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EUROPEAN HR OPPORTUNITY: CONNECTINGSTRATEGY AND SYSTEMS TO ENGAGE TALENTWEBCAST 20 NOVEMBER 2014

Today’s SpeakersMERCER WEBCASTStacey HarrisElizabeth BryantThorsten BarthSierra-CedarMercerMercerContinuing Vice President,Research and Analytics,@StaceyHarrisHRPartner and North AmericaLeader for HR EffectivenessPrincipal and European Leaderfor HR Technology mercer.com1

Today’s Agenda Introduction – Mercer / Sierra-Cedar Sierra-Cedar HR Systems survey findings Take-aways Q&AMERCER WEBCASTNovember 20, 20142

Sierra-Cedar Fast Facts7Service & Solution AreasApplication ServicesBusiness IntelligenceHost & Managed ServicesInfrastructure ServicesIntegration & Cloud SolutionsResearchStrategyTraining17Years of LeadingHR Systems Survey &Research2014 merger of4 companies withdecades ofexperience2000 Employees5Industry FocusCommercialHealthcareHigher EducationPublic SectorJustice & Public SafetyDelivering industry-focused client success by providing consulting,technical, and managed services for the deployment, management andoptimization of next-generation applications and technology.MERCER WEBCAST3

Mercer Fast FactsWe are a global consulting leader in talent, health, retirement, and investments. 4.2 billion in revenue. 76-year history. Four business segments. 20,000 colleagues. Operations in over 130 countries.MERCER WEBCAST4

Connecting Strategy and SystemsStrategy and CultureFoundationInnovationHR Tech StrategyCloud HRMSSocialEnterpriseIntegration StrategyUser ExperienceMobileCulture of ChangeWFM TM BIQuantified OrganizationMERCER WEBCASTNovember 20, 20145

Sierra-Cedar 2014–2015 HR Systems SurveyDemographics: All RespondentsOrganization SizesRepresentedLarge10,000 Medium2,500–10,000 Small100–28%2,500Total WorkforceRepresented1,063Organizations19 Million29%Other Services43%Avg. number of Employees 16,053HealthcareEmployees Contingent(in millions)Financial ServicesHigher Ed./Public Admin.ManufacturingTrans., 1%7.9%3%MERCER WEBCASTNovember 20, 20146

Sierra-Cedar 2014–2015 HR Systems SurveyDemographics: All RespondentsEuropeOrganisation SizesRepresentedLarge10,000 Medium2,500–10,00048%25%APACOrganisation SizesRepresentedSmall100–2,50028%Large10,000 Medium2,500–10,00039%22%Small100–2,50039%North AmericaOrganisation SizesRepresentedLarge10,000 Medium2,500–10,000 Small100–28%2,50029%MERCER WEBCASTNovember 20, 201443%7

Two-Year European Look at HR InitiativesEnergy on BPI, Service Delivery, Global; Declining Focus on Talent Mgt.Major Initiatives – Two Year %33%28%16%14%** Global Organizations OnlyMERCER WEBCAST8

Enterprise HR Systems Strategy & IntegrationIncreases Positive Perception of HROrganizations With a CurrentEnterprise HR Systems StrategyPrimary Approach for HR ApplicationIntegrationIntegrate into HRMSRegularly updated17%21%36%In development33%22%8%Rarely updatedstrategy35%15%No strategy/NotawareIntegrate into ITMEnterprisestrategy/platformCase by case13%No approach/not awareHR organizations with an Enterprise HR Systems Strategy andEnterprise Integration Strategy are more likely to be viewed by all levelsof management as contributing strategic value.MERCER WEBCASTNovember 20, 20149

HCM Application BlueprintAdministrative ExcellenceService Delivery ExcellenceWorkforce Management ExcellenceService DeliveryHR Help Desk, Portal, WorkforceLifecycle Management (Onboarding)Talent Management ExcellenceWorkforce Optimization ExcellenceSelf Service/Direct AccessAdministrative AppsEmployee Self ServiceManager Self ServiceCore HRMS, Roles/Competencies (Profile Mgt.), Payroll,Benefit Admin, Embedded HR Analytics, Embedded HR SocialWorkforce ManagementTime & Labor, Absence & LeaveManagement, Labor Scheduling, LaborBudgeting, WFM Analytics, SocialWorkforce OptimizationWorkforce Planning, WorkforceAnalytics, Predictive AnalyticsTalent ManagementRecruiting, Performance, Learning,Compensation, Succession, Career,Talent Profile, Talent Analytics, SocialBusiness Intelligence FoundationReporting/visualization and BI toolsMERCER WEBCASTNovember 20, 201410

