Mark V. Hurd - President and Director
Steve Miranda - Senior Vice President of Applications Development
Jason Blessing - Executive Vice President of Products and Technology
Neil Hudspith - Chief Customer officer and Executive Vice President
Oracle Corporation (ORCL) M&A Call April 26, 2012 12:00 PM ET
Mark V. Hurd
Well, welcome, and thank you for joining our webcast. We announced the close of the Taleo acquisition earlier this month, so a special welcome to all of our Taleo customers.
This acquisition is particularly important to us because we're adding the leader in cloud recruiting and talent management to our Fusion HCM cloud. Taleo's cloud manages 15% of all the hires in the U.S. and is one of the world's largest cloud deployments, with nearly 16 billion transactions per year. Oracle is now the only vendor that can offer a complete suite of core HR systems, combined with recruiting, talent management and analytics, on-premise and in the cloud. Together, we'll help companies drive exceptional organizational performance.
Strategic talent management is no longer a nice-to-have investment. It's a key driver of business success and financial performance. In fact, it's the #1 issue for CEOs today. Many companies know more about their laptops than they do their people.
Talent management is one of the last major business functions that has to be automated. HR typically doesn't have the tools to provide the management information or the data to be able to benchmark results. Only 25% of organizations today have HR-related KPIs, or key performance indicators. Companies that can make data-driven decisions deliver as much as 40% higher profitability per employee. So this is a big deal. Oracle Fusion HCM with Taleo will now provide the applications and the analytics to help companies improve performance, drive growth and to become more competitive.
Let me give you a couple of scenarios, in fact, I'll give you 3. Hiring and recruiting. First scenario, we're hiring aggressively to grow our sales force. It's important to hire the right people the first time around, because every bad hire can cost you $500,000. Simple math, do 10 poor hiring decisions, costs you $5 million. And I've got to get them on board and productive as quickly as I possibly can. Positions not filled have a direct impact on my ability to deliver on my sales targets.
Scenario 2, identifying and retaining top talent. 80% of companies can't even identify the top performers who are a flight risk, and they don't know if career plans are in place for those employees. As a leader, I've got to decide if I invest more in retention or recruiting for each function, big decision. Do I retain what I have? Do I recruit more? I need data. What's the tenure of employees in certain positions? Is their compensation right? Is there opportunity for them to advance?
Scenario 3, how much of a focal or increase should I plan and pay for this year? I look at my goals, attrition rates and benchmark our compensation against the industry. I need to understand the impact of choosing a 3% or a 4% increase. Should it be the same for every geography? Should it be the same for every job category, every function in the organization?
With Taleo, Oracle expects to help human resources teams elevate their strategic contribution to the business to allow HR organizations to effectively consult, advise and lead companies on how to address the issues that I've described, full suite of solutions, simplify HCM and talent management through cloud delivery and mobile access to those capabilities, powerful analytics and data that drives leadership strategy and talent productivity.
Now here to give you some more details are Steve Miranda. Steve is Senior Vice President of Oracle Development; Jason Blessing, who's Taleo's EVP of Product Development; and Neil Hudspith, Taleo's Chief Customer Officer. And I'm pleased to announce that both Jason and Neil have accepted leadership positions at Oracle. It ensures continuity of relationships with Taleo customers, maintains vision and expertise for the Taleo products, and I'm thrilled they could join us today as well.
So with that, let me hand it off to Steve.
Great. Thank you, Mark, and thank you for joining us, everyone. As Mark mentioned, the way we work has changed. Not only is the competition for top talent really increased, increased globally, our access to information, the number of devices we consume information has dramatically increased and changed, and really, the added importance of finding, recruiting, retaining and then effectively making the top talent effective has become very, very critical to the companies, not only as the Chief HR Officer, the head of recruiting in a company but really every manager throughout the enterprise.
So as these changes take place in organizations, what are we doing or what are the trends that we see within HCM or, really, the future of HCM? And they come into a couple of different areas. The first is really simplifying the HCM product, not only from delivery quickly to be able to deliver in a very agile methodology in cloud and then to have that delivery across multiple different channels, including, and especially, mobile as it becomes much more pervasive throughout the enterprise.
