A Publication From BUYER S GUIDE TO HR SOFTWARE

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1 A Publication From BUYER S GUIDE TO HR SOFTWARE

2 BUYER S GUIDE TO HR SOFTWARE This Buyer s Guide will provide a detailed analysis of the human resource (HR) software market, specific HR software use cases, and key points for businesses to consider when choosing and implementing HR technology. Table Of Contents 3 Introduction 4 Categories of HR Software 10 Current Trends 12 Conclusion 12 Have Questions? Click to compare HR Software 2

3 BUYER SGUIDE GUIDETO TOHR HRSOFTWARE SOFTWARE BUYER S Introduction The growing human resources management (HRM) software market is forecast to reach $9.2 billion by 2020 [1]. Often referred to as Human Resources Management Systems (HRMS), or Human Resources Information Systems (HRIS), HRM software is designed to streamline and automate a company s Human Capital Management (HCM) through one central database. Since HR software has evolved with the continually changing functions of HR departments, the market is now at an interesting turning point. There has been little movement in traditional segments of the HRM software market, such as payroll, time and attendance, and benefits management, which means market growth and consolidation is being driven by emerging HR strategies as well as new technology and trends. Organizations often cite the following five reasons for seeking new HRMS[2]: New, better, faster technology solutions on the market (76 percent) Improvements to user experience (73 percent) Inability to get analytics (57 percent) Business goals cannot be addressed with current technology (54 percent) Unable to efficiently integrate with other systems (54 percent) This desire for change and upgraded technology presents businesses with overwhelming options in a swiftly expanding market. There are both integrated suites with sweeping functionality and best-of-breed platforms for extremely specific tasks. This guide examines the three developing categories of HRMS based on features and business function, as well as prominent vendors, and progressive trends. Click to compare HR Software 3

4 3 Categories of HR Software 1. HR Administration It s estimated that 58 percent of HR staff time is spent on administrative tasks - which does not include the additional 20 percent of time spent on activities related to reporting and compliance [3]. HR Administration software is designed to streamline and automate the three traditional pillars of HRM: payroll, time and attendance, and benefits management. Sometimes called Core HR, this segment has shown slow growth recently but continues to make up a large portion of the market. These platforms are generally available either as a package of integrated features or as separate modules focused on specific tasks. Forrester recently named Workday the leading choice for SaaS replacement of traditional on-premises HR systems [4]. The report evaluated HRMS from eight vendors using 60 criteria categorized by current offering, strategy, and market presence. Workday earned a leader position in both the current offering and strategy categories, receiving the highest overall scores in each of the following areas: core human resource management compensation and benefits subcategories customer experience technology > Market Leader: Workday One vendor gaining rapid traction on the HRMS front is Workday. The rising demand for cloud based (or Software-as-a-Service) platforms in both the IT and HR industries has pushed Workday to the top of the market. The depth and breadth of Workday s core HR functionality, along with its advanced integration and real-time analytics make it a good choice for large organizations interested in seeing rapid ROI. The company continues to grow its revenues at more than 70 percent annually as it moves toward $800 million for the current fiscal year. 4

5 Case Study: Flextronics Flextronics is a leading electronics manufacturing services provider. The company was struggling with manual global reporting that often caused inaccuracies. 80 different HR systems existed within the company due to several acquisitions, which made management difficult. Rather than working as a whole, various locations acted more like independent entities. They had separate processes and systems that didn t talk to other parts of the company, resulting in widespread inefficiency. Flextronics implemented Workday s HCM and cloud payroll solutions to create a single record system for their entire global workforce. Workday s self-service features have given managers greater transparency into the organization, including the ability to see how much their employees cost, and what current priorities are. The subscription-based SaaS delivery model also reduced up-front investment, which has helped their organization stay agile. Results: 80 disparate global HR systems replaced by a single system 30 percent reduction in total cost of ownership compared to a packaged solution from a traditional vendor Additionally, by replacing their expensive, fragmented system, Workday helped Flextronic s HR automate transaction-based processes so they could focus on strategic business projects and provide data to company leaders. Flextronics successfully implemented Workday with no help from third-party integration partners. Dave Smoley, the SVP and CIO, considers this upgrade one of the premier accomplishments of his career. Comparable Products Regulatory Compliance Management Accounting & Financing Workday UltiPro Dayforce HCM ADP Expense Management Payroll Management Time Tracking Absence Management Benefits Administration Management Reporting Project Management Analytics Employee Self-Service Portal 5

