Globalization, the social revolution, mobile technologies and advances in big data shifted the landscape of HR technology in 2013, creating new challenges and opportunities for organizations to manage their current and future workforce.
But where 2013 was fraught with change, 2014 promises to be the year of mastery. Organizations will hone their workforce analytics skills to better predict workforce needs, while vendors will be busy integrating all of their new acquisitions, rolling out new features, and pushing their expertise in cloud and mobile technologies.
Experts offered these predictions about trends that will shape the HR technology field in the year ahead.
1. The integration journey continues. Oracle, SAP, Salesforce.com and a few other major enterprise software providers spent the last 24 months on an HR tech buying spree, acquiring many midsize providers of HR software tools in the marketplace — and even a few startups.
The acquisition trend was driven by vendors’ desire to offer a full suite that will accommodate every HR software need, from recruiting and onboarding through performance management, payroll and recognition. Now they face the tricky part: integrating all of those acquisitions into a single seamless offering, according to Forrester Research analyst Claire Schooley. “Integration will be a huge issue in 2014,” she said.
It will also establish a dividing point for vendors who built versus those who bought their HR expertise, said Ron Hanscombe, research director at Gartner.
He noted that vendors such as Halogen, Workday and Ceridian, who built most or all of their core functionality in-house, paid the price early on in time to market. “But once those tools were built, they were integrated into the suite and now offer the same delivery model and user experience as the rest of the tool set,” he said.
In comparison, there are companies that acquired much of their HR functionality, such as Oracle with Taleo, SAP with SuccessFactors, or IBM with Kenexa. “These vendors are just beginning an integration path that will take a lot longer than 2014,” Hanscombe said.
In the meantime, customers can expect a lot of talk about integration, but the actual seamless connectivity between newly acquired systems could take years.
2. One-trick startups are the new acquisition target. The trend to buy rather than build won’t stop in 2014. But major vendors are more likely to focus on small startups that offer “one-trick” features that will expand a vendor’s recruiting, talent management or other HR offerings, said Katherine Jones, an analyst with Bersin by Deloitte.
“Buying is still viewed as more expeditious than building,” she said. “So if a startup has an interesting product, good code and a handful of clients, they could be a target for acquisition this year.”
Ray Wang, founder of Constellation Research, predicts that Oracle, SAP and the other big players will continue to buy small companies to round out their HR offering, with a focus on tools that drive motivation and encourage employee engagement. One hot area for acquisition is likely to be stand-alone gamification vendors that offer innovative ways to apply rewards and drive competition in the company, he said.
“Gamification got a lot of hype in 2013, but companies haven’t quite figured out how to do it,” Wang said. As the gamification models mature, and companies realize how to use them effectively, vendors will want to start adding more of these features to their offering.
Wang also anticipates companies that offer payroll options will add or acquire additional finance-focused features, including payment cards that also act as ID cards. They could be used to pay salaries and rewards, and also be configured to act as key cards to access the building and as identify cards for employees. “I can see companies like ADP, Paycheck and Ceridian getting into this area because it would be a natural extension of their broader business model,” he said.
3. HR finally gets its upgrade. After years of delays, companies are finally realizing that their existing HR software system is a lot older than they thought, Wang said. Constellation’s research shows a 50 percent uptick in companies interested in upgrading or replacing their HR systems.
A 2013 HR Service and Technology survey from Towers Watson & Co. shows that 29 percent of organizations plan to adopt a new HR software system in the near future. Among them, 35 percent will only consider a software as a service rather than an on-premise product.
Gartner is seeing similar increases in interest in human capital management upgrades, Hanscombe said. “Whether it’s core HR or specific talent management tools, all areas of HR software are seeing growing interest.”
But the transition to new HR technology is not going to be easy. “Some of these systems are so old and so over-customized that migrating to a new one will be painful,” Wang said. But it’s unavoidable for companies that want to gain the flexibility and ease of use that new, often cloud-based HR suites have to offer. “The time has come to upgrade, no matter how onerous it will be.”
4. Organizations figure out how to actually do workforce analytics. The HR industry spent 2013 talking about the benefits that workforce analytics can bring to the business. In 2014, they will start delivering on that promise.
“Workforce analytics will really take shape in 2014, as HR and IT teams join forces to meet executive demands to prioritize talent,” said Leighanne Levensaler, a vice president at cloud software company Workday. She predicts that organizations will be focused on figuring out what worker-related data sources they have access to, what information can be derived from these sources, and how that data can be used to find and keep top talent.
Business intelligence and analytics are expected to become the top focus for chief information officers until 2017, according to Gartner research. However, the survey also shows that for the next couple of years, confusion about big data analytics will constrain spending.
