optimal tech stack report

THE OPTIMAL TECH STACK

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About KeyInterval ResearchKeyInterval is a practitioner centric market research firm. We survey practitioners in HR and Recruiting to discover what their work with technology is like. We work at the intersection of HR and Technology. We use a blend of quantitative and qualitative research to see beyond the more traditional vendor centric view.

The company is driven by the curiosities of its founders, William Tincup and John Sumser. Our goal is to provide practitioners with a clear view of what actually happens when their peers and colleagues go to work.

We help practitioners understand what is working in the day to day business of HR. We do this by investigating the realities of work in the HR practitioners’ world. We make maps that help practitioners to work more effectively and vendors to supply better technology.

As long term participants in the HR ecosystem, we’ve heard a lot of stories about how things work or don’t. We’ve originated, repeated, recycled, learned and catalogued much of the folk wisdom that passes for rational thought in HR. We are pretty sure that the realities of HR work are substantially different from the ways they are portrayed.

We want to discover what is true and accurate. We want to separate that from wishful thinking. We are mapping the realities of our industry. We will have better questions and better answers as time goes on.

The explosion of technology makes it possible to replace anecdote with fact. Our work combines quantitative research (surveys) with qualitative (interviews and focus groups). The big vision is to replace fiction with fact and to sharpen the things that are true.

HOW TO CONTACT US

Web: keyinterval.com Phone: 415.683.0775 Twitter: @keyintervalR

William Tincup: Principal Analyst @williamtincup [email protected] +1.469.371.7050

John Sumser: Principal Analyst @johnsumser [email protected] +1.415.683.0775

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Table of ContentsAbout KeyInterval Research .................................................................... 1

Pocket Guide: A Quick View of Survey Data ........................................... 9

Onboarding System ................................................................................ 18Analysis ................................................................................................... 21

Succession Management System .......................................................... 22Analysis ................................................................................................... 25

Total Rewards (Recognition) .................................................................. 26Analysis ................................................................................................... 29

Wellness Management ............................................................................ 30Analysis ................................................................................................... 34

Compensation Management .................................................................. 35Analysis ................................................................................................... 39

Learning Management ............................................................................ 40Analysis ................................................................................................... 43

Recruiting ................................................................................................ 44Analysis ................................................................................................... 47

Performance Management ..................................................................... 48Analysis ................................................................................................... 52

HR Analytics ............................................................................................ 53Analysis ................................................................................................... 57

HR Information Systems (HRIS) ............................................................. 58Analysis ................................................................................................... 61

Time and Attendance .............................................................................. 62Analysis ................................................................................................... 65

Benefits Management ............................................................................. 66Analysis ................................................................................................... 69

Payroll ...................................................................................................... 70Analysis ....................................................................................................74

Notables .................................................................................................. 75Notable for Onboarding ........................................................................... 76Notable for Succession Management ...................................................... 77Notable for Total Rewards (Recognition) .................................................. 78Notable for Wellness Management .......................................................... 79Notable for Compensation Management ................................................. 80Notable for Learning Management .......................................................... 81Notable for Recruiting ............................................................................. 82Notable for Performance Management .................................................... 83Notable for HR Analytics ......................................................................... 84Notable for HR Information Systems ........................................................ 85Notable for Time and Attendance ............................................................ 86Notable for Benefits Management ........................................................... 87Notable for Payroll ................................................................................... 88

What We Missed and New Questions .................................................... 89Responses by Region ............................................................................. 90Responses by Level of Educational Attainment ....................................... 92Responses by Role ................................................................................. 93Responses by Function ........................................................................... 94Responses by Industry ............................................................................ 95

Research Agenda .................................................................................... 96Acknowledgements . . . ........................................................................... 96




IntroductionWe are optimists about the potential of data to improve human lives. But the world is incredibly complicated. No one data set, no matter how big, is going to tell us exactly what we need. The new mountains of blunt data sets make human creativity, judgment, intuition and expertise more valuable, not less.

—Alex Peysakhovich and Seth Stephens-Davidowitz in How Not To Drown In Numbers (New York Times, May 2, 2015)

This report is the beginning of our research into the way that companies assemble their HR Technology. We are pretty sure that the “optimal technical stack” varies by region, organizational size, underlying business model, and industry. To fully document that, we begin by understanding what practitioners are actually doing.

This report tells the beginning of a story. Our sample set of 785 HR practitioners is not large enough to give us insight into every possible niche. But, we can clearly see trends by software type and business size.

We will take you into the data in order to help you understand a new perspective. The report documents the way that practitioners view each of thirteen categories of software.

To date, our reports have focused on the vendor perception of some of the categories. We think that the conventional wisdom includes inflated estimates of the depth of HR Technology’s penetration.

Our research, on the other hand, errs on the conservative side of the equation.

We explain much of the dissonance to differences in roles. While 100% of people in the payroll department know what the toolset is and who the vendors are, people in the recruiting department may not know whether the payroll function is performed in house. While buyers are explicitly aware of contract details, users rarely are. The executive’s view is often missing the nuance of the practitioner.

Within some HR Silos (Recruiting and Learning in particular), the very definition of what is or isn’t a system varies as a function of expertise. The more complex the operation, the less likely that practitioners

Conventional wisdom inflates the depth of HR Technology’s penetration; our research errs on the conservative side.


http://www.nytimes.com/2015/05/03/opinion/sunday/how-not-to-drown-in-numbers.html



understand technology as a single system. That is why market penetration estimates for these two functions may appear low at first.

In recruiting for example, tools that deliver contemporary competitive advantage multiply at extraordinary rates. In many ways, recruiting is where innovation enters the HR function. Aggressive recruiting shops are constantly testing and trading tools rather than polishing and improving the procedures associated with a single system.

While much research data is groomed to highlight a specific attribute, we choose to leave this data in its most unadulterated form. We prefer to try to acknowledge and understand the inconsistencies that are the natural realities of complex organizations. It is our view that stark conclusions in easy to consume information nuggets obscure the realities of the market.

We think our audience is savvy enough to understand that an accurate lay of the land is critical for effective tactical work. Simplification before complete understanding is a risky approach to both market and product development.

Defining the right approach for one’s organization is not a simple undertaking.

In future updates, we believe that the working realities will come into focus even more clearly. This report paints a picture of an HR Technology Silo that shows the likelihood that other practitioners are using the tool, how they feel about it, how long contracts last, and a sense of whether this is a trend worth joining.

Today, we can tell you how practitioners see general software areas. The underlying data is rich enough to offer segmentation insight by organization size. Beyond the scope of this report, we are able to slice the data across a number of parameters. As our research matures, our insights will be deeper and more nuanced.

One of the things we learned is that the answers to our questions change while we ask them. HR practice is a dynamic universe with wide ranges of impact and effectiveness. HR departments are continuous consumers of new technology so today’s line in the sand is tomorrow’s anachronism.

In many ways, recruiting is where innovation enters the HR function.




For each of thirteen major areas of HR Technology, we developed an info-shot that shows:

• Market PenetrationDefinition: The percentage of companies that use the tool (segmented by organization size).

The likelihood that a company of your size uses the tool. This estimate gives you a sense of which tools are seen as important enough to include in the optimal technical stack.

• Net Promoter Score® (NPS®)Definition: Measures the likelihood that a friend or colleague would recommend the type of software.

Most vendors have collected data about the NPS® for their company and products. Using the niche specific score as a benchmark allows you to validate the meaning of their data. A good purchasing process should compare the vendor’s NPS® against this standardized score.

An NPS® score can be as low as -100 and as high as +100. A score of +50 or above is often seen as an example of excellence. A score of below -50 is understood as dismal.

• Buy Cycle:Definition: The time between replacement purchases. How long companies keep their software.

This gives you a sense of how long your decision will last. While there is a lot of emphasis on portability (ease of quitting) in SaaS applications, the deal is stickier than it might seem at first. When considering a purchase, it is important to understand how long most people stick with their provider.

• Outsourcing:Definition: The percent of companies who contract another company to perform the function.

This variable seems to vary by complexity and newness. Outsourcing is an important option to consider when deciding to deploy a new technology.

When considering a purchase, it is important to understand how long most people stick with their provider.




• Part of Suite:Definition: Whether the tool comes as a part of a larger toolset the organization uses.

There is a perennial battle among pundits and analysts about the value of a tool that is part of a larger suite. One side argues that focused point solutions provide levels of excellence that a suite provider cannot deliver. The other side argues that the consistency provided by a suite creates better data integration and standardization of the user experience. Both sides have merit.

