HCDM vs. ERP: Human Capital Development

HCDM vs. ERP:Human Capital Development &Managementand Enterprise Resource PlanningSystems

Complements for Supporting Organizational Performance

S A B A White Paper

Executive Overview: The Evolution of EnterpriseApplications in the Management of Human CapitalDuring the 1990s, companies invested heavily in ERP (Enterprise Resource Planning)systems – enterprise-wide Financial, Order Processing, Manufacturing and HR applications.The goal was to aggregate and automate functional business information to increaseefficiency and provide financial control. These systems drive cost savings by creatingconsistency across an enterprise, and give the organization visibility over transactions thataffect their physical, financial and - to some extent - human capital.

As companies have been automating their transactional and human capital information withERP, they are faced with two new challenges. These challenges represent both significantchange and significant opportunities for organizations. First, with the widespread adoptionof the Internet, organizations must extend their human capital information and applicationsto employees, customers, partners and suppliers — the extended enterprise of theorganization. Second, best performing organizations are beginning to strategically developand manage their human capital skills, experience and knowledge as a source of competitiveadvantage. Organizations have started to evaluate their ERP systems as sources to addressthese challenges, but have discovered limitations in translating a human capital informationsystem into a human capital process system. This challenge stimulated the creation of amore comprehensive and innovative system to complement ERP – Human CapitalDevelopment and Management (HCDM).

HCDM is a management system for developing and managing people, rather thanmanaging people’s information. It focuses on the integration and improvement ofenterprise-wide cross-organizational processes, and emphasizes competency development,certifications, organizational alignment, knowledge management and talent tracking anddevelopment. Extended enterprises now span the globe, communities and alliances ofpeople are working together in multiple time zones, speaking multiple languages, formingecosystems of distributed relationships requiring visibility, process and alignment. HCDMsystems are becoming both the glue and dynamic catalyst for making these extendedenterprises operate as a seamless, high-performing whole.

Though HCDM and ERP are both enterprise-wide management systems, their purpose,features and functions, and value propositions are very different; they are components of acomplementary broad-based infrastructure, not substitutes for one another. ERP systemsfocus on information, financial and physical assets, in an automated, functional, internal-only back-office format; HCDM focuses on people-in an aligning, cross-enterprise, and end-user format. Whereas ERP collects and organizes data for cost-saving administrativeefficiency, HCDM integrates the core processes of a human capital management system –learning, performance, content, collaboration and talent management – to achieve superior

Human Capital Strategy in the Networked Enterprise A New Application Imperative2 Saba

performance. Good ERP deployment results in better budgets and cost accounting; goodHCDM deployment results in improved productivity of people, speed-to-market, businessalignment and reduced risk of non-compliance. Taken together the two kinds of systemsrepresent an operational and strategic whole.

This white paper explains the HCDM strategic imperative, the differences between ERPand HCDM and explains how they work together as an overall management system for theenterprise.

Human Capital Strategy in the Networked Enterprise A New Application Imperative 3Saba 3

The Challenge: Developing and Managing Human Capitalin the Extended EnterpriseStudy after study demonstrates that a business’ value is directly linked to its collectiveknowledge and skills, and the ability to develop and manage its people to achieve superiorperformance. Organizations with the best people, most knowledge and most effectivelydeployed human capital increase their ability to increase revenue and market share whilereducing costs and risk. Not surprisingly, an organization’s human capital assets are nowthe greatest factor in determining its market value.

Figure 1a: Economic Value of Human Capital Assets

As much as we now understand that human capital assets are keys to success, organizingwell for such things is not easy. It is difficult to systematically develop and manage people,while efficiently and effectively keeping their knowledge, skills and capabilities up-to-dateand constantly linked with performance objectives. This complexity is exacerbated by theexpansion of organizations’ reach to become extended enterprises of employees, customers,partners and suppliers. Each of which has its own complement of human capital upon whichstrategy and execution depends.

Human Capital Strategy in the Networked Enterprise A New Application Imperative

Businesses are challenged, directly and indirectly, with considerable barriers to developingand managing people across the complex environments of these extended enterprises.Consider these very real quandaries, for example:

• Product Introductions: “We roll out twenty new products every month.How can I get my global channel partners up to speed faster, so they cansell greater volumes before competition enters my market?”

