ISG Software Research Analyst Perspectives

Gadgets be gone: That was one of my lighter tweetable sentiments from last week’s HRO Today Forum analyst summit, and you’ll see why below. At this gathering we industry analysts discussed the difference in perspectives on innovation, or the lack thereof, held by HR technology suppliers and the HR practitioners who buy and use their products, many of whom attended the HRO Today Forum. Our firm’s benchmark research shows a distinct lack of innovation in this market. One component of it, the Ventana Research Maturity Model™, evaluates the maturity of organizations in a given industry or with respect to a business or IT process. The highest level of maturity we call Innovative. Our recent research on workforce analytics shows that only 12 percent of companies are innovative in how they aggregate, track and manage analytics to improve their workforce and business performance – even though 77 percent of executives and managers who participated in the research said that the performance of the workforce is the most important metric. In the area of total compensation management only about one-third of organizations rank at the Innovative level of maturity. In both cases most organizations claim that they haven’t come across a system that can handle all their workflow processes and functionality needs. Software vendors seem to take a cheerier view. A recent HRO Today survey of more than 100 buyers and providers of HR technology revealed an “innovation gap”: While providers for the most part feel they are highly innovative, the practitioners disagree. When asked how innovative providers are, 72% of providers themselves said their talent acquisition technology is innovative, 68% said their talent management tech is innovative, and 64% said their human resource management system (HRMS) is innovative. That didn’t surprise me after years of hearing vendors tell me no one else is as innovative as they are. In contrast, practitioners said that only 32% of providers are innovative in talent acquisition, 33% in talent management and 27% in HRMS. Considering how well cloud-based software development has overcome security issues for delivering multitenant SaaS, it was a little shocking to see these low numbers. While I don’t have the demographics of the survey respondents, I suspect that a good number of them are still battling on-premises software (although according to my colleague Mark Smith, that is finally changing with new offerings from the likes of Oracle and SAP). The “innovation gap” survey provided another similar finding. When asked if technology innovations support HR work or are just gadgets (cue my above tweet), more than 60% of providers said such tools support HR work across talent acquisition, talent management and HRMS, but half of practitioners said they’re just gadgets of no great usefulness. This perceived lack of innovation calls into question the value of actions of many HCM vendors in the areas of product development, customer service and user adoption. Many vendors have told me that besides customer advisory councils, focus groups and user group gatherings, they’ve also created software development “sandboxes” where customers can play with features and enhancements before they’re released live. This is relevant when we note that a multitenant SaaS architecture allows customer companies to receive new updates regularly, usually at no additional cost as part of their subscription. The speed in which multitenant cloud-based software solutions are updated is dramatically faster than that of more costly on-premises counterparts. Vendors have also created online care and idea centers where customers can suggest, vent and collaborate. For instance, the idea to develop a single product across mobile platforms at ADP came from the company’s product development team talking with more than 700 customers and prospects. However, the survey indicates that the democratization of customer product development apparently hasn’t convinced the customer side as regards to vendor innovation. Innovation must be something new or a re-imagining of how technology can drive efficiencies, in this case in HR and recruitment processes and activities, and it has to contribute to overall business growth. It must take into consideration the how and why of the workplace today — the best practices of processes and technology in acquiring, empowering and retaining talent. It can’t produce a gadget for gadget’s sake just so a vendor can say, “Hey, you can log in to our talent management system on your smartphones now.” The question that follows is, “To do what, exactly?” Good question. Technology improvements alone are not enough to advance human capital management maturity. Our Maturity Index and benchmark research consistently show the need for coordinated advances in people, processes, information and technology aspects of business. Only internal improvements, which include efforts to improve processes and information, balanced with deployed technology, will help organizations mature today. HR practitioners also need to better educate themselves on the uses of technology in the workplace and even take “tours of duty” in finance, operations, IT, customer service and other areas to understand what it means to run and grow a business, not just keep it in compliance and avoid risk. I’d like to hear from you, the HR and business practitioners who read this blog and our HCM research. What do you think? Is there innovative HR tech out there? When is it really valuable in acquiring, empowering and retaining your workforce? Regards, Kevin W. Grossman – VP & Research Director

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