HR Technology for 2016: Ten Disruptions on the Horizon
It’s HR Technology season, and once again vendors are introducing amazing and disruptive new technologies in all areas of HR. I developed our “Ten Big Disruptions” report again this year, which I encourage you to read.
At a high level, let me summarize what’s going on – and as always we encourage you to reach out if you’d like to discuss more.
The HR Technology market tends to go in cycles, as companies install new solutions and go through a 5-7 year cycle of implementation, rollout, and then replacement. In several areas of HR we are nearing the end of a cycle, so let me summarize some of these evolutionary changes – then you can read the report for more detail.
First, there is a massive replacement of licensed, traditional HRMS systems taking place.
More than 40% of all companies are replacing or plan to replace their core HRMS systems. Cedar-Crestone believe 60% of all companies are working on a new enterprise HR systems strategy and 46% are increasing budgets. Interestingly, Stacey Harris (one of our alma maters) also found out that companies with new, recently upgraded HRMS platforms are spending 22% less per employee on HR, so they are seeing financial benefits (even though the cost of implementing new HR technology is high).
These new HRMS systems are cloud based, and they are coming from vendors (Oracle, SAP, Workday, ADP, Ceridian, Ultimate Software, and others) that have mostly built-out talent management suites. Almost 26% of the companies in the Cedar-Crestone survey are doing “rip and replace” – totally throwing away their old systems.
I just hosted a panel with Delta Airlines (SAP implementation), Macy’s (Oracle implementation), and United Technologies (Workday implementation) and we discussed the highly complex, multi-year process these companies are going through to replace their core technology. In every case the company selected a vendor that had particular capabilities that met their needs, and in each case there are many incumbent systems, payroll providers, and outsourcers involved.
Erica Volini, Deloitte’s service line leader in HR Transformation and Technology, explained clearly that there are no “best products” in this space – it’s all a matter of where you’re coming from, where you’re going, and the vendor who’s roadmap best matches yours.
Second, the talent management market is being redefined.
I’ve been in this market for 15+ years and the standalone market for learning, recruitment, and other talent applications is being redefined. The LMS markets is being disrupted by new video-based learning solutions, many of which will be complimentary to installed systems. There are a host of new, disruptive recruitment vendors who are clearly going to change the applicant tracking market. In fact I believe that market is ripe for disruption, since most ATS systems are quite old (as are the vendors). And the market for new performance management systems is emerging.
I know, the ERP vendors do all this stuff. Well even so, companies of all sizes will often either A) not use the ERP vendor’s products, or B) can’t afford the ERP solution – so these new vendors have a huge marketplace ahead. As always, once the gorillas emerge they will likely be acquired by the big HRMS/Payroll providers, but that’s years ahead.
Third, the market for feedback, culture, and engagement apps is here.
I wrote extensively on this in the article “Feedback is the Killer App.” The traditional annual engagement survey is going the way of the dinosaur (slowly however) and a new breed of pulse tools, feedback apps, and anonymous social networking tools has arrived. If you aren’t exploring this space you are missing a huge opportunity to make your company better. I wont list the vendors here, but every one of them is growing and I see this as a whole new segment.
Fourth, we have a maturing market for employee well-being, wellness, and productivity systems.
We have published a lot of research which shows that employees are ovewhelmed, and right now I’m working on next year’s Human Capital Trends and you’ll see even more on this coming up. To deal with this companies are now introducing some very exciting and well developed systems that let your employees join health-related challenges, track their fitness, collaborate with their health care providers or others, and just help balance their work-life.
Personally I think this will be a huge market going forward, and even device manufacturers and exercise equipment providers are developing these systems.
Fifth, the era of People Analytics is here.
I just published another article on the Ten Things We Have Learned in People Analytics. In short, this space is now maturing. While most companies are early in their implementations and solutions, there are now a good set of organizations that have implemented strong people analytics strategies, and almost every vendor now has some form of predictive analytics embedded into their product.
Rather than seeing dashboards, you’re likely to see “recommendations”- so some of this technology is invisible behind the scenes. Tools to predict flight risk, assess high potential job candidates, even find toxic employee behavior – are all in the market today. While many are not highly proven yet, they all work to a degree, providing great value to any company.
Apps as the Platform of the Future
The final note I’ll make here is that “appification has arrived.” As you’ll read in the report, mobile apps are the future – and they are different and more powerful than typical browser-based web systems. Not all the killer apps have been created yet, but most of the new, exciting HR applications coming are apps first, then web systems later.
This does not mean they aren’t powerful and complex behind the scenes, but they expose themselves as pinch and swipe on your phone – making it easier than ever to embed location and peer to peer collaboration into the system. We’ll write more on this soon.
If you haven’t been evaluating HR technology lately, you should now. The investment and venture capital pouring into new companies is astounding, and many of these new tools are transformational in their value.
It’s an exciting year to be an HR professional: the worlds of technology, mobile computing, analytics, and behavioral economics are all coming together for you! We look forward to helping you understand and implement some of these exciting new solutions.