Kronos: Not So Boring Anymore
Kronos is breaking out of its niche as the country's leading provider of time clocks and associated software to push the envelope of the "Workforce Management" category. And in the current economy that couldn't be better news for customers and Kronos -- and worse news for the ERPs.
By Bill Kutik
Say "Kronos," and you think: "time clocks." Say it again, and if you're not a customer, you still think: "time clocks." Spend a day at the company's campus in chilly Chelmsford, Mass., (as I did recently) and you think: pushing the envelope of "Workforce Management."
OK, Workforce Management (WFM) admittedly includes some of HR's more mundane transactional tasks: time & attendance (stop that buddy punch-in!), absence management, workforce scheduling (avoid paying overtime!) and workforce optimization (who's available to work which shift and at what price?).
Maybe that's ho hum during ordinary times, but we are not, as you've noticed, in ordinary times. These days, labor costs are the beating heart of any company in various industries with lots of hourly workers. They need to focus on the basics and lower those labor costs, hopefully by using labor more efficiently rather than by firing it.
Workforce Management holds out that promise. Guess that suddenly makes it strategic.
Despite its own recent reduction-in-force, Kronos is well situated to take advantage of our new economic realities. The company is 32 years old with about 30,000 customers. All of them are very sticky because they have bought software licenses, installed the systems in-house and own or lease the time clocks, which Kronos itself built until last summer. (No, they're not being made now in China but by a contractor up the road.) This is quite an installed base to sell into.
Over the years, Kronos has been smart about coming up with new things to sell them. It first added software in 1981, "The Totalizer," that knows all the pay rules, gets the hours from the clocks and does the zero-to-gross calculation that payroll then reduces (to every employee's chagrin) from gross to net. In 1985, it introduced a PC-based product.
In the late '80s, it added scheduling. And about 10 years ago, "activities," which track what a worker is actually doing, not just the time it takes, and for what project. This allowed discrete manufacturers to do job costing. Absence management came in 2004. And, of course, there are analytics.
About six years ago, Kronos bought Motiv! from Best Software, a complete mid-market HRMS and payroll system. A half-dozen new versions later, it has been mostly installed in-house at more than 550 customers, with an average of 1,500 employees, and the majority taking payroll, too. Kronos says half of them are new and not previous time-clock customers. Naturally, the HRMS and payroll are tightly integrated with the WFM applications.
Then Kronos took a flyer: adding software for hourly recruiting. CEO Aron Ain frankly admits that Wall Street pressure (when the company was still public) got him talking with every hourly recruiting vendor in the market. Kronos bought market-leader Unicru at the end of 2006, and then when it discovered the technical platform wasn't up to snuff, bought Deploy at the end of 2007.
A deal with MrTed to offer salaried recruiting didn't work out, Ain says. The two acquired products were integrated onto Deploy's platform -- with assessments from Unicru and back-end ATS functionality from Deploy -- and properly dubbed "Workforce Acquisition (WFA)."
Why they were then put into an organizational bucket called "The Talent Management Division" is beyond me, but they'll soon simply be called "Hiring." Kronos intends to stick to its knitting -- though its scarf is slowly turning into a sweater -- and has no plans to become a talent management suite vendor.
More important than the functional leap, those acquisitions put Kronos solidly into the hosting business for the first time, since both products were delivered as Software as a Service (SaaS). And they leave Kronos with two very distinct (and unintegrated) product lines -- Workforce Central (the WFM applications plus HR and Payroll) and Hiring (WFA) -- with separate delivery methods, platforms and user interfaces.
This is a major opportunity for the company because the benefits of integrating hiring and WFM are potentially large. While Unicru was a terrific product, the special magic it offered customers was predicting successful applicants based on a database of assessment answers from previous winning employees.
In Unicru's traditional customer base -- retail chains, supermarkets, big-box stores and fast-food restaurants -- a winner was someone who simply stayed on the job for more than three months!
With minimal integration, a store or restaurant manager could hire someone based on what shifts are currently uncovered (from WFM scheduling) and which ones they're willing to work (from Unicru), as well as their chances for success. Seems so simple, right? But scheduling a large retail establishment is as complicated as doing payroll. And like payroll, you need to have done it at least once to appreciate the complexity.
Finally, the 6.1 version of Workforce Central previewed at last October's user conference will be announced near the end of February. With many details still under wraps, it takes a hard position against the ERPs' offerings in WFM, which Oracle has been beefing up since before last summerboth in PeopleSoft Enterprise and Oracle EBS.
As the third largest HR vendor, according to AMR Research, what battle could be more appropriate to take on for Kronos, a decidedly unboring company?
HR Technology Columnist Bill Kutik is co-chairman of the 12th Annual HR Technology Conference & Exposition® in Chicago, two weeks earlier than usual this year, on Sept. 30 to Oct. 2. He is also host of The Bill Kutik Radio Showsm. He can be reached at email@example.com. FULL ARTICLE