The Talent Management Software Market Grows and Evolves
The market for corporate talent management software continues to surge. CornerstoneOnDemand just announced 39% YTY growth in revenues, and our discussions with Saba, SumTotal Systems, SAP, Oracle, ADP, Jobvite, and others show growth rates all in the double digits..
Our latest research shows that this market grew by 17% last year and is now over $5 billion in size. Why? The talent management software market is now well established and companies are now looking for a single vendor to integrate all their talent management applications.
Talent Is The Topic
The topic of talent is front of mind. Everywhere I go executives talk about their challenges in developing leaders, locating and hiring top technical skills, diagnosing and improving organizational culture, and creating a better process for internal talent mobility. Reid Hoffman’s new book The Alliance is helping fuel this fire, as he socializes the need for a new ways of managing people.
There is also a transformation taking place in corporate learning. MOOCs, new LMS technology, and interactive digital content has forced companies to rethink their L&D strategies as well.
Integrated Talent Management Software Takes On A Bigger Role than HR
Companies now want (and vendors provide) a single, corporate-wide system that lets employees “manage their work” and helps managers “manage people.”
The original concepts of talent management software (pioneered by a company called Authoria, now part of PeopleFluent) were to provide an integrated system for HR (recruiting, performance management, development planning, etc.).
Today the market has totally shifted: talent management software is not for HR (even though HR buys it), it’s for the employees, managers, and leaders.
A System of Engagement, Not Just A System of Record
As these product mature, companies now see these systems as an employee “system of engagement.” They are now seen as productivity and work management systems, despite their HR heritage.
For example, employees need to find skilled staff, locate information and content, set and share goals, learn new skills, collaborate, and manage their teams. HR not only wants to implement standard people practices, but now monitor engagement, collect real time feedback, develop work-life balance programs, and manage workforce schedules.
All these functions are being integrated into the talent management system.
I sometimes think we should “rename” this whole space “Work Management Software” instead of “Talent Management Software” because these systems are now being used to help people get work done. This is a seismic shift that has taken place in this market.
Here are some of the application areas now covered by talent management software:
And I would suggest that this category will soon include real-time engagement and agile work management tools. (Read my latest article on “The Quantified Employee” for more on that topic.)
Funny thing has happened here, and we could have predicted it. While many of the smaller fast-growing players were acquired (SuccessFactors, Taleo, Authoria, GeoLearning, Pathlore, and many more), there are still many newinnovative companies entering the market.
As our market share shows (taken from the Market Brief you can download here), there are plenty of well established vendors to choose from. Not only have SAP, Oracle, IBM, Workday, CornerstoneOnDemand, and ADP staked out this space, but so have many other highly innovative companies (including good sized vendors like Saba, PeopleFluent, SumTotal Systems, Halogen, ADP, Lumesse, Ultimate Software) and others.
If you realize that every single company with more than 200+ employees can use this software, the available market size is 400 million users or more. So some companies (Halogen, Ultimate, ADP) focus on mid-market firms, and others (SAP, Oracle, Workday) tend to focus on big companies. In most cases vendors which focus on large customers have been unable to develop products which meet the needs of mid-sized companies (the product has to be much easier to implement and lower cost). Workday has been trying to reach into smaller companies through resellers; CornerstoneOnDemand has a mid-market business unit; and ADP has a large enterprise product group. But even with these efforts, our research shows that vendors which focus on a single segment are far more successful.
Market share by customer count shows how many vendors have large numbers of customers.
For years analysts speculated that this market will become dominated by the ERP providers. Not true. Today the market is rapidly expanding into mid-sized businesses and there is plenty of room for new vendors.
I also believe the market is too big and moving far too fast for the ERP providers to dominate. Not only are their 200+ LMS vendors today, but we see an explosion of new tools for social recruiting, sourcing, analytics, real-time engagement and feedback, and social recognition. These HR software categories will all eventually “converge” into the talent management system, keeping the market exciting and alive.
Look at companies like Achievers and Globoforce, for example. These two fast-growing companies provide very powerful tools for social recognition, real-time employee feedback, and employee engagement. Today they are both growing at 40% or faster and they have very unique and powerful solutions which really change the daily lives of employees. Are these tools available from the larger talent management vendors? Not yet. This is only one of many categories we see emerging.
Our history is in the learning management systems market (LMS), which also continues to grow. Today with more than 200 new vendors, we believe the LMS market is entering a whole new era of innovation – focused much more heavily on integration with MOOCs, enabling corporate expertise to be shared, and finally delivering on “on-demand” learning.
The other fast-growing part of the talent software market is talent acquisition software, the most innovative category of all. Not only are people fed up with their 10 year old applicant tracking systems (they were designed in the days of paper resumes and no LinkedIn), there are dozens of exciting startups building mobile recruiting tools, online assessment tools, tools for candidate relationship management, and analytics. Again, these innovative companies typically grow to $30-50M in size and then they either disrupt or are acquired by larger HR software companies. So this makes the space more exciting than ever.
I will be talking much more about this market at the upcoming HR Technology Conference (Session TM1) and at HR Tech Europe in October.
Let me conclude with a simple thought: if you don’t have an integrated talent management platform yet, you should think about it. These systems are not only highly valued by HR, but now highly valued by your employees as well.
About the Author: Josh Bersin is the founder and Principal of Bersin by Deloitte, a leading research and advisory firm focused on corporate HR, leadership, learning, and talent management.