Analyst Perspectives

Many organizations are having a difficult time selecting what they believe to be the “best fit” HCM system for their particular strategic workforce goals and priorities. This is due in some cases to the very different evaluation lenses or criteria used by IT and HR teams involved in the process. The former tends to emphasize technology-specific selection considerations such as whether the system meets well-defined usability, performance and reliability criteria such as number of clicks needed to navigate, speed of database calls or system uptime thresholds, respectively. In contrast, many users from HR and other non-IT departments seek freedom from “IT dependency” in influencing the way the system presents itself and meets their business requirements, also referred to as the system’s configurability by end-users. This is the essence of the Adaptability evaluation dimension in Ventana Research’s Value Index market reports.

In other cases, challenges complicating the selection process are associated with the relatively recent emphasis from both HCM vendors and customers on improving the “total experience” of stakeholders, meaning not just in using technology but whether those across the organization, irrespective of role or persona, routinely view the full range of activities in their daily work lives as productive and satisfying. That said, as this experience lens also reflects the personal needs, interests and goals of whoever is evaluating, it can add more of a subjective element than when evaluations were much more straightforward about whether or not an HCM system meets process automation, data and reporting requirements.

Then you have the dynamic of much more parity existing between competing offerings when it comes to degree of interoperability with other systems and data streams, within and outside of the HR/HCM domain. This is attributable to factors such as the near-universal use of web services architectures and related development standards and the fact that, increasingly, business processes in all areas tend to span multiple enterprise systems when more impactful analytics and KPIs are utilized. These practices in the deployment and use of enterprise software have elevated interoperability of HCM systems to be comparable in importance to usability.

Finally, today’s proliferation of artificial intelligence/machine learning (AI/ML)-enabled HCM product capabilities (or, at least, near-term vendor plans) and other forms of system intelligence are gradually helping HCM system customers achieve personalization at scale in areas such as learning management, recruiting, coaching and even total rewards, all core to a superior employee experience. This has resulted in customer expectations along these lines beginning to force the issue on “AI in HCM” parity as well, albeit with vendors attacking different use cases in different orders, depending on their heritage or what they are most known for, as well as what is most relevant to their customer and industry footprint. For more context on the fast-evolving AI in HCM arena, another of my Analyst Perspectives, “The Benefits of AI in HCM: Practical Advice from a HR Veteran” highlights what I refer to as, “the 3 P’s: Personalize, Predict and Prescribe,” although other categories of AI in HCM use cases include the ability for employees to curate various types of resources or for the entity to better understand employee sentiment on different issues.

These dynamics, plus the fact that customer-specific or customer-driven use cases are not always addressed in vendor-driven product demonstrations, also makes it more challenging to confidently distinguish among potential HCM software products. I therefore urge organizations investigating a new HCM approach to not only develop key use cases (or a range of HCM business situations that would benefit from certain automation capabilities) to be used in vendor selection, but to also craft use cases they have not seen many, or any, vendors showcase in their product marketing efforts to-date.

As highlighted in the market assertion from my 2021 HCM Market Agenda, modern learning management systems are associated with elevating what I call “the alternative ERP acronym” (Engagement, Retention, Productivity) should be a core guidepost that many detailed use cases should ultimately map to, as these are among a small group of HCM business imperatives that basically have universal applicability, along with others such as improving organizational agility, increasing degree of innovation and achieving proficiency in managing change. Elevating “ERP” is also a natural outcome of delivering a superior employee experience, covered in more detail in this analyst perspective. And the “ERP” lens is of course relevant to not just Learning activities but to all areas of HCM.

Examples of “less easily supported” use cases will vary by customer, the market they operate in and other aspects of operating context, and they will vary in relative importance based on the stakeholder or persona whose inputs are being solicited. Moreover, if they are challenging or difficult enough for a vendor product to support “out of the box,” the only option may be to request the vendor’s take on either some creative ways to address or how a future release or product update will make it easier to support until it becomes standard functionality. Based on my years as a global HR and HR systems leader, here are a few use cases that might serve this exact purpose:

• To provide system guidance on whether the best option for acting on a staffing or skills gap is to hire a regular employee, procure a contractor, train someone or re-deploy another staff member. Hopefully with AI/ML, this type of everyday guidance needed by managers and HR teams will become more prevalent in HCM systems.
• The critical area of evaluating an employee’s or candidate’s skills against a potentially unwieldy skills library, or clarify an incomplete or fluid picture of the most important and relevant skills needed to perform well, or the questionable reliability of self-reported proficiency levels. These skills-related HCM requirements are relevant to the entire HCM value chain, from recruiting to performance management and coaching, to learning, rewards and succession planning.
• Planning and modeling have not historically been a strength of HR technology offerings that were principally designed for automating and tracking what is occurring vs. what might occur. Complex planning and modeling needs arise in relation to hiring activities and costs, optimally allocating compensation budgets and rewards elements to workforce segments or overall, and several other areas. “Thin” capabilities in HCM planning and modeling have been a key reason why many full HCM suite or platform customers have needed to rely on more flexible and possibly purpose-built point approaches or, unfortunately for a host of reasons, spreadsheets.

Whether these HCM system requirements have been historically under-supported due to the need for various digital innovations to occur first, or due to a sense among vendors that solving for these issues would be too idiosyncratic across customers to try to cost-effectively attempt to productize, or any other reason, many HCM software vendors have simply allowed their competitors to grapple with the more complex but still long-standing people-management issues that organizations face and seek help with. This is now, however, starting to change, as HCM vendors are indeed tackling the tougher HCM use cases with innovative technology approaches.