The Future of HR Technology
What new developments will we see in HR technology during the next several years? We turned to the experts to get their thoughts.
By Andrew R. McIlvaine
If your organization doesn't (or isn't planning to) allow employees to conduct nearly all of their HR-related transactions on a smart phone or tablet, then you're behind the times. If you're not using Big Data to find out what employees think of your company's work environment -- similar to the way many companies find out what their customers are saying about them -- then you could be at risk of missing some serious retention issues. And if you think you've got nothing to fear by relying on the cloud for more and more of your HR software needs, well . . . think again. So say the experts anyway.
Last year, in our April 2012 issue, we featured some of those gurus in a story on the "Most Powerful HR Technology Experts." This year, we decided to go back and ask many of the same experts to share their thoughts on the developments they expect -- and would most like -- to see within the next few years. In particular, we asked them to gaze into their crystal balls with regard to: cloud computing/Software-as-a-Service, smartphones and tablets, the changing vendor landscape and predictive analytics. We also asked them to share some thoughts about other areas of HR technology where we can expect to see some exciting new developments.
This time around, we reached out to include an additional HR-tech guru, John Sumser, publisher of HR Examiner and an HR technology consultant based in Bodega Bay, Calif., who offers his own unique perspective.
When it comes to the cloud, "true SaaS will dominate -- software that has been architected specifically for this model, that is multi-tenant and highly configurable," says Naomi Bloom, managing partner of Fort Myers, Fla.-based Bloom & Wallace.
Cloud software that hasn't been architected specifically for the medium is like a boat hull designed for calm inland waters, she says: As loads increase on that faux SaaS architecture, it will start to fail as more demand is placed on it, much like that inland boat hull that can't withstand the constant battering of ocean waves.
The cloud/Software-as-a-Service will enable more of what Bloom calls "interrogatory configuration" -- software that's designed to configure a cloud-based solution to the specific needs of a client via a series of questions, rather than through on-site configuration and implementation.
Although bigger, more complex customers may still need some on-site interaction, the overall market will have to get beyond the "handcrafting" of configuration and allow "smart software" to perform that function instead, she says.
"Interrogatory configuration is going to shift the work that a lot of people do -- there's potential disruption to the partner ecosystem," says Bloom.
Now that so many vendors are offering their wares via the cloud, HR leaders will have to make some tough decisions to ensure better integration between these systems -- such as narrowing their providers from as many as eight down to two or three or even just one unified vendor, says Mark Smith, CEO of Pleasanton, Calif.-based Ventana Research.
"You've got one vendor for recruiting, another for onboarding, another for core HR -- the challenge is getting these things to interconnect," he says. "HR will have to figure out what sort of data integration they can take on to connect all these things or simply transition to a single provider."
Vendors will also come under pressure to open up their platforms to outside developers, says Yvette Cameron, vice president and principal analyst at Constellation Research in Denver.
"The reality is that not a lot of vendors can offer the depth and breadth in the cloud that many companies need, so I think the cloud vendors that are going to emerge as winners will be those focused on being open," she says.
The cloud will continue to force companies to rethink their processes, says Jason Averbook, CEO of Knowledge Infusion in Minneapolis. "They can't just keep customizing to meet weird business requirements that have been around forever."
These days, user experience is key when it comes to employee-facing software -- and in that respect, cloud-based solutions trump on-premise, says Alexia Martin, director of research and analytics at Alpharetta, Ga.-based CedarCrestone and overseer of that firm's annual HR Systems survey.
"That's the No. 1 reason we see organizations moving to cloud/SaaS," she says. "I'm surprised it's not ubiquitous already. In our last survey, respondents ranked 'user experience' of their HR software a 2 on a 1-to-3 scale -- that's not good enough. All the SaaS users ranked their software much closer to a three."
As for Sumser, he's not particularly bullish on the cloud. He predicts that, in the coming years, many companies and vendors will realize they "can't afford to be in" the cloud, due to security concerns and the lack of customization.
"The cloud is great until someone decides to run a huge denial-of-service attack across the Internet and shuts everything down," he says. "It only has to happen once before people say 'I'm not doing this.' "
The lack of customization is another factor that will lead many organizations to rethink putting everything on the cloud, says Sumser.
The difference between cloud-based solutions and traditional on-premise software is the difference "between an off-the-rack suit and a custom-tailored suit, or buying a custom-built house and renting an apartment," he says. "SaaS software is, in fact, rental software and the changes you'll get aren't necessarily the changes you want."
Smartphones and Tablets
What's notable about the advance of smartphones and tablets, says Averbook, is that -- for the first time ever -- ordinary consumers now have access to better technology than most businesses do.
