The HR tech market is projected to reach $30B by 2025. In addition to leading vendors like Workday, Oracle PeopleSoft, ServiceNow, and Coupa, there is a rapid increase in the number of vendors that specialize in HR automation, recruiting, payroll, benefits, people analytics, and more.
Implementing new digital HR technology is becoming a bigger priority for top companies, with approximately half of large and mid-sized companies now indicating that they are increasing spending on HR tech. This accelerating market is being driven by a combination of core HCM software and specialized HR software. About half the overall market size is made up of non-core HCM software.
What is Human Capital Management (HCM) software?
HCM software is a common HR solution with features like a 360-degree view of employees, payroll, time-tracking, employee scheduling, benefits management, employee portals, recruiting, applicant tracking, accounting, and performance management.
The growth and adoption of HR technology has given HR a greater capacity to directly impact employee productivity, retention, and satisfaction, as well as HR operational efficiency across the board. Because of this, HR departments — increasingly equipped with powerful digital tools to manage the employee lifecycle — are being leveraged more than ever as critical components for organizations’ success.
56% of companies surveyed in 2017 are redesigning their HR programs to leverage digital and mobile tools in hiring, onboarding, developing, managing, and providing resources to employees. 41% of companies are actively building mobile apps to deliver HR services. 33% of surveyed HR teams are using some form of artificial intelligence (AI) technology to deliver HR solutions.
Fifty-seven percent of the organizations surveyed by Deloitte stated that an inability to generate analytics with their legacy system was a top reason that they were seeking new HR technology. Many studies show that the cost of losing an employee can range from tens of thousands of dollars to 2X the employee’s annual salary.
Hiring employees is costly too. Some industries average costs of nearly $7,000 per new employee hired. While a 5-7% annual churn rate is expected for SaaS companies, employers can ease the burden on their employees by automating HR processes like recruiting to bring in new talent, developing employees to steadily grow their skill sets and responsibilities, and retaining the high-growth mode employees Kim Scott refers to as “superstars” in her book Radical Candor.
The need for HRM integration
Digital transformation is a term thrown around often in enterprise tech. What was once considered “cutting-edge” HR technology — interactive phone systems, LANs, dot-coms — has evolved or been completely replaced by emerging technology innovations like AI, chatbots, and IoT.
However, throwing the newest travel expense software or feedback app into your HR tech stack will not simply “digitally transform” your employees’ experience at work. True digital transformation requires HR to create a cohesive digital experience that helps employees get work done easier and faster in the broader context of their lives.
Only 5% of HR respondents report having a fully integrated HR cloud platform. The majority still used a combination of cloud and on-premise software, and 29% reported using no systems at all.
With the majority of organizations using and maintaining numerous HR systems, the quality of user experience — both for employees and HR managers — and level of integration of cloud HCM with the rest of the ecosystem was well below expectations. When employee data resides in multiple systems that require manual input, hiring managers, HR, and people managers are forced to make decisions based on an incomplete or outdated view of employee data.
What it takes for HR to have a lasting impact on employee success
To truly make a difference in employees’ lives (and hit their employee success metrics), HR must connect data, systems, and application across the entire employee lifecycle. The gig is up: 89% percent of HR professionals have made integration a top priority this year. According to Deloitte’s 2019 Global Human Capital Trends, “The average HR department now has more than nine systems of record—up from eight a year ago—demonstrating that organizations continue to buy multiple solutions to meet their needs.”
Learn more about what it takes to create a unified employee experience with this checklist for essential HCM integration tools.