What’s Driving the HRTech Space?

Technology is undergoing a real transformation, and so is the human resource space. HR software and platforms now make up a phenomenal $14 billion market, with new-age HR platforms and software reinventing the HRTech game. The focus has shifted from operational efficiency to more collaborative and engaging functionalities, and for this HR is digging in to the latest in tech- video streaming, mobile applications, talent analytics, team-centred management. Gone are the days of an obligatory online presence for HR functions — today HRTech is all about riding on a new wave of innovation.

Disruption is a constant when it comes to technology-led industries. In the early 2000s, the emergence of HR ERPs such as online recruitment and applicant tracking tools, learning management systems, and performance management systems created a new wave of people management. The focus then, was on automation and management. Finding, engaging and retaining talent was becoming more critical for business success and companies turns to consolidated and “core HR services” to add value to the customer. As a result, specialists made it big in the market, SuccessFactors dominated performance management; Taleo became popular for recruiting; and CornerstoneOnDemand, Saba and SumTotal rose to the forefront of learning and development.

Since the past couple of years, a different wave is changing the tide across the HR function, and it’s called integrated talent management. The focus is shifting from mere management to collaboration and communication. Cloud is becoming popular by the day, at the same time companies cannot ignore the fact that on-premise and legacy data centers are still mainstream for traditional businesses. Thus, the need was felt for an HR solution that could cut across this technology clutter. SuccessFactors realized this gradual shift from specialized to integrated, and introduced Employee Central, a cloud HR database designed to replace a company’s core HRMS. SAP, Oracle and Workday too have followed suit, and PeopleSoft and Cornerstone Link were lapped up. But this was not enough, it was important to integrate across HRMS, payroll, and talent management. A new wave of consolidation has then made it large to meet this objective. SAP acquired SuccessFactors, Oracle acquired Taleo and SelectMinds, IBM acquired Kenexa, ADP acquired Workscape, Skillsoft acquired SumTotal and Workday expanded its solution.

These integrated services providers, soon realized that the cloud was the future, and from 2011 to today, a rapid series of consolidation efforts have been ongoing. Niche market segments, sometimes led by industry emerged, with the likes of Ultimate Software, Ceridian, Namely, Zenefits, Infor, and Sage digging into a market that was favouring customization. Standalone HR software is rapidly being replaced by integrated cloud platforms. The result is that the stand-alone service providers who deliver specialized systems, such as Cornerstone, SumTotal, Saba, PeopleFluent and others, have seen a contraction in their market. Many of these are complementing ERP providers, or catering to small customers.

Today is the age of “people management systems” which focuses on team collaboration, continuous communication and feedback, employee engagement and a high performance culture. Companies are revamping their core HR systems, sometimes overhauling the entire concepts of talent management. For example, performance management is no longer about the annual appraisal cycle, but has been reduced to a continuous information flow through periodic “check-ins”. Modern HR processes revolve around the employee, be it learning, engagement or improving retention. Integrated talent management of today and tomorrow is all about bundling these together as one solution that suits the organization.

The main reason for this shift is that new platforms and communication channels have become mainstream. Mobile applications are truly “mobile”, always-on and are more receptive to a wide range of inputs such as location, sounds, touch etc. How we consume the internet has changed, with the plethora of smart devices that we own. It is not long before we see an “all mobile” HR system. Mobile will foster the rise of live video streaming, gamification-based engagement, and customized interactions through analytics. Even wearables will be configured to understand the employee and respond or recommend as per his or her physical status (for example the heartbeat) so as to design wellness interventions. A case in point is a customised engagement pulse survey that tracks employee tone and voice to understand work stressors. It can then provide suggestions to relieve the stress, by modifying the task as hand, say a meeting. This hi-tech and perceptive angle of HR will soon be a reality.

HR vendors will need to adapt to this shift. Mobile implementations of existing web HR applications, team-based communication tools, social recruiting, and video interviews- an endless opportunity awaits, if only companies can innovate to meet these hi-tech needs. This is the beginning of a new era called “Digital HR”, a trend that innovators will ride high on, and those who cannot keep pace, will perish.

This article was originally published on Read IT Quik

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