This score lets you know how many of your colleagues prefer a tool that is a part of a suite.

• Homegrown:Definition: Whether the company accomplishes the function with internally developed tools, including the use of standard office software to accomplish the function.

Some companies want to be sure that their special sauce dominates a particular function. Or, they have been solving the problem since it was a small inconvenience and developed an internal specialized system for handling the problem. This score tells you the percentage of your colleagues who ‘roll their own.’

• Desirability:Definition: The percentage of organizations that do not have the tool that they wish they did.

This is another guide to whether or not you should be acquiring the software tool. If you are considering a purchase, this score tells you what percentage of your peers are leaning towards the idea.

• Vendor Recall:Definition: The ability of the user to remember the name of the vendor.

For the most part, the inability to recall the vendor’s name indicates that the tool is not heavily used. The lower the score, the more likely it is that the software element will sit on the shelf collecting dust.

If you are making, participating in, or trying to influence a decision to make, replace or terminate a technology purchase, the data in this report will help you understand what your peers are doing.

The optimal technology stack is the set of HR tools that meet your organization’s needs.

If you are making, participating in, or trying to influence a technology purchase decision, this report will help you understand what your peers are doing.




Category DefinitionsWe have examined 13 distinct types of software. Here are the definitions we used when we asked companies about the components of their HR Technology Stack.

TECHNOLOGY TYPE DEFINITION

OnBoarding Tools used to organize, track, monitor, manage, and report on the process of bringing a new person into the organization.

Succession Management Tools used to plan for and manage changes in critical roles.

Total Rewards (Recognition) Tools used to supplement formal compensation programs with short-term recognition and motivational incentives.

Wellness Management Tools that organize, monitor and report on the activities within Wellness programs.

Compensation Management Tools that validate and administer the pricing of job categories.

Learning Management Tools used to organize, track, monitor, manage, deliver, and report on training.

Recruiting Tools used to organize, track, monitor, manage, and report on the process of acquiring new people.

Performance Tools that organize, track, monitor, manage, and report on the assignment and execution of goals.

HR Analytics Tools used to analyze, report and predict business outcomes utilizing HR Data.

Human Resources Information System (HRIS) Tools that organize, track, monitor, manage, and report on the organization’s people.

Time and Attendance Tools that organize, track, monitor, manage, and report on attendance, time worked, arrival and departure times.

Benefits Management Tools that organize, track, monitor, manage, and report on employee benefits at both organizational individual levels.

Payroll Tools to organize, track, monitor, manage, deliver, and report on the various aspects of delivering paychecks to employee.




In our research… we asked respondents about a series of other pieces of software. We were surprised to find significant adoption in the following areas. In later research (next year), we will look deeply into these additional areas.



Pocket Guide: A Quick View

of Survey Data




RANK CATEGORY NPS

1 HR Analytics System 18

2 Wellness Management System 10

3 Total Rewards (Recognition) System 10

4 Succession Management System 9

5 Time and Attendance 8

6 Payroll System 8

7 Human Resources Information System (HRIS) 7

8 Benefits Management System 3

9 Compensation Management System 1

10 Performance Management -8

11 Recruiting System -9

12 Learning Management System -14

13 Onboarding System -25

A Net Promoter Score® . . . can be as low as -100 and as high as +100. A score of +50 or above is often seen as an example of excellence. A score below -50 is understood as dismal. In this survey, we viewed the entire category from an NPS® perspective. This gives the practitioner a baseline against which to measure claims from vendors, and a way to put the specific product’s NPS® in perspective. Note that newer, less highly evolved areas occupy the top third of the ranking and that the bottom third is dominated by Talent Management tools.

Net Promoter Score®




RANK CATEGORY YEARS

1 HR Analytics System 3

2 Wellness Management System 3

3 Succession Management System 3

4 Compensation Management System 4

5 Learning Management System 4

6 Total Rewards (Recognition) System 5

7 Performance Management 5

8 Onboarding System 5

9 Human Resources Information System (HRIS) 5

10 Time and Attendance 6

11 Recruiting System 7

12 Benefits Management System 8

13 Payroll System 9

The Replacement Cycle . . . is the amount of time between acquisitions (purchases). Newer types of tool are used for shorter periods of time. The more important a piece of software is to maintaining the status quo, the longer the replacement cycle.

Replacement (Buy) Cycle




RANK CATEGORY DESIRABILITY

1 Succession Management System 50%

2 Compensation Management System 50%

3 Onboarding System 50%

4 Recruiting System 48%

5 Time and Attendance 38%

6 Learning Management System 29%

7 HR Analytics System 28%

8 Human Resources Information System (HRIS) 28%

9 Benefits Management System 26%

10 Performance Management 25%

11 Total Rewards (Recognition) System 22%

12 Payroll System 20%

13 Wellness Management System 18%

Desirability . . . is a simple measure. Of the people who do not have a particular kind of system, what percentage would like to have one. This list tells you how the market of practitioners prioritize what they want. Whether not other practitioners will purchase the system is a cross between this measure and the buy cycle. For example, half of the market wants a Recruiting system. But, Recruiting systems have a long replacement cycle, so it is not as likely to happen as it might look.

Desirability




RANK CATEGORY LIKELIHOOD














Having a Single Vendor . . . and a standardized data set is worth a lot. Companies buy software that is a part of a larger suite for this reason.















Having a Single Vendor . . . and a standardized data set is worth a lot. Companies buy software that is a part of a larger suite for this reason.

Purchased as Part of a Suite


















Homegrown Systems . . . Organizations develop their own internal processes and procedures when:

• They can not satisfy their needs with a vendor’s product

• They do not know there is a market solution available

• They start solving a simple problem and later discover its complexity.

Homegrown




RANK CATEGORY PENETRATION

1 Human Resources Information System (HRIS) 52.4%

2 Time and Attendance 47.4%

3 Performance Management 37.1%

4 Payroll System 35.5%

5 Recruiting System 33.8%

6 HR Analytics System 24.2%

7 Learning Management System 22.5%

8 Compensation Management System 21.8%

9 Benefits Management System 20.4%

10 Wellness Management System 15.0%

11 Total Rewards (Recognition) System 13.9%

12 Onboarding System 12.5%

13 Succession Management System 8.3%

Market Penetration . . . is a measure of the degree to which the overall market has adopted a particular solution as a part of their HR Tech suite. This figure tells you whether the decision to purchase a particular solution is a part of standard practice.

Market Penetration (Adoption)




Outsourced Measures . . . the likelihood that a particular function is outsourced. The decision to outsource is based on the idea that an external operation can perform the task more effectively at a lower cost.















Outsourced


















Vendor Brand Recall . . . is a measure of whether the practitioner can recall the name of her provider. Not knowing generally indicates a lower amount of usage, a lower organizational importance, or (paradoxically) a level of quality that is so high that no one ever thinks about the vendor. The last one is pretty rare.

Vendor Brand Recall




Onboarding System




Onboarding software systems vary in visions of completeness and complexity. The simplest executions, usually in hospitality and retail, involve filling out immigration and work permit forms. The most complex systems guide strategic development of critical new hires and provide complete orientation and training to bring new employees fully up to speed.

An Onboarding System crosses the boundaries of most other HR Silos. In order to bring a new employee onboard, almost every single system is modified to include data about the new employee. In some significant ways, the Onboarding System is a use case for all of the other software systems.

Some emerging vendors use simple scripts and HTML to allow HR practitioners to make the Onboarding tool an overlay on all of the other systems. These tools simply create a page of links that the new employee must navigate.

• Market Penetration: 12%Only 12% of all companies have a formal Onboarding System. This is largely due to the fact that Onboarding is a cross-discipline function. There is no natural champion for the function and no natural buyer.

• Net Promoter Score®: -25The Onboarding segment has the lowest Net Promoter Score of any of the HR Tech Silos. It has the largest number of detractors (people who scored the area as a 6 or less on a scale of 1 to 10) and the smallest number of promoters.

• Buy Cycle: 5 YearsOnly 20% of people who currently have an Onboarding tool plan to replace it within the next year.

• Outsourcing: 0%Nobody (statistically speaking) outsources Onboarding. This is because Onboarding is unique to the company, and often to the individual position and employee. It is, on one level, the very definition of a critical ‘rite of passage’.

• Part of Suite: 62%Almost 2/3 of the practitioners who have an Onboarding tool use something that is a part of an existing suite.

In some significant ways, the Onboarding System is a use case for all of the other software systems.




• Homegrown: 5% Interestingly, the number of companies that build homegrown solutions for Onboarding is lower that any other area.

