Continuous growth and evolution will be experienced by HR technology in 2020 and beyond as new players enter the business market. Organisations have also turned to technology for further efficiency and productivity gains, while venture capitalists remain enticed by the promise of HR tech firms.
Industry analyst Josh Bersin wrote that HR software continues to be “white-hot” in part because companies operating in “talent-constrained environments” seek to invest in tools to help them better recruit, develop, and support their workforce. Here are seven other reasons, according to Josh Bersin, why HR technology is so well-represented now and in the future.
The average HRMS system in large companies today is more than 5 years old and more than half are over 7 years old. With most enterprise software becoming nearly obsolete in seven years, most companies will need to shop around.
Nearly every major HR software provider now offers their solution in the cloud, making it possible for corporate HR managers to stop the frustrating cycle of upgrading systems every year or two.
This includes core HR tech providers such as Oracle, SAP, Workday, ADP,Ultimate, Infor (Lawson) as well as talent vendors such as CornerstoneOnDemand, Silkroad, SumTotal, Lumesse, Halogen , PeopleFluent, Saba, Kenexa (owned by IBM) and many others.
When you buy a cloud-based system, you are out of the cycle of major upgrades every few years because the vendor does this for you.
The biggest challenge HR software buyers face is the fear that people won’t use the systems. Research shows that the number one driver of change is the need for a more compelling, consumer-like, experience. Most of the vendor solutions now have mobile applications also, enabling employees to manage their vacation, time sheets, and employee directories on the road.
Deloitte new research shows that only 13 percent of organisations have a single HR system and on average companies have 3-4 different HR applications (one for HRMS, another for learning, another for recruiting, for example).
Vendors have gobbled each other up, making most platforms more complete than ever. The result: nearly half of the buyers we surveyed this year told us they are willing to sacrifice features for a single vendor solution.
Second on the list of buying criteria is the desire to create better talent analytics. Research shows that while much of the core HR technology has now become a commodity, analytics remains a new area of technology and vendor solutions here vary greatly.
SAP (SuccessFactors is now a $billion business), Oracle (Fusion, PeopleSoft, and Oracle E-Business), ADP, Workday, and all the other big talent management providers offer integrated analytics now, giving buyers the promise of finding a single solution at last.
Companies are ready to play “Moneyball” with their people data, and the software providers are investing heavily in this area.
Since more and more companies now have cloud-based systems for recruiting, learning, and other HR applications, it is now easier than ever to switch. Unlike traditional software which is highly customized by IT, these new systems can be replaced.
Deloitte research shows that 24 percent of the companies surveyed are considering replacing their vendors. Yes cloud-based software is a wonderful business model – but it also reduces switching costs to some degree.
And finally, as the global economy recovers, more and more companies realize that talent is their biggest challenge. Strategic recruiting, employee development, social networking, and internal employee communications are all critical business issues.
HR software is no longer purchased to improve the efficiency of HR. Today companies buy these systems to help transform their talent strategies and directly improve employee engagement and the ability to hire.
HR technology is an enormous part of business today. In the United States alone, there are more than 12 million employers spending over $5 trillion on payroll, benefits, and other employee programs. Businesses around the world have also licensed and used corporate HR software while the market is still young. And every year, new categories are created, enabling the market to expand in size. Needless to say, business leaders, together with their team, should be prepared to provide room for human resources and technology growth within their companies.