And in addition to simplify, you need a much more connected process to -- full life cycle from finding the top talent, retaining the top talent, training the top talent and then having that life cycle of data feedback so that you will have a virtuous cycle, if you will, of data to help you improve that process throughout, to simplify HCM and make HCM and every manager enterprise more effective.
In addition to that, there are other data elements, if you will, that come into play that -- which should help customers and organizations accelerate their business success, really, data points that we've never had before: social HCM, not only internal to the enterprise but external to the enterprise; taking advantage of real time analytics to make decisions faster and with data-driven decisions rather than intuition-driven decisions; and then taking that one step further to further use the patterns that you see and technology capabilities to give HR professionals and managers predictive analytics.
With these trends is what -- we're so excited to be able to deliver the -- what we believe is the most complete cloud HCM and talent management suite on the market today. Added to the already available in-the-cloud Fusion HCM products, including global HR, global payroll, workforce management, we now have a complete suite of talent management products: recruiting and onboarding; learning; performance; engagement and retention; comp, including incentive comp and rewards; as well as talent review. And underlying and across all those products, all available via mobile, integrated solutions with embedded analytics, not only analytics for like key performance and benchmarks but also predictive analytics, and all available at Oracle's reliable and secure cloud of Enterprise scale going forward.
And really, the combination then of Taleo with Oracle brings you the world's leading and best-in-class Taleo recruiting and onboarding, learning and development. We've added to the Oracle performance management product a Taleo performance management product, really giving both perspectives, not only performance management that ties back into recruiting but has tight integration with HR so you get that closed loop functionality. And then on the back end, really, the Oracle products that we've had: engagement and retention, compensation, talent review and core HR.
And the key here is now the combined entities of Oracle and Taleo. We can start to accelerate the investment across all of these products by bringing what Taleo has done very, very well in their cloud applications, in their cloud service offerings with what Oracle's done well, not only with the Oracle cloud applications but to be able to really expose the broad set of Oracle applications and the Oracle set of technology and delivery capabilities to the Taleo customer base going forward.
To explain little bit more of that, let me introduce Jason Blessing. Jason is the EVP of Taleo Products and Technology. Jason?
Thanks, Steve, and good morning, good afternoon, everyone, and thank you for joining our webcast today. As Mark said in his opening comments, I've decided to join Oracle, and I'm extremely excited about the opportunity. My team is also being brought over into Oracle intact, and we'll continue to focus on Taleo products and Taleo and Oracle customer success. I also think that as part of Oracle, we can deliver more value to our customers through a much broader offering and also by bringing faster, more rapid innovation into our product suites.
This morning, I'd like to accomplish 2 things. First, I'd like to ensure the participants on the webcast understand the breadth of our combined offering, and I also want to make sure that our customers understand where we are investing. It's also important for the Taleo customers to know that we intend to continue to support and invest in the Taleo products. In fact, we plan to proceed with our current planned release schedules for both the Taleo and Oracle product suites.
Let me start by talking about our industry-leading talent acquisition solution. As Mark stated earlier, talent management is the #1 issue for CEOs, and finding and hiring the right people is one of the most important steps in addressing that issue. Our recruiting product provides the most comprehensive set of tools to both source talent and then match this talent up with key roles in an organization. We plan to continue to invest heavily in our Recruiting offering, and we'll be directing that investment in the following areas.
First, we plan to improve our integrations with Oracle's core HR systems to really streamline the hiring process, make it easier for our customers. We also plan to enhance the candidate experience, making it easier for candidates to apply on devices, such as mobile and tablets, and also giving our customers more control over the career website experience. This is something our customers have asked for. We've heard you, and we're going to deliver on that this year.
And we also plan to further invest in predictive analytics so companies can better optimize their sourcing spend, which is often one of the largest line items in an HR budget. For example, people spend a lot of money on talent acquisition around things such as media, campus recruitment, et cetera. In fact, the annual spend around sourcing is over $15 billion a year. And we want to help our customers predict the timing of hiring, as well as the best sources for recruitment, so again they can optimize that spend.
Mark also talked about the importance of investing in and growing internal talent. Now many of you know this, but building talent is usually cheaper than buying it on the open market. And Taleo's learning and development product allows companies to grow world-class talent internally. Our product supports formal, informal and social learning.
