SaaS Work Management Landscape from HRTech 2012

#HRTechConf news and insights from HRTech 2012 can be read here:

• Cool New Social Performance Management HR Technology from #HRTechConf

• HRTech Recap of the World’s Largest HR Technology Conference and Town Hall Meeting #HRTechConf

  
  
  

2011 HRTech Recaps

 

SaaS Work Management Introduction

“Work management software," a term popularized by Bill Kutik in 2011, combines ‘social HR, talent management and performance management’ with collaboration tools into existing finance, revenue, services delivery, and industry solutions. 

Work management software commonly blends the line and integrates across functions including HR, Sales, and Finance.

 

While every company today requires technology to effectively manage; growth and adoption of SaaS Work Management software is being widely adopted in multiple functions and facets of business. The adoption of the work management software is being widely influenced by globalization and employee consumerism towards social technology. The rise of employee consumerism and its impact on work management is everywhere from social to mobile to self-service.  Technology today enables customers and employees to be much more engaged with their products and companies.

The consumerization of technology has completely shifted the way to build a brand, acquire customers and grow a company. Every day companies around the world decide to reinvent themselves to adapt to today’s work.

 

Accordingly, HR software as well as BPO outsourcing providers have grown beyond providing core payroll and HR services, to multi-process, multi-functional solutions being delivered via a SaaS platform that makes companies more efficient.

 

Jump to:

• Download HCS Industry Reports
• HR Outsourcing
• RPO
• Payroll
• PEO
• ASO
• Performance Management
• HRMS - HRIS
• HRO
• Download HCS Industry Reports

 

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HCS History and Future State

The market for HR services and HR technology is as big as business itself. Most small businesses start by outsourcing payroll, staffing/recruiting and HR technology.

 

As organizations grow in size and complexity, they turn to outsourced HRO solution providers including HRO, PEO, ASO, RPO, fractional HR providers, and project oriented HR consultants t of it their specific needs.

 

While still evolving, HR technology platforms have been consolidated to a few major players per organization type, size, and industry paving the way for global, national and regional service providers to approach the SMB and mid-market. The future HR technology players will consolidate into the following camps: all encompassing solution providers, system of record providers that include a suite of processes, and app providers. Enterprise HR technology adoption and SMBs are adopting HR technology from one of the major players or opting for "best-in-class" SaaS app providers to fir their specific, exact needs.

The future HRO (human resources outsourcing) players will provide unbundled functional processes and outsourced solutions to not only enterprises, but mid-market and SMBs as well.  

 

 

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The Human Capital Services Marketplace

The players with the most market share in the United States among the mid-market include Peoplesoft, Oracle, SAGE, ADP, Ceridian, Paychex, Infor, Workday, NetSuite, Kronos, Taleo, Epicor, and Microsoft. However, there are numerous "best-in-class" solutions as well as players that thrive in specific industries.  

 

While the HR technology marketplace, has consolidated in recent years, the market for HR solution provider is highly fragmented with more than a hundred multi-process mid-market HRO enterprise solution providers.

 

The outsourcing marketplace is a multi-hundred billion dollar industry encompassing hundreds of providers selling hundreds of different products and services. When you consider that virtually every business outsources some HR processes, you can appreciate the total size of this unique marketplace. If you are an outsourcing provider, aggressively targeting small business and the mid-market enterprises, it is critical to secure your position of this marketplace.

 

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Human Capital Services Trends

In the early days, the term "Outsourcing" typically meant that a single process, such as payroll or benefits, was handled by a 3rd party. Today, the small business and mid-market outsourcing market encompasses almost all functions and processes; essentially anything not deemed to be core competitive advantage can be outsourced.

Currently, HR outsourcing takes many forms as organizations contract outsourcing service providers to handle distinct business processes, such as recruiting or personnel administration.

Where is HR outsourcing headed?

 

First, almost all of the transactional processing can be done by technology that did not exist 10 years ago. Companies will spend less time processing and more time on the core business.This means anything currently being processed manually will be automated, and/or outsourced.

 

Second, the business world is simply more complex. Rising complexities due to macro forces: globalization, social media, contingent workers make up a third of the workforce, etc... This means, that having "Go-To" on-demand partners and experts to support on strategic items such as Compensation Structures, Compliance, Workforce Planning, Leadership Development, etc., is a must.

 

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HR Outsourcing

Most Common Outsourced Functions and Processes

Why did outsourcing take so long to catch on among mid-sized companies?

One key reason is the lack of stable, sizable outsourcing partners focused on the SMB and middle market. Big consulting firms and outsourcing providers have not developed efficient client acquisition and operating models to service the small business mid-market with their high set-up expenses and the shorter contract lengths on which many smaller firms insist.