• Sales Force Effectiveness: “Our highest margins come from selling toenterprise accounts. How do I quickly develop and share the knowledgeand skills across my sales organization to leverage our success in selling toFortune 500 customers? How do I ensure collaboration from our partnersin big deals?”

• Regulatory Compliance: “We beat every other airline in on-timedepartures, yet new security regulations dramatically affect my flightschedules. How can I track and record that my people learn the newregulations and are certified as quickly as possible? And what about ourcontractors? “

• Customer Service: “I know that within my extended enterprise there arepeople with the skills to solve my customer’s problem. How do I locatethem fast and get their expertise applied to a critical problem right now?How can I shorten the time to competence of my support people when newproducts roll out? Should I train my customers to make them smarterabout the problems they send to us?”

• Employee Development and Retention: “After a round of layoffs, weworry about retention and morale. Employees want to improve theirknowledge and skills. How can we use our limited training budget todeliver new and exciting development opportunities to our critical peoplethroughout the world?”

• Performance Management During Restructuring: “We have improvedproductivity and reduced inventory. But we are dramatically restructuring— how do I make sure that my leadership knows how to manage andmotivate their teams, establish clear performance plans and adapt to newways of working? How do I bring that same thinking to our customers,partners and suppliers, both new and old?”

Looking at these kinds of challenges, the complexity of achieving success becomes apparent.The people that business leaders depend upon for the execution typically sit in differentfunctions; and, in many of the examples indicated, they are not in the core organization butrather in organizations of customers, partners and suppliers. Customers have a significantrole to play, both in providing insights for new innovation, and in being an audience forsome of the learning and knowledge associated with new products and services.

In addition, the pace of activity within departments and initiatives such as customer service,

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Human Capital Strategy in the Networked Enterprise A New Application Imperative 5Saba

merger and acquisition or compliance is frenetic: knowledge and skill development must bequick, flexible and driven by the individual. At the same time, for that knowledge andlearning to impact organizational performance, it must be closely linked to performancegoals and assessment and be continuously monitored for improvement and adaptation bymanagers. Ideally, it is not only tailored to specific people-their needs, styles, culturalsettings and placement in an organization – but even to the different roles that they play inthe many different processes to which they contribute. It must be flexible to both scale andmode, combining both formal and informal learning.

The Performance ImperativeThe human capital challenges we have been discussing ultimately roll up to one overarchingobjective – organizations must be able to develop and manage people better than theircompetition to achieve superior performance. Today, disembodied strategy is not enough:value is created through superb execution, and execution critically depends on getting thebest people and making them the most productive that you can. Doing that has never beeneasy, and no one system can solve the myriad interrelated problems implied, but a giant stepforward has been taken with the development of the management systems of human capital.To better understand how these solutions have emerged, and indeed how Saba has led theirevolution with its vision and experience, we should turn to some of the recent history ofERP and HCDM technologies: where they came from, and how they have evolved.

Saba Human Capital Strategy in the Networked Enterprise A New Application Imperative6

Traditional ERP Solutions: An Historical PerspectiveUnderstanding the origins and assumptions thathelped develop ERP will illustrate the advancesrepresented by HCDM, as well as underscore thedifferent value propositions of these solutions.

In the 1980s, computing became inexpensive enoughfor a wide range of new applications to be developed.Thanks to both the advent of client/serverarchitectures, as well as a more broad-based approachto extending technology to a wider range of businessprocesses, organizations were ready to embrace a newclass of solutions that standardized and integratedseparate islands of information. Enterprise ResourcePlanning solutions (ERP) were first developed toautomate financial and physical asset managementand better manage the back office functions thatwere the center of business operations.

From the beginning, the main focus of ERP was toautomate and integrate existing business processesfor financial and manufacturing control and increased efficiency. Specifically, the goal ofERP was to tightly integrate certain internal administrative processes so the organizationcould manage financial and physical capital more consistently and more streamlined. Bybringing together business processes such as accounting, order entry and fulfillment,purchasing and supply chain into a standard and linked set of applications, ERP systemsnow provide the ability to tightly manage the information a business carries on its balancesheet.

ERP Supply Chain Automation Systems specifically manage processes such as ordering parts tomeet manufacturing plans, sharing materials across plants and setting up supplier andvendor contracts to meet particular manufacturing needs and processing manufacturingcosts. These ERP systems ensure, for example, that parts ordered in one factory arepurchased in bulk and shared across multiple locations.

