HR Software – The New HR Spaghetti?
Workforce.com recently reported that while there has been a slowing of sales, HR application spending is still expected to show some growth for 2009. The article said, “…despite the downturn, investments are being made in HR software vendors and technologies that could lead to new capabilities when the economy eventually recovers.”
According to early results from CedarCrestone’s 2009-2010 HR Systems Survey to be published in full this October, “60% of respondents said they were cautiously continuing their HR technologies plans and budgets but more than ever must support requests for funds with a strong business case.”
And a report NelsonHall recently conducted on the commoditization of IT and BPO services found that seven percent of organizations think SaaS will assist in improving business costs, and nearly 100 percent believe that SaaS plus BPO services will reduce business costs.
There is HR software business being done, but it is not the rip-and-replace new ERP variety. The economic downturn has greatly reduced risk tolerance for big bet, upfront investments or long-term commitments, which is reflected in the slow pace of major HR deals of any sort. The current economic environment, where end-to-end anything seems too aggressive, favors the growth of point solution deals and even piece part and component deals. Not ready to fully integrate talent management or outsource recruiting and staffing? Why not just add a new applicant tracking system or a compensation management application? Uncertain about outsourcing payroll services today? Consider opting for a hosted solution. The fact is, sales of both hosted and true SaaS software is growing, bolstered by the comfort of lower costs in the short term — let’s call it SaaS at the edge.
My July 24 HRO Insights blog discussed that today’s buyers want fast, flexible and free HRO, and investing in and leveraging a SaaS solution is about as close as you can get to that model. But doing so is not without longer term impacts and strategic HR considerations.
For example, when, how and where should you add on around your core HR system, how many varieties of separate work flow automation can your end users tolerate, and where will business intelligence live in HR? Techie decisions on data architecture, data warehousing and service-oriented architecture are important and have major cost and capability impacts.
Any purchase that is new and pretty, and just adopted and adapted to by users, impacts decisions that will replace it too soon. This effects both multi-process and point solution HRO. The economic benefits of integrated solutions are reduced for both the buyer and service provider when the pressure is to cobble together a service solution around existing software and vendors. Many buyers and providers will have to work around the decisions of today that will still be constraining the opportunities of tomorrow.
Without a strategic plan for HR-wide services technology, HR will end up with a new generation’s version of the old legacy system spaghetti – systems that silo HR functions and data, reducing the capability to manage and measure human capital across HR processes and across the enterprise. Yogi Berra once said, “If you don’t know where you’re going, you’ll end up somewhere else.” I say that if you do not know where you are going, it will be harder to get there from here.
Linda Merritt, Research Director, HRO, NelsonHall