KronosWorks 2010: Of Next-Gen User Experience & Workforce Mobility

Given our shared presence in the Boston metro area, I’ve had numerous contacts and interactions with Kronos Incorporated in the past, but this fall was my very first attendance of the vendor’s annual user conference: KronosWorks 2010. That attendance was a worthwhile use of my time and a great learning experience about the company and its customers. As some background, here is Ventana Research’s report from the previous conference, KronosWorks 2009.

Kronos is the global leader in workforce management (WFM) solutions that enable organizations to control labor costs, minimize compliance risk, and improve workforce productivity. Tens of thousands of organizations in 60 countries — including more than half of the Fortune 1000 — use some or all of the following modules of the Kronos Workforce Central suite: time and attendance (T&A), scheduling, absence management, human resources (HR) and payroll, hiring, and labor analytics.

The conference’s official program started with an intriguing animated video with some startling statistics about what our working days and weeks have begun to look like. For example, 15 percent of people admit that they are addicted to e-mail – some confessed to checking their e-mail at the beach, weddings, and even at funerals. 

The “How Will Your Week Work” video portrayed how our typical work week has evolved through labor regulations, technological innovations, and shifting workplace norms. The video is the second in a series of “striking home” videos by Kronos (in collaboration with XPlane) that illustrate the ever-changing global workforce. The first video in the series, "How Will You Manage” has reportedly been viewed more than 40,000 times on YouTube.

Bullish on Innovation

Following the video, Kronos’ CEO Aron Ain delivered his remarks to more than 1,200 customers, thought leaders, and practitioners at the MGM Grand in Las Vegas (the same place where I spent my honeymoon 5.5 years ago, but I digress). First and foremost, he was delighted to report bullish corporate results for fiscal 2010, in which the company grew to be a US$741 million gorilla in the market (and one of the largest private software companies).

Afterwards, Ain discussed the critical importance of innovation and how consumer-oriented technology (which is converging with mainstream enterprise platforms) is transforming the way business technology works. Based on the idea that users should not have to choose between deep functionality and ease of use, Kronos' vision for the future of WFM is centered around three unique capabilities: instant engagement, guided decisions, and mobile management.

Kronos' Next Generation User Interface (NGUI) was released in January 2010 to early adopters (mostly in retail) and has been generally available (GA) since this past summer to all industries. I was given a demo of the upcoming product in January at the National Retail Federation’s (NRF) BIG Show 2010 event, which has resulted with my recent blog post on the offering.

What was quite new to me, though, is the recent work that Kronos has done with regards to mobile applications that are tailored to both managers and employees (e.g., time-off requests and related approvals). These applications will be native to iPhone, Android, Blackberry, and even to a generic (platform-neutral) smartphone.  They will apparently be available as add-on applications from pertinent app stores, but their pricing and availability date have yet to be decided.

Some Levity Helps in a Grim Situation

The main feature of the morning program was the keynote presentation by Robert Reich, the former Secretary of Labor during the Clinton administration. While I knew Reich as a knowledgeable economist and savant, I had no idea about his standup comedian abilities. His humor has certainly helped us all digest the grim global economic prospects due to the following three trends:

  1. Depressed consumer spending (i.e., the aggregate demand in the economists’ lingo) -- whereby 70 percent of the US economy heavily depends on this spending. Unfortunately, the latest “Quantitative Easing (QE2)” or fiscal stimulus of US$600 billion of injected (i.e., printed) money by Ben Bernanke is not expected to help much in this regard (i.e., companies are already sitting on huge piles of cash, but are rather using it for stock buybacks, investments abroad, and whatnot, but not on hiring new workers till some certainty comes back). If anything, the move is expected to increase speculation and generate a possible stock market bubble.

  2. Globalization -- meaning that everything can be made and sold everywhere, and that cost is only one of many factors. Namely, if cost were the major factor, then Bangladesh would be the manufacturing capital of the world, which is not the case. Productivity and added value are other critical factors, as exemplified by Reich’s own artificial “French designer” hips that were manufactured in Germany and implanted in the United States (US).