This will only increase the pressure on HR technology vendors to improve the user experience of their products, he says.
Lisa Rowan, research vice president for talent and HR at Framingham, Mass.-based IDC, agrees.
"The consumer experience has become so acclimated to smart devices that people are expecting everything they work with to have the same kind of user experience that they have with consumer-based apps," she says, adding that some enterprise vendors, such as Workday, design their software for the mobile platform first before taking it to the desktop.
Although recruiting predominates among mobile HR applications, mobile will soon encompass the whole spectrum of HR simply because it's becoming the most common way people access technology, says Rowan.
The trend is also leading to what Averbook refers to as the "app-lification" of workforce technology.
"You'll no longer have to worry about training or navigating menus; you just click on an app and that's how you do your work," he says. "App-lification will be how workers leverage the vendors' platforms."
Mobile devices also give HR the opportunity to get a near-instantaneous read on workforce sentiment, says Averbook. "If you roll out a new comp plan, you can ask people what they think of it, analyze the results and make any tweaks you think are necessary."
Up until now, HR's adoption rate for mobile capabilities has been relatively low save for recruiting, says Martin. However, as large organizations undergo a "second iteration of service-delivery transformation," that will change, she says.
"It's a trend driven not only by the ubiquity of mobile devices, but also by the fact that the existing user interface at most organizations is subpar," says Martin. "So that is driving some work to improve the user interface by giving it to employees on mobile devices."
Smith says he expects to see continued advancement in areas such as workforce management, in which -- for example -- hourly workers can check their schedules, and view pay statements and additional work-related information via their smartphones. Tablets, meanwhile, will see continued advancement in talent management, with apps that let users conduct performance reviews and succession planning.
"The swipe-and-zoom features of the tablet make it easy for users to perform tasks like this on it and I think we'll continue to see more activity in this area," he says.
When it comes to mobile devices, Sumser predicts the growing use of smartphone attachments that can monitor heart rates and other biorhythms may lead to the end of "bring your own device to work" policies.
"The phone is rapidly becoming a device that lets people understand their physical performance from much more than just an athletic perspective, and employers are going to want access to this kind of information," he says.
Some smartphone apps can even, via specialized headsets, measure a person's brain activity to determine whether his or her mind is in a "relaxed and meditative" state or a busy one, says Sumser.
"It's not hard to imagine companies saying, 'I want your best eight hours, considering that's what I'm paying for,' " he says.
Of course, companies have no way of getting this information when employees use their own devices at work, says Sumser, which means they may replace BYOD policies with company-issued devices, with the caveat that employees are expected to share with them the information that is generated.
And what about privacy concerns?
"You may want to pretend there's privacy, but there is some price point at which you'll willingly part with it," he says. "Privacy isn't a right, it's a commodity."
The Vendor Landscape
When it comes to vendors, Smith counsels "expecting the unexpected."
"You're going to see innovations from even the biggest, most established vendors," he says. SAP's acquisition of SuccessFactors means it has the capability to deliver a "completely different" user experience to its clients, while Oracle is developing new apps for the tablet and its new social network, along with more collaborative tools and analytics embedded in its applications.
Meanwhile, new and insightful tools from niche players such as OrcaEyes and Visier will make analytics more intuitive and "go beyond traditional dashboard stuff to deliver truly insightful analytics that HR can act on."
"Our research shows that buyers are now less concerned about things like how big or small a vendor is and more concerned with practical matters such as the usability and manageability of the apps they're offering," he says.
The vendor landscape is "changing faster than I could have imagined," says Bloom. And she expects further consolidation in the near future.
"It's getting harder and harder to mount the human talent it takes to bring these increasingly broad and complicated applications to market and sustain them over time," she says. "With true SaaS, you're expected to come out with three or four new releases per year -- that's a lot. There's going to be a smaller number of vendors than today offering core HR with integrated talent-management tools, and I think that's what buyers want, rather than trying to hook all these different things together."
Cameron says she expects to see IBM "really come out strong in the human capital management space," adding that its recent acquisition of Kenexa will help it "really drive social collaboration in a purposeful way."
She expects to see more innovations coming from Salesforce.com as well. "I think they'll do some interesting things with the employee profile and with recruiting."
Sumser, meanwhile, is upbeat about Ceridian.
"It's going to market as a single-code, single-rule provider," he says. "That's going to make a difference with time-and-attendance, scheduling, performance management and recruiting. It's going to be the turnaround story of this decade."
Predictive analytics has long been touted as a tool that will help HR departments achieve strategic importance within their companies. Yet Martin thinks there still is a "huge disconnect between the talk and the walk" when it comes to the actual usage of these tools.
