Tactical and administrative human resources (HR) management is morphing into strategic human capital management (HCR). In the US, we live in a litigation-happy society that makes any company more likely to be sued by an employee than to be audited by the Internal Revenue Service (IRS). US regulatory requirements and corporate governance issues thus certainly vouch for the modestly increased demand for transactional HR systems that provide tools to produce (for instance) W-2 and 1099-R forms, the maintenance of data in compliance with immigration laws, and Americans with Disabilities Act (ADA) disability information. Also, there will be an ongoing need for support for the Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Occupational Health & Safety Administration (OSHA), and Sarbanes-Oxley Act (SOX) compliance. Another key driver, especially in large companies, is the need to consolidate multiple HR transactional systems for efficiency and global workforce visibility.
Part Four of the series Thou Shalt Manage Human Capital Better.
Still, enterprises will likely invest less in integrated complex suites, as a result of their customarily high upfront cost, lengthy implementation, and hard-to-achieve return on investment (ROI). Instead, many are now looking at hosted service models where companies pay per-employee-per-month fees, bear no responsibility for hardware and software upgrades, and have complete control over their own talent management processes. Additionally, they might want to invest in point solutions that target line of business (LOB) users, and that provide proven, short-term payback in the form of direct cost reduction, process improvement, and increased user satisfaction.
Certainly, the latest technology advancements have also been a catalyst for a transformation in the way HR services are delivered to and adopted by employees and managers, allowing HR administrators to trade the largely transactional and administrative work they have been burdened with in the past, for more time to work on critical business-facing initiatives. To that end, a raft of best-of-breed solutions have automated HR workflows, reduced costs, and improved data quality.
Many software tools and applications have recently been designed to align and heighten employee and corporate performance, making the emerging human capital management (HCM) software category (sometimes also called workforce productivity or workforce optimization) especially fertile and crowded. Vendors abound, from as many directions as there are HCM subcategories. Many more vendors try to cover most of the bases with broader product suites that address "employee life cycle management" in its entirety. However, while there have been noticeable consolidation moves, which vendors will dominate the space in the long run cannot be exactly stated at this time.
Even long before being acquired by Oracle, former HCM leader PeopleSoft had methodically rounded out its HCM capabilities and reached critical mass with most of its capabilities, which has prompted many point solution providers to merge and marshal a broader HCM offering. But then, immediately after the PeopleSoft acquisition and the inevitable uncertainty about the product's direction under Oracle, the market has seen prosperity and higher profiles of several niche HR- and HCM-related special applications providers, although Oracle (including its original and PeopleSoft and JD Edwards HR products) remains an undisputed leader in all HCM software categories except for time and attendance (T&A), where Kronos rules.
One should again note that T&A is a segment of broader strategic workforce/talent/human capital management suites, that in most definitions includes at its core the HR, payroll, and benefits modules, which have lately been bolstered with self-service for employees and managers, and similar intuitive applications like a centralized workforce portal that conducts on-boarding and other pertinent functions. Additional applications might include recruitment and staffing, performance and compensation management, appraisals and assessments, learning management, succession planning and career paths, workforce scheduling, and (sometimes) pension administration.
For background information, see Thou Shalt Manage Human Capital Better, Tactical Human Resources Evolves into Strategic Human Capital Management, and Performance and Compensation Management at the Core of Human Capital Management?.
The HCM Providers' Medley
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.
SOURCE:
http://www.technologyevaluation.com/research/articles/the-human-capital-management-market-hot-but-also-overpopulated-18741/
Part Four of the series Thou Shalt Manage Human Capital Better.
Still, enterprises will likely invest less in integrated complex suites, as a result of their customarily high upfront cost, lengthy implementation, and hard-to-achieve return on investment (ROI). Instead, many are now looking at hosted service models where companies pay per-employee-per-month fees, bear no responsibility for hardware and software upgrades, and have complete control over their own talent management processes. Additionally, they might want to invest in point solutions that target line of business (LOB) users, and that provide proven, short-term payback in the form of direct cost reduction, process improvement, and increased user satisfaction.
Certainly, the latest technology advancements have also been a catalyst for a transformation in the way HR services are delivered to and adopted by employees and managers, allowing HR administrators to trade the largely transactional and administrative work they have been burdened with in the past, for more time to work on critical business-facing initiatives. To that end, a raft of best-of-breed solutions have automated HR workflows, reduced costs, and improved data quality.
Many software tools and applications have recently been designed to align and heighten employee and corporate performance, making the emerging human capital management (HCM) software category (sometimes also called workforce productivity or workforce optimization) especially fertile and crowded. Vendors abound, from as many directions as there are HCM subcategories. Many more vendors try to cover most of the bases with broader product suites that address "employee life cycle management" in its entirety. However, while there have been noticeable consolidation moves, which vendors will dominate the space in the long run cannot be exactly stated at this time.
Even long before being acquired by Oracle, former HCM leader PeopleSoft had methodically rounded out its HCM capabilities and reached critical mass with most of its capabilities, which has prompted many point solution providers to merge and marshal a broader HCM offering. But then, immediately after the PeopleSoft acquisition and the inevitable uncertainty about the product's direction under Oracle, the market has seen prosperity and higher profiles of several niche HR- and HCM-related special applications providers, although Oracle (including its original and PeopleSoft and JD Edwards HR products) remains an undisputed leader in all HCM software categories except for time and attendance (T&A), where Kronos rules.
One should again note that T&A is a segment of broader strategic workforce/talent/human capital management suites, that in most definitions includes at its core the HR, payroll, and benefits modules, which have lately been bolstered with self-service for employees and managers, and similar intuitive applications like a centralized workforce portal that conducts on-boarding and other pertinent functions. Additional applications might include recruitment and staffing, performance and compensation management, appraisals and assessments, learning management, succession planning and career paths, workforce scheduling, and (sometimes) pension administration.
For background information, see Thou Shalt Manage Human Capital Better, Tactical Human Resources Evolves into Strategic Human Capital Management, and Performance and Compensation Management at the Core of Human Capital Management?.
The HCM Providers' Medley
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.
SOURCE:
http://www.technologyevaluation.com/research/articles/the-human-capital-management-market-hot-but-also-overpopulated-18741/
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