With the advancements in technology platforms, HRO outsourcing is becoming more prevalent among SMBs and middle market enterprises.

 

Human Resources Outsourcing (HRO): Multi-process refers to contracts that encompass more than one outsourced capability but do not rise to the level of covering most or all HR functions. Most of the contracts in the midmarket, therefore, are not end-to-end HRO deals that would be comparable to the comprehensive contracts in the large-company market.

• Recruitment Process Outsourcing (RPO): Encompassing recruitment and staffing this includes searching for and hiring new employees and a wide variety of services from job boards to staffing and relocation firms, testing and assessment technologies, applicant tacking technologies, executive search/placement firms, background checking services, etc. For the most part, this category ends when the employee is hired.
  
  
• Employee Benefits Outsourcing: This category encompasses a wide variety of employee benefit and related services from traditional health and welfare benefits to worksite/voluntary products, pharmacy benefit programs, benefits administration and communication software, third-party administrators, retirement plan services, and workers' compensation/disability insurance services.
  
  
• Talent Management: This category includes all the human resources services related to managing the individual once they are hired as an employee -- appraisal, evaluation, recognition, promotion, retention, and succession planning services.
  
  
• Training and Development: This category includes the many products and services related to training and developing employees from instructor-based training to eLearning solutions.


• Payroll Outsourcing: This includes everything from payroll processing companies to companies specializing in specific payroll and compensation services, compensation design, and salary statistics services.


• Compliance Outsourcing: This category includes all the services related to complying with and managing the various aspects of labor laws, labor relations, legislation, litigation, alternative dispute services, OSHA, HIPPA, etc.


• Knowledge Process Outsourcing (KPO) is a form of outsourcing, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.

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RPO Introduction: Recruitment Process Outsourcing

For organizations on the grow, leveraging an outsourced partner is critical to ensuring KPIs such as Cost-per-Hire, Time-Per-Hire, are successfully managed.

 

What to look for in an RPO outsourcing provider?

1. Pricing including pay-for-performance, success fees, Implementation Fees, Training costs, SLAs
2. Recruitment Services Delivery Model
3. Holistic versus Point oriented providers
4. Flexibility and/or customization requirements
5. Success Stories by company type, size, industry

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Payroll Services and Payroll Outsourcing Trends

Employers are looking at payroll providers to incorporate Time and Attendance, Labor Management (Scheduling, Tracking, etc..), Human Resources Software such as Employee Self-Service and other Talent Management HRMS features, Spend and Expense Management.

Prevalent Payroll Outsourcing Trends:

1. An opportunity for niche providers to emerge for those that adopt to buyers demand for "Beyond Payroll Technology and Services."
2. Buyer adoption will continue to prefer a “Phased” over a “Big-Bang” approach.
3. The demand for workforce analytics will continue to increase.
4. Industry specialization will continue especially from services-oriented and labor-demanding industries.
5. SaaS adoption.
6. Shift towards more add-on, integrated products and services.

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PEO and ASO Trends

PEOs (Professional Employer Organizations), also commonly referred to as "Employee LEasing" or "Staff Leasing" provide HR services to small businesses. The major trends include: a) healthcare reform and its impact including state funded exchanges, b) rising complexities and regulations of doing business, and c) adoption of SaaS version 2.0 HR SaaS software platforms.

 

For ASOs (Administrative Services Organizations), also commonly referred to as "unbundled PEOs", or HROs, their exists a major growth opportunity for mid-market niche providers to emerge as major consolidation among the larger providers continues.

 

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HRMS Trends

Primary challenges (priorities) for HR technology providers today to overcome include:

• HR’s ability to impact/solve/support the business. As HR continues to move from “HR centric” to a “worker centric model tied to business outcomes”; the demands placed upon professionals and systems evolve. The admin and strategic functions of HR are intrinsically intertwined and cannot be separated and have to be performed durably well. Essentially, HR’s job is to create jobs. If sweepers are viewed as unimportant then they can be outsourced, but if HR finds sweepers that are customer service oriented, sweepers become an integral part of operations in the above pictorial example.
• Vendor Definition. The current fragmented landscape continues to evolve as the major players consolidate and race to keep pace with the advancements in technology and the demands of consumers. First and foremost, providers have to decide whether they are Business Management Platform (ERP) or an HR Platform (Talent Management suite + core HRIS-HRMS) or simply an application that integrates into the aforementioned platforms? Today, the HR solutions landscape is littered with hundreds of providers that have meaningful client bases, but there are only a few players that have the majority of the market share by segment and region.
  Suites exasperate the vendor definition problem as companies need to deploy processes and not modules (illustrative list of processes here).
  Data Management Sludge. According to Naomi Bloom, data management is a big problem not only in HR but is actually preventing the US economy from tHRiving because the ability to effectively and efficiently manage requires usable, actionable, secure data.
• Customers are moving towards demanding Solutions and not software (i.e. the demand for SaaS + solutions). The emergence of HROs servicing a broader scope as well as the mid-market continues to grow. These outsourced human resource providers are filling a needed role of performing transactions for companies, providing back-office shared services, and providing expertise across the HR and human capital management spectrum. But also, software providers have to change their thinking and approach to fit consumers’ demands. Software providers must think of user adoption and measurement of outputs as the end goal versus “go-live.” Software systems have for too long rewarded the wrong goals. Adopting enterprises and organizations have exasperated the problem as well by implementing technology to solve the business problem when technology is only a tool. Organizations are best served by starting with strategy and desired business outcomes and then defining their requirements for architecture and their users (defining wow user experiences before deployment).