For example, just last week, I read a great book on leadership. Our product allows me to propagate that out to my team. I'd like my team to read it. Our learning system allows me to put the reading of that book in their development plan and allows the team members in my group to collaborate on that book as they read it. We're also one of the few vendors that can support your for-profit training business in addition to internal training, all on the same cloud-based platform.
This year, we will continue to focus our learning and development effort or investment in a few key areas. First, the value proposition of a learning system is really enhanced when it's integrated tightly with performance management. This allows your customers to ensure that your employees with the highest potential get access to the right learning content, as well as the right development tools. And finally, we're planning some exciting new ways to push learning out into both social and mobile environments.
On to performance management. We have and we'll continue to differentiate our performance management capabilities based on ease of use. We believe ease of use aids in adoption, which helps turn performance management into an ongoing conversation between a manager and an employee versus a conversation that only happens on an annual basis.
Organizations can also configure their performance processes in our application to match their business practice. Workers and managers can easily navigate through the process and complete evaluations that are aligned to their HR practices and their recruitment practices. For example, the combination of PM and recruiting allows you to better recruit the people that are similar to the star performers in your organization.
We also believe that the value proposition of performance management is greatly improved when it's both integrated with the talent management suite as well as core HR. This will enable our customers to leverage the information such as goals, competencies, career aspirations to have a much more complete view of an employee when reviewing their performance. To support this vision, we will continue to invest in the usability of our products and integrating performance management with core HR and also continuing to broaden out the talent profile.
Social and goal management is another key area of investment for us, which we think will make it easier for teams to collaborate around shared goals and drive better business results in an area.
Another key aspect of our offering are tools that are designed to improve employee engagement and retention. One of the keys to successful employee engagement is ensuring that they have visibility into their own HR information and control over their own HR activities, whether they're related to changing personal information or something having to deal with a talent management process, such as updating competencies or goal progress.
Our plan is to expand the Oracle Fusion talent base, which is already the foundation to help workers and managers own their own HR transactions. This includes things such as updating skills assessments and the ability to compare people in jobs to ensure best fit for performance. Employees will also be able to use this tool to do things like find mentors and collaborate with other employees that have similar likes.
We will also be moving quickly to bring together the best aspects of Taleo and Fusion's employee profile to deliver a single comprehensive view of your entire employee population. And the best part, all of this functionality is represented in a very easy-to-navigate org chart.
Compensation and rewards is another very important investment area for us. Effectively compensating employees is a challenge for most managers. Our compensation products empower organizations to pay for performance with a comprehensive approach to both focal compensation and incentive comp, all in one product.
Modeling and budgeting capabilities are also included so that organizations can define compensation plans and build complex calculations to ensure they are making the best use of their compensation budget and allocating it to the right people. The product also is underpinned with best-in-class analytics to support strategic planning and the allocation of compensation rewards based on a comprehensive view of an employee or a group of employees, again to make sure you're rewarding and incenting the right people.
As we look forward, we will be adding market data to the applications on pay to allow customers to better benchmark their compensation plans to what's going on in the industry. We will also be adding more capabilities around grade-step progression and matrix management for -- to compensation to better support hourly workers and complex reporting assignments.
Talent review. We are hearing more and more from our customers about the need to attract and keep top talent. How do we identify key players, and how do we ensure that they are placed into the positions where they can be most successful? The talent view process -- talent review process is an opportunity for managers to identify and also align their top performers and high potential employees with the right roles and responsibilities in the organization.
Talent review is a visualization tool that helps managers get a much better understanding of their organization's strengths, their organization's potential while also providing additional information, such as formal and also the ever-increasing important informal performance feedback on their employees, so they have a complete picture of all of the employees in their organization.
Now going forward, we will add the ability to do individual comparisons within the visualization tool. And we will also plan to leverage talent pools, a concept that Taleo brought to the table, and recruiting profiles, to see what the pipeline looks like for key positions to make -- and also making sure that employees have an opportunity to participate in talent reviews to make sure they are appropriately slated for new positions.
Moving on to Taleo Business Edition. I'm proud to say that Taleo Business Edition is the most widely deployed talent management platform in the industry for small- and medium-sized customers. We have over 4,700 customers that use Taleo Business Edition. With Taleo Business Edition, we offer a flexible try-before-you-buy approach that allows our customers to experience the full suite of talent management products before entering into a contract.
