It’s no secret that I’m a fan of data and analytics. I’ve built my career around them. But data and analytics can be tricky things. While we think of math as a subject where there is only one right answer, when we talk about math that describes, correlates, and ultimately predicts outcomes where human beings and human organizations are involved, things get complicated. True predictive analytics requires deep expertise in statistical analysis, and technological horsepower to make it fast and usable. Which is why Ultimate Software’s announcement of its acquisition of Vestrics is of interest.
I’ve followed Vestrics, and CEO Brian Kelly, for many years now. Brian has been at the forefront of the HCM analytics trend since his days at infoHRM (acquired by SuccessFactors in 2010). And Vestrics, under founder Gene Pease, had created not only a tool that could provide the analytical heavy lifting, but presents its capabilities in a way that allows non-technical users to tease out the elements of their human capital decisions that are having the greatest business impact.
So why is this acquisition a big deal? Ultimate is showing its commitment to moving organizations beyond data reporting and correlation, and into a realm where business users can gain insight into the business impact of their talent decisions. And while lots of companies talk predictive analytics, it’s important to look at what they really mean. This is not straight line forecasting where you look at the past and assume documented trends will continue within a margin of error. This is causation based on true regression analysis – enough to give post-traumatic flashbacks to anyone who suffered through freshman stats class. And while Ultimate began investing in analytics and its own data scientists several years ago, this acquisition will accelerate their analytics capabilities.
It’s also a big deal because of its reach. According to data from Aptitude’s 2016 Workforce Management study, just 38% of organizations have some level of predictive analytics solution in place. Another 41% want to add this capability to their HCM arsenal. With over 3200 customers, Ultimate’s reach could bring true predictive analytics to the mainstream. Our study data found that less than half of organizations use workforce data when solving business issues, building teams, forecasting revenue or evaluating learning. The power of this matchup to bring workforce data into the business more broadly has huge potential impact – and integrates analytics into the work stream where they can be used in the moment, versus a stand-alone analytics solution.
Of course, as I always caution, tools are only as good as their users, so education of organizations and leaders in using the power of predictive analytics will remain crucial for Ultimate. Analytics success depends on both technology and expertise. In the mid-market where Ultimate plays, scaling such services can be difficult. Ultimate already has over 400 customers using their UltiPro predictors for retention and high performers. The work Vestrics has put in to make powerful analytics more usable to the non-technical user may help mitigate that issue. And certainly the ability to further tap into Ultimate’s customer base as a platform to bring this capability to the forefront will be exciting to watch.