Did you know?

• 1 in 5 enterprises are seeking to replace HRMS in 2011 up from 9% over the previous two years.
• 25% of firms looking to upgrade their HRMS.
• The top 3 initiatives regarding HR tech spending in 2011 include: Business process improvement/innovation (approximately 2/3), Implement/automate talent management processes (more than half), and third is a tie between Implement self-service and Support Business Strategy from HR by nearly half the responses
  

The overall state of technology continues to evolve as consumer technology evolves. Today, SaaS deployments are taking over, as evidenced by Workday’s market share growth, and the shift towards truly integrated platforms has become the adopted standard (although it will take years to filter to everyone).

 

 

The future workforce is notably already different than the current workforce including:

• Large global and virtual “outside the firewall” workforce along with a mobile workforce. Do you have integrated language translation services embedded in your systems? Providers need to embed global into everything from data standards to analytics to systems blueprints to processes.
• Contingent workforces will represent a significant portion of the workforce.
  Younger generations are driven by “meaningful work” not money and other changes in work.
• Matrix and team organizations will be more prevalent.
• Total Compensation prevalent based on the new workforce demographics and attributes.
• Consumerization requires re-thinking about Usability, Usefulness and Utility.
  Users expect the same experiences at home as they do at work. Software systems will need to be so easy that anyone can start using right away (No more form driven, tabbed, menu driven solutions that require manuals).
• “Gamificaiton” = Engagement. The fastest growing application is games. Games have already been adopted by numerous Global 2000 companies as well as non-profits for training and development with outstanding ROI.
  

Historically, the majority of HR technology systems were implemented for either “payroll+” reasons or to solve a specific human resource pain. Coupled with advancements in technology, and demand from consumers, many organizations are facing re-implementation. Lots of roadmaps exist (email us for a list of options). Beyond defining your multi-generational tech savvy requirements (SaaS architecture for the future), processes (KSAOCs), and creating your organization’s YBR ("the “Yellow Brick Road”), having the right game-plan & mantra is key.

 

 

As the buyer of HR technology has shifted towards the end-user; the future of HR technology will certainly be work centric, workforce driven, and people performance-oriented.

 

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SaaS EPM

The market size for Performance Management software applications is greater than $1B annually according to Gartner. Historically, Performance Management was
licensed software, but today, is largely being replaced by SaaS (software as a service).

Performance Management is a segment of software within the Human Resources or
HCM (Human Capital Management) software market, also commonly

referred to as “Talent Management.”

 

SaaS Performance Management includes:
• The web-based tool includes: Performance Management, Goals Management, Training & Learning modules, CRM features and other add-on apps such as surveys, compensation, succession.
• Pre-configured industry solutions for regulated organizations such as Education, Government, Healthcare, and multinational corporations.

Most licensed software providers have inhibited the routine use of these systems. These non SaaS systems have additionally required mass customization and coding to fit workflow processes and end-user adoption has been limited due to expense.

 

Today, there exists a significant number of organizations that, due to performance
mandates and/or regulations, are now required to document performance.

 

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Fractional HR Services - Outsourced HR Services

Fractional HR service providers, similar to interim CFO and contracted outsourced bookkeeping, run the gamut from strategic to tactical. The market is highly fragmented with no national players.

 

Buyers of fractional HR services include:

1. Entrepreneurs: The alternative to doing HR themselves/bootstrap
   
   
2. Growing businesses: Outgrowing their current HR capabilities
   
   
3. PEO refugees: Companies looking for added value services (non transactional services) to traditional PEO / ASO offerings 
   
   
4. Limited internal expertise: Companies without a current HR department 
   
   
5. Transitional: Companies bridging to an internal staff
   

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