The changing face of HR systems
Author: John Leonard
For many years, human resources systems (also known as human resource information systems HRIS, or human capital management HCM) were something of an IT backwater, with companies commonly keeping systems in place for 20 years or more. Many of the traditional providers have been around for a long time too. Payroll solutions provider ADP dates back to 1949, while in the UK NGA HR (formerly Northgate) was established in the 1960s.
But the old-timers have recently been joined by new players. Predominantly cloud-native and specialised in certain areas such as recruitment, benefits or on-boarding, these new competitors can move quickly into niches where more traditional players with their on-premises baggage struggle.
The biggest example of the newer type of HR provider, at least for large enterprises, is Workday, but there are other vendors focused further down the size scale or within certain sectors or functional specialisations. HR systems cover a lot of different functions and therefore tend to be modular rather than monolithic.
In response, companies like ADP have acquired cloud-based HCM platforms and are building on their core competencies. NGA HR recently hived off its UK operations into a new cloud company Zellis, while enterprise giants Oracle and SAP have been trying to streamline operations by persuading customers into the cloud. (This has not proceeded as quickly as they had hoped, forcing them to extend support of their main on-premises platforms until 2030.)
Another recent entrant is Microsoft, which added Talent to its cloud-based Dynamics 365 subscription in 2017. In a recent Computing Delta research programme into HR solutions, Dynamics users reported a concerted marketing effort by Microsoft to push its new offering. Presumably as a consequence, Talent was the most trialled HR solution among the IT professionals we surveyed.
Source: Computing Delta, N = 238
Underlying these changes are the new modes of working. HR managers and employees alike expect to be able to manage their lives from a smartphone, and an HR system that lacks a mobile app may not even make the shortlist.
Other new features are automated on-boarding and leaving, and AI and automation and predictive analytics. There is a fair amount of ‘AI-washing' in vendors' promotional literature, but the use of chatbots to answer queries and machine learning to automate certain aspects of HR management and to aid decision making are certainly here already, even if uptake may be relatively low for now.
Among the respondents surveyed and interviewed for this research, the newer players were certainly on the radar but they had not yet made a huge amount of headway. Likewise, with some of the newer features. Some seemed unaware that their legacy incumbent provider now offers cloud and mobile options - a reminder of the longevity of HR systems.
Source: Computing Delta
A majority of survey respondents said their organisation runs more than one HR system, with 10 per cent operating more than five. About half said they have a core HR system to handle most functions with the other half saying certain key areas were handled by niche solutions.
The most likely areas to be covered by niche or specialist providers were (in order) Payroll, Health & Safety, Time & Attendance and Applicant Tracking and Recruiting.
Functions most likely to be rolled in with a core HCM/HRIS system were Employee Wellness/Wellbeing, On-boarding of Recruits, JML Processes, Holidays & Sickness and Compensation & benefits.
Source: Computing Delta.
The majority view was that SaaS is the best option for HR systems, giving organisations more flexibility in terms of deployment and payment - although often at the expense of configurability.
When selecting HR vendors and solutions issues of cost, particularly unexpected or hidden costs, were considered most important, followed by understanding of customer needs and ongoing support.
The renewal cycle and details in the SLA were thought to be the most important issues to negotiate with vendors, followed by bespoke features. Ironically, the favoured cloud model tends towards less flexibility in these same issues, with boilerplate SLAs and standardised core platforms. Generally speaking, cloud services are easier to manage but less open to customisation.
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