That confusion is particularly prevalent in HR, which is unaccustomed to doing big data analyses, Hanscombe said. To overcome this shortcoming, many HR teams are adding analysts to their teams, or joining forces with finance and IT departments to tap the analytics skills they need to transform data into useful knowledge.
HR functions are also cleaning up their data and integrating the systems from which the data are collected, Hanscombe said. “Organizations are going to be much smarter about data accuracy and cleansing in 2014.”
Their skill will be bolstered by a new generation of easier-to-use analytics tools that show the data in easy-to-understand graphical formats. This will make them more user-friendly, particularly for nonanalytical business professionals.
“It’s about giving customers insights versus just a data dump,” said Tim Low, vice president of marketing at PayScale, a salary profile database vendor. “Software vendors will provide that as an increased value in 2014.”
5. Mobile comes first. For the first time, developers of HR technology are going to begin their development process with mobile applications, then follow up with more traditional PC-based platforms, Schooley said.
“Until now, mobile has always been a ‘bolted-on’ extra,” she said. But this year developers will start designing with mobile in mind, choosing functionality and user interfaces that are specifically intended for a mobile environment.
Workday has already jumped on this trend with its new Workday Recruiting app, to be released in April, which was designed with a mobile-first model. “The reason for our mobile-first approach is simple,” wrote Amy Wilson, vice president at Workday, in her corporate blog. “The most fundamental aspects of recruiting — including sourcing candidates, sharing those prospects with hiring teams, nurturing top candidates and even making the offer — take place while people are on the go.”
This mobile-first trend, which is being driven by younger workers who are more likely to use tablets and phones to access technology, suggests that mobile will become a much more important part of the HR software infrastructure going forward.
The Towers Watson report shows that only about 10 percent of organizations use mobile apps for HR, but researchers expect that to jump to 25 percent in the next 12 to 18 months.
“We are going to see more interest in this area in the years to come,” Wilson predicted.
6. People assessments are on the rise: One of the reasons that workforce analytics has taken so long to gain a foothold is that it is a lot harder to quantify people skills than it is to analyze financial results or IT metrics.
“There is so much variability with HR metrics, they are all over the map,” Hanscombe said. That’s going to change in 2014 with the rise of assessment tools to accurately quantify soft skills.
“We expect that people-related competencies and skills will take on increased importance in 2014,” said Joe Ungemah, vice president of talent solutions at SHL Talent Measurement Solutions, a unit of the Corporate Executive Board. The assessment trend will include evaluation of soft skills like prioritizing contributions that benefit the organization, fostering teamwork and seeking an understanding of the social context. “It is about building highly productive relationships between different functions and skill sets for the good of the entire company.”
Companies such as CEB, PI Worldwide and Kenexa offer talent management assessments that can help HR gauge these soft skills to make sure employees fit the culture and specific job skills needed.
7. Social goes corporate. Many talent management suites added their own collaboration layer in recent years as an answer to the demand for social media in all areas of the business. These tools can be useful as a way to track progress, offer mentoring and feedback, and support the annual performance review process by creating additional data, Hanscombe said. However, they were too siloed in the talent management suite.
“There is a need now for a specific collaboration platform around HR that plays well with other areas of the business,” he said. “The best tools will incorporate their activity stream into the broader enterprise.”
Hanscombe expects the HR vendor community to deliver incremental technological progress in this area, and he hopes that HR leaders will see this transition as an opportunity to spearhead the adoption of social media for workforce management.
“Talent managers can gain traction on the heels of attempts by IT to deploy enterprise collaboration tools that no one used,” Hascombe said. If HR can demonstrate how these collaboration tools can spur engagement and capture data about performance across the enterprise, they will be the leaders of social collaboration 2.0.
8. CRM meets social recruiting: Using sites like Facebook, Twitter and YouTube to attract talent was a huge trend in 2013, but it was an ad hoc approach that was hard to track or manage.
That will change this year, with the introduction of recruiting customer relationship management tools, said Pete Kazanjy, co-founder of TalentBin, a talent search engine. “Many platforms are now implementing features traditionally seen in sales CRM to fit the needs of recruiters,” he said.
The biggest benefit of these tools will be automation features, such as email programs that drip communication to candidates over time. “It will help to streamline the recruiting process, allowing recruiters to do more with their time and automate away a lot of manual drudgery that technology can help with,” he said. “That will raise quality of hire and reduce cost of hire.”
“Social marketing” will be another hot buzz phrase in the recruiting space, Schooley said.
It will no longer be enough to have a job opportunities section on the corporate website with a vague description of the corporate culture, she said. Companies that want to attract hard-to-find talent in 2014 need to put on a full song and dance to win their attention. “That means building marketing plans and launching recruiting campaigns around job descriptions that will attract key talent to the brand.”
Sarah Fister Gale is a freelance writer based in the Chicago area. She can be reached at email@example.com