ERP Financial Systems integrate processes related to financial flows and manage such thingsas purchasing equipment, paying invoices, processing payroll and depreciating equipment.They close the books on the business, ensuring that all business processes traverse thenecessary financial transactions to calculate true costs, true revenue and manage expenses.

ERP systems took a major step closer to managing people processes with the arrival ofintegrated human resource systems. The information work of such systems has historicallybeen operational and administrative, not strategic: they tend to optimize people–informationfor standardization, rather than personalization and flexibility. These human resource systemsmanage processes such as the administration of hiring employees; changing pay scales;

Evolution of ERP Applications

1980s – Automation of back officefunctions such as payroll, humanresources, financials to mainframeonline systems (Dun & Bradstreet,Cullinet, et al)

1990s – Migration of back-office systemsto client/server architectures (Oracle,Peoplesoft, Baan, SAP) – emergenceof HR focused ERP systems.

Late 1990s – Emergence of sales andCRM front-office systems (CRM andcall center automation) (Siebel,Vantive, Scopus).

2002 – Focus of ERP remains onautomating internal processes.

Human Capital Strategy in the Networked Enterprise A New Application Imperative 7Saba

reductions in force; and tracking benefits, retirement programs and reporting structures inthe organization. ERP HR solutions allow Human Resources departments to keep track ofpeople-information and also log all relevant financial information about a company’semployees. ERP has little functionality or perspective related to managing people’s skills,supporting their development needs nor does it provide tools and analysis for flexible anddynamic planning of talent acquisition and deployment.

In the end, ERP systems, even ERP HR systems, are tools for accounting andadministrative managers whose primary function is people-information management. ERPsystems are an important part of most large organizations’ architecture because they providethis useful and necessary functionality. Deployed correctly and appropriately, ERP systemsimprove efficiencies of people-information management in large complex organizations.HCDM, by contrast, is an integrated platform to both equip managers to develop anddeploy people for business impact, and to empower people to manage their own careers,community-based learning and performance objectives. HCDM focuses on the developmentand management of people processes that ERP is not suited to manage.


HCDM Technology Evolution

HCDM can be traced to many different applications over the last decade, each of whichtried to solve some piece of the overall people-process puzzle. A major shift occurred whenorganizations recognized both the need to focus on the strategic, rather than administrative,side of people management, and the importance of developing and managing organizationalcapability at a time when business was accelerating and becoming more global.

Some of the earliest efforts to bring technology to bear on the needs of the forward-lookingorganization were simple (and often awkward) collaboration and knowledge managementtools. These early efforts were followed by first generation training systems-based upon therealization that the administration of training, once computerized, had the potential tocreate more strategic processes of learning. When the Internet began to boom, visionarycompanies saw the potential to combine not only these systems in an easier and moreflexible format, but also to link other related people-process applications (such asperformance management), and to bring them all together in a common platform to providean integrated solution for the extended enterprise. From its origins in the mid-1990s, Sabahas been pacing this broad-reaching and integrative vision: creating an overall, end-to-endmanagement system for the entire extended enterprise of human capital.

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After years of experience, working collaboratively with innovative customers, Saba has takenthe HCDM vision and translated it into a new class of enterprise application – one thatensures that the people in an extended enterprise are trained, aligned, performing andcollaborating in a consistent and optimal manner. HCDM supports the sharing ofinformation, best practices, knowledge, content and expertise on a global scale. The solutionallows customers, partners, employees and suppliers to access formal and informal learningcontent, manage goals and performance plans, share position descriptions and utilizecollaboration tools and certification programs to ensure execution of business goals. It isscalable, open, Internet-based and designed to accommodate flexible business processes.

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Understanding the Differences Between HCDM and ERPFive Key Differentiating Features of HCDM:

1. HCDM provides an overall management system for human capital.The combination of functionality and processes managed by HCDM comprises anoverall integrated approach to developing people, which represents a system for leadersto manage human capital. By both the breadth and interconnectedness of the processesincluded, HCDM enables a more comprehensive and interwoven approach to trackingand empowering people. Most of the processes in HCDM are not addressed by ERPsystems.