• Desirability: 50% Half of people who do not currently have an Onboarding tool wish they did. Only Succession and Compensation have similar levels of desirability. Practitioners really want to add an Onboarding System to their tool kit.

• Vendor Recall: 79% 21% of the companies with an Onboarding System cannot recall the name of their vendor. Most can.




AnalysisThe Onboarding segment offers one of the most interesting opportunities for innovation in all of the HR Tech Silos. A very low NPS® coupled with very high desirability and a long replacement cycle is a perfect target for new products and services.

It would be interesting to consider marrying Onboarding and HR Analytics. Both areas are really use cases for the data contained in the rest of HR. The basic integration skills are complementary.

There are some indications that the reason for the broad dissatisfaction with Onboarding involves the range of things that are possible. In the most ambitious implementations, Onboarding’s goal is to reduce time to productivity for critical employees. While that approach (which often involves setting meetings and making introductions for 90 days) is time and resource intensive, it works and produces spectacular results.

One of the ways that HR can most easily contribute to the financial success of the organization is by reducing the time to productivity for a new hire. Unfortunately, many Onboarding tools are used exclusively to mitigate risk by ensuring that the minimum legal documentation requirements are met.

HR can most easily contribute to the financial success of an organization by reducing the time to productivity for new hires.




Succession Management System




Each organization examines the issues and complexities of Succession Management in slightly different ways. In mature companies that have grown under the leadership of the original founder(s), how to replace the original team takes on nearly Shakespearian overtones. Life beyond the founder can seem unimaginable.

In more ‘managed’ operations, Succession Planning begins with rotating all managers through a series of assignments designed to round out their skills and conceptual understanding. In this setting, the question is more like the orchestration of a complex game of musical chairs.

In the early 2000s, some African companies pioneered the idea of managing the succession of critical roles in a new way. The AIDS plague was wiping out categories of relatively low level workers (like truck drivers). The future of the company came to rest on being able to quickly and easily replace low level functions that would cripple the company if left unfilled.

Like many bits of HR Software, Succession Planning tools are really a good way to document a rapidly changing conversation. As the organization evolves and as the key players grow and change, the right solution to the Succession Rubik’s Cube changes.

• Market Penetration: 8%8% of all companies use Succession Management Software. That’s less than 1 in 12. This doesn’t mean that most companies don’t have a process for examining Succession issues. It simply means that they don’t use a formal software tool to do so.

• Net Promoter Score®: 9Comparatively speaking, the people who do use Succession Management Software are ‘happier’ with their tools than other silos. It is worth noting there appears to be an inverse relationship between usage and Net Promoter Score. In other words, the less a piece of HR Technology is used, the higher its NPS®.

• Buy Cycle: 3 YearsThe most common buy cycle is 3 years. One third of current Succession Management tool owners will replace their system this year.

Succession Planning tools are a good way to document a rapidly changing conversation.




• Outsourcing: 6% 6% of companies that have Succession Management tools outsurce them. This seems to mean that large strategy consultants (like Mercer and AonHewitt) are the keepers of the conversation.

• Part of Suite: 75% Three quarters of the practitioners who have a Succession Management tool use something that is a part of an existing suite.

• Homegrown: 18% Succession Management tools are home grown 18% of the time. This is a reflection of the uniqueness of the process.

• Desirability: 50% Fully half of the people who do not currently have an Succession Management tool wish they did. Only Onboarding and Compensation have similar levels of desirability. Given the short buy cycle and high desirability, you can expect market penetration to grow quickly.

• Vendor Recall: 89% Succession Management systems have the highest percentage of people who remember the name of their vendor of any HR Tech tool.




AnalysisExpect to see a relative explosion in tools that can be used to manage and understand the process of evolving an organization’s leadership. The combination of a relatively high NPS®, high desirability, maximum vendor recall and a universe of home brewed solutions, the market is ready for growth in the Succession Management segment.

It is an interesting time in the market.

Demographic shifts (primarily the departure of the older generation and key talent shortages) means that Succession Management’s moment in the sun is here.

HR can influence both the organizations continued stability and growth by making the decisions clear and the consequences obvious. Great Succession Management software provides the foundation for a conversation. The topic is: “How does the organization navigate the expected and unexpected changes that rearrange the critical chairs?”

Expect to see an explosion of tools to manage and understand the process of evolving an organization’s leadership.




Total Rewards (Recognition)




Total Rewards and Recognition tools are used to supplement and reinforce existing compensation structures. In very large organizations, there is an important need to make the messaging about performance more precise.

Traditionally, the Total Rewards market has belonged to awards and motivational gift companies.

With the advent of social media and cross-functional, horizontal communications within companies came the notion that recognition (in the form of digital thank-yous or points) could provide important organizational stimulation. In the past decade, vendors emerged to provide a broader range of Recognition services. There is a grass roots feel to some of these tools that shifts Recognition from a top-down reinforcement to crowd sourced appreciation.

On some levels this is where flatter governance structures have their origins. The emerging Recognition tools suggest that peer recognition is a complementary force that improves engagement. The idea is that when the team’s cohesion is improved, everyone feels like they belong, they want to show up for work, and hopefully, they will do better work.

Recognition Systems have a powerful narrative. Harnessing loose, but positive, energy in the organization is a low cost, relatively proven approach to morale improvement.

Although Total Rewards Systems mostly have an underlying economic model, there is a school of thought that wants to separate Recognition from any underlying monetary incentive. Vendors also differ on the questions of anonymity, privacy, governance, and so on. The software tends to route and handle communications of positive feedback while keeping track of individual performance.

• Market Penetration: 14%Although Total Rewards software has a market penetration of 14% across the board, it is nearly double that (26%) in companies with more than 10,000 employees. It is 10% or lower in small companies (under 500 employees). It could be argued that these tools are not really useful in organizations where everyone knows everyone else.

• Net Promoter Score®: 10Given the span of NPS® scores (from -25 to +18), Total Rewards systems have a respectable NPS® score. When people use the systems, they like them better than most HR technology.

The emerging Recognition tools suggest that peer recognition is a complementary force that improves engagement.




• Buy Cycle: 5 Years Only 20% of people who currently have a Total Rewards tool plan to replace it within the next year.

• Outsourcing: 4% Only a few companies (statistically speaking) outsource their Total Rewards. In those cases, a program administrator is responsible for the program and the software it runs on. It is often less expensive to have someone else do the work at a lower labor rate.

• Part of Suite: 44% Almost half of the practitioners who have a Total Rewards tool use something that is a part of an existing suite.

• Homegrown: 9% Nearly one in 10 companies build their own Total Rewards system. Homegrown systems tend to be used to solve simpler problems like remembering employee anniversaries and other traditional Recognition programs. Purchasing Total Rewards software is a commitment to a deeper kind of Recognition program and not all companies want that.




AnalysisTotal Rewards software is generally more effective in larger environments. The smaller your company, the less you will need Total Rewards software. From the other perspective, the larger your company, the more interesting the prospects.

Installing a Total Rewards system is one way of addressing the organizational divergence that is part of working in a big company. The more people, the more there is conflict between organizations and individuals. Often, the two groups are pursuing conflicting objectives.

This conflict is not a bad thing. It can be the result of differences in customers, regions, or leadership style. Total Rewards localizes (and makes more immediate) the impact of peer group (and first level management) approval and respect. Total Rewards tools also make a great deal of sense in highly transactional environments like data processing or retail. They provide coverage of the motivational gap between pay periods.

There is a lot of investment going into the Total Rewards space. That is why you hear so much about it. The data says Recognition is not yet a necessary component of your technical stack. But, there is a chance that it could be powerful for you. Look for references from your competitors.

• Desirability: 22% Only about one in five companies want to install a Total Rewards system currently. This suggests that the tool is more useful in some settings than others. It would be smart to check references for other customers in your industry or region.

• Vendor Recall: 66% One third of companies that have a Total Rewards program can not recall the name of their vendor. This indicates a lack of use once installed.




Wellness Management




Wellness Management tools encompass a variety of approaches to harnessing employee health and wellbeing. The definition of Wellness and its relationship to productivity or engagement is elusive. That said, there is a growing belief in management and investor circles that the combination of reduced health care costs and the feel good quality of endorphin rushes are an adequate rationale to purchase Wellness Management Systems.

There’s an inescapable logic to the idea that a healthier workforce is a more cohesive and adaptable workforce. If your employees are not out sick, they certainly show up for work more.

