This week we publish our HR Technology Disruptions for 2017, and I expect to see some radical changes in the year ahead. Let me summarize the highlights here, and I encourage you to read the 50 page report that details our thinking.
First, tools for engagement, pulse surveys, feedback management, and culture assessment will be white hot. Not only are these tools now becoming critical infrastructure for companies trying to understand their employee’s needs, they are becoming integrated with performance management, leadership assessment, change management, and just about every other people practice in business. As I described in the article “Feedback is the Killer App,” this category of software is now mandatory in HR.
Which leads to the issue of what happens to all these vendors? (There are more than 100 companies in this space now.) Last week Ultimate Software gobbled up Kanjoya, leading to a domino effect of other large vendors likely to do the same. Workday now has its own survey system, Saba is introducing one, and I would expect SuccessFactors, Oracle, ADP, and just about every other major software vendor to build or buy this type of tool. These tools, as I discuss in the report, are quite sophisticated now, so I expect the smaller vendors to fall behind as the leaders add real-time analytics, natural language processing, text analytics, and narrative analytics to their software. How can you run a company when you can’t “listen to your employees?” That will be a huge theme in 2017. (We’re particularly excited that Deloitte CulturePath, a new, research-based organizational culture assessment tool, won an award at the conference this year.)
Second, the market for performance management tools is now in a disruptive stage. For almost 5 years companies have been throwing away ratings, adding check-ins, developing agile goal systems (I expect OKR approaches to grow), and making performance management much more data driven and team-oriented. Guess what? There are almost no tools in the market to automate this yet – until now. All of a sudden we see a dozen or more well funded companies selling cloud-based, team-centric performance management systems that connect to your HRMS or ERP system. These companies are likely to grow, be acquired, or perhaps turn into the “next wave” of talent management providers.
Third, cloud-based HRMS “switchout” continues at a fevered pace. I attended the Workday, Oracle, and many SAP events last year and everywhere I go there are thousands of companies replacing old systems with the new breed of cloud-based HR platforms. While there are many differences between these products (and companies), they are all quite similar now – and buyers have very good options to upgrade their old HRMS systems with cloud products. If you’re a small company, products like Namely, Ultimate Software, Ceridian, ADP Vantage, Zenefits, BambooHR, and others have now brought the benefits of cloud to everyone.
Fourth, the learning platform business is finally reinventing itself. While most big companies have legacy LMS systems (ie. Cornerstone, SumTotal, Saba, Oracle, SuccessFactors), there are now many new options available. First, all these legacy products are being reinvented, so we see major new releases from every vendor. Second, new products like Workday Learning, Fuse Universal, SAP Jam, and other video products are now focused on scaling video learning to the enterprise. I’ve talked with quite a few companies who believe they can “shut off” their legacy LMS as a result.
There is also a new category of learning product coming: one I’d call “learning experience platforms.” These include systems like Degreed, Pathgather, EdCast, Everwise (new release coming), LinkedIn Learning, and others – that focus on delivering a “learning platform” not a “learning management platform.” There’s a huge difference here – these products bring YouTube-like experiences to your employees (similar to what Workday Learning does), and include features for curation, career recommended learning, and data-driven recommendations. I believe this new category of software will become huge, as every major company realizes they need these systems – as a compliment (or some day replacement) for their LMS.
Fifth, the recruitment software market is ready for massive replacement. After about ten years of consolidation (Oracle-Taleo, IBM-Kenexa), a new generation of systems is now starting to reach enterprise scale. Products like SmartRecruiters, Greenhouse, Lever, Gild, JobVite, HireVue, and others are now redefining the space – focusing on today’s modern recruitment process, not just “applicant tracking.” Recruitment today is a marketing, brand-building, social process – one that requires integrated analytics, enterprise workflow, and deep integration into sourcing tools. And AI and machine learning is now impacting the interviewing, screening, and sourcing process. These new products change the game. And nearly every company I talk with is trying to figure out how to replace their incumbent ATS systems.
In fact the sourcing market itself is exploding with innovation as well: products like Entelo, Connectifier (acquired by LinkedIn), Gild, and dozens of new tools are now trying to create the “next LinkedIn” for sourcing. We’re going to be producing a big report on this in the Spring, so stay tuned.
Sixth, mobile apps and the use of design thinking is replacing “process tools” with “experiences.” Today, focused on helping employees be more productive at work, we see a tremendous interest in mobile tools (throughout all categories of HR technology) and integrated platforms for employee self-service. The phrase “self-service” is very old-fashioned, I like to think of these as “employee experience platforms.” Salesforce, ServiceNow, and Deloitte (ConnectMe) are now in this space, and I believe virtually every company will eventually buy one of these systems.
These new products bring together the heterogeneous HR technologies in the company (everything from benefits applications to learning systems) to give employees “journeys” and “solutions” to their day to day transitions. “I just moved and need to update HR” or “I changed jobs” or “I changed locations” or “I had a child” are all such transitions we make. In every case we want to integrate all the various transactions, support, and advice employees need into one place. These tools do this, and they enable mobile apps and also provide case management and advice systems as well.
Seventh, I see a huge growth in the market for “well-being” applications. This is an emerging market, one growing from the traditional marketplace for employee wellness and employee assistance platforms. Last week Aetna announced, for example, that they were giving all employees a free Apple Watch if they signed up for the advanced wellness system. This new market (watch companies like Limeaid, VirginPulse, OC Tanner, and others) is not one focused on simply reducing insurance costs, we now know that helping employees feel good is a performance and brand enhancing strategy. New Deloitte Research shows that more than 40% of Millennials will select an employer based on their health and wellness benefits.
“Millennials in Brazil, Canada, China, Germany, India, Mexico, UK, and the US listed “flexible working conditions and work/life integration” as the number 1 way organizations would have to change if they wish to improve retention.” (“The Millennial Majority is Transforming Your Culture, by Deloitte”)
And there is so much more. Analytics is growing like a wildfire, new tools to enable customizable benefits and pay are starting to grow, and the marketplace for social recognition is morphing into the market for performance and team management.
Which brings me to my final point. The whole marketplace for HR technology is making a glacial shift: away from systems to manage transactions and HR processes toward systems to make employees’ work lives better.
It’s a huge transition, but one that is long overdue. Today we barely have time to get through our emails each day – when HR tells us we have to fill out a form or take a course, we sigh and think “maybe later.” That problem has to go away – and it is now being solved by HR tools that fit into the flow of work. You can read more about that whole disruptive trend in the report.
As an analyst who has now covered this market for about 15 years, I find these trends exciting, but also disruptive in many ways. Big incumbent HR vendors have to work harder than ever, and you as a buyer have almost too many options to consider. I suggest you read the report carefully and call us if you need help understanding what all this means to you.
Have a wonderful Fall and I look forward to seeing you on the speaking circuit as I travel around the world discussing these issues with all of you.