"This is so sad -- we started tracking this in our survey starting in 2001, when we saw about a 5 percent adoption level, and today, the adoption rate for predictive analytics is only 10 percent," she says.
Part of the reason for the low rate, Martin says, is the rise of "embedded analytics" offered by vendors of core HR and talent-management solutions versus enterprise-level business-intelligence tools. However, she predicts an eventual swing back to the enterprise tools.
"Those embedded analytics are really just for the processes handled by those systems," she says. Only enterprise-level software has the ability to generate true predictive analytics by utilizing a much broader set of data, including operational and customer-facing data, says Martin.
Predictive analytics has the potential to help companies craft better workforce strategies, but HR must first "have an understanding of what is meant by 'better,' " says Bloom. "For example, in order to make better hiring decisions, we need to have crystal-clear understanding of what those holding the position are expected to accomplish, a profile of an individual who could be successful in that position and then, you have to be able to look at a total stranger and determine, based on that profile of success, whether they'll excel in that position. That's not so easy to do."
Although it has "great potential" for HR in areas such as identifying talent that's most at-risk for leaving, says Smith, predictive analytics is "an advanced analytics technique and HR is still at the basic stage. It's why we haven't seen much advancement in this area over the past year and probably won't during the next two years, either."
The significant value of predictive analytics for HR actually lies beyond simply analyzing HCM data, says Cameron.
"Predictive analytics is not going to be driven by traditional HCM vendors," she says. "Think about what's happening in the customer-relationship-management space, where they're analyzing the tone and frequency of conversations customers are having about a company and its products to really understand how people feel about it -- if you apply that internally, you can really change the game."
By doing this, HR will be able to arrive at new insights that help the business move forward, says Cameron. One company she recently worked with, for example, combined and analyzed data in this fashion to create a profile of its most successful salespeople. Among the findings was that its most successful salespeople returned 80 percent of their emails within a set amount of days, she says.
Exciting New Areas
Rowan also expects to see greater alignment between customer data and employee data.
"There's been all this focus on delivering a great customer experience and, at some point, you've got to start thinking about the employee experience," she says. "Customer-experience management relies upon service. Who delivers that service? Employees do. Think about Wegmans Food Markets -- everyone loves them, and their stated premise is that they treat their employees as well as they treat their customers."
A number of vendors are working on applications designed to help employers "listen" to what employees are saying about the company, similar to tools that are already in use on the CRM side to determine customer perceptions of the company, she says. These tools may eventually prove more valuable than employee-engagement surveys, Rowan adds.
"Engagement surveys are limited because they're conducted at one point in time and employees are generally very careful about what they say -- they don't feel the surveys are completely anonymous," she says.
Sumser says he expects HR will eventually morph into a "data hub" for people-related data.
"Every other department in the company is going to be interested in having predictable, reliable data from HR about the employee base," he says. "HR's primary role will evolve from a provider of transactional services to a publisher of reliable employee data that lets other departments arrive at the answers to problems."
Bloom says that, after some initial skepticism, she's bullish on the future of gamification within HR, particularly its ability to help employees master new technologies, ideas and processes faster. "Rather than just sitting there watching a video, they're engaged in competing for prizes while doing some hands-on learning at the same time," she says.
Tools to help managers provide regular feedback to employees and ensure they're on task and engaged will augment, rather than replace, the traditional once-a-year performance appraisal, says Smith.
"There's a whole new generation of activity-and task-management tools
from Kronos and Work.com that have the potential to help HR support managers [in getting] more productivity and value from their employees, he says.
Cameron says an exciting new trend is the shift away from HR transactional systems toward "systems of engagement."
"It's important to understand the experiences of your company's employees and customers, and to get to that, you have to focus on understanding the individual, and the only way you can do that is knowing as much as you can about those people," she says.
The ubiquity of non-customizable cloud-based software will lead more HR departments to "design their own apps," says Averbook. "There's been a tremendous renaissance in 'do-it-yourself' tools such as Heroku and Force.com that let companies design 'add-ons' to standard software when they can't find something on the market that accommodates a unique process that actually gives them a competitive advantage," he says.
Averbook also sees video playing a growing role, and not just in recruiting.
"Now that bandwidth is becoming less and less of an issue, anything video-related has huge potential," he says. "I'm expecting video performance reviews to be really hot. It lets me record and play back as I'm trying to learn to improve my performance [and] it can be shared with others as part of a 360. There are technologies that turn video conversations into text, so organizations can conduct searches to see whether someone had a conversation on a particular topic -- to me, this is the future of knowledge management."