A Wellness Management system collects and reports on data associated with individual and collective fitness and health activities. In some cases, the definition of wellness spans the range from exercise programs to meditation to financial education. The systems often emphasize competition between individuals or groups of employees.

One way of thinking about Wellness Management Systems is that they are a kind of Learning Management System for the whole person. Where most HR technologies focus directly on things specifically related to work, a Wellness Management System offers ways for employees to manage almost the entire universe of things that cause and relieve stress.

The systems are getting a lot of attention and investment currently. This is because of the rapid increase in the number of wearable devices and monitoring tools. In some ways, the hardware technology has outpaced the underlying organizational theory.

It is early enough in the evolution of Wellness Management systems that the jury is still out on key issues like privacy, security, and what happens with the data.

In some cases, the definition of wellness spans the range from exercise programs to meditation to financial education.




• Market Penetration: 15%Only 15% of all companies have a formal Wellness Management System. The idea that wellness and fitness have a place in the corporation is still cutting edge. There is no natural champion for the function and no natural buyer. The appeal of a wellness program covers both benefits and talent management concerns.

The company size segments with the deepest utilization are between 201 and 500, and between 2,501 and 10,000 employees. In those settings, about 20% of companies offer Wellness tools. That’s nearly double the rate of the other segments.

• Net Promoter Score®: 10The Wellness Management segment has a pretty good NPS® given the range of scores for HR Tech Systems. This is likely to be limited by the fact that there is no logical silo into which it can be stuffed. It could also be that Wellness is the new Engagement, or that it’s hard to not be in favor of health.

• Buy Cycle: 3 YearsA three year buy cycle is a good indicator of growth possibilities. The market can get used to rapid innovation at that point. That’s a good thing because this area will have some of the fastest and deepest changes of any silo (as the result of the high speed of related consumer technology change).

• Outsourcing: 5%When Wellness Management Systems are outsourced, it is usually to a full service provider. Many Wellness Management providers supply staff. This is driven by the fact that the function has no logical home. In other words, the dynamics are in place for growth in outsourcing.

• Part of Suite: 42%Two out of five companies buy their Wellness Management tools as a part of a larger suite. That makes it one of the three areas that are least likely to be purchased as a part of a suite. In other words, look closely at the point solutions in this area.

The idea that wellness and fitness have a place in the corporation is still cutting edge.




• Homegrown: 9% Homegrown systems track the fundamentals of ongoing Wellness Initiatives. They generally lack the sophisticated layers of tracking, competition, insights and visualizations of the commercial products. But, there is a move to try to expand the utilization footprint of other tools.

• Desirability: 18% Fewer than one in five of the companies that do not have a Wellness Management System want one. This means that the vendors are not adequately articulating the value of the tool or that that value is extremely elusive. There is also hesitation based on valid concerns about privacy and storage and use of employee wellness data. From a purchaser’s perspective, this means that you have to be very clear about what you want and why.

• Vendor Recall: 71% 29% of the companies with a Wellness Management System cannot recall the name of their vendor. This indicates usage and adoption issues.




AnalysisThe Wellness Management segment is the shiniest new object in the HR tech pantheon. Key cultural forces, like the Apple Watch and other wearable devices, make the prospect of a healthier workforce a little more real. The hype may be a little ahead of the reality.

If you are considering acquiring a Wellness Management tool, it will require extraordinary effort to get the system to work in your culture. Generally, Wellness Management is a significant cultural change (unless your company is hypercompetitive already). In less competitive settings, no one seems to have figured out how to harness employee motivation yet. So you’ll be facing that problem.

On the other hand, a modestly successful program built around a great wellness communications program (some vendors provide some of this) can turbocharge the motivations of some parts of your operation. If you are willing to take the risk, the payoff might be interesting.

Key cultural forces, like wearable devices, make the prospect of a healthier workforce a little more real.




Compensation Management




Compensation Management is the art and science of optimizing the connection between work and pay. It is how jobs are ‘priced.’ In general, compensation is set by a policy that matches market supply against demand to determine an acceptable pay range for a given job.

The underlying idea of Compensation Management is to maximize the return on talent. In effect, Compensation Management establishes a quality ‘band’ that the organization stays within to control overall costs. By setting a range of acceptable pay for a given position, the organization establishes the level of quality that it wishes to acquire.

Compensation Management Systems account for salary, bonus, stock option, and benefits budgets as a part of the total compensation picture. Some systems store and display compensation analysis studies from data providers.

Some Systems also operate as a workbench for creating job descriptions. Although it is rarely seen, being able to use the job description derived from the Compensation Management System as the basis of all other job descriptions used by the company allows for clear understanding of both performance and compensation, and also provides important information for Recruiting.

• Market Penetration: 22%About one in four companies have a Compensation Management System in place. Very small companies are less frequent owners of Compensation Management Systems. Very large organizations are slightly more likely to have a Compensation System in place.

This is not to say that companies without a formal Compensation Management tool don’t accomplish much the same thing. Rather, the move towards formal technical Compensation Management software is a function of the desire to really perfect this part of organizational economics.

• Net Promoter Score®: 1A NPS® of 1 means that about the same number of users love it as hate it. This is likely caused by the fact that the discipline is extremely dry and accounting like. The stereotypical HR practitioner is not much like an accountant.

Compensation is also unique to each position and company. And people generally don’t talk about salaries of employees to others outside the company.

Compensation Management is the art and science of optimizing the connection between work and pay.




• Buy Cycle: 4 Years25% of people who currently have a Compensation Management tool plan to replace it within the next year.

• Outsourcing: 15%Nobody (statistically speaking) outsources their Compensation Management. Yet, Compensation Management is the second most likely HR Tech module to be outsourced. When it is executed by a third party, both the human being and the service are delivered, usually temporary employees or independent contractors who are paid by the agency.

• Part of Suite: 52%About half of the time, practitioners use software that is a part of a larger suite of HR Tech.

• Homegrown: 15%The initial thrust to have a Compensation Management System comes from the way that compensation evolves. In a growing company, Compensation practice is a series of exceptions to the basic payroll and job pricing approach. Homegrown systems are used initially to track the various configurations of compensation that make up payroll.

Then, when compensation studies are added to the mix, the compensation department has to navigate data that is sorted by position or job title. Invariably, some aspects of compensation are always exceptions. This accounts for the relatively high percentage of homegrown solutions.

Homegrown would be the largest vendor of Compensation Management solutions if it were a vendor.

• Desirability: 50%Half the people who do not currently have a Compensation Management tool wish that they did. Practitioners really want to add an Compensation Management system to their workflow. In the absence of a Compensation Management system, both the information involved and decision making is extremely complicated to administer. This suggests a fertile growth market. We expect this to become a standard part of the HR Tech stack.

• Vendor Recall: 82%The fact that four fifths of all customers can remember their vendor’s name indicates a high level of engagement.

Half the people who do not currently have a Compensation Management tool wish they did.




Compensation Management is the second most likely HR Tech module to be outsourced.




AnalysisCompensation Management is a relatively dry facet of HR that has a high financial payoff. Treading the line between penny-wise and pound-foolish is the challenge that faces compensation practitioners as they articulate payroll —almost every company’s largest expense. This means getting Compensation right is critical to determining company profitability. Being able to monitor market conditions, control third party reference data, and handle conversations about exceptions is at the heart of the discipline.

As the company grows and HR matures, the Compensation Management function is one of the most critical elements of the company. Expertise in pricing jobs usually gets the department into the business of being the go-between from the Board to the CEO in compensation negotiation.

If there is a single place to invest in HR, this is it. The provider market is more fragmented than other areas (and all of HR Tech is extremely fragmented). Picking the right vendor is essential and depends more on expertise than technical functionality.

If there is a single place to invest in HR, this is it.




Learning Management




Learning Management Systems are in a state of flux. Since anyone can develop and publish information and much work is recorded in some manner, the workforce itself may be the best source of training content. Rather than a solitary function that dictates the learning and development hierarchy, the L&D Department is now becoming more like a curator.

Newer tools are able to harness a wide variety of content sources and forms.

Learning Management Systems can include everything from content development to rating, to compliance monitoring. The most complex tools organize and manage content delivery while monitoring attendance and certification.

In the world where every employee comes to work with a video camera embedded in their smartphone, the Learning Management function harnesses the knowledge and experience of the workforce.

• Market Penetration: 23%One fourth of all companies (and 40% of large companies) have a Learning Management System. The larger the company, the more likely this is the case. Adoption is largely driven by the overall complexity of the training problem.

• Net Promoter Score®: -14More than 80% of practitioners either do not like or do not care about their Learning Management System. The data suggests that broad market adoption is being slowed by the user experience.

