The Puzzling World of HR Technology

Note: On December 14 HRchitect conducted its traditional year-end WebMingle. Matt Lafata (President), Ron Hanscome (VP HCM Systems Strategy Consulting) and John Hinojos (VP Consulting Services) spent a lively hour discussing major HCM technology events that occurred in 2011 versus what we predicted last December, and delivered a fresh set of predictions for 2012. Part 1 reviewed major events of 2011 and how our predictions panned out, and Part 2 covered what we expect will happen in 2012. This post will wrap things up by discussing what HRchitect believes this all means for companies looking to invest in HCM technology solutions over the next 12 months.

When all is said and done, 2011 was certainly an eventful year for the HCM marketplace. The frenetic pace of merger, acquisition and investment activities has certainly validated the strength of the market, along with strong organic growth experienced by many vendors. Fundamentally, the HRchitect team views the following as the major HCM market implications that every potential customer needs to consider in order to increase the chance of a successful outcome:

• Even though consolidation has reduced the number of vendors, the complexity of decision making remains as high as ever – following all of the moves/adds/changes can be a time consuming, bewildering experience for those who follow HCM providers on an intermittent basis. In many cases, all of the market activity has only traded one kind of complexity (number of providers) for another (product & technology integration, product strategy). Current and potential users of HCM technology will get significant value from guidance provided by those who regularly follow the twists and turns of this market.
• Implementation timeframes have become somewhat extended – there are many factors driving this, including disruptions due to acquisition (changes in vendor product strategy, exodus of implementation resources), extended configuration/design phases as customers struggle to include leading-edge features (e.g., social, mobile, analytics), and greater than expected change management activities. Potential customers should take this complexity into account as they build cost estimates for their implementation plans.
• More than ever, potential customers of HCM technology solutions need a robust framework for selection decision making – with every vendor marketing their “latest & greatest” features, it’s important for customers to understand what is most important to their business and HR function, and to have a methodology for ranking vendor solutions. HRchitect provides a “Decision Drivers” framework that our clients use for this purpose – access a white paper that outlines this methodology here (Note: registration required for download).
• HR is still recovering from the downturn – the impact of 2008 and the uneven recovery since then has definitely affected the HR team in most organizations. Staff cutbacks have forced many HR teams to do more with less, and run a “bare bones” operation that is focused on getting processes done instead of gathering and analyzing information to drive business decisions and outcomes. It will be critical for those implementing HCM technology in 2012 to allocate some headcount to establish and extend the metrics framework to deliver information of value to the organization.
• Strategic linkage is critical – any potential purchaser of HCM technology needs to start with their organization’s business strategy, goals and objectives, and check the HR strategy for alignment. Only then can an HCM technology strategy be developed that supports the overarching HR strategy, which will then support the business. HCM project teams must understand the business at a deep level in order to make this happen.
• Be careful, integration can be a real “gotcha” – with all of the acquisition activity there are fewer HCM vendors that deliver an organically developed integrated application on a single platform. Recent acquisitions will take between 18 and 36 months to be completely integrated into the vendor’s main platform. Make sure that your evaluation process tests the extent of integration that exists between modules, as well as the robustness of integration tools for 3^rd party and enterprise applications. Remember also that project teams typically underestimate by at least 15% the time and cost required to integrate all the products needed to deliver seamless HCM processes – so build some cushion into your project plan.

We hope that you found this series of posts valuable as you move ahead into 2012. We’d love to hear about any questions or comments you may have, so fire away!

If desired, you may access the full audio of the WebMingle here. You can also find some very helpful supporting content (white papers and vendor summaries) here.