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Both old and new HR software vendors benefits, downsides

When it comes to HR software vendors, both new ones and old ones have their risks.

Buyers looking for the latest technologies face tradeoffs between well-established, overly cautious HR software vendors and new ones that are more innovative but may be less financially stable, said Brian Sommer, founder and president of TechVentive.

A major cause of the so-called HR tech divide -- the gap between the new HR technologies companies want and the tech vendors are able to provide -- is the market moving away from its traditional emphasis on processing HR transactions, Sommer said in a video interview at the 2019 HR Technology Conference in Las Vegas.

People want HR technologies that solve the chief HR officer problems for the future, not the past, he said.

"A lot of the big suites that are out there are still solving old problems around efficiency and productivity, and while that will remain always an important goal, [now] the real focus is on: 'How do I grow my business in an outsized fashion?'" he said.

HR executives are worried about filling positions, which drives interest in technology that primes the recruiting funnel, Sommer said. They want to know which HR software vendors will give them recruitment marketing capabilities to help manage relationships with both active and passive job seekers far in advance of needing them, he said.

Lowering turnover is another priority in some industries. Manufacturers, for example, need HR technologies that will help them reskill or replace up to 85% of their workers in the next five years, Sommer said.

But old and new HR software vendors face their own challenges in meeting such demands. Under pressure to return capital to private shareholders, some older vendors haven't invested wisely and relied instead on acquisitions to add cloud HR technologies that aren't always integrated, or their core HR products use "highly constrained" data models, Sommer said.

For their part, newer vendors tend to be small and undercapitalized, leaving buyers of more advanced HR technologies torn between predicting which vendors will survive or waiting for established vendors to catch up.

In his conference session, Sommer named the following as "wow factor" HR technologies that companies want: new data models and big data; AI and machine learning that employ defensible logic; chatbots that are tightly integrated with operational and HRMS systems; and combinations of those technologies that provide capabilities like advanced analytics and exception handling.

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