• Buy Cycle: 4 YearsOnly 20% of people who currently have a Learning Management tool plan to replace it within the next year. Interestingly, at a time when the need for learning and development is expanding, the combination of NPS® and purchasing cycle suggest a slower expansion of the Learning Management footprint.

• Outsourcing: 5%When Learning Management is outsourced, the provider is generally a curriculum source with relevant industry and profession related content.

Since anyone can develop and publish information, the workforce itself may be the best source of training content.




• Part of Suite: 40% 60% of companies buy their Learning Management System as a standalone point solution that is divorced from a suite. The majority of companies prefer to acquire a tool that meets their specific needs in spite of the extra procurement work involved.

• Homegrown: 10% Homegrown systems would be the largest single vendor if it were a vendor. The Learning Management system market is extremely fragmented as companies focus on meeting their individual needs.

• Desirability: 29% About one third of companies without a System wish they had one.

• Vendor Recall: 78% 22% of the companies with a Learning Management System cannot recall the name of their vendor.




AnalysisThe Learning Management segment seems hungry for a new paradigm. Customers are unhappy, market adoption is stalled, and the buyer favors point solutions. This suggests a flurry of new providers who compete based on their affinity with specific niches.

The generational shifts in the workforce are driving the adoption of collaborative grassroots content that may not have the same level of professional development as existing courseware. The marketplace is beginning to favor bite sized trainings with local experts delivering the material. New market entrants seem to favor tools that resemble social media even though the proof points for the approach are somewhat suspect.

The Learning Management System must fit the cultural norms of the company that hosts it. Even if collaborative forms seem to represent the latest and greatest approach to learning, the question is whether the existing political and cultural infrastructure will support it. The more hierarchical an organization is, the less likely that new training approaches will be successful.

It is easy to believe that the level of dissatisfaction with Learning Systems is really an indictment of the adequacy of the underlying content. It is easy to blame the delivery tool for the weaknesses in the curriculum. No doubt, that is partly true. But part of the issue is also that many work processes are changing faster than anyone can develop the training for them.

When introducing tools that have a significant crowd-sourced component, there is an important question: How do you determine and define training adequacy when the content comes from organizational grassroots? While you can rely on the organization to generate guides to routinely experienced problems, there is no natural champion for the core routine processes that define industrial operations.

The role of the curriculum developer is growing, changing, and expanding. With new learning tools, the L&D department is being given with greater responsibility. We see that increasing with time.

When considering a purchase, it is important to understand how long most people stick with their provider.




Recruiting




Recruiting ranges from simple administrative operations to complex, branding infused, competitive scrambles. As the HR Department’s only market facing function, recruiting operates differently from the rest of HR.

Recruiting is where innovation happens most frequently in HR.

When we initially reviewed the data for Recruiting Systems, we were alarmed by the low level of market penetration (adoption). We then realized this is because advanced recruiting practitioners use a range of specialty tools rather than a single system. Our qualitative interviews clarified the fact that experienced recruiters do not think of their tool set as a system. It is more like a toolbox.

With between 12 and 20 sub-processes, recruiting operations rarely use all of the same tools in the same sequence. Unlike other HR functions, recruiting techniques vary by job, industry, region, corporate culture, and, business model.

• Market Penetration: 34%Only 34% of all companies have a formal Recruiting System.

A single Recruiting System is useful in very specific settings. The market penetration figures reflect that reality. The rest of the market uses a more complex array of point solutions.

• Net Promoter Score®: -9Only 23% of practitioners have a positive take on their Recruiting System. This seems to be an additional reflection of the problem with Recruiting Systems. If Recruiting is really all about using specific tools for specific purposes, then practitioners will experience the system as a constriction of effort rather than a way to be liberated from drudgery.

• Buy Cycle: 7 YearsOnly 14% of people who currently have a Recruiting System plan to replace it within the next year. In other words, once you are committed to a Recruiting System, you will have it for a long time.

• Outsourcing: 8%Recruitment Process Outsourcing is a common approach to Talent Acquisition. At 8%, the recruiting process is in the top 1/3 of HR Systems that are outsourced. Because recruiting is complex, companies with broad expertise are often a reliable alternative to purchasing technology.

Advanced recruiting practitioners use a range of specialty tools rather than a single system.




• Part of Suite: 52% Almost half of the practitioners who have a Recruiting Tool use something that is a part of an existing suite.

• Homegrown: 10% Interestingly, the number of companies that build homegrown solutions for recruiting is lower that any other area.

• Desirability: 48% Nearly half of the people who do not currently have a Recruiting Tool wish that they did. Only Succession and Compensation have similar levels of desirability. Practitioners really want to add a Recruiting System to their workflow if they do not currently have one

• Vendor Recall: 86% Only 14% of the companies with an Recruiting System cannot recall the name of their vendor.




AnalysisThe idea that practitioners do not like their Recruiting system is deeply held in both the practitioner and vendor communities. When you contrast that reality (and an NPS® of -9 supports the idea) to the 7 year term of ownership, you have to scratch your head. What is it that makes something no one particularly likes so sticky?

The answer has to do with the actual utility of the Recruiting System. At its core, this is where the records are kept for review by the Department of Labor. Recruiting Systems are the place where hiring records are kept. When there is a government audit or investigation, this is what they want to see. If a company does business with the government, a Recruiting System is usually required to collect and keep hiring data.

No other tool in the HR Tech Stack is so conflicted. Practitioners routinely expect innovative results and performance from a system that is designed to mitigate legal risk. It is just like putting a fish in a blender (remember SNL’s Bassomatic?). While you can do it, the results are always suspect.

Recruiting departments routinely purchase ‘the next thing’ in their ongoing quest for competitive advantage. That is how operations like large social media companies can build a billion dollars of recruiting revenue seemingly overnight. The new tools do not replace the need for a record keeping system for hiring. Rather, they keep the organization’s options open in an ever competitive market for talent.

Practitioners routinely expect innovative results and performance from a system designed to mitigate legal risk.




Performance Management




Performance Management Systems can be as simple as a shared to-do list and as complex as a hierarchical cascading goals program. The underlying premise is that the organization is best able to achieve its objectives when all employees understand their part in things. Generally, the process is annual with quarterly updates. In many places, Performance Management is executed only once a year.

There is growing discomfort with the idea that company goals are achieved through reviewing past performance of individuals. In reality, no organization gets anywhere with an inflexible system that assumes that a goal can stay fixed for a specific period of time. Businesses survive and thrive when they can adapt. Thus, the Performance Management System approach can be at odds with agility.

Yet, there is an additional use for the tools. Every manager from first level supervisor up has to manage a raise pool. The money allotted for compensation increases never stretches as far as desired. So, managers are required to make difficult decisions about scarce resource allocations. Who gets which level of raise is a tough problem.

Performance Management Systems quantify the dilemma and allow decisions that at least have the appearance of rationality.

Part of the challenge with Performance Management Systems is that they bear little resemblance to the way work actually gets done. There is no system in the market that makes an assessment of whether or not a specific employee can carry her load of goals. Since goals emerge through cross functional teams, there is little tie to the functional manager who is ultimately responsible for compensation.

Meanwhile, alternative structures (from ad hoc governance in a holocracy to crowd sourced short term feedback systems) are presenting themselves. It is yet another area where the best thing for the organization is both industry and culturally dependent.

Assessing performance is different in a factory than it is in a law firm (or a coal mine, bank, hospital, or call center).

The challenge is that Performance Management Systems bear little resemblance to the way work actually gets done.




• Market Penetration: 37%Almost 2 in 5 companies have a Performance Management System in place. In the largest companies, that number is half. The problem of documenting and appraising performance is more important in settings with a quantitative output. The idea is a little harder to execute in service environments.

• Net Promoter Score®: -8Practitioners are generally unhappy with their Performance Management system. This has to do with suitability for purpose. Systems don’t work well when their fit to their purpose is inefficient. In software, sometimes dissatisfaction comes from the software. Sometimes it comes from the problem being solved another way.

• Buy Cycle: 5 YearsDissatisfaction with software does not always translate into replacement. Only 1 in 5 plan to replace their system this year. It is challenging to get resources to change something that does not work very well.

• Outsourcing: 3%When Performance Management is outsourced, the contractor provides the administration of the program. This is usually done to reduce cost.

• Part of Suite: 46%Slightly less than half of the practitioners who have an Performance Management Tool use something that is a part of an existing suite.

• Homegrown: 12%Interestingly, the number of companies that build homegrown solutions for Performance Management is lower than in any other area.

