Cornerstone is pushing employee experience with its HCM suites

The provider of cloud-based solutions for human capital management has started out as a specialist in the field of learning, an area that is still key for its business. Now Cornerstone wants to grow with a more comprehensive HCM approach that comprises suites for employee performance, recruiting, learning and human resources management. Besides, it adds consumerization features to evolve the employee experience.

Cornerstone is one of the HCM specialists addressing companies' growing demand to hire new talent and train and develop their workforce – not just in the US, but also in EMEA. At the beginning of October, the vendor hosted its annual conference for EMEA customers in London.

While in the past Cornerstone was mostly known as a provider of learning systems, its ambition now is to grow in other areas as well. For instance, the vendor expects that customers that already use features such as employee performance and learning are also interested in deploying the recruiting suite. And in fact, about 600 of its customers (or 20 percent of its customer base) have already added the recruiting component. 

Cornerstone's strategy is less about replacing products from rivals, which are, among others SAP (with SuccessFactors), Oracle and Workday or HCM specialists like Saba, SumTotal and Lumesse; instead, the company hopes to sell its suites of solutions to companies that want to complement existing HCM landscapes.

That said, we believe that Cornerstone’s strength in learning will remain important for various reasons: one is that other providers such as Workday have entered the learning space; another is our belief that training the workforce will become an even more relevant task for companies in the digital age.

Therefore, Cornerstone keeps on improving its learning offerings. It copies the basic principles employed by Netflix and Spotify in terms of delivery of learning content by using recommendations, playlists as well as machine learning to improve the efficiency of both the distribution and consumption of training material.

Another trend in HCM tech is to embed big data analytics into the system. To do so, Cornerstone uses technology bought in 2014 (Evolve acquisition) to provide benchmark features to its customers. The company has developed its own HCM processes, which it can benchmark against competitors in the field based on KPIs. Another area is the creation and visualization of an employee's possible career path with the support of the systems’ machine learning capabilities.

Although these features are quite impressive, they are not a guarantee for success. Given the speed in the cloud space, others may come up with similar approaches. What can make a difference, however, is the way companies experience both the solution and the vendor. The user experience, including a user-friendly design that supports mobile devices and personalization, is a key part of this, and like other players, Cornerstone continues to improve in this regard.

Another important factor is a vendor's ability to keep customer intimacy high. In this regard, we have the impression that the company does its best to listen carefully to what the users expect and want.

In any case, Cornerstone seems to have heard the concerns of companies in France and Germany about using cloud-based solutions from data centers outside their home countries. Next year, the vendor will open data centers in these two countries.

But also in other regards, 2018 may be an interesting year for Cornerstone. Since the EU directive GDPR also has an impact on human capital management, Cornerstone and other vendors are likely to benefit from companies that need to transform their existing applications to comply with the new rules.

Overall, we think that Cornerstone has the potential to continue its growth also in areas outside the learning space. Its approach to offer four product suites may make it easier for customers to adopt the various pieces, even for those that already use applications from third-party vendors.

Like many other SaaS providers, its revenue is developing well (year over year growth was nearly 25%). Last fiscal year’s revenues exceeded $420 million, and the number of customers is now above 3,000. 

Cornerstone’s challenges have less to do with solutions. If it wants to win more larger deals and become more of a strategic platform, it needs to create a stronger ecosystem of systems integrators.