  3. The workforce demographic situation -- whereby about 77 million of baby boomers (including Reich, George W Bush, Laura Bush, Bill Clinton, and Cher, all born in 1946, when “love starved soldiers came back home from the World War II and met their wives at home”) are expected to retire soon en mass. This generation has been moving through (and impacting the US economy for better or worse) “like a pig through a python.”

On a positive note, the so-called “baby bust (trough)” generation that is 20-30 years away from retirement should be in great demand. Also, when all the initial shock and anger subside and the “finding the guilty party” (e.g., immigrants, China, India, socialists, "earmarks", etc.) ends, the time will come for everyone to roll up their sleeves and find a solution. US Social Security is not apparently an insurmountable problem to solve (either via raising the retirement age slightly or lowering the guaranteed pay, or in any other not-so-painful way, and extended over many decades), but anyone that is serious about significantly cutting the US national debt and deficit will have to take plunge and scrutinize the seemingly untouchable “sacred cow” status and costs of the Defense and Medicare budgets.

Zooming Into Kronos’ Offerings

After these sobering remarks, the time came for the breakout sessions, and I chose to attend the session on the future roadmap and directions of the Kronos Workforce Central 6.2 suite. The main idea behind all new enhancements is to put everyone to work as quickly as possible. The main three themes in this regard are:

  1. Even Easier – via guidance, exceptions, embedded workflows, etc.

  2. Global-Ready -- in multiple languages, currencies, and abiding by local workforce regulations (rules)

  3. Unified & Secure – single sign on (SSO) with role-based permissions across all the modules

As for the product’s future directions, the ease of use, rich functionality, guided decisions, global-ready, quality, reliability & scalability, and verticalization will continue to be the themes. As for the verticalization theme, Kronos already has industry solutions for Dining, Federal Government, Financial Services, Gaming, Healthcare, Higher Education, K-12 Education, Life Sciences, Lodging, Logistics, Manufacturing, Oil and Gas, Retail, Small-to-Medium Business (SMB) Solutions, State/Local Government, etc.

The breakdown of the industries the vendor serves and more detail about each area can be found here. One untapped opportunity could be monitoring and optimizing workforce and tasks in call centers. For example, RedPrairie has already opportunistically implemented its WFM product in a couple of call centers. However, it has not actively pursued this market because it is a bit non-traditional for the warehousing and distribution expert company.

Another interesting session was the one on the strategic alliance between Kronos and Microsoft in retail. It appears that Microsoft SQL Server has lately become a platform of choice even at some larger retailers. This trend is due to the fact that the database platform now supports failover clustering, server consolidation & virtualization, while Microsoft claims fewer critical patches than Oracle in the past 12 months or so.

Also worth mentioning is the Workforce Acquisition 8.7 release that now supports the recruiting of both contingent (hourly) and salaried employees, which puts Kronos in a league with Taleo, Kenexa, and Authoria (PeopleClick). Kronos focuses on recruiting (both hourly and salary employees) but will not likely be entering the Learning, Performance Management, and Compensation areas of talent management.

The Analyst Meeting Takeaways

What transpired from the industry and financial analysts’ meeting with Kronos’ top brass, in addition to the recap of the abovementioned financial results and new products, was the company’s forays in the cloud computing and its managed services customer base growth. Kronos prides itself in being Easy to Buy, Deploy, and Maintain. To that end, customers have many choices in terms of Payment (i.e., perpetual license, subscription, or rent-to-own), Deployment (i.e., in a customer data center or hosted in secure off-site facility), and System management (i.e., either maintained by the customer or Kronos).

Thus, since late 2009 (when the cloud offering was made available) Kronos has acquired about 200 single-tenant cloud customers. This figure does not include the abovementioned recruiting module (coming from former Unicru), which is a multi-tenant software as a service (SaaS) product with about 100 customers.

The company is also bullish about its future based on the prospects of up- and cross-selling to its large install base in North America and brand new customers in emerging markets. For example, Kronos' recent geographic expansion (via direct presence) has resulted with 60 brand new customers in China and 40 in India.

Kronos is not shy about talking about potential tuck-in acquisitions, whether to expand its geographic and vertical presence or its functional footprint. As for the latter, I realized that the vendor does not yet have task management capabilities in the retail sector. I was told that its executives are still deciding whether to acquire or develop in-house in this economy (perhaps Reflexis Systems, based on my speculation only, as no particular names were mentioned).