• Desirability: 25%Only one quarter of practitioners who do not have a Performance Management system would like to have one.

• Vendor Recall: 80%21% of the companies with an Performance Management System cannot recall the name of their vendor.

It is challenging to get resources to change something that does not work very well.




Fewer companies build homegrown solutions for Performance Management than in any other area.




AnalysisThe Performance Management software segment is fractured for a clear reason. What works in one setting does not in another. One way to read this data is that more than half of companies cannot find value by automating performance management.

When purchasing Performance Management technology, it will be important to check references from organizations with similar cultures. A sizeable portion of firms find it better to document this with homegrown tools. A good purchasing process will begin with a very clear understanding of the company and what it is trying to accomplish.

At the surface level, Performance Management should be at the heart of the company’s strategy. It is the single HR tool that directly promises to leverage the full potential of Human Capital. Performance Management is where HR should be able to demonstrate its importance and relevance. This is an administrative process that promises both essential information about what is happening in the company and real results for the business.

Yet, Performance Management systems have a tendency to become politicized and get used narrowly. Performance Management often just means a review of whether goals of the past were met and whether someone gets a raise, instead of being used for development of people in their jobs for the future. Like Learning, Performance Management has room for growth and redesign to be used in new and interesting ways. But it does not appear that we are there yet.

Purchasing a Performance Management System can easily become one of those exercises where idealism is trumped by the reality of the trenches.

Performance Management is the single HR tool that directly promises to leverage the full potential of Human Capital.




HR Analytics




In practice, there is little differentiation between Reporting and Analytics tools. In theory, Reporting is the process of organizing data into informational summaries in order to monitor how different areas of a business are performing. Analysis is the process of exploring data and reports in order to extract meaningful insights, which can be used to better understand and improve business performance.

The two activities, reporting and analytics, are inextricably linked. More often than not, the trigger for a deep analysis of a problem is something that emerges in routine reports. Although there are plenty of cases of deep investigation resulting from someone’s intuitive hunch, the majority of data analysis comes as a result of a change in the regular report.

Some Analytics tools start with this premise and use visualizations as a way of navigating the data beginning with the routine report. In those settings, HR Analytics are a gateway to a constantly improving capacity to predict human performance.

More often, ‘analytics’ is used interchangeably with ‘reporting.’ Today, most vendors claim to have an analytics capability. In reality, what is being sold is a repurposed version of the existing reporting packages, perhaps with additional drill-down functionality.

Many vendors offer preformed reporting that looks at specific HR Tech performance variables. One vendor published a dictionary of HR Analytics that featured 250 primary measures with about 10 variations of each. That is 2,500 possible HR measurements. It is not unusual to find preprogrammed reports on some or many of these variables being sold as analytics.

The promise of ‘big data’ and the ability to ‘directly measure HR’s impact on the business’ is creating a heightened demand for analytics tools. This is another area where sound purchasing depends on being very clear about what you want.

The promise of ‘big data’ directly measuring HR’s impact on the business is creating a heightened demand for analytics tools.




• Market Penetration: 24%Only one quarter of all companies have a formal HR Analytics System. This is largely due to two factors. One, HR Analytics is a cross-discipline function. There is no natural champion for the function and no natural buyer. Two, claims and expectations about HR Analytics functions vary widely.

• Net Promoter Score®: 18The HR Analytics segment has the highest Net Promoter Score® of any of the HR Technology Silos. It has the lowest number of detractors (people who scored the area as a 6 or less on a scale of 1 to 10) and the highest number of promoters. In spite of the underlying market confusion, this is curently the hottest area in HR Tech.

• Buy Cycle: 3 YearsOrganizations replace their HR Analytics tools faster than any other segment.

• Outsourcing: 5%When Analytics are outsourced, the contractor provides an analysis shop that manipulates the company’s data on its behalf. There is an emerging argument that outsourcers are more likely to be able to discover insight.

• Part of Suite: 54%This is where you can see a significant difference in approach. Using the analytics toolset embedded in a suite guarantees a reduced level of hassle for data integration. Using a point solution opens the possibility of greater insight. The market is roughly split on which approach is better.

• Homegrown: 9%Compared to other HR solutions, the organization is less likely to build its own HR Analytics function.

• Desirability: 28%A higher percentage of practitioners would like to have a Learning Management system. For all of the excitement, a new HR Analytics system is in the middle of the wish list. This is due in part to a stereotype that HR practitioners are incapable of working effectively with statistics and data.

• Vendor Recall: 79%21% of the companies with an HR Analytics System cannot recall the name of their vendor.

In spite of the underlying market confusion, this is currently the hottest area in HR Tech.




For all the excitement, a new HR Analytics system is in the middle of the wish list.




AnalysisThe hardest part of any HR Analytics implementation is the data integration component. That is the driving force behind the choice to use analytics that come as a part of a large suite. Data integration can be quite difficult. It is unpleasant to be the HR practitioner who has to tell management that the question can not be answered because the data is there but not available.

In our qualitative interviews, it became clear that HR practitioners are ambivalent about some aspects of the emerging analytics discipline. Many people in HR spend their time moving data between spreadsheets to generate insight. They have adapted to the inefficiencies of the software around them and succeed by being human data integrators.

It would be easy to dismiss that approach as something to be automated with a great cost savings. The business of examining and reexamining data is the central component of a great analytics process. Several organizations have made the tactical error of assuming human insight will not be needed.

Then, it often turns out that the new tool requires the same old approach and does not actually provide analysis of anything.

HR Analytics are being cast as a foundation for a utopian world in which data can be used to eliminate the vagaries of human involvement in work. The promises largely remain unfulfilled. Choosing to acquire an HR Analytics System brings risk that is difficult to manage and requires a great deal of time and attention. This is one area where a Tech acquisition requires new and more work instead of trying to save work.

That said, this is the hottest segment in HR and the place where future leadership careers are being mined.

Many in HR have adapted to the inefficiencies of the software around them and succeed by being human data integrators.




HR Information Systems (HRIS)




An HRIS can be as simple as a repository for employee contact information and as complex as a system the combines most employee data, payroll, benefits, scheduling, workforce management, recruiting and compliance. Sometimes, the term is used to describe all HR Technology activities in a company. Sometimes it refers to a simple ‘system of record’ that other systems rely on for data standardization.

We asked an open-ended question without regard to the underlying functionality. This data measures what practitioners say they have at their companies. The answers indicate that having an HRIS is directly related to the size of the organization.

The fuzziness in definitions is at the heart of a large communications problem. When definitions do not synch up, it is challenging to expand, replace or improve the core functionality.

There a many offerings emerging that combine social data, employee profiles, a communications functionality and directory/contact information into a single employee profile. As attractive as these new offerings are, they seem to lose sight of the more complex and secure data that HR is responsible for. Both employee health and personnel records have a range of security constraints associated with them.

• Market Penetration: 52%52% of all companies have a formal HRIS.

• Net Promoter Score®: 7The HRIS segment has a slightly favorable NPS®.

• Buy Cycle: 5 YearsOnly 20% of people who currently have an HRIS plan to replace it within the next year. HRIS is a workhorse and rarely seen as a sexy tool in need of improvement. It is a challenge to demonstrate the strategic impact of an HRIS. It is record keeping straight up.

• Outsourcing: 5%Nobody (statistically speaking) outsources their HRIS. This is due to the fact that HRIS is unique to the person and perhaps to the individual. It is, on one level, the very definition of a critical ‘rite of passage’.

The answers indicate that having an HRIS is directly related to the size of the organization.




• Part of Suite: 56% Almost 2/3 of the practitioners who have an HRIS tool use something that is a part of an existing suite.

• Homegrown: 13% At 13%, the number of companies with Homegrown solutions is significant. To some extent, the smaller the company, the more likely the HRIS is a kluge of spreadsheets and documents.

• Desirability: 28% Slightly more than a quarter of the companies without an HRIS want one. We think this is an area where naming conventions have affected the data. As companies increase in size, keeping track of employees becomes both more difficult and more important. Our best guess is that the HRIS functions are being performed by other software (like Payroll, Benefits and Scheduling). Some suites that offer core HR functions deliver HRIS functionality without ever actually calling it that.

• Vendor Recall: 84% Only 16% of the companies with an HRIS have trouble recalling the name of their vendor.




AnalysisThe HRIS is a gateway to the most complex aspects of data in the HR Technology stack. The lines between payroll, scheduling, benefits management and HRIS are hard to clarify and depend heavily on the way a vendor organizes their technology.