Taleo Business Edition will continue to be supported as a part of Oracle and will continue to receive new investment. This new investment will be directed towards making the product easier to deploy and use. We also plan to add new capabilities to all modules, with a specific focus on improving the recruiter experience and also adding new features to both performance management and learn.
As I said earlier, joining forces with Oracle will give us access to a much broader technology portfolio, which will allow us to more quickly deliver innovation to our customers. Mobile is a fantastic example of this. Oracle has already made significant strides in their mobile development framework, and we at Taleo are very excited to see Fusion for tablets coming to market this year. And by leveraging Oracle's mobile development framework, we will be able to push more and more key talent management functionality out to tablets and mobile phones as we bring the products together.
We also envision providing candidates with better tools to apply for jobs from mobile devices, as well as applications that allow employees to access everything from their talent profile to learning content while on the go. This is going to allow us to better serve the needs of today's mobile candidates and mobile workforce.
The combination with Oracle also allows us to accelerate our vision of embedding social collaboration constructs, things such as feeds, following threaded discussions directly into the talent management processes. We will do this by leveraging the innovative Oracle Social Network product offering.
We feel that embedding social aspects into our products can do a few things. It can improve key business processes, such as sourcing new talent or teams collaborating around goals and performance reviews. This social collaboration will improve both the user experience, the business value of the systems and, overall, the richness of the data being collected in the applications.
The next area of focus for us is analytics, accelerating business insight. Until now, most business intelligence solutions had been focused on what happened. They've been rearview-mirror focused. How many requisitions did we fill? How much did they cost? How long did it take to fill these requisitions? We think that there is a huge opportunity to look differently at business intelligence, by focusing on what's happening right now and into the future, to give managers more information to make better decisions to guide their business.
We are also planning to expand our investment in workforce predictions. Today, we can provide insight to our customers, somewhat of an early warning system, to highlight employees who could be at risk or those who are likely to be top performers in the future that perhaps we just haven't identified yet. We also plan to go further and tie in recruiting and learning data, again, to help predict employee success, and we also anticipate allowing customers to use the tools to help reengage or redeploy employees on higher value-add assignments who might be at risk at the company.
And finally, one of the areas that I'm most excited about is accelerating our Big Data solutions. Again, this is another area where the combination of Taleo and Oracle benefits our customers through accelerated innovation. As Mark talked about in his opening comments, Taleo has a massive data store that contains key insights. For example, our data shows from which source a company is most likely to find a critical hire, like a software engineer here in Silicon Valley, how much they'll cost to get on board and how long it will take for the company to on-board them. This is a very simple example but it shows how our data can be packaged and leveraged by our customers at a much more strategic level to drive business planning and also optimize sourcing costs.
Oracle has done a tremendous job building engineered systems that combine hardware and software, solutions like Exadata and Exalytics machines. We will take advantage of this investment, these solutions, to help unlock the insights in our data store and share those learnings back with you, our customers, embedding these insights directly in the applications. Again, this is another great example of where our combined efforts can deliver differentiated value to our customers.
And with that, I'm now going to hand it back to Steve, and Steve's going to wrap up the application section of our presentation. Thank you.
Thank you, Jason. Welcome to Oracle.
So and really for the class of customers we have out there, for those of you who are Taleo customers who aren't Oracle customers, welcome to you as well, and welcome to Oracle. And hopefully, you've seen, from Jason's detailed roadmap, that we're doing a couple of key takeaways for you as a Taleo customer.
First, we're continuing with Taleo's roadmap across all the products to deliver value based on our customer feedback and customer success the Taleo product line has had for a number of years. Second, we're accelerating that investment by leveraging Oracle application investment with tight integrations to Fusion HCM and components that come in the Fusion Talent Management suite as well. And then finally, really accelerating that investment in terms of what Oracle can bring to the table technology-wise to help Taleo accelerate and speed to market mobile, business intelligence, as well as social solutions, again, all available in the cloud, all available as you expect it through the normal upgrades that Taleo provides today.