2. HCDM automates and integrates development and management ofinformation and processes about and for people, whereas ERPmanages transactional information, mostly about tangible assets.HCDM focuses on the development and management of people. The core of itsinformation is about people and their capabilities and potential: their competencies,learning history, assessments and development plans. It aligns goals, sets performanceplans, delivers training and facilitates collaboration; it integrates opportunities forstaffing, recruiting and succession. When a new product is launched, for example, theHCDM system assures that all members of the direct and indirect channels havetraining and certification programs available immediately – and tracks and measurestheir progress. When new government regulations are released, the HCDM systemcertifies that employees, customers, partners and suppliers meet compliancerequirements. As a tool for recruitment, development and retention, HCDM providesperformance planning, training and collaboration to help people improve their skills andperformance.

ERP solutions, by contrast, even those in the HR arena, focus primarily on transactionsrelated to financial administration: employee names, ID numbers, demographics, payrollrecords, hiring/firing records, benefits and simple employee history. They have nounderstanding of, data regarding, or focus on the learning, development and peoplemanagement processes.

3. HCDM is designed for the extended enterprise: employees,customers, partners and suppliers.HCDM is designed to share information and processes across the extended enterprise.ERP software solutions, in contrast, focus on organizing and structuring a company’sinternal information, typically in a rather uniform way. ERP systems lack the necessaryflexibility and dynamism to support learning across boundaries and among differentconstituencies.

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For example, training and learning programs about new products are often shared acrossemployees, customers, partners and suppliers – but learning requirements andrecommendations are based on job roles, and training requirements may be verydifferent for employees than for partners and again different for different classificationsof partner. Higher-level partners may require stricter certification rules than others, yetwill share some of the same baseline certification programs and assessments. Thesediffering requirements must be managed flexibly and quickly, as well as fluidly acrossdifferent organizational boundaries.

Talent Management must now also span organizational boundaries and accommodatethe fast-changing world of soft assets. For example, a Talent Management system mustallow people to locate talent – from anywhere, both internal and external – toparticipate on a project team. With talent management, an employee is now able tolocate specialized skills not only within his own function or broader organization, evenwithin partner organizations, or from interconnected pools of contractors and othertalent providers. Similarly, managers can flexibly staff projects and new initiatives.

To accommodate different groups of users in its multiple complex people processes, theHCDM solution supports different interfaces and access privileges, depending on theuser. Each individual has a personalized view of information that is relevant andappropriate to him/her – while still respecting (and efficiently reusing) data andprocesses that are shared. ERP systems provide industrial-strength databases ofinformation, but lack the flexibility and reach to differentiate among pools of userswithin and across enterprises.

4. HCDM supports highly flexible, configurable business rules.Because of the complexity of people and people processes, the HCDM solution solvesmany different business processes for many different constituencies across the extendedenterprise. HCDM brings together best of class business processes in a scalableenvironment.

For example, the demands of accommodating multiple kinds of learning, certificationsand talent management must now extend across organizational boundaries. But evenwithin an organization, HCDM supports several diverse populations of people, eachwith varying demands – based not only on different job types, but even on roles withinthose job types. It also supports the changing demands of projects, and new initiativesthat characterize any best-performing organization.

Training for a single product rollout, for example, may require five languages, severaldifferent certifications, different assessments and pricing in multiple currencies. Somebusiness units may require management approval to attend courses – others may not.Partners may need to pay a fee to take courses. Certain managers must have accessprivileges in assessing pools of talent, and others may not. Some information must bekept confidential for security purposes, and other learning programs must be availableto all, anywhere, any time. The HCDM system has flexible business rules to enablelearning, both formal and informal across the extended enterprise; similarly HCDMenables flexible setting and monitoring of goals in its performance managementprocesses. ERP systems, by contrast, tend to enforce consistent and uniform businessprocesses across an entire enterprise. Consistency of information and process – for

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example in the handling of receivables or currency valuations-are their strength. Butthat strength also highlights the inflexibility of the system when it comes to theirpeople-who demand personalization and highly flexible development and managementof knowledge and skills.

5. HCDM is an end-user focused application. HCDM is designed for anytime, anywhere access by end-user individuals – employees,managers and executives-through a browser. It is easily integrated into enterprise-wideemployee and partner portals, and seamlessly becomes part of e-mail environments andnormal communication processes. Its information and notifications are personalized toan individual’s job, role or project needs. It allows people to find and engage in formaland informal learning opportunities, collaborate with peers and experts online,contribute learning content and job aids, see and report progress against goals anddevelopment plans and chart their desired career and skill development paths.

