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HR Technology Column

http://www.hreonline.com/HRE/images/BillKutik106x106.jpgThe New War Gathering        

Over Recruiting Technology

Not the War for Talent. This new war is over who will be the next generation's Taleo, BrassRing, Peopleclick, Virtual Edge and others: the new leaders in recruiting technology. Companies of all sizes are building brand new systems, and the battle will benefit smart end-users, turning others into collateral damage.

Monday, July 22, 2013
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On the slim chance there's a reader who doesn't know this, let me first restate the obvious. (Of course, you know it, but please be patient for that other guy.)

Recruiting has fundamentally changed in the last five years. The center of value has shifted far away from the traditional applicant tracking systems (those legacy leaders mentioned at the top) that were seen as miraculous and work-enhancing 15 years ago.

Now, very few users are happy with them. Hard for recruiters to use; even harder for candidates to use to apply.

Moreover, recruiters now value more the so-called "edge applications" such as candidate relationship management and marketing, social recruiting, referrals, sourcing, predictive analytics, video -- all sold separately and rarely a part of their ATS.

The analogy to the history of the HRMS is almost too perfect. The HRMS was first seen as the miracle, and its "edge" applications were once recruiting and performance management, also offered by partners. Then people realized the HRMS was largely administrative, and while they still needed one, the real value lay in those other applications, now aggregated into talent management, and the good ones at the time were still only sold separately.

Now HR is demanding a completely integrated HCM with core HR (the HRMS) and talent management. Sometimes that package comes from former talent management vendors like SuccessFactors (now an SAP company) and sometimes from former core HR vendors -- you know the list, including Workday and Oracle Fusion.

The ATS is the new HRMS: necessary but largely administrative. The edge apps are its equivalent of the talent management suite. The war will be over who is going to put them all together the best.

I've long said that recruiting and learning management are the two big, honking applications that no vendor without them (but needing them) wants to build from scratch.

Yet in the last two years, we have several brand new recruiting applications for large companies from SuccessFactors, Cornerstone OnDemand and Jobvite. Plus Workday is famously running as fast as it can to produce recruiting for a very public deadline of early 2014.

And then there's MrTed co-founder and CEO Jerome Ternynck, starting to swim upstream with his three-year-old SmartRecruiters free application, once targeted at companies with 50 to 1,000 employees, then 50 to 5,000, but now with clients above 30,000. Of course, larger companies will have to pay for the enterprise edition.

Through my own bad timing, this column will focus only on his offering. But I am having in-person briefings shortly with the others mentioned; the war will be long; so more dispatches from the front will be useful.

MrTed was considered the leading ATS in Europe, when Jerome sold it to Lumesse (then still StepStone) just about three years ago to concentrate on his next generation product, SmartRecruiters.

Some took it less than seriously because of its SMB target market and, more importantly, because of its radical business model. Beyond a "freemium," where vendors offer a 30-day free trial before requiring payment, SmartRecruiters is actually free.

Revenue comes from splits or commissions with the many partners selling services to companies using SmartRecruiters. In short, it is a platform play like Apple's AppStore or Salesforce.com's Force.com, but with the important difference that the partner applications are not written on the platform's technical stack. But they are pre-integrated.

SmartRecruiters – with offices in San Francisco and Krakow, Poland, where much of the development takes place -- has attracted enough customers and partners to create a going concern. Without any outbound sales or marketing -- not so much as an e-mail, Jerome says -- the company has signed 40,000 customers through a social media presence, a blog and customer referrals. But of course a much smaller number are active users. It's so easy to sign up for "free."

Despite the aspirations, its sweet spot today remains companies with 51 to 250 employees, about 55 percent of its customers. It attracted $5.5 million in institutional funding in mid-2012.

Unlike MrTed, SmartRecruiters is largely used in the United States, where 80 percent of its customers reside.

Partners include behavioral assessment firms, background and reference checking, skills testing and most importantly, recruiting agencies.

SmartRecruiters does all of the administrative tasks of a typical ATS but often simpler, easier and more "partnered." Whether the simplicity can be maintained in an enterprise product will be the company's major challenge.

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Those tasks including creating job advertisements (not just job requisitions), posting to hundreds of job boards (impressively including Craigslist with its millions of hourly job ads), connections with dozens of recruiting agencies from a single place (with system-generated judgments on their performance based on data aggregated across customers), a widget to create career sites on corporate websites, one-to-four-click applications, resume-parsing (from Telemetry) and simplified candidate management.

Of course it includes the new task of getting social referrals, letting friends and employees scan their networks and send people jobs. It doesn't yet search their networks for them and match their connections to open jobs, but that's a future!

And, naturally, it touches Facebook, adding a careers tab to a company's Facebook page.

SmartRecruiters includes my favorite new recruiting feature -- which I originally saw in a SuccessFactors' PowerPoint presentation -- of creating a private social group among those who have interviewed a candidate in order to reach consensus about a hire. This eliminates a great deal of friction in recruiting.

Jerome is passionate about wanting to fix recruiting, which just about everyone admits is still broken. He has a collaborative vision and is working hard to make it as easy to use as consumer software. And while SmartRecruiters is currently a blend of farming, fishing and hunting for candidates, he sees the future in social sourcing. And the surface of that has just been scratched.

His enterprise product will offer service level agreements and support for companies larger than 5,000 employees at a price starting at $1,500 a month. Next year, new features will be added for them, as well as a SmartRecruiters enterprise salesforce.

It will be a tough transition for SmartRecruiters to make, but the war for the new leaders in recruiting is just beginning.

HR Technology Columnist Bill Kutik is founding co-chairman of the 16th Annual HR Technology® Conference & Exposition, returning to Las Vegas, Oct. 7-9, 2013. This year's conference program is online, or download the brochure. Many discounts expire after August 5. You can comment on this column at the Conference LinkedIn Group, which doesn't require prior or future conference attendance to join. He is also host of The Bill Kutik Radio Show®. He can be reached at bkutik@earthlink.net.

 

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