Thus, one can define three families of HCM solutions providers:
1. traditional ERP vendors like SAP, Oracle, Lawson, Microsoft Dynamics, Agresso, Sage, Deltek, etc.;
2. former best-of-breed niche human resource management systems (HRMS) vendors that are evolving into best-of-breed HCM suite providers, such as Hewitt Associates (including its recent acquisition Cyborg), Ultimate Software, Employease (recently acquired by its long-term partner, ADP), Extensity (formerly Geac HR, now part of Infor), Kronos, Meta4, Taleo, BrasRing, Czanne Software, Genesys, Workstream, and including traditional payroll or HR service providers like ADP and Ceridian, which have also encroached on the realm of HCM lately; and
3. the plethora of niche HCM providers (most of which have been mentioned earlier) in areas like performance and compensation or incentive management, e-learning, employee development, competency modeling, succession planning, workforce scheduling and optimization, and so on.
What may work in favor of the best-of-breed applications is their complementary nature to an installed enterprise resource planning (ERP) system, and increasing ease in integrating these and orchestrating processes via service-oriented architecture (SOA) and Web services developments (see Understanding SOA, Web Services, BPM, BPEL, and More).
Some industry data and first-hand observations indicate that many enterprises which have deployed an HRMS system from one of the leading ERP providers might gain better results and increasingly deeper functionality by working with a best-of-breed provider, such as those for core workforce management functions like compensation planning or employee performance management. This is largely because many best-of-breed HCM vendors excel at delivering tools that are configurable to support a customer's existing business process, and that are highly intuitive and easy to use, ensuring high rates of adoption by the most important user communities: employees and managers. Additionally, the proliferation of merger and acquisition activity in the HR vendor community is helping best-of-breed suite providers gain additional functionality fairly quickly, a trend that makes them even more formidable competitors to the large enterprise vendors.
Yet although pure-play vendors can sometimes provide more robust functionality, where they typically lack is in the integration with core HR employee data and back-office financial applications. ERP vendors tout the inherent strength of their comprehensive integration across the organization. For example, if a customer runs Oracle Financials and then implements the Oracle HRMS and Oracle CRM (customer relationship management) applications, it should get the added benefits of seamless integration and lower maintenance costs, and less downtime any time the company upgrades the software or installs dot-release enhancements. But if the customer chooses the cobbled approach and runs Oracle Financials along with Taleo, SumTotal, Callidus, ADP, Authoria, etc, one can imagine the inefficiencies, downtime, and strain on the information technology (IT) department created by the need to continuously make sure that all versions of the diverse niche software applications are integrated with the back-office financials applications.
While ERP vendors will continue to move toward one-stop shopping, thereby adding a wide variety of applications to their suites, best-of-breed HCM providers will gain strength through consolidation and by focusing on meeting specialized client needs in certain industries. For that reason, the likes of Authoria, Workscape, and Kenexa have lately promoted themselves into broader HCM suite providers from mere niche players.
The overall HR and HCM category is also experiencing a continuation of a shift to a subscription model, which is already well established in some segments, and often suitable for companies with variability in demand (see Software as a Service Is Gaining Ground. Some providers, like Ultimate Software, have lately reinvented their license businesses, and achieved stellar financial performance owing to the subscription-based model.
1. traditional ERP vendors like SAP, Oracle, Lawson, Microsoft Dynamics, Agresso, Sage, Deltek, etc.;
2. former best-of-breed niche human resource management systems (HRMS) vendors that are evolving into best-of-breed HCM suite providers, such as Hewitt Associates (including its recent acquisition Cyborg), Ultimate Software, Employease (recently acquired by its long-term partner, ADP), Extensity (formerly Geac HR, now part of Infor), Kronos, Meta4, Taleo, BrasRing, Czanne Software, Genesys, Workstream, and including traditional payroll or HR service providers like ADP and Ceridian, which have also encroached on the realm of HCM lately; and
3. the plethora of niche HCM providers (most of which have been mentioned earlier) in areas like performance and compensation or incentive management, e-learning, employee development, competency modeling, succession planning, workforce scheduling and optimization, and so on.
What may work in favor of the best-of-breed applications is their complementary nature to an installed enterprise resource planning (ERP) system, and increasing ease in integrating these and orchestrating processes via service-oriented architecture (SOA) and Web services developments (see Understanding SOA, Web Services, BPM, BPEL, and More).
Some industry data and first-hand observations indicate that many enterprises which have deployed an HRMS system from one of the leading ERP providers might gain better results and increasingly deeper functionality by working with a best-of-breed provider, such as those for core workforce management functions like compensation planning or employee performance management. This is largely because many best-of-breed HCM vendors excel at delivering tools that are configurable to support a customer's existing business process, and that are highly intuitive and easy to use, ensuring high rates of adoption by the most important user communities: employees and managers. Additionally, the proliferation of merger and acquisition activity in the HR vendor community is helping best-of-breed suite providers gain additional functionality fairly quickly, a trend that makes them even more formidable competitors to the large enterprise vendors.
Yet although pure-play vendors can sometimes provide more robust functionality, where they typically lack is in the integration with core HR employee data and back-office financial applications. ERP vendors tout the inherent strength of their comprehensive integration across the organization. For example, if a customer runs Oracle Financials and then implements the Oracle HRMS and Oracle CRM (customer relationship management) applications, it should get the added benefits of seamless integration and lower maintenance costs, and less downtime any time the company upgrades the software or installs dot-release enhancements. But if the customer chooses the cobbled approach and runs Oracle Financials along with Taleo, SumTotal, Callidus, ADP, Authoria, etc, one can imagine the inefficiencies, downtime, and strain on the information technology (IT) department created by the need to continuously make sure that all versions of the diverse niche software applications are integrated with the back-office financials applications.
While ERP vendors will continue to move toward one-stop shopping, thereby adding a wide variety of applications to their suites, best-of-breed HCM providers will gain strength through consolidation and by focusing on meeting specialized client needs in certain industries. For that reason, the likes of Authoria, Workscape, and Kenexa have lately promoted themselves into broader HCM suite providers from mere niche players.
The overall HR and HCM category is also experiencing a continuation of a shift to a subscription model, which is already well established in some segments, and often suitable for companies with variability in demand (see Software as a Service Is Gaining Ground. Some providers, like Ultimate Software, have lately reinvented their license businesses, and achieved stellar financial performance owing to the subscription-based model.
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