European Three-year Adoption OutlookLooking Forward, Service Delivery, Talent Mgmt., and Social ToolsThree-year Application Outlook84%86%Administrative46%Service delivery69%49%Workforce management66%60%Talent management82%38%Social media tools66%BI (reporting and tools)Workforce optimizationMERCER WEBCASTIn Use Today49%63%14%In Use within 3Years27%November 20, 201411

Application Adoptions Level by RegionApplication Adoption Level by RegionEurope/Middle 84%64%Service delivery49%50%46%43%Workforce management46%46%49%49%Talent management55%55%60%48%BI (reporting/tools)41%41%49%26%Workforce analytics/planning12%12%14%15%Social media tools41%42%38%29% 5% above averageMERCER WEBCASTLeads in adoption of TalentManagement and BusinessIntelligence applicationsAsia/India/AustraliaLower adoption levels thanother regions-5% below averageNovember 20, 201412

Adoption Differences Between EMEA and USService Delivery Average2014 By RegionEMEAHelp deskESSMSSWorkforce/Employee lifecycle managementService Delivery Average40%60%54%29%46%US44%76%47%33%50% 6% above comparison regionMERCER WEBCAST13

Adoption Differences Between EMEA and USTalent Management2014 By RegionEMEARecruiting/talent acquisition servicesProfile managementLearning and development (training)Career planning and developmentPerformance managementSuccession planning / Succession managementCompensation managementTalent Management %70%55% 6% above comparison regionMERCER WEBCAST14

Adoption Differences Between EMEA and USBI (Reporting/Tools)2014 By RegionEMEASimple management reportingDrill down and ad hoc reportingDashboard (visualization of key metrics)Statistical tools (e.g., SPSS, SAS)Other visualization toolHRMS WarehouseMiddlewareBI (Reporting/Tools) Average89%76%56%18%14%63%31%49%Workforce Analytics/PlanningUS83%63%33%17%17%50%24%41%2014 By RegionEMEAWorkforce analyticsPredictive analyticsStrategic workforce planningWorkforce Analytics/Planning Average13%10%20%14%US16%9%11%12% 6% above comparison regionMERCER WEBCAST15

Adoption Differences Between EMEA and USSocial Media Tools2014 By RegionEMEALinkedInFacebookCollaboration tools / repositoryTwitterOrganization-wide (corporate) social networkbehind firewallSocial Media Tools AverageUS35%32%78%13%53%37%62%30%29%27%38%42% 6% above comparison regionMERCER WEBCAST16

European HR Tech Spending OutlookOver 50% of Survey Respondents Will Increase Spending Next YearSpending Plans for Next Yearby Employer Size*57%32%Large11%LargeIncrease50%Stay the arge 10,000 ; Medium 2,500–10,000; Small 2,500MERCER WEBCAST17

European HRMS Deployment ModelsIn Europe SaaS HRMS Deployments are Hitting a Tipping PointHRMS Application Deployment OnlyLicensed software – on premiseLicensed software – hosted33%22%15%19%SaaS – subscription-basedCombinationsOutsourced (process andsoftware)MERCER WEBCASTToday LicensedDeployments are78% in12 months 56%47%44%9%8%3%Today12 Months0%18

HRMS European Vendor Landscape12 Month Plans Indicate Increased SaaS AdoptionHRMS Vendor Adoption Outlook OverallPlease note that these represent survey adoption levels, not Market ShareOverallTodayIn 12 MonthsADP22%15%SAP HCM19%18%Oracle PeopleSoft/JD Edwards16%14%Oracle EBS13%7%Workday6%17%Kronos6%4%Oracle HCM Cloud (Fusion)3%7%SuccessFactors Employee Central1%4%30%28%Other* SAP adoption underrepresented** Columns do not add to 100% as organizations have multiple solutions in useColored cells indicate greater than 5% gain or more than 5% loss in 12 months. 5% loss 5% gainn 80MERCER WEBCAST19

#1 Reason For Moving is User Experience!How Are Vendors Doing?1 Poor: not user friendly, excessive steps, limits use2 Acceptable: workable but requires training to use3 Excellent: intuitive, user centered design, effectively promotes useAnd, why is it is such a big deal?It’s about driving user adoption,so both employees and the organizationget the most value from the solution!MERCER WEBCAST20