ERP systems, by contrast, are designed for use by back-office workers – typically HR,payroll, purchasing, order-entry and finance personnel. They do not have the interfaces,business logic or customization needed for broad end-user access; they are powerful buthierarchical systems, oriented for expert administrators — not people who mustintegrate learning into their daily and urgent tasks. Once again the strength of ERPsystems also becomes their weakness: they discourage freedom of information even asthey structure it well for the expert users who depend on it.

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Summary of differences between ERP & HCDM Systems

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1. Which

Processes are

Managed?

ERP automates HR, financialand manufacturing functionsto improve financial control.

Hiring, Firing, Change ofBenefits, DepartmentNumber and Change of Job.

HCDM manages the skills, capabilities,deployment and development of people.

Learning, Certification, ClassroomTraining, E-Learning, Live E-learning,collaboration, Skills Management,Certification and Performance Planningand Customer Education.

2. What People are

managed?

ERP HR systems manageinternal personnel andresources only.

HCDM supports the extended enterprise,in a single integrated system.

ERP HCDM

3. Who uses the

system?

ERP systems are designed forback office users.

Typical users are internal HRemployees, back officeworkers and financialmanagers.

End users may have access tobasic information via portals.

HCDM is designed for use by everyone inthe extended enterprise.

Employees, customers, partners andsuppliers can directly access the system.Interfaces and privileges vary dependingon the user. Administrators and managershave special privileges.

Portals provide access with both highinformation and functionality.

4. What data and

information is

stored in the system

ERP manages data andprocesses around financial andphysical assets.

Focuses on the masteremployee record, salary,benefits, promotions, andfinancial budgets for theenterprise – but from anadministrative perspective.

HCDM manages data and processesaround people, organizational profiles,learning and related processes.

Employee, customer, partner, and suppliertraining history, competencies,performance plans, certifications, financialtransactions for training, as well as historyof informal learning activities andknowledge management resources.

5. How flexible is

the system in

enabling global

business rules?

ERP solutions enforceconsistent and uniformenterprise-wide businessinformation.

Designed to implement globalprocesses in a uniform wayacross the organization. Notdesigned to support differentbusiness rules for differentparts of the organization.System is transaction –oriented to create integratedfinancial reporting.

HCDM supports global processes withflexible, configurable business rules.

Flexible system with configurable businessrules to enable different rules and alertsfor different sets of users within andbeyond the enterprise. Enables manyportals depending on user needs andaudiences to be served. Integratedfinancial management of the trainingfunction is included


6. How does it

support informal

learning and

collaboration?

None. Not designed for this

application.

Allows users to share information, access

experts and historically codified learning;

also obtain prescriptive recommendations

for informal learning as part of their

performance plan.

7. Content

management

Features?

None. Manages learning content, collaboration,

live learning and is built on AICC and

SCORM content standards. Content

builder function to assemble content from

learning objects.

ERP HCDM

8. Enables what

business benefits?

Integrated and consistent

business practices for

financial functions – provides

standardized budgeting and

financial reporting across the

enterprise.

Helps achieve superior performance by

integrating learning, performance, content

and talent development and management

for the extended enterprise (customers,

employees, partners and suppliers).

Faster time-to-competency; shorter time-

to-market; reduced cost of regulatory

compliance; optimized channel alignment

and increased sales and channel

productivity.


ERP and HCDM as Complementary SolutionsThough we have stressed the differences between HCDM and ERPsystems, in the appropriate role and deployment both are valuable forthe large enterprise. Indeed, together they represent complementarypieces of an operational and strategic whole. ERP systems and HCDMfocus on solving different problems – and both serve important anduseful functions. Taken together they represent a strategic managementsystem for improved productivity.

Every organization will-and indeed should — have its own technicalarchitectural plan for connecting ERP and HCDM; Saba makes thateasy with our wide range of ERP connector applications, and well-documented system integration and migration specifications. Saba hasintegrated with all major ERP systems, in scores of large complexorganizations; for PeopleSoft alone, robust and transparent interfaces arein place at such companies as Agilent, Amazon, EMC, Ford,Hillenbrand Industries, Network Appliances and others.

At a conceptual level the working relationship between ERP andHCDM is relatively simple to describe: ERP data becomes sourceinformation that adds to the pool of data for the HCDM managementsystem. The data is processed and handled by the HCDM applicationsalong with end-user information, profiles, preferences, and all humancapital processes.

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“Proctor and Gamble GlobalTraining Initiative Integrates

with SAP HR”

Proctor and Gamble manages the 90,000

P&G University globally with Saba.

