the best. We are in the transition phase, and I agree that part of the world is divided.

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Greyhound Research: What’s also happening around us is that decision-makers are changing. How do you build relatability to these new breeds of buyers, who are a lot more hands-on, have a lot more technical depth, and have different demands that Oracle has traditionally not been asked to deliver on? 

Oracle:The business asks, and the ability of a company like Oracle to be agile enough and rapidly respond to the business ask is key. And in the recent past, we have successfully delivered that. Part of it is because of how our whole product has been designed; agility is a fundamental tenet. For example, we recently signed up with the largest pizza company in the country, which wanted an application that could also cater to their emerging gig employee needs. We could understand the business requirement and bring an agile and robust product.

To your earlier point of stakeholders changing, yes, that’s true; therefore, our communication must change completely. I’ll give you an example. You talked about CDO and other positions. So, I think that is very true, and we must engage much more now, non-technically and from a domain-depth perspective. At the same time, we need to have two or three different versions of the engagement conversation. How will you ensure that the CISO is convinced about you? Whether it is a CMO, CFO, or CHRO, all are very hands-on in these decisions. So, it’s much more challenging for us. The cycles are more complex.

Greyhound Research: While leaders like yourself can talk digital and outcomes exceptionally well, the moment we start going minus one, the cracks in the wall are obvious. Not all sales folks can carry that lingo. So how do you make digital outcomes a culture? Also, how do you build them to discuss HCM or human capital outcomes?

Oracle: Things have certainly improved. Remember, we started as a company that was hardcore IT sellers. Three years ago, our people didn’t even know the HR KPIs. Today, it is improving. It has certainly changed, but we are not there. There are challenges. Talent fungibility is a problem, and the talent pool is evolving. Luckily for us, we are much better in terms of employee retention. We make a lot of investments and put in much energy, but I would say more needs to be done. And we are conscious of that.

Greyhound Research: You mentioned HR KPIs, and that’s our next question. One of the significant struggles of CIO and technology teams is Cloud value realization. This is because while there’s an initial capex of a minimum of six to seven crore rupees, there’s an additional annuity payout of three to four crore rupees yearly. So, the technology team often finds it difficult to make the business case for such expenses. So, how are you helping companies and leaders bridge this gap?

Oracle: I think it is a level-wise challenge. Step number one is to explain to them that when looking at ROI from HR technology, there are two buckets: things that can be quantified and qualitative but have a very significant quantifiable financial impact. The problem is that right now, we are in a transition phase. While we say we are moving to SaaS, and therefore your hardware and maintenance expenses will go, most companies can’t let go of their existing expenses because of their pearls-of-string approach. So, in the interim period, it’s very difficult.

More and more now, we are working with our clients to do insights studies. We have a dedicated team at Oracle to help them realize value. For example, one large company realized their time-to-hire had decreased by 13%. They didn’t even realize, and we could, on the back of a paper, put a dollar value to that which ran into millions for them.

Then the last thing is around how insights can have a financial impact. So, for example, I talked about this very sophisticated attrition prediction engine that we have built. Once companies start using it and it has chewed upon enough learning data, it becomes very accurate. So that has a very strong ROI. The problem happens when a lot of people don’t use them. Most customers are unhappy because they don’t know what they have under the boot.

Greyhound Research: We like what you said about insights. And we think it’s a large part of not just HCM rollout and success but overall SaaS rollout and success. But one of the challenges we see with most organizations when they start working on something like this is that while there are great dashboards and visualization, there’s nothing pre-built for their industry to get started from. So, they always must work from the ground, make these kits around quantifiable KPIs and then work from there. So, how would you solve that gap wherein, while at one end, you’re working on combining data sources for better visualization, at the same time, you probably have pre-built APIs and dockets which allow the speed of change and execution from a quantifiable insights’ perspective?

Oracle: Oracle HCM has one of the highest pre-built KPIs people can use from day one. The problem is that, in many cases, these are not activated because companies don’t even know. So, for example, we have this attrition predicting engine. During the pandemic, we found out that in certain industries and certain places, specifically the IT and ITES industry, the distance between the employee’s residence and office location played a very important role. And we could understand the PIN code, what the difference would be, and the threshold of the difference and increase their joining ratio significantly.

