The HR technology market is expected to be more than a $15 billion market in software, and it’s expected to expand with growth and innovation in 2015. HR technology providers are developing new tools to help companies manage worker communication, engagement, recognition, and workplace wellness. This new cycle of innovation is leading private equity and venture capital firms to invest heavily in the space. According to Forbes, the top 50 HR technology investment deals in 2014 were over $560 million and the top 50 learning and educational technology deals were over $800 million.
This increased interest in HR technology is leading to one of the most innovative times ever for the market, with experts predicting big innovation diruptions.
Shift from System of Record to Systems of Engagement
HR software today is no longer focused on the functional feature set, but rather on the degree of user engagement. While there continues to be a large market for back office systems built to automate, store, and manage worker data primarily used by HR managers, HR systems have changed. Now HR systems are “self-service” and their success is dependent on how easy they are to use by workers, managers, and even job candidates.
For example, recruiting systems have transformed substantially. Just a few years ago, applicant tracking systems were electronic digital filing cabinets used for storing and indexing resumes. Today’s recruitment systems allow job candidates to apply using mobile devices with just one click, do video interviews, and take online assessements. Companies developing recruitment software now have to make these systems so easy to use that they are actually fun.
Mobile Apps, Not Just Mobile Versions
According to Kleiner Perkins research, there are approximately 5.2 billion devices and 1.6 billion smart phones, but only 789 million laptops and 743 million desktop PCs globally. This signifies that most workers are more likely to access HR applications on their phone than they are on their PC.
This trend means that the focus of new applications should be mobile, with emphasis on usage mechanics, user interface, and design. HR systems that are designed well for mobile should have the capabilities to “tap and swipe” rather than “click and type.”
Data Analysis as a Solution, Not Product
Talent analytics research from Bersin by Deloitte shows that companies who go through the process of “datafying” their HR organizations see 2-3x better results in their quality of hire and employee turnover.
Software is becoming more of a commodity, while value is driven by data, decision-making, and analytics. While finance, marketing, and supply chain organizations have been investing in analytics solutions for decades, HR is just starting to look into business analytics. Only 4 percent of large organizations currently have the abilty to predict or model their workforces.
As HR managers become more interested in data analysis, they are more likely to buy tools due to their embedded analytis with intelligence and analytics capabilities.
Contingent Workforce Mangement Technology
Companies currently depend upon a variety of technology solutions to manage their contingent workforces; with Vendor Management Systems (VMS) technology being the most utilized solution in the industry. These systems have evolved from eProcurement for temp workers to become all-around systems for all aspects of the management of non-employee labor, including analytics, recruiting, and freelancer management.
CWM Solutions Utilization
Source: Ardent Partners
According to Ardent Partners’ ‘The State of Contingent Workforce Management’ report, over the next 12 to 16 months, mobile applications and portals will become more important to contingent workforce management technology. Freelancer Management Systems (FMS) are also increasing in adoption as freelancers and independent talent are being sought after by more companies.