6 2. Talent Management Systems Whereas traditional HRMS focuses on administration and transaction processing, talent management systems (TMS) provide a central location and database for recruitment, employee development, and retention efforts. TMS are sometimes called applicant tracking systems (ATS) or even more broadly, strategic HR. They can be standalone or integrated with an HR Administration software suite to provide additional core HR functions. TMS are largely responsible for the recent high growth of the HRMS market. This segment grew by 17 percent last year to become a $5 billion market [6]. Such growth is not surprising when one considers that 83 percent of CEOs list talent management - i.e., managing skills, driving productivity, and retaining employees - as their number one priority [7]. As traditional HRMS have automated many functions of traditional HR departments, many companies have repurposed HR to focus on recruiting top employees. Businesses are now replacing dated systems and paper resumes for social media recruiting, online assessments, and real time analytics. > Market Leader: SuccessFactors SuccessFactors is an SAP company with robust TMS offerings. The company provides solutions for businesses of every size that feature performance management, goal management, employee profiles, and reviews. For enterprise, additional functionality and integrated suites are available to bring together analytics and planning capabilities. By offering talent management along with core HR features and what the company is calling business execution features (analytics, data integration, etc.), SuccessFactors sets itself apart from the competition. SuccessFactors was positioned as a leader in the TMS industry in Gartner s 2013 Magic Quadrant [8] for demonstrating a market-defining vision of how TMS helps enable success, and executing that vision through a wide variety of global customers and vertical industries. SuccessFactor s TMS solution currently has over 4,000 customers with 25 million users. 6

7 Case Study: Yoh Yoh is a technology staffing firm headquartered in Philadelphia that used SuccessFactors to build their recruiting efforts. Before SuccessFactors, the company let individual offices choose which sourcing channels to use. With no centralized control, Yoh estimates that they overspent for job board postings by roughly 30 percent. Additionally, the company was unable to track which efforts were effective. Yoh aimed to track and automate the process, since posting a job involved 18 steps, and 75 percent of their candidates never even made it to the applicant tracking system. Yoh implemented SuccessFactors Recruiting Marketing as the back end of its new career site in order to measure its recruiting campaigns, track applicants throughout the funnel, build a robust talent community, and automate the job posting and application processes. Applicants now go directly into the applicant tracking system, where they re visible to any recruiter across the organization. Within the first year of going live with SuccessFactors, Yoh s career site saw: A 200 percent increase in unique visitors, with 85 percent of traffic driven by SuccessFactors Recruiting Marketing A 350 percent increase in unique candidates, and an 83 percent visitor conversion rate Approximately 10,000 new sign-ups per month for their talent community. All of this has added up to a 15-day reduction in time-to-fill, a $200 reduction in cost-per hire, and a 31.5 percent increase in hires. Comparable Products Applicant Tracing System SuccessFactors Cornerston OnDemand Ascentis Bullhorn Skill Matching Performance Management Goal Management Employee Onboarding Social Integration Mobiligy Analytics 7

8 3. Learning Management Systems Learning Management Systems (LMS) track an employee s education, qualifications, and skills, then outline materials or courses available to develop those skills. Some LMS may function as a part of TMS, but many standalone options are also available. The emerging LMS segment is one of the fastest growing segments of the overall HR software market. It grew more than 11 percent in 2013, with worldwide sales of over $2 billion [10]. BUYER S GUIDE TO HR SOFTWARE LMS allow managers to approve training, budgets, and calendars alongside performance management and appraisal metrics. Most LMS users create their own learning content which then gets hosted on an LMS server. Any department looking to centralize administration, consolidate training initiatives, and customize learning or training content could benefit from this type of program. > Market Leader: Saba Saba s learning and development software has defined the LMS market. Their solution provides personal and relevant class recommendations, social learning opportunities, and coaching tools. For companies that do not create their own learning content, Saba s LMS solution integrates with most major content providers, including Skillsoft. Saba has a sophisticated compliance and certification system, along with collaborative and social learning features. A few facts about the company: Saba has over 2,200 total customers, 700 of which are using talent related products. Over 800 of Saba s customers are now on the cloud, and many are moving from single-license to cloud subscriptions Saba has 31 million licensed users, one of the largest talent management footprints In the last 12 months 60 percent of the company s new customers were mid-market or SMB. By acquiring innovative software companies and continually expanding their offerings, Saba is now positioned as a frontrunner in the LMS market. 8

9 Case Study: Discovery Discovery is a prominent South Africa-based insurance company that provides health insurance, life insurance, wellness programs, investment services, and credit card services. The company needed to provide professional learning and development courses to a distributed workforce in order to foster company success and meet regulatory compliance requirements. Discovery implemented Saba to automate the management and reporting of all learning for their growing workforce to efficiently meet those goals. After deployment, the company: Reached 18 percent more learners while reducing the time devoted to training by 98,559 hours in one year Realized significant ROI of more than five times the original technology cost Reduced overall costs by more than two million USD. Additionally, Saba provided Discovery with a variety of collaborative tools for adding to the company s collective knowledge bank. The LMS also enables Discovery to easily produce engaging, interactive learning content in-house at a reduced cost. Comparable Products Saba SumTotal GreenLight Coaching Tools Real-Time Analysis Personalized Recommendations Certifications Smart Lists to Group Users Social Collaboration Mobility Gamification Elements Virtual Learning 9