User Adoption Level by User Experience ScoresHigher User Experience Scores with Newer Cloud SolutionsHR Management SystemManager User Adoption and User Experience75User Adoption Percentage70SAP (HCM)65UltiPro:Workday60Manager adoption,increased by 47%from last year.Ceridian HROracle, 5Kronos* Ceridian DF UltiPro (2013)* Oracle HCMCloud (Fusion)* SF/EmployeeCentralOrganizations withnew cloud solutionswill see increasedadoption levelsquickly.301.601.852.102.35User Experience Scoresn 389MERCER WEBCAST2.60* Sample Size Small,Indicative Data Only21

SaaS Takes Less Time to DeployLength of Time for New HRMS ensed On Premise 15.3 monthsLicensed Hosted 11SaaS 9.0 monthsTime for New Deployment for an HRMS by Size of Organization*in n 536MERCER WEBCAST8.37.1Licensed On PremiseLicensed HostedSaaS*Large 10,000 ; Medium 2,500–10,000; Small 2,50022

SaaS Requires Fewer ResourcesRequires Fewer Total HR Technology Headcount than Licensed SolutionsHRIT/IT Headcount by Deployment Type*Functional HRMSApplication Support sed on premiseSaaS*All Licensed on premise and SaaS respondents from organizations withaverage of 11,000 employees plus contingents served by the HRMSSaaS advantage holds true across small, medium, and large organizations.It is best to benchmark for your size and industry.n 85MERCER WEBCAST23

Integrated Talent ManagementEuropean Approach to Talent Management Still Includes Point SolutionsAggregate Integrated TalentManagement ApproachNone/NotAware14%None/NotAware16%ITM Suite29%PointSolutions15%ITM Suite25%PointSolutions22%HRMSITM suite42%MERCER WEBCASTEuropean Integrated TalentManagement ApproachHRMSITM suite37%24

ITM European Vendors LandscapeAdoption Continues to Increase in Cloud SolutionsIntegrated Talent Management Vendor Adoption Outlook OverallPlease note that these represent survey adoption levels, not Market ShareOverallTodayIn 12 MonthsOracle (PeopleSoft, EBS)19%12%Oracle HCM Cloud Lumesse (Stepstone/MRTed)12%10%Cornerstone umTotal/SoftscapeSabaOther* SAP adoption underrepresentedColumns do not add to 100% as organizations have multiple solutions in useColored cells indicate greater than 3% gain or loss in 12 months.n 80MERCER WEBCAST 3% loss 3% gain25

BI/Analytics Deployment ApproachesAdoption is Less Important than Deployment. We Must Learn from the Past!Business Intelligence/HR Analytics Approach53%47%Enterprise BI30%33%Embedded HRCombination SolutionsStandalone HR Analytics ToolToday9%13%7%8%12 MonthsPredominantlyStandalone Apps2007With experience,organizations movedto adoptEnterprise Solutions2012Currently, anemerging trend ofEmbedded HR Analytics2014Going forward, we will see44% growth in adoption ofCombinations12MoCaution: consider past learning as you develop your BI/analytics strategy.While embedded analytics solutions that provide transactional and operational analyticswill not go away, they are not the end solution. Enterprise solutions will be needed.n 488MERCER WEBCAST26

Top Adopters of WFM, TM, and BIAchieve Higher Outcome Scores and Higher lligenceTop Workforce Management, Talent Management, and Business Intelligence Adopters: Have across the board higher HR, talent and business outcome scores Achieve higher Return on Equity (31% higher than lower adopters)They integrate WFM, TM, and HRMS datathree times as often as lower adopters.MERCER WEBCAST27

Why Add Mobile to Service Delivery Tech?Higher HRMS User Experience ScoresHRMS User Experience Scores**by Service Delivery ModelNoor Low Tech1.75WithSelf Service*2.1WithSelf Service*and Help DeskWithSelf Service*,Help Desk,and Mobile2.22.649% increase in user experience scores with combinedself service, help desk, and mobile technologies.*With Self Service: Employee and manager self service applications serve 60% or more of employees and 50% or more of manager populations**User experience scores based on a three point scale: 1 Poor, 2 Acceptable, 3 Excellentn 158MERCER WEBCAST28