Differences between the claims and realities of competing products are challenging to understand on one level. On another, there is very little real difference between providers. It is mostly a question of the language being used to describe the product.

Purchasing an HRIS should involve a clear definition of a comprehensive set of use cases. Rather than attempting to specify complex functionality, the purchasing process should revolve around a group of mandatory use cases.

Our data reflects the confusion in the market. In a nutshell, practitioners have to solve that question on their own. It is another place where the idea of checking references provided by companies in similar circumstances is essential. In this area, organizations will have to rely more deeply on their vendors.

Purchasing an HRIS should involve a clear definition of a comprehensive set of use cases.




Time and Attendance




Time and Attendance Tools range in complexity from simple time clocks and spreadsheet-like tracking to complex arrays of time keeping and project management time accounting. They are far more common in companies with hourly employees, where adequate tracking of time is both a compliance and compensation issue.

With salaried employees, project tracking and billing are less dependent on time spent. The amount of time a salaried employee spends on a given task is a matter of recollection and perception (unless they bill by the hour).

Time and attendance is one place where mobile technology is really making a difference. Having the capacity to interact with the Time Keeping System from the smartphone or tablet eases managerial workload and increases employee flexibility.

• Market Penetration: 47%About half of all companies have a formal Time and Attendance System. The likelihood that a company has a Time and Attendance System is inversely related to company size. The smaller the company, the more likely they have a system.

• Net Promoter Score®: 8The Time and Attendance segment has a relatively high NPS®.

• Buy Cycle: 6 YearsBuying a Time and Attendance system is a long term arrangement. Only one in six current system owners are planning to replace their system.

• Outsourcing: 4%Time and attendance is most often outsourced as a part of a larger Payroll outsourcing project.

• Part of Suite: 47%Time and Attendance is a part of a suite for half of users.

Time and attendance is one place where mobile technology is really making a difference.




• Homegrown: 13% Smaller companies are more likely to build their own system. There are some interesting cases of organizations that partner with a vendor to build a homegrown system.

• Desirability: 38% Two in five organizations that do not have a Time and Attendance system wish that they did.

• Vendor Recall: 83% 17% of the companies with a Time and Attendance System cannot recall the name of their vendor.




AnalysisThe Time and Attendance segment is changing because mobile technology (phones and tablets) open the area to innovation. When employees can use self service to schedule shifts and report to work, management workloads associated with those administrative tasks decline. The smaller the

company, the more likely they have a Time and Attendance system.




Benefits Management




BenefitsManagement software gives employees an interface between the company’s benefits plan and the benefits providers. The core idea is to present all of the options in a single, consistent workflow and interface. The most sophisticated tools provide for a two way exchange between providers and employees in the framework of company policy.

Having all benefits transactions occur in a single framework allows the organization to optimize its benefits spend while encouraging employees to customize their end of the arrangement.

A Benefits Administration System creates and maintains an enrollment profile for every employee, keeping track of information such as the date hired, marital status, number of dependents, total hours worked, and attendance records.

• Market Penetration: 20%The majority of companies outsource benefits administration to either a provider or an intermediary. The distribution of software utilization peaks in the middle of the company size spectrum. Companies smaller than 500 employees manage benefits in house and manually, while companies over 2,500 usually use a third party to execute.

• Net Promoter Score®: 3The Benefits Management segment is evenly balanced between promoters and detractors. With nearly 50% of practitioners being passive, practitioners do not care about Benefits Management Systems in the same way that they do not care about Learning, Succession, and Total Rewards.

• Buy Cycle: 8 YearsSlightly more than one in ten companies that currently have a Benefits Management System are considering replacing it.

• Outsourcing: 10%The data suggests that practitioners make a distinction between outsourcing benefits management and outsourcing all of benefits selection and administration. That means that when all of the work associated with providing employee benefits is outsourced, the Benefits Management component is simply a part of the larger issue.

The core idea is to present all of the options in a single, consistent workflow and interface.




• Part of Suite: 38% Nearly two in five companies use Benefits Management Tools that are a part of a larger suite. In other words, the majority of companies use a point solution.

• Homegrown: 7% There are two types of homegrown solutions. For small companies, keeping a log of benefits expenses as a part of accounting is a common approach. In larger companies, using spreadsheets to integrate the data between multiple providers of benefits is common.

• Desirability: 26% About one quarter of the organizations that do not currently have a Benefits Administration Tool wish they did.

• Vendor Recall: 79% 21% of the companies with an Benefits Management System cannot recall the name of their vendor.




AnalysisBenefits management is one of the HR disciplines that is well beyond the core capabilities of most companies. The combination of execution and regulatory complexity make it an ideal candidate for outsourcing. Many benefits providers are willing to take on the entire administration process in order to win the core benefits business.

In the benefits world, the cost of administration is dwarfed by the actual cost of the benefits being administered. That is why third party providers are willing to take on the workload. In other words, the choice to acquire or replace a Benefits Management System is inextricably linked to a larger benefits execution discussion.

The argument for local embedded management of benefits programs is that costs are more actively controlled by an in-house practitioner. The argument against begins with the reality that the cost manager will have to deliver customer service directly to employees.

The combination of execution and regulatory complexity make Benefits Management an ideal candidate for outsourcing.




Payroll




The complexity of Payroll problems is directly proportional to the size of the organization. The greater the span of professions and locations, the greater the array of compensation models and regulatory requirements. In the United States alone, there are more than 400 laws (from local to national) that regulate everything from minimum wage to pay periods, overtime, tax withholding, garnishment and what has to be on the pay stubs.

Global firms have even greater problems. Very few vendors (almost none) are able to provide comprehensive international payroll services. Within the roughly 200 sovereign nations are conflicting laws covering who gets paid what, when, and in which currency.

Payroll, which is a critical function in every organization, is singularly difficult to get right. Most organizations that execute their own payroll process in house, begin making trial runs nearly a week in advance of the final payroll run. Still, something inevitably goes wrong.

Perhaps the toughest thing about payroll is how personal its outcomes are. In an organization of five hundred, 99% accuracy means that five people’s pay checks are screwed up. While the execution is nearly perfect, those five employees are profoundly affected. Even a 99.5% effectiveness rate is damaging to organizational morale. Payroll requires perfect execution.

There is an energetic universe of outsourcing vendors for payroll. The float (the difference between the time the vendor receives payroll funds and has to disperse them) is a powerful element of the equation. Even if the financial benefits of handling the float (short term interest and large bank accounts) is discounted or set aside, handling that much money has a clear impact on the vendor’s service proposition. The salary and demographic data is even more enticing.

New systems are arriving on the scene. They reduce the friction associated with payroll execution by providing real time trial runs.

Payroll, a critical function in every organization, is singularly difficult to get right.




• Market Penetration: 36%Only 36% of all companies have a formal Payroll System. There is an inverse relationship between size of the company and the likelihood that it has a Payroll System. Over half of small companies have one. Slightly more than a quarter of large companies do.

• Net Promoter Score®: 8While errors are painful and damaging, more people like their payroll provider than not. A full 33% of Payroll System customers give their providers high marks.

• Buy Cycle: 9 YearsOnce you acquire a Payroll System, you tend to have it for life. Organizations keep their payroll software longer than any other HR software. This is largely because the change can be so traumatic. No one wants the high error rates a transition will inevitably bring.

• Outsourcing: 53%As companies grow, they tend to outsource payroll.

• Part of Suite: 49%Half of all companies that have a Payroll System in house use something that is a part of a larger suite.

• Homegrown: 6%The 6% of organizations that use homegrown solutions are mostly smaller companies.

• Desirability: 20%One in five of the people who do not have a Payroll System in place wish they had one. These are mostly small companies.

• Vendor Recall: 85%15% of the companies with a Payroll System cannot recall the name of their vendor.

Once you acquire a Payroll System, you tend to have it for life.




There is an inverse relationship between size of a company and the likelihood it has a Payroll System.




AnalysisConsidering a Payroll System offers an important array of decision making. All companies have to pay their employees. Therefore, all companies have some form of payroll function. While small companies try to accomplish the function in-house, most companies choose to outsource the entire function. That makes the issues associated with compliance go away.

With either outsourcing or a Payroll System, a company gets help with making sure that employees are paid on time in the right place, in the right amounts, that withholdings are calculated correctly, and that the information that is required by each state, and often cities, is provided.

However, no payroll company or Payroll System can fix issues with worker misclassification or inaccurate time keeping by humans. Still, it is a huge service to have someone else keep track of all of the wage hour reporting requirements.