Proctor and Gamble University offers

more than 150 learning programs,

including clases, e-learning programs and

live collaboration.

The P&G Human Capital Development

and Management system supports 140

countries and is linked directly to SAP

which houses the company’s master

human resource database. All training,

certification, and skills data is stored in

the Saba server.


Figure 3: Different Data between ERP and HCDM

In working with ERP HR systems, HCDM draws from the ERP databases the “primaryemployee record” for internal employees -employee ID, name, address,salary, organization and the master employee identifier. HCDM thentakes the basic employee or individual name and identificationinformation and adds to it information on skills, competencies, thestudent transcript of all learning events and certifications, performanceplans, objectives, language and organizational location of the individual.The information in the HCDM system is additive to that in ERP; itputs the information in a human capital development context andprovides functionality to make it end-user oriented and part of theproductivity processes of the extended enterprise.

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Medtronic IntegratesPeopleSoft with HCDM

Medtronic, world leaders in

manufacturing embedded medical life-

extending devices, uses HCDM to

manage its global process for training,

certification and compliance with FDA

regulations.

PeopleSoft is the Medtronic ERP Human

Resources system, forming the basis for

the Medtronic global employee database

and employee identifier. Regular batch

programs update the HCDM system

from PeopleSoft to make sure that all

employees have a single identifier to

provide certification and training records,

allowing auditing by the FDA.


In each case, to integrate these two systems, a periodic batch program orXML-based file transfer program is typically used to replicate additions,updates and deletions as new employees are added or personnel recordschange. Multiple ERP systems can in fact (and often do) feed intoHCDM.

Since HCDM is less transactionally-focused than ERP, it is rarelynecessary to send information back the other way, i.e. from HCDM toERP. HDCM becomes the global system of record for skills, traininghistory, certifications and performance plans, as well as handling all ofthe human capital processes beyond the scope of ERP functionality.

When organizations need integrated reporting on employees and theirskills, performance plans and certifications, this information is all storedin the HCDM system for easy reporting and analysis.

Figure 4: How HCDM Solutions complement ERP Solutions

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Cisco Integrates PeopleSoftwith HCDM.

Cisco, the worldwide leader of

networking for the Internet, uses Saba

HCDM to manage training for 40,000

employees in 225 offices around the

world, a cost-saving and strategic

foundation for Cisco’s extensive e-

learning strategy. The Saba system takes

nightly batch updates from PeopleSoft

with data such as employee information,

roles, locations and joins it to learner

profile records for all Cisco people,

ensuring continually updated information

for human capital management.


FREQUENTLY ASKED QUESTIONS

1. What is Human Capital Development and Management (HCDM) and howdo I explain it to my organization? How does it complement ERP?

Just as traditional ERP solutions integrate financial management across the supply chain,Saba integrates information and learning across the extended enterprise. With HCDM youcan consolidate learning, performance, content, collaboration and talent management in asingle system – and this system complements your ERP solutions to provide an overallmanagement system for the human capital in your extended enterprise.

2. I just finished implementing ERP for my HR and supply chainmanagement. Why would I purchase Saba?

An HCDM solution is unique and different from an ERP solution - it provides the learning,performance, content and talent management to support your human capital developmentand management, across employees, customers, partners and suppliers. HCDM also enablesthe management of the global formal and informal learning needs and allows you to deploycertification programs (OSHA, FDA, EEOC) across your extended enterprise,complementing your ERP solutions. ERP training management modules were notdesigned to accommodate this extended enterprise, nor do they have the features to manageall forms of learning in an enterprise.

3. Will ERP vendors build their own HCDM solutions?

Although this is theoretically possible (and indeed many ERP providers already claim tohave an HCDM solution), one should not underestimate the effort to build what has takenSaba over 1500 man-years, working with world-class customers, to create. Nor should oneunderestimate the effort required to transform one kind of application into something withvery different features and functionality, or to bolt on a basic LMS to try to achieve HCDMfunctionality. ERP and HCDM are management systems with highly dissimilar processes,data and users. ERP companies have already invested hundreds of millions of dollars intodata models, application logic and engineering teams dedicated to solving the problem ofautomating HR business processes and integrating financial systems; their success in theserealms make it all the more difficult for them to transition in a different direction.

HCDM is a new class of management system designed to help an enterprise manage itshuman capital through integrated business processes and information flows for learning,performance, content and talent management. Businesses are increasingly recognizing thepower of best-of-breed, complementary solutions.