Now if you're a current Taleo customer and also an Oracle customer or use Oracle PeopleSoft, JD Edwards, E-Business Suite or Fusion, again, you will continue to see the same investment that Jason went through, as well as investment in the Fusion Applications, in PeopleSoft, in e-Business Suite but now we have identified opportunities to really make this integration easier and better for you. So instead of dealing with 2 different companies, Oracle has taken on the task of doing that integration to deliver a much more comprehensive solution for you, the joint customer.
And finally, if you're neither a customer of either Oracle nor Taleo for talent management or for HR, we really want to offer you the best of both worlds and really give you the decisions to be able to be flexible and make the business decision that makes most sense for you across a number of dimensions, which product, whether you want to have a full suite of applications, full suite of combined HR and talent management or even one particular product deployed quickly, available in the cloud to best serve your business needs. And really, this is what we think is the strength of Oracle applications: Customer choice, comprehensive solutions.
So really, to wrap from the product side, we feel very excited to have Taleo on board and as part of the Oracle product family and really part of the Oracle cloud. We believe we're the only vendor that combines a comprehensive HCM and talent management solution in the cloud, again, full circle and completely integrated from recruiting, talent acquisitions, learning, performance, talent review, on the core HR, payroll, benefits, incentive compensation, all of which has social, mobile and business intelligence underlying it for rapid customer success and rapid customer adoption in this changing world that we have in managing top talent.
So with that, let me introduce Neil Hudspith. Neil is Taleo's Chief Customer Officer. Neil?
Thank you very much, Jason and Steve. It is great to be here with you today.
One of the things that has made Taleo great are the extraordinary clients who use our technology every day to create competitive advantage through talent. Since the acquisition by Oracle was announced, I've had the pleasure of meeting with many of our clients and partners, the community we serve, who have overwhelmingly expressed their support of this great combination.
There are a few key areas that they find particularly compelling. The combination of Oracle and Taleo will deliver the only, the only, complete HCM and talent management offering in the cloud, a complete solution that delivers talent insights to business leaders, enabling growth, organizational optimization and, ultimately, driving, in my opinion, the holy grail, employee engagement. Secondly, Oracle's leadership and investment in HCM and talent management, combined with Taleo's data store, is expected, in fact, will provide a wave of innovation like we have never seen before. And lastly, Oracle and Taleo's combined technology and expertise in the field of HR and talent analytics, helping HR managers deliver metrics and performance data to the boardroom to help drive profitability and growth.
One of the many ways that we engage with our clients is through the Customer Executive Council, a group of Taleo's top 25 customers who meet regularly to provide guidance, best practices and insight to our leadership teams and to one another. In a meeting we held a few weeks ago in San Francisco, we spent time discussing an integrated solution with Oracle embracing the cloud, mobile and social, and it was energizing to hear the passion and excitement they had around the future of Oracle's HCM vision and products.
Reinforcing the themes I've just shared, I just want to share with you a few insights from specific customers that were provided about our acquisition. A leading grocery store chain who is focused on talent management analytics said they believe a strong integration between Taleo and Oracle BI and HCM solutions will help them have a more strategic voice inside their company. A top consulting firm said they believe the Oracle-Taleo partnership will lead to a more powerful and rewarding customer and, importantly, end-user experience. And lastly, one of the largest healthcare management companies said they are enthusiastic about the Oracle-Taleo acquisition due to the combination of top Taleo talent along with the strong reputation and financial backing of Oracle. And I love this last piece, they believe it makes us unstoppable.
As you would have sensed, I am passionate about our customer's success. And I want you to know that Oracle shares exactly the same passion and commitment: To continue and accelerate our journey to becoming the most used, the most used talent software on the planet.
I am delighted to be joining Oracle with the vast majority of the Taleo engineering, sales and services teams who will be joining Oracle. For our Taleo customers, your support teams remain unchanged. You will continue to work with the same teams that have provided you with the excellent support that you have come to expect from Taleo.
And finally, I'm delighted to announce that Oracle has planned to continue our Taleo World conference on September 11 through the 14 in Chicago. Taleo World, it's all about ideas and innovation, featuring dozens of informative breakout sessions, offering Taleo customers the opportunity to learn more about the combined product strategy. We are also thrilled to welcome all of Oracle's HCM customers, too.
Thank you so much for joining the webcast today, and I look forward to seeing all of you in Chicago in September.