Ephor Group is a Management Advisory firm that invests resources in our clients to create wealth producing enterprises.
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“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.
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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 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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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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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.
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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.
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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.
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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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Primary challenges (priorities) for HR technology providers today to overcome include:
Did you know?
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:
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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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 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:
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