But in many cases, for example, PIN codes are not even tagged as a part of the HR data gathering. So how can we make it work? First, customers should activate as many fields as possible. When it comes to data analysis, a little extra is always good. Remember when they were doing Excel files, they had this habit of only taking the bare minimum because it was the other way around. Today it must change. To give you the exact number, the HR KPIs run into a few hundred. Unless and until it’s a unique industry, doing some unique analysis, most of our customers have these delivered already in pre-delivery.

Greyhound Research: Please talk to us about what Oracle is doing, from advanced data security to data identity workflows. Please give us the lowdown on everything you do to ensure the HCM stack becomes more robust and secure.

Oracle: This applies to HCM and all our data security. So, first, all our Cloud products comply with the GDPR. In fact, most of our compliance is above and beyond GDPR requirements.

But specifically, when we come to HCM, we have 6-7 layers of security. One is essentially role-based access, which is critical. In addition, we have data encryption for any personally identifiable information and have introduced multi-factor authentication, specifically in remote working, to make it safer. Then, of course, there are audit trails and total data masking. Also, we have the most secure APIs because there is a lot of incoming data. And as I said, that overall Cloud security framework that we have cuts across OCI and everything, so any regulatory standard, whether it is HIPAA, GDPR, ISO, everything is pretty much built in there. And because we run such highly secure data networks, the US government and Pentagon use our services.

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Greyhound Research: This conversation would be incomplete if we didn’t talk about the support services. Can you speak to us specifically about your efforts to onboard additional resources and train partners to help customers fully utilize their Oracle stack?

Oracle: When it comes to Oracle Certified resources, most of that population sits here in India. We have five layers of support that are available.

Level one is Oracle Support, which is open to all our customers. So not only do our customers use Oracle Support, but our partners also use Oracle Support. And, of course, they have dedicated helplines there. So, we have said that level one is where your resources must be certified. And the second level is Oracle University, which runs all these processes and curriculums to ensure everyone is robustly certified.

Then we have Oracle Cloud Marketplace, which allows them to have many add-on products and services to enhance the experience further. Oracle Partner Network is huge, and they interact with each other. While we have niche partners, we also have the likes of Deloittes and Accentures of the world, and then we have local partners.

Lastly, I think one of the most popular and most used is the Oracle Communities, where all customers and partners interact. Earlier, when I talked about 90% of our innovations coming from customer feedback, the source of that is Oracle Communities. We do a lot of analysis to understand what communities are discussing and their requests and then take it up.

Greyhound Research: So, the last question we’d like to ask is, right now, we are working with some very large customers, and they are at the moment signing these end-to-end deals with you. Some are signing some CX deals, and some are considering HCM, but when it comes to signing the dotted line, they’re getting these big stacks of papers, and the deal is stuck for the last two months between their legal and your legal, and there is a total disagreement even on basic terms. Indemnity, for example, is a huge part of the conversation because indemnity beyond a point is not something that people agree on. So how do you reduce this friction? Where we are coming from is it creates a lot of bad blood in the decision-making process and adds unnecessary complexities to signing the dotted line. And where the sellers come from is that it is their financial year end or quarter end, and these special deals may not be applicable post-specific dates. All this while the legal isn’t moving. How do you change that? Because in the end, if a deal doesn’t go through because of all this, there is bad blood.

Oracle: I will say it has dramatically improved. Today we have very simple click-to-accept kind of terms. But the problem happens when both the legal teams are very complex and complicated, and they will not do their standard click to accept. But that said, there is a lot of agility. Day in and day out, we sign these very complex contracts where all the teams are involved.

We’re trying to anticipate the complexities; the customer should also do it. So even before you decide, it’s okay to start those conversations. Secondly, internally we are helping our people to navigate the system and get certain things done. But I tell everybody, don’t wait for the last week. Our people are telling our customers proactively that legal processes also take a long time, so we might as well bring those stakeholders early in the game. So, the only doable thing is, and customers should know, please start engaging early.

Greyhound Research: This conversation has been genuinely insightful. Thank you so much once again for your time!

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