Itching for New Software

Bersin-HRE research shows one in four respondents plan on replacing their current HRIS over the course of the next 12 to 18 months. Study digs into why, and even suggests there may be a "seven-year itch" involved.

Tuesday, May 7, 2013
Write To The Editor Reprints

You've probably heard of the seven-year itch, that point in a relationship -- after seven years -- when people decide their relationship is unsalvageable. But does the seven-year itch apply to the relationship of HR professionals and their software providers?

We surveyed readers of Human Resource Executive ® magazine and the Bersin Research Exchange panel in the fall of 2012 to discover just that -- are companies itching to change their currently installed and deployed software? Are they seeking to change software that has been in their companies for close to a decade? 

Or are they adding new software rather that replacing existing software? And what is the prognosis for integrated talent-management suites?

Our research was derived from a fall 2012 study of 308 corporate users of human resource information systems, talent-management suites and stand-alone talent-management-software applications representing a broad range of businesses and industries. (Specifically, they included 36 percent global, 24 percent multinational and 40 percent national (that have operations in solely one country); 28 percent with more than 25,000 employees, 33 percent with 5,000 to 24,999 and 39 percent with 1,000 to 4,999; and 62 percent earning $1 billion or more in annual revenue.)

We looked at many different factors: the solutions they were using today (both their talent-management and their HR information systems), the length of time they had been using these solutions, and what changes they intended to make -- and had budgeted for -- in the year ahead. 

The results in a nutshell:

* According to respondents, integrated talent-management suites are a top priority for new-application acquisition;

* Improving the end-user's experience is cited as the biggest driver for change;

* Issues with lack of integration and inability to derive analytics are critical considerations in new-purchase decisions;

* Very few surveyed companies seeking to replace an HRIS application will look to their current providers of those solutions (only one in four would consider going back to their current vendor); and

* Surveyed companies have budgets for the spending they plan to incur (40 percent have budgeted more than $500,000 to replace their HRIS; 40 percent have budgeted more than $750,000 for a talent-management suite).

What They're Looking For

So what's behind this "itch"? For one, many companies' HR systems are aging. Fully 53 percent of HR information systems have been deployed for seven years or more, with almost two-thirds (63 percent) of large employers using their HRIS/HRMS for more than seven years. (See Figure 1.)  Sixty percent of surveyed companies that use the human-capital-management application within their enterprise-resource-planning system have had the product for more than seven years.

By contrast, fewer than half of companies (41 percent) with a stand-alone HRIS application have had the system deployed that long. However, more companies with a stand-alone HRIS -- albeit a small population (42 companies) -- reported an intent to replace it than did those that use the HCM system within their ERP.

Thus, while the HR module with an ERP has been deployed longer, users are less likely to replace it. Those with discrete HR information systems that are not part of an ERP, even though they have had the product for a shorter time, are more likely to make a switch.

Moreover, one in four (27 percent) respondents plan on replacing their current HRIS over the course of the next 12 to 18 months. Of these, 14 percent of global companies surveyed are looking to replace their HRIS/HRMS, certainly not a trivial task considering the complexity of these large organizations. However, more multinationals are anticipating changes in their HR information systems (38 percent) and another third (32 percent) of national companies plan to acquire a new HRIS. Almost half (44 percent) of small companies (those with 1,000 to 4,999 employees) report the intent to replace their HRIS/HRMS.

And what drives the itch on the part of business to replace an HRIS?  "Access to new, better, faster technology solutions currently available" is the top driver for this change, followed by a search for an improved user experience and the ability to get analytics. Other forces at work here are the inability to address business goals and the inability to efficiently integrate with other systems. (See Figure 2.)

For 93 percent of HRIS users surveyed (179 companies), the employee statement of record is housed in the HCM module of the corporate ERP system. Another 94 percent report using a stand-alone HRIS -- either a stand-alone module of an ERP provider's solution or a discrete software application. 

Plethora of Products

HR is, indeed, technology-rich, at least in terms of the numbers of systems used throughout the organization. Products proliferate in the average HR environment, sometimes causing management and integration headaches. According to the study, the majority (87 percent) of HR environments have more than two systems -- and almost 20 percent have more than six different HCM software solutions. Of those, seven percent of respondents have more than 10 solutions. (See Figure 3.) Almost one in five (18 percent) large companies surveyed report use of more than 10 HCM systems.

When it comes to talent management, given the multiple "people" applications, are HR buyers more likely to replace their existing talent-management solutions (such as talent acquisition, performance management, succession planning, compensation, or learning management) or add more new ones? And will users move from discrete, siloed talent-management solutions to integrated suites as indicated by the solution providers themselves? (For more on this, see Integrated Talent Management Systems: 2013. Katherine Jones and Wendy Wang Audia, Bersin & Associates, November 2012. For a complimentary copy of the WhatWorks ® brief, "Managing Talent through Technology: HCM Buying Trends in 2013," visit:

Unlike HR information systems, fewer talent-management applications have been deployed for seven years or longer, (performance and compensation management are the oldest with 18 percent of surveyed users indicating a product in place for seven or more years.) Between 25 percent and 30 percent of responding companies have implemented their compensation, succession, learning, onboarding, performance or recruiting solutions within the last one-to-three years. Large companies typically have had their solutions in place the longest: Almost one in three (29 percent) of large employers have had their performance-management systems for more than seven years.