But I also heard an argument that task management is not that critical and that Kronos’ main competitors have not particularly benefited from their task management capabilities. Well, that frankly felt like sour grapes of a sort to me and an attempt to minimize the shortfall in the product by implying that task management (or retail execution management as others might also call it) is not making an impact. The truth is that RedPrairie has lately (and Infor Workbrain has in the past) closed some very major deals where this capability was the determining factor.

Kronos for Logistics – Playing Devil’s Advocate with Kronos

Given that this report has been mostly upbeat and complementary to Kronos, I felt obliged to challenge the vendor in its quest somehow to tackle new vertical sectors. Namely, in early 2010, the vendor announced the Kronos for Logistics offering. My provocative questions and Kronos’ answers are as follows:
TEC/PJ: As for your recent "Kronos for Logistics" announcement, I suspect that the likes of RedPrairie, Manhattan Associates, HighJump, and Infor don’t feel Kronos is a real threat in the logistics side of their business for several reasons. What is your take in that regard?

Kronos: We have over 1,000 customers in pure logistics such as Southwest Airlines, NFI, Kuehne Nagle, Con-Way, Pepsi Americas, and strong presence in the retail distribution side as well, for example, Staples, Roundy’s and Hannaford’s.

As you may have seen, last year as a company we made a strategic decision to increase our vertical focus and investment. As such, we are building on our existing success in the industry with increased investment and additional focus on tailoring our application and services to satisfy the special needs of Logistics providers. In short we feel good about what we have to offer today and are very excited about the success our customers have achieved with Kronos already, and our plans for the future.

TEC/PJ: First and foremost, the abovementioned competitors claim that they rarely see calls for standalone WFM. Everyone is looking for WFM tightly integrated with warehouse management system (WMS), which you currently do not offer and have no experience with.

Kronos: WFM is a mission-critical, high value class of software. Kronos is seeing a good business for standalone WFM and is in discussions with prospects and customers determining how to extend the value of WFM.

We have seen, among other things, the desire to tightly integrate WFM and WMS data and in fact we have built and deployed a unique solution – Distribution Center Monitor – that does just that. Distribution Center Monitor is currently in use in the market giving real-time visibility into labor allocation and analyzing it against order status so that users can hit delivery deadlines and timeframes while increasing labor productivity. We connect the “people part” with the flow of goods in the warehouse, taking into account absenteeism and real-time performance.

TEC/PJ: How about their claims that Kronos has no street credibility in Logistics?

Kronos: We have a strong reputation with our over 1,000 customers in the Logistics space. We are visiting and listening to these customers with a goal of improving awareness in the Logistics industry. If we continue to listen and deliver value, hopefully we will continue to earn the respect and trust of the market.

TEC/PJ: Last but not least, you don’t have major industrial engineering capabilities for designing preferred work methods or establishing engineered labor standards in warehouses – and that is where the real value lies.

Kronos: We have extensive industrial engineering capabilities and have been in the business of helping customers establish labor standards for years both in the retail and the distribution space. We are currently exploring the idea of expanding our services practice in this area for the expressed purpose of assisting our Logistics customers with their industrial engineering needs.

TEC/PJ: What do you generally say to all these assertions? I am sure you have had similar first reactions when you tried to tackle other industries (mfg., retail, healthcare, etc.) and how did you overcome the obstacles in those sectors?

Kronos: Kronos focuses on what we can control and improve. The approach to tackling an industry is actually fairly straightforward: invest in domain expertise, listen carefully to what customers are saying, tailor (don’t customize) services and products to meet the special needs of the industry, focus on making customers successful, document the success, and repeat all the previous steps. The bottom line is that if Kronos can solve important business problems such as Controlling Labor Cost, Minimizing Compliance Risk, and Improving Workforce Productivity better than anybody else – Kronos wins and more importantly, the customers win.

We will have to wait and see how Kronos’ above-mentioned recently unveiled multi-prong strategy will unfold. Your views, comments, opinions as well as experiences with Kronos’ products and services are as usual welcome in the meantime.
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