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4. Does an organization incur additional costs by adding an HCDMsolution?

In most corporations, training takes place in a relatively fragmented and often disorganizedmanner – each division, department or geography does their own training. Thisfragmentation and redundancy is reflected in multiple, costly separate content libraries,separate management systems and duplicate staff functions. An HCDM solution willintegrate all these functions in one application - and why it therefore typically savesconsiderable costs by allowing a company to share content, reduce headcount and managetraining consistently.

Further, HCDM, with its business benefits of increasing revenue and market share whilereducing costs and risks can also help drive top line growth and save other, more indirectcosts, all of which adds to the ROI of the software.

5. How does Saba compare to other HCDM solutions?

Both Gartner Group and Brandon Hall (a leading analyst in the United States) have ratedSaba as the most mature, functionally rich and scalable solution for end-to-end learningmanagement on the market. Saba is listed as a leader in the Gartner 2002 LearningManagement System (LMS) “Magic Quadrant” report. * Published February 8, 2002, thereport evaluates the performance of more than seventeen LMS vendors based on ability toexecute and completeness of vision. Saba has an ecosystem of more than 100 content andapplication suppliers that add value to the Saba solution.

*The Magic Quadrant is copyrighted February 2002 by Gartner, Inc. and is reused with permission. Gartner’s permission

to print or reference its Magic Quadrant should not be deemed to be an endorsement of any company or product depicted in

the quadrant. The Magic Quadrant is Gartner’s opinion and is an analytical representation of a marketplace at and for a

specific time period. It measures vendors against Gartner-defined criteria for a marketplace. The positioning of vendors

within a Magic Quadrant is based on the complex interplay of many factors. Gartner does not advise enterprises to select

only those firms in the Leaders segment. In some situations, firms in the Visionary, Challenger, or Niche Player segments

may be the right match for an enterprise’s requirements. Well-informed vendor selection decisions should rely on more than a

Magic Quadrant. Gartner research is intended to be one of many information sources and the reader should not rely solely

on the Magic Quadrant for decision-making. Gartner expressly disclaims all warranties, express or implied of fitness of this

research for a particular purpose.

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A Partial List of Saba CustomersOrganizations around the world and representing every industry type rely on Saba learning,performance, resource, and content management systems to enhance their competitive edge.

COMMUNICATIONSAlcatelCENTECLucent TechnologiesNortel NetworksSprintTelecom Italia

COMPUTERS AND

ELECTRONICSCisco Systems, Inc.Cypress SemiconductorDellEMCNetwork Appliance, Inc.Xilinx

CONSUMER GOODSAmazon.comAnheuser-Busch, Inc.Best Buy The Procter & Gamble Company

FINANCIAL AND

INSURANCE SERVICESABN AMROBanca Popolare di MilanoFifth Third BankPrincipal Financial GroupRoyal & SunAllianceStandard Chartered BankWells Fargo & Company

GOVERNMENTDutch Ministry of Economic AffairsScottish University for IndustryU.S. Army

MANUFACTURINGCaterpillar, Inc.Daimler-Chrysler, AGFord Motor CompanyGeneral Motors CorporationHillenbrand IndustriesHyundai

PHARMACEUTICAL AND

MEDICAL EQUIPMENTAventis Medtronic, Inc.The Procter & Gamble CompanySiemens Medical Solutions

PROFESSIONAL SERVICESAutomatic Data Processing, Inc.

(ADP)Deloitte and Touche EDSKPMG ConsultingKendle International, Inc.PricewaterhouseCoopers

SOFTWAREBMC Software, Inc.BowstreetE.piphany, Inc.PTCVeritas Software Corporation

OTHER TOP

ORGANIZATIONSCemexContinental Airlines, Inc.InformationWeekKinko’sMinneapolis School DistrictSchlumbergerW.W. Grainger

©2002 Saba Software, Inc. All rights reserved. Saba, Saba Software, the Saba logo, Moving theEnterprise. Moving Minds and the names of Saba products and services referenced herein areeither trademarks or registered trademarks of Saba Software, Inc. All other trademarks are theproperty of their respective owners.

SABA

2400 BRIDGE PARKWAY

REDWOOD SHORES, CALIFORNIA 94065 USA 650-696-1758, [email protected] saba.com

August 2002 WP-ERP001

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HCDM vs. ERP: Human Capital Development

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