Working the Midstream

Workstream on Wednesday unveiled its Workstream Compensation Professional application, a program designed for midmarket companies. While larger firms have been using similar products for years, the technology is just starting to make its way into the midmarket, according to officials at the company and an industry analyst.

Midsize companies--a segment Workstream defines as "businesses with under 2,500 employees"--had typically handled compensation data via spreadsheets that were often siloed department by department, so there were no centralized capabilities, according to Deepak Gupta, Workstream president and chief executive officer.

This data is becoming more complex--and the regulatory environment surrounding it is becoming more stringent. As a result, compensation data is under increased scrutiny, says Mark Smith, chief executive officer and executive vice president of research at Ventana Research, citing the Justice Department's ruling earlier this week in the first stock-options-backdating case to go to trial that the former chief executive officer at Brocade Communications Systems had defrauded investors.

More of these cases are pending, intensifying the need for midsize and large companies to have accurate reporting regarding stock options and all other elements of employees' or executives' compensation packages, including salaries, wages, incentives, bonuses, and a host of other factors, according to Smith. "When you look at compensation, there are a lot of variable elements," he says.

The application provides managers with a single, flexible planning screen where they can

• see and edit their plan information;
  
• view online analytics on their plan; and
  
• compare guidelines for pay increases based on performance and other plan variables.

Furthermore, the application's "advisor" function gives planning managers real-time information and advice about such compensation issues as paying an employee more or less than company guidelines suggest.

All Workstream Professional solutions are delivered on-demand; other modules include:

• Workstream Development Professional (employee development);
  
• Workstream Performance Professional (performance management); and
  
• Workstream Succession Planning Professional (leadership and succession plans).

Smith notes that such suites are becoming increasingly popular in the human resources arena for midsize and large companies alike.

Meanwhile, not all the other news is rosy. Burlingame, Calif.-based Workstream recently reported financial results for both its fourth quarter and its 2007 fiscal year that ended May 31. Year over year, fourth-quarter revenue dropped 6 percent, from $7.8 million to $7.4 million, while the company's quarterly net loss accelerated, from $2.4 million a year ago to $4.0 million. For the fiscal year, total revenue was $29.3 million, a 4 percent rise over last year's $28.1 million. But Workstream's annual net loss increased from $13.0 million to $13.8 million.

The company also recently announced an agreement to raise $20 million in new capital, and brought on some fresh blood: Gupta, the former general manager and founder of PeopleSoft's OnDemand software unit, was named chief executive in February; according to his corporate bio, prior to PeopleSoft, Gupta was at Oracle, as the chief architect of the software giant's hosting business and as global leader for its middleware line.

As for Workstream's latest release, the new application provides a centralized, Web-based repository for data, and Ventana's Smith says this bodes well. "The necessity to automate and improve the compensation process has never been more clear, as organizations realize the impediments of antiquated approaches from the 1990s and overladen use of spreadsheets," Smith says. "Workstream's focus on compensation management helps drive further value for its customers, who are looking to address this key process, but also [to] provide a foundation element of pay for performance and talent management."

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