10 Current Trends As the HR software market grows and changes, there are a few additional considerations to make when choosing a solution. Features such as analytics, social integration, and mobile capabilities are becoming standard issue for most platforms rather than innovative selling points. Here are the two most prominent and ongoing HR software trends: Integrated Systems vs. Best of Breed Though the solutions in this guide have been referenced in three categories, many vendors offer integrated systems. This means one vendor could provide core HR, TMS, and LMS as an all-in-one, or best of suite solution. Advantages of this approach include a seamless user interface, easy access to data across the system, and comprehensive analytics. Best of breed refers to a specific software used for a specialized area. So rather than choosing software with several HR functionalities, it s possible to simply purchase a great payroll system for your business. Advantages can include tailored functionality for specific job functions and competitive upgrades to solve niche problems. On average, companies manage over eight HR and payroll systems. However, over 33 percent would be willing to sacrifice features in order to get a single vendor solution [12]. While the debate is ongoing, and unique to each company, buyers should focus on defining their needs and must-have features. What is missing from your existing system? What do you wish your current tools could do? Defining what you need and why you need it will help determine which solution is best for your business. Software-as-a-service (SaaS) Perhaps the biggest trend in HR software is the move away from on-premise solutions. Rather than buying a one-time license and housing an HR system onsite, business are choosing to use cloud-based systems instead. This SaaS model allows companies to pay a subscription fee (generally per month or year) in order to use the software. 10

11 According to IDG Connect, almost half of companies surveyed have already migrated to cloud HR software. Of the companies who haven t already moved away from on premise HR, 56 percent planned to migrate to cloud solutions within a year [13]. Contributing factors to the switch include: Lower capital expenditure Reduced administration costs Rapid deployment Scalability Better functionality Less drain on internal IT departments Additionally, over half of respondents suggested their desire to change systems was driven by competitors who already had cloud HR solutions. BUYER S GUIDE TO HR SOFTWARE 11

12 Conclusion This analysis of the HRMS market, prominent categories, leading software providers, and current trends can be used as a starting point for your HRMS decision. It s also important to read individual reviews of the software you re considering, or to speak with an expert. If you d like to sort products based on the features you need, you can use the TechnologyAdvice Product Selection Tool at no cost, or call to speak with an in-house tech advisor. Have Questions? Our team of experts is ready to help!

13 Sources 1. Human Resources (HR) Software Market Forecast Market Analysis. Accessed on October 16, Managing Talent Through Technology: HCM Buying Trends in Bersin by Deloitte. April After the Transformation: Achieving Strategic HR. ADP. Accessed on October 16, MASWhitePapers/MASWhitePapersProtected/AchievingHR_final.ashx 4. Hamerman, Paul D. The Forrester Wave : SaaS HR Management Systems, Q4 2014, Forrester Research Inc. October 1, document/110447/oid/1-s2p4qt 5. Flextronics and Workday: Simplicity as Competitive Edge. Workday. Accessed on October 16, The Talent Management Systems Market Surges Ahead. Bersin by Deloitte. June 26, Surges-Ahead.aspx 7. People in the Cloud: Trends in Human Capital Management. ADP. May 8, SuccessFactors Positioned as A Leader in the 2013 Magic Quadrant for Talent Management Suites. SuccessFactors press release. en_us/company/press-releases/2013/gartner-mq.html 9. With SuccessFactors, Yoh Builds a Talent-Attraction Machine. SuccessFactors. Accessed on October 16, en_us/resources/case-studies/yoh-cs.pdf 10. Is Saba Coming Back?. Bersin by Deloitte. April 13, post/2014/04/is-saba-coming-back.aspx 11. Discovery Health: Reducing costs by over 2 million USD. Saba. Accessed on October 16, Fairchild, Micah. HR System Integration: Suites Versus Best-of-Breed. HRlab. Accessed on October 16,

14 13. Market research into cloud HR software. XCDHR. April 1, com/features/market-research-into-cloud-hr-software/ Guide Photography Credits 14. arper aston office chairs + custom conference table by Incase used under CC BY / 15. SPECIAL SET 16x hi-res Neourban Hipster Office by Markus Spiske used under CC 16. BY / desaturated from original 17. Detail from Meeting by David Wall used under CC BY / desaturated from original 18. Dusted Studio by David Wall used under CC BY / desaturated from original 19. Dusted Office by David Wall used under CC BY / desaturated from original 20. Colliding Corners by KarenB Photography used under CC BY / desaturated from original 21. Human Highway by Kevin Dooley used under CC BY / desaturated from original 14

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