Most HR professionals indicated they plan to procure new software within the next 18 months (57 percent) -- and most indicated they will both replace and procure new solutions (61 percent). Twenty-three percent of respondents are solely replacing existing solutions and 16 percent solely plan to add new solutions to their existing HR environment.

Stand-alone talent-management applications are the primary replacement targets for users (33 percent), with an additional one-fifth (22 percent) indicating they will replace those talent-management applications with an integrated suite. (Only 10 percent of respondents indicated they would replace their existing talent-management suites -- demonstrating that current talent-management-suite users are satisfied with their existing solutions.) 

For those buyers looking at replacing stand-alone applications with an integrated talent-management suite, the primary reasons were markedly similar to those for replacing an HRIS: improve users' experience and address the inability to efficiently integrate with other systems.

Those that are exchanging one suite for another report that their business goals cannot be addressed with their existing applications, nor can they get the analytics they need. (See Figure 4.)

And replacing existing solutions is not the only investment that HR leaders are planning:

* Net new acquisitions still include stand-alone applications (11 percent of respondents are acquiring a stand-alone talent application).

* Integrated suites will capture the largest percentage of HR/TM dollars to be spent.(59 percent of those respondents buying a new HCM application indicated that they would invest in a suite).

* Thirty percent of buyers who are investing in new HRIS applications seek those that include talent-management applications or modules.

This surveyed audience clearly demonstrates a move away from stand-alone talent-management solutions. (See Figure 5.)

Newsletter Sign-Up:

HR Technology
Talent Management
HR Leadership
Inside HR Tech
Special Offers

Email Address

Privacy Policy

Recruiting or talent-acquisition applications are more likely to be acquired as stand-alone applications than any other talent-management solutions -- but far more are looking to deploy that functionality within a larger suite of applications.

Serious Considerations

Three of the "hottest" trend drivers today are:

* The tsunami-like advance of mobile applications that aid workforce and employee management,

* The increase in social-collaboration capabilities in almost every type of talent software, and

* The enterprise-driven drive to operate within global markets.

All three trends may affect software solutions and their attractiveness to HR buyers as they relate to new solutions. But do these trends really impact today's buyers with real money to invest in solutions?

According to the survey:

* Mobile support is seen as most relevant to talent-acquisition solutions, followed equally by performance management, learning management and onboarding applications.

* Global support is most sought in performance management, followed by learning and development management.

* The addition of social features is seen as most compelling in recruiting and talent acquisition solutions. (See Figure 6.)

Whether a company is buying new applications for the first time or replacing software with different solutions, a budget is required. The companies intent on acquiring new solutions for whatever reason know this and many have budgeted for the software (or subscription) and the implementation.

Many of those HR professionals surveyed, while having direct involvement in procurement decisions, did not know what they planned to spend.

This study confirmed the other Bersin research cited above that demonstrates the increasing expenditures being made in talent-management solutions, whether stand-alone applications or integrated suites.

The greatest planned spend, however, is in the replacement of an existing HRIS -- not in numbers, but in cost, as these systems are more costly to procure and implement than talent-management applications.

Once a company makes the investment in a software solution of any type, and spends sometimes years deploying that software, it often requires radical needs and momentum to unseat that incumbent solution.

Without compelling business needs, it is difficult to create the business case to replace applications -- particularly HR applications -- which are sometimes not perceived as business-critical. What we found interesting in this study was that the drivers behind both new and replacement strategies for both HRIS and talent-management software centered on five primary drivers, although in slightly different ranked order.

Overwhelmingly, the top five reasons behind any human capital-management-software expenditure for the coming 12 months included:

* Improving the user experience,

* Addressing the inability to get analytics,

* Integration or consolidation with other TM or HR products,

* Cost efficiencies/savings, and

* Adaptability, customization or ease of configuration.

The desire for an improved user experience predominated as both the reason surveyed users would abandon their current applications and what their main criteria will be in selecting new ones. This is not surprising, in that employees often will not use cumbersome software.

At a time when many traditional HR applications have become employee-facing, acceptance and use of the solutions is imperative. Yet, the other reasons demonstrate that it will require more than a pretty face to close 2013's HCM-software acquisitions.

The itch for change in the case of HCM-software acquisitions for the near future is not a random malaise with a provider or a solution. Unlike a relationship that may grow stale with time, the itch for better people-management solutions is driven by compelling issues facing HR professionals today.

Katherine Jones is lead analyst of HCM technology for New York-based Bersin by Deloitte and Deloitte Consulting. She is based in San Francisco. Send questions and comments about this feature to

Copyright 2017© LRP Publications