Businessmodel of Cornerstone OnDemand

Customer Segments

Cornerstone OnDemand has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at enterprises, public sector organizations, and nonprofits.

Value Proposition

Cornerstone OnDemand offers four primary value propositions: convenience, performance, risk reduction, and brand/status.

The company offers convenience by making life simpler for clients. Its solution is cloud-based, enabling clients to reduce maintenance and IT costs and receive automatic updates. The product can also be easily integrated with other platforms and accessed from any device. Lastly, the firm offers a marketplace through which clients can purchase prebuilt integrations to extend its functionality.

The company demonstrates strong performance through tangible results. Specific examples of positive outcomes for clients include the following:

• Virgin Media used Cornerstone to centralize its learning and performance management system, resulting in a 35% reduction in training time and 15,000 hours in saved administration time
• Walgreens used Cornerstone’s solutions to streamline its performance management system, resulting in a process that was continual rather than just once or twice a year
• The University of Southern California used Cornerstone’s solutions to increase the robustnes of its learning management system, resulting in increased employee access to training modules
• Hyatt used Cornerstone’s solutions to enhance its talent management process, resulting in a significant reduction in sourcing time and an increase in frequency of talent reviews

• Hershey Medical Center used Cornerstone’s solutions to transform its talent management system, resulting in a reduction in the number of versions of onboarding training The company reduces risk by maintaining high quality standards. It maintains the Client Success Framework, an operating model identifying an end-to-end process for a successful business relationship with clients. The model highlights key tools for each job role in the client lifecycle. Cornerstone also reduces risk by maintaining high security standards, as follows:

• It maintains a multi-tenant, multi-database architecture with the highest uptime and compliance standards. Data is not co-mingled and the infrastructure has numerous certifications.
• It works closely with customers’ Legal, HR, and Data Protection departments to ensure compliance with data protection and privacy regulations. It is EU-US Privacy Shield-certified.
• Its infrastructure is developed by its IT Security, Privacy, and Compliance team, whose members each hold one or more professional compliance or security certifications.

• It enables clients to control the location of their data – specifically by storing it in a specified geography, either in Europe or North America. Backup data is also stored in the same region. The company has established a powerful brand due to its success. Its offerings are used by over 2,800 clients worldwide, representing 28 million people in 191 countries and in 42 languages. It has offices in more than 24 countries and has grown at a compounded annual growth rate of over 50% since 2007. It has averaged a 95% client retention rate since 2002 and has several prominent customers, including The Neiman Marcus Group, Turner Broadcasting System, Virgin Media, Novartis, Walgreens, and Starwood Hotels & Resorts. Lastly, it has won many honors, including the following:

• Recognition as a “Leader” in the 2015 Gartner Magic Quadrant for Talent Management Suites
• Recognition as a “Leader“ in the 2013 Forrester Wave for Talent Management
• Recognition as a“Leader“ 2014 IDC Integrated Talent Management Marketscape ### Channels

Cornerstone OnDemand’s main channel is its direct sales team. It also sells its offerings through a global network of distributors. The company promotes its offerings through its website, social media pages, webinars, online/e-mail/direct mail marketing, regional client user group meetings, and participation in industry events such as summits, symposiums, and conferences.

Customer Relationships

Cornerstone OnDemand’s customer relationship is primarily of a personal assistance nature. The company assists customers in the following ways:

Support Services – The company assigns clients a dedicated Client Success Manager (CSM). CSMs have expertise due to being former HR practitioners and Cornerstone clients. Cornerstone also offers general customer support through its Global Product Support Team. It comes in two options:  the Professional Support Package and the Premier Support Package, which provides enhanced services.

Training Services – The company operates  Cornerstone University, which provides a variety of training services, including live onsite training, virtual labs, and live webcasts.

Professional Services – The company offers the following professional services:

• Implementation Services – Cornerstone develops a system implementation plan for clients that includes four steps: Discovery, Design, Execution, and Implementation.
• Business Consulting Services – Cornerstone provides consulting services that helps clients identify, design, and implement necessary changes for their HR functions. Guidance is provided for change management, talent management, and business process alignment processes.
• Technical Consulting – Cornerstone helps clients develop systems that match their business objectives with its products’ functionality. Guidance is provided in the areas of systems integration, content integration, and software configuration. Despite this orientation, there is a self-service component. The company’s website provides self-paced online training courses. The site also features a “Resources” section that includes white papers, data sheets, briefs, infographics, and a glossary.

There is also a community element in the form of a portal called the “Success Center” that enables clients to interact with their peers by collaborating and sharing best practices.

Key Activities

Cornerstone OnDemand’s business model entails designing and developing software and delivering  its services for customers.

Key Partners

Cornerstone OnDemand’s key partners are the distributors that help it sell its products.

The company also operates the Alliances Program, through which it works with service providers to offer its solutions to their clients. The goal is to expand the reach of its offerings. Further, it utilizes service providers to offer their services to its own customers. Specific partners include The Educe Group, Aon Hewitt, Bluewater Learning, and Appirio.

The company also maintains the Cornerstone Innovation Fund, a strategic venture fund through which it invests in and collaborates with startups developing next-generation cloud solutions. Specific partners include Strive, One Month, Workpop, Qualified, Portfolium, Comparably, and Rallyteam.

Key Resources

Cornerstone OnDemand’s main resource is its proprietary software platform, which serves over 2,800 clients.  It depends on human resources in the form of engineers that design and develop its software, sales employees that promote it, training/consulting employees that provide instruction/advice, and customer service employees that provide support. Lastly, as a startup it has relied on funding from investors, raising $44.7 million in three rounds as of March 2011.

Cost Structure

Cornerstone OnDemand has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent service enhancements. Its biggest cost driver is sales/marketing, a fixed expense.

Other major drivers are research/development and administration expenses, both fixed costs, and cost of revenues, a variable expense.

Revenue Streams

Cornerstone has three revenue streams:

• Subscription Revenues – Revenues generated from fees charged to clients for subscriptions to the company’s cloud-based platform. Subscriptions typically last from one to three years, and fees are based on a variety of factors, including number of products bought and number of users with access.
• Professional Services Revenues – Revenues generated from fees charged to clients for various professional services, including implementation, consulting, and training. The services are usually purchased as part of a subscription.
• eLearning Revenues – Revenues generated from the reselling of third-party on-line training content.