ISG Software Research Analyst Perspectives

The HCM software market continues to evolve at an unprecedented pace. The innovations we’re seeing are exciting new features and capabilities, but many have more profound impacts: They provide organizations with more effective ways to serve their customers and enhance their experience. HR’s customers –employees, managers, retirees, candidates, leadership and external partners – can now access and take advantage of native mobile apps, virtual agents and chatbots (via text or voice) as well as robotic process automation (“RPA”) technology for predictable-task execution and algorithms that prescribe best actions. We are also seeing increasing evidence of the power and potential of virtual and augmented reality to create immersive experiences (for candidates and learners) and the internet of things is helping organizations achieve an even more connected, data-driven workforce. We at Ventana Research recently released our research agenda for 2018, which outlines the ways we plan to track and evaluate these advances and innovations in the coming year. At the heart of many of these HR technology advances is artificial intelligence (AI), which can simulate the way humans gather, curate and then act on information, although usually much more quickly and accurately than people can and with the ability to deal with far more information from a vast number of sources. Personalization will be a cornerstone theme in our HCM research agenda in 2018 given its relevance to an employee’s role, career interests and goals, tasks required at work, how one completes tasks and the preferences and usage patterns around systems. Personalization is a critical element in achieving a rich, relevant and efficient (or “frictionless”) experience at work, and it contributes to considerable “stickiness” in HCM systems deployed. As in previous years, our HCM research will examine attitudes and changes in how organizations approach technology-enabled HCM. We will structure the knowledge and insights we provide in six HCM focus areas. Four of the six HCM focus areas in 2018 – those related to learning, compensation, payroll and workforce management – extend research that we’ve already established. These four areas are arguably the ones most on the minds of employees, and the systems that automate them are among the most frequently used in the enterprise. We are also launching research in two new HCM focus areas this year: candidate engagement and the employee experience. Candidate Engagement Candidate engagement is an emerging focus of human capital management that addresses tight labor market situations and the increasing demand for digital-age skills and behaviors through proactive, personalized and continuous outreach to candidates, particularly passive candidates. It’s an undertaking that goes beyond current approaches to social and mobile-centric recruiting, employing AI-empowered technologies to find and engage passive candidates. Furthermore, this focus encompasses what we expect will be an accelerated adoption of chatbots and conversational interfaces that enable candidates to get status updates, information on similar opportunities or other career-relevant information on the channel they prefer. These advances promise to bring new levels of efficiency and stakeholder satisfaction to the often-challenging talent-acquisition arena. From a best-practice perspective, top candidates need to be educated and convinced through a process that feels authentic and tailored, as opposed to the impersonal job-posting process of years past. We will explore these and other key aspects in our customer-focused Dynamic Insights research on candidate engagement, which we plan to launch in the second quarter of this year. Employee Experience Optimal workforce performance, administrative excellence across the employee life cycle and the retention of top talent are goals many organizations find impossible to achieve without a rich, relevant and frictionless employee experience, one that emulates the best consumer experiences. An important step in that direction is when HCM systems effectively automate HR processes while simultaneously elevating employee engagement and productivity. A superior employee experience includes technology-enabled career-pathing, career management and mentoring, and taking a holistic approach to promoting employee well-being. Doing these things also provides an antidote to employees feeling overwhelmed by constant change because of the many new tools and processes they must master as well as the daily tsunami of email and text messages and system-generated tasks. A best-practice mindset recognizes that retaining and motivating employees involves consistently demonstrating that their career interests and professional development are equally important to the organization. It also involves identifying not just promoters of employee engagement but impediments as well. We will kick off our 2018 Dynamic Insights research in employee experience in first part of 2018. Learning Management As the pace of change in the workplace increases, so too must an organization’s ability to react by modifying learning goals, methods and tools. As an example of that latter change, organizations are increasingly adopting on-demand digital learning tools such as short videos. They also should opt for modern learning-management system platforms that adjust presentations to reflect individual differences in the way people learn, including assisting managers who may need to enhance their people-management skills. Process and technology linkages between learning management and performance management are well documented, but best practice also involves connecting learning management to upstream HR processes such as workforce planning and recruiting. Our research indicates that while the vast majority of organizations have a training department, only half have a learning management system. This represents an opportunity for vendors and customers, and innovations in this domain challenge both groups to rapidly evaluate the merits and costs of a wide range of learning options and tools. In addition, new options are redefining the concept of blended learning and raising accessibility standards. We plan to kick off our benchmark research in learning management in the first quarter and will launch our vendor-focused Value Index research in first part of 2018. Total Compensation and Rewards Management In 2018 we will paint a broader research and best-practices picture of total compensation management. We will do this by examining the overlap and distinctions between TCM and total rewards management and by guiding vendors and enterprise executives and managers through the total-rewards maze. Our previous benchmark research in this area found that few organizations (17%) have meaningfully integrated compensation management with other aspects of talent management. However, we anticipate that this is about to change, with good reason: A holistic approach to planning, administering and communicating compensation has never been more important because organizations are not getting adequate ROI from simply communicating salary and bonus information. Such an approach should focus on which rewards maximize cost/outcome ratios, including non-monetary ones. Also, we expect to see AI-mediated pay equity and diversity analyses become more proactive and anticipate interesting research findings in this area. Our research in this focus area will consist of both our user-focused Dynamic Insights and our vendor-focused Value Index, each of which we plan to launch in third first part of 2018. Payroll Optimization Payroll optimization addresses how those in payroll functions will balance their continuing desire for control over data with newly available digital innovations such as robotic process automation and bots that aim to improve efficiency and quality of service. RPA will be able to help payroll departments aggregate, validate and perform calculations around data more quickly and accurately than ever before; payroll functions are already deploying chatbots to answer the high volume of routine questions that burden and distract employees. Our previous benchmark research in payroll management found that organizations want payroll systems to help improve employee productivity, which they now largely do by providing information to employees on demand through mobile devices. Our research on payroll optimization this year will highlight the continuing impact of modernizing the payroll user experience in the context of the total employee experience. We will also investigate the degree to which payroll data can be integrated with broader HR data as well as non-HR data to support decision-making and organizational agility objectives. Our payroll optimization research efforts will commence in the first quarter with both benchmark research and a Value Index. Workforce Management Workforce management systems continue to advance, driven by digital innovations to deliver more intuitive user experiences across the three WFM pillars: labor forecasting and scheduling, time and attendance capture, and leave management. New tools in the market are making time tracking and leave management even more hassle-free and labor forecasting and scheduling will each be enhanced through AI and machine learning. We’re now seeing early-stage bots that process leave requests and obtain manager approval within a matter of seconds. Our recent benchmark research found that inadequate software for workforce management impedes efforts to develop a collaboration strategy for workers and managers. That research also identified cost reduction as a top benefit of cloud computing in workforce management. We expect that new research will find the impetus for upgrading WFM platforms moving beyond cost savings and improved collaboration to include enhancing the employee experience. This will help organizations avoid employee disengagement, errors and potential safety and compliance issues by managing worker schedules proactively. We expect to find that the combination of AI and the internet of things will play a major role. Our workforce management research will consist of a Value Index and benchmark research in first part of 2018. Our 2018 HCM research agenda thus covers learning, compensation, payroll and workforce management. We also are launching Dynamic Insights research in two critical areas, candidate engagement and employee experience. This enterprise user research will be complemented this year by user interaction, including virtual roundtables of HR leaders to explore where their organizations sit in the digital HCM journey.

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