In response to the tension between the full suite human capital management (HCM) and best-of-breed solutions, California-based talent management vendor Cornerstone OnDemand, or simply CSOD, is definitely opting for remaining a best-of-breed solutions provider—a talent management specialist in a world of HR generalists. The chief executive officer (CEO) Adam Miller made it very clear that the company will continue to function as an independent—not interested in being acquired—talent management software provider. In fact, CSOD took advantage of the market upheaval that arose from the acquisition of SuccessFactors by SAP and Taleo by Oracle, keeping its focus on expanding its customer base with its highly specialized products.
SaaS Then and Now
Since its inception in 1999, CSOD has witnessed the growth of its own products, and other competing ones, in the software-as-a-service (SaaS) market. Back then, the company encountered much resistance to this delivery model, but today SaaS is what most organizations want in human resources (HR)/HCM software. This is reflected by the increasing footprint of SaaS solutions in verticals such as health care and the public sector. CSOD has invested heavily in its cloud infrastructure to ensure the security of customer data. The company also has a third party perform quarterly hack tests to attempt to hack into CSOD’s data and reveal possible vulnerabilities in data security—the results of such tests are transparently exposed to the vendor’s clients. Today, CSOD has its data centers located in Los Angeles, California, and London (UK), and is expecting to open more data centers in Asia Pacific (APAC).
In its early days, CSOD did not start like other software companies, looking to first secure small clients. Instead, the company took advantage of the Wall Street contacts of its founding members and tackled the big clients. As a result, it had to respond to very demanding and complex organizations, which helped rapidly enhance the quality of its talent management product (see image of employee potential grid)—its strong configurability and support for business processes. Among its first clients were Smith Barney and Washington Mutual.
Flexible Solution Backed By Customer Support
The complex development of the talent management product was also helped by quarterly product releases. Although it may seem scary, due to the associated change management efforts, these frequent releases allow for fast innovation, which big clients oftentimes appreciate. It also has the advantage of allowing some of its features to be turned on or off, such that clients do not have to adopt all the features right away. The vendor offers training sessions and change management support for its clients on an ongoing basis, as well as a customer success center supported by its own social tool, Cornerstone Connect, for idea generation and collaboration among clients.
To further ensure the success of its clients’ interaction with its products, CSOD has developed a team of client success managers (CSMs)—former talent management or HR practitioners who act as dedicated resources for individual accounts. CSMs respond to customer requests and guide customers for the optimal use of the solution. Their subject matter expertise allows them to swiftly understand and adequately respond to the pain points of clients. This strategy has ensured a reported 95% customer retention rate since 2002.
Vertical-Specific Features and Content
CSOD’s approach to vertical-specific requirements is twofold: the provision of vertical-specific features and content services. As all customers are on the same version at the same time, certain features may start out as industry specific but then be adopted by various other industries. A good example of such a feature is the performance review ‘observation checklist,’ which was built for the healthcare sector and later was used by manufacturing, retail, and educational institutions, where performance reviews also take place ‘in the field.’
From a content perspective, CSOD collaborates with third-party providers for learning content, skills and competency libraries, assessment quizzes, psychometric tests, recruiting pre-hire assessments, etc. These providers develop industry-specific content, thus giving vertical substance to software capabilities. For instance, learning offerings may differ drastically from one industry to another, even for topics such as leadership—as distinct skills and competencies are required from leaders working in different industries.
The organic growth of the vendor’s talent management enterprise solution results in a unified user experience (see image of example user profile) thanks to:
A consistent user interface across all modules and applications offered within the suite.
A unified data model that gives reporting more substance, as it can combine data from various points of access (recruiting, onboarding, performance, learning, etc.).
A unified support model that will not get disrupted by the transitional processes inherent to acquisitions or mergers.
How It All Came About
Very few components of CSOD came via the acquisition of Sonar6 in 2012—namely, some attractive graphical features and a few performance management tools.
Cornerstone understood that tackling the small business market (400 employees and below) with a lighter version of its talent management enterprise solution is not the best way to go, and that is why it decided to acquire Sonar6. Today, the solution is known as Cornerstone Growth Edition, and it has been enhanced with learning management capabilities from CSOD.
CSOD also introduced Cornerstone for Salesforce.com—CSOD’s attempt to take a stab at the specialty market. The product was built native on force.com and is probably the only force.com sales-enablement product—delivering training to sales organizations directly through salesforce.com. The company will continue to invest in this product and based on its success consider inserting CSOD into other platforms.