HR Tech Is Not Just for HR

What everyone still refers to as “HR tech” isn’t just for HR, said industry analyst and thought leader Josh Bersin, speaking at the HR Technology Conference & Exposition in Las Vegas.

The move toward what might be more accurately described as “work tech” is certainly focused on employees, added Bersin, CEO of the Josh Bersin Company and dean of the Josh Bersin Academy for professional development in HR.

Previously, HR technology was a system of record—a place to store employee data and perform important back-end HR transactions such as payroll and benefits processing. But then vendors began building employee-facing interface software—which became a new layer of the employee experience—on top of these systems.

“The focus on the employee experience has led to an explosion of tech,” Bersin said. “Everyone assumes the core HR system works. You don’t get credit for that anymore. HCM [human capital management] technology is now used for recruiting, onboarding, training and all aspects of the employee experience. Usability, integration with workflow, integration with core systems—those are the keys to technology success in the workplace.”

Bersin says employee experience tools have moved from being service portals to being development solutions that support engagement, productivity and retention. Furthermore, “advanced systems are data systems, not just software-as-a-service,” he said. “They’re going to put data in and process data and tell you things about your workforce that you don’t know.”

HR technology vendors are building employee experience layers into their HCM systems, competing with hundreds of mid-sized software companies in all market segments. “HCM vendors are busy, and they tend to buy best-of-breed solutions as they grow,” he said.

Increased innovation, sky-high technology budgets and record-breaking investment have been great for the industry, but for HR tech buyers, the massive growth of vendors and offerings over the past few years has confusing.

“The number of vendors has exploded because of the ease of development in the cloud,” Bersin said. But that leads to what he calls “the kitchen drawer problem—every appliance is bought for a good reason, and next thing you know you have a drawer full of stuff. Most of it isn’t really used but you really don’t want to throw it away. Here we are.”

Investment in workplace technology, which hit new highs last year, has fallen in the first half of 2022. Bersin said it will be harder for vendors to raise money this year and buyers should expect further market consolidation.

He added that he expects to continue to see the marquee technology companies—Google, Microsoft, Salesforce—to turn their attention to the workplace. “Microsoft has definitely woken up in the HR market,” he said. “Watch out Microsoft, it’s pouring a lot of money into this space.”

Next-Gen HCM

The largest core HR vendors—Oracle, SAP SuccessFactors and Workday—are growing and evolving next-gen systems. “Workday is almost a $6 billion company now, and they just announced growth at 22 percent; ADP stock is trading at an all-time high; and SAP SuccessFactors, the world’s largest HCM vendor, is introduced its most important release in a decade,” Bersin said.

SuccessFactors customers will get a robust mobility and career development solution, he said. That includes a talent marketplace, which recommends projects, gigs, part-time jobs, mentors, and learning opportunities; a dynamic team collaboration feature; and an assessment and profiling tool called the Whole Self Model, which identifies personality, preferences and work styles to drive the employee experience.

“Oracle has done an amazing job in building a new integrated cloud HCM system,” said Bersin. “Oracle ME is designed for the employee experience, including deep feature sets for journey development, employee learning, surveys, service delivery, and custom sentiment analysis. It is a wonderful offer.”

He said Oracle is heavily focused on competing with ServiceNow for employee experience functionality and has built “a full journey management system; journey design system; and a series of features for employee feedback, well-being and social connection .”

Workday’s big next-gen focus is its architecture, Bersin said. “As a pioneer in the cloud of skills, the company now realizes that AI and intelligent data services need to be more core to the system.”

The company is also investing heavily in the employee experience. “Workday is adding more integrated portals, travel and mobile apps to give employees easier access to Workday functionality,” he added.

ADP has also developed a next-gen HCM system, and ServiceNow is “moving away from the employee experience function,” Bersin said.

HR ‘Oversold’ in Skills Tech

One of the most intriguing statements Bersin made during his comprehensive overview of the HR technology market was that while technology skills—tools that help assess, categorize, improve and manage skills at work—is a critical emerging area, employers may be relying too much on this time.

Skills data is important for learning, talent mobility, talent acquisition, retention and compensation equity. “But solving skills is a very complicated problem,” he said. “There are probably 100,000 skills in the world, and in five years there will be 10 or 20 thousand new ones. Skills are constantly changing. With every new technology, new method or new idea, we need new skills. The the idea that you can buy a piece of software that will index your company’s data and spit out the skills you need is unrealistic. There is progress being made, but I think you are being oversold on if what skills can tech do for you now. It will take time.”

Bersin is differentiating one sector of skills tech—talent intelligence platforms that integrate insights about employees to help accelerate their organizational careers.

“The talent intelligence platform is the backbone of integrated talent management, matching people with opportunities,” he said. “When we talk about opportunities, we don’t just mean open positions. Opportunities are also project roles, gig work, developmental assignments, promotions, mentoring, and learning opportunity.”

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