Improving how employees and managers can improve talent management activities through changes in process, technology and better access to information is both a theme of my research agenda this year. It is also what the key technology vendors in this space have been focused on developing products to do. Cornerstone OnDemand is one of those vendors that has been in the talent management space since 1999, when it launched its original CyberU learning management product, and now offers a broad range of talent management applications. It is growing at a strong rate relative to many of the other companies in the market. Cornerstone’s products now span learning management, learning extended enterprise (learning extended to partners and customers), performance management, compensation management, succession management and recruiting management. Cornerstone has always sold its products in a cloud-deployment-only model, a decision that has served it well. Today Cornerstone enjoys a strong customer base for a standalone talent management company, with a reported 1,237 customers and 10.5 million users across 189 countries.
Cornerstone made two interesting announcements this month. First, it reported another strong year of growth for fiscal year 2012. Cornerstone’s 2012 results showed 56 percent growth for the year and revenues of $117M. Cornerstone has a strong cross-sell story to tell customers who have purchased only one or two of its products, because its products tie similar talent management processes together, and because all Cornerstone products are cloud-based, so rolling out additional products to existing customers is relatively easy, compared to the process for companies with on-premises software.
Our research on social collaboration and human capital management shows that 45 percent of all budgets for social collaboration technologies in organizations are held by the human resources department. Since many of the new releases of products in the human capital management market include a strong social dimension to them, understanding how the social features in these products help employees collaborate better can help managers fund new initiatives.
Cornerstone’s second announcement of the month is the launch of Cornerstone for Salesforce, a learning management system that will work for any current Salesforce.com customer. This is a smart addition to the company’s product line, as it will increase the market for Cornerstone to include companies that use the Salesforce platform and want a learning management system that runs within it.
Cornerstone for Salesforce provides accesses to learning and development capabilities that span classic learning management features and social and mobile learning capabilities. Highlights of the classic learning capabilities include support for instructor-led training and virtual training, and handling of development plans that tie to skill gap analysis to help sales and partner team members find specific training to fill knowledge gaps. Cornerstone can also handle certification and compliance workflow to help sales professionals become certified for their product and services knowledge. The application includes basic social collaboration capabilities, which enable better peer-to-peer learning, and the ability to run on any mobile device.
Cornerstone for Salesforce also integrates with two of the most popular HR and collaboration applications. Salesforce Chatter complements Cornerstone’s formal training with informal social collaboration, knowledge sharing and social recognition capabilities, as well as peer-to-peer learning, which is often how sales teams learn. In addition, Cornerstone aligns closely with Salesforce Work, a performance and goal management application. Working closely with these two applications makes Cornerstone’s application a stronger offering for Salesforce customers. Having a complete performance and learning process tied to sales objectives, all in the Salesforce platform, is a value add for customers, as is improved usability and accessibility for sales teams who are often remote and don’t need another system to deal with. All of these factors can help sales and customer service teams successfully implement talent management.
All of the Cornerstone’s products are offered only via cloud deployment, and almost all have been developed in-house, which should give customers a more unified user experience than if they were acquired. The exception is Cornerstone Small Business (CSB); in March 2012 Cornerstone acquired Sonar Limited and rebranded its software as the CSB product which they target for medium-sized business which is fine though it is only one of many applications needed for an organization.
While Cornerstone has many strengths, it also faces some challenges. One is the lack of products that larger competitors such as Oracle, SAP and SumTotal Systems have – namely workforce management, payroll and an HR system included within the platform. Cornerstone’s technology partnership with Workday may address part of this issue by enabling customers to purchase an HR and payroll system through Workday, but this also “breaks” some of the value of having a system provided by one vendor. The other challenge is Cornerstone’s approach to the market as an “organically grown platform.” This can become a double-edged sword for customers; eventually, Cornerstone will need to deal with integrations from mergers and acquisitions. Focusing on the values customer derive from the organic platform, such as ease of use, streamlining talent management processes and improving the quality of information to make better decisions, will provide a more lasting value propositions for customers.
Cornerstone’s recent announcements strengthen its offerings and show its success selling products in the market. 2013 will likely see continued expansion in the talent management market. Despite the likely implementation of the U.S. government’s “sequester,” which may stop growth across the public sector, Cornerstone should see growth with its products. If you have not looked at Cornerstone OnDemand, or Cornerstone for Salesforce for sales or customer service organizations, you may like what you see.
Stephan Millard – VP & Research Director