No Payroll System can fix issues with worker misclassification or inaccurate timekeeping by humans.




NotablesIn each of our surveys, we ask practitioners to name vendors who are ‘Notable” in specific areas. The question uses a blank, fill-in-the-box format. No prompts are offered. The practitioner must answer the question based on unaided recall.

This is our third attempt to portray the practitioner view of the marketplace. We know that it will be vastly different from the vendor’s perspective. Like two sides of the same coin, the two vantage points are radically different while describing the same reality. It is important to understand that practitioners rarely make some of the distinctions that vendors do when they characterize their market or the HR Industry.

For instance, while practitioners are aware of vendor names, they are rarely aware of which market segment or niche a particular vendor serves. This means that the practitioner view is an aggregate view. These word clouds reflect that view.

From the vendor’s perspective, the market is composed of the other people who go to the same trade shows and engage the same demographic. At KeyInterval, we have a list of 1,000 vendor names that we generally expect will show up on that list.

The vendor perspective is largely about direct competitors in the same niche.

Most other analyst firms present a picture of the vendor landscape that resembles the vendor point of view.

The practitioner perspective is different. Formed from a combination of marketing inputs and direct experience, practitioners are more interested in the tools that they use than an analyst’s view of what matters. Name recognition and reputation are built from the grassroots. In the practitioner’s view, the buyer and the vendor can be somewhat indistinguishable (depending on how far removed they are from the process).

That is why vendors who might be perceived as smaller made it to the top of our first list. Practitioners can only tell us about their experience. There is no incentive for them to have or maintain the analyst/vendor’s view of the universe.

There is a Second . . . dimension to the question.

Every single HRTech vendor works in some sort of niche. They only serve customers that have a certain size and complexity. They fare better in one industry or another. They have deeper reach in some geographies. Their audiences are limited.

The practitioner audience is not niche specific.

None of the companies paid to be mentioned in this report.

In each of the following sections, the word cloud and Top 10 list reflect the practitioner’s perspective on the subject.




Notable for Onboarding10 Most Notable Vendors . . . for Onboarding Systems are:

1. ADP

2. Taleo

3. InHouse

4. Oracle

5. UltimateSoftware

6. Icims

7. SAP

8. Enwisen

9. ExactHire

10. SuccessFactors




Notable for Succession Management10 Most Notable Vendors . . . for Succession Management Systems are:

1. Microsoft

2. ADP

3. Halogen

4. IBM

5. InHouse

6. Ultimate

7. Oracle

8. SumTotal

9. 9Box

10. CornerstoneOnDemand




Notable for Total Rewards (Recognition)10 Most Notable Vendors . . . for Total Rewards (Recognition) Systems are:

1. InHouse

2. Microsoft

3. Kronos

4. Oracle

5. TotalRewardsSftwr

6. Globeforce

7. OCTanner

8. SAP

9. AwardCo

10. CorporateRewards




Notable for Wellness Management10 Most Notable Vendors . . . for Wellness Management Systems are:

1. Microsoft

2. CSISoftware

3. MindBody

4. IBM

5. InHouse

6. SoftTech

7. UnitedHealthCare

8. ADP

9. Anglo

10. Atena




Notable for Compensation Management10 Most Notable Vendors . . . for Compensation Management Systems are:

1. ADP

2. InHouse

3. Microsoft

4. OracleHCM

5. PeopleSoft

6. SAP

7. Cisco

8. Halogen

9. IBM

10. Workday




Notable for Learning Management10 Most Notable Vendors . . . for Learning Management Systems are:

1. InHouse


3. Microsoft

4. Skillsoft

5. SAP

6. ADP

7. HewlettPackard

8. Saba

9. Blackboard

10. Capterra




Notable for Recruiting10 Most Notable Vendors . . . for Recruiting Systems are:

1. Taleo

2. InHouse

3. Microsoft

4. ADP

5. Icims

6. Oracle

7. Monster

8. PeopleAdmin

9. Recruiterbox

10. USAStaffing




Notable for Performance Management10 Most Notable Vendors . . . for Performance Management Systems are:

1. Microsoft

2. Halogen

3. Oracle

4. InHouse

5. PeopleFluent

6. ADP

7. Workday

8. IBM

9. SuccessFactors





Notable for HR Analytics10 Most Notable Vendors . . . for HR Analytics Systems are:

1. OracleHCM

2. Microsoft

3. Aquire

4. IBM

5. Visier

6. HewlettPackard

7. PeopleSoft

8. InHouse

9. Tableau

10. ADP




Notable for HR Information Systems10 Most Notable Vendors . . . for HRIS are:

1. ADP

2. Oracle

3. InHouse

4. Microsoft

5. PeopleSoft

6. Workday

7. IBM

8. Kronos

9. SAP

10. Sage




Notable for Time and Attendance10 Most Notable Vendors . . . for Time and Attendance Systems are:

1. Kronos

2. ADP

3. InHouse

4. Microsoft

5. SAP

6. IBM

7. Paychex

8. Sage

9. TimeForce

10. Oracle




Notable for Benefits Management10 Most Notable Vendors . . . for Benefits Management Systems are:

1. ADP

2. Oracle

3. Microsoft

4. InHouse

5. Zenefits

6. Kronos

7. AonHewitt

8. BambooHR

9. Ceridian

10. Cisco




Notable for Payroll10 Most Notable Vendors . . . for Payroll Systems are:

1. ADP

2. Intuit

3. Kronos

4. InHouse

5. Paychex

6. Oracle

7. Microsoft

8. Cisco

9. PeopleSoft

10. APS




What We Missed and New QuestionsGreat research asks new questions or provides new insights on older questions. Our goal is never to reaffirm the status quo. Our research is designed to stimulate thought and discussion. We are looking for new insights that can make the industry’s conversations more effective.

In this research, we wanted to reframe the current dialog about software’s utility and the idea that every company needs the same toolset. We know that there are differences between companies driven by business model, size, industry, and region. The goal of this project was to illuminate the differences and define an optimal technology stack for an HR department.

We expected that we would be able to have a good picture of what works for whom based on those four elements (business model, size, industry, and region).

We are getting there. It’s going to take more and deeper research over time. This report is a powerful beginning that will be supplemented and expanded in the coming years.

One of the biggest surprises was the meaningful number of software silos that are important to the HR story. We missed seven or eight important categories of software. We will fold those in to the next studies. (They are defined in the categories chapter.)

Overall, market penetration was much lower that we expected. The world of the analyst is an idealized universe in which every company does everything. What we are finding is much more interesting than that.

Instead of 13 basic types of HR software, there are 20 or 21. And, if you count some of the more complex types of recruiting tool, the number of different possibilities may be as high as 30.

Some companies use that many different tools. Others don’t. The range of probable scenarios is much greater than we thought. The actual practice of HR is far more variable than we have been led to believe.

The actual practice of HR is far more variable than we have been led to believe.




MethodologyResponses by RegionThe 785 responses were spread across the United States in a representative fashion. The following tables and maps illustrate the underlying structure of the data.

Our 785 Responses . . . were driven using a variety of means. Social media campaigns, targeted emails, promotions in trade journals, and purchased panel responses all played a role in the process.




Responses by Region, cont’d.




Responses by Level of Educational Attainment

EDUCATION RESPONSE %

Less than High School 0 0%

High School / GED 41 5%

Some College 88 11%

2-year College Degree 86 11%

Trade/Technical/Vocational School 17 2%

4-year College Degree 383 49%

Masters Degree 146 19%

Doctoral Degree 12 2%

Professional Degree (JD, MD) 12 2%

TOTAL 785 100%




Responses by RoleAll of the various roles in HR are represented in the responses.

ANSWER RESPONSE %

CHRO 26 3%

SVP 13 2%

VP 30 4%

Director 134 17%

Manager 317 40%

Business Partner 40 5%

Recruiter 78 10%

Other 147 19%

TOTAL 785 100%




Responses by FunctionAll HR functions except University Relations are represented in the 785 responses.

HR FUNCTION RESPONSE %

Benefits 58 7%

Business Partner 40 5%

Compensation 29 4%

Compliance 25 3%

Diversity 4 1%

Employee Relations 138 18%

Generalist 120 15%

Organizational Development 47 6%

Payroll 86 11%

Recruitment 89 11%

Safety 7 1%

Talent Management 34 4%

Training and Development 58 7%

University Relations 3 0%

Other 47 6%

TOTAL 785 100%




Responses by IndustryThe 785 total responses came from 104 different industries.

Accounting 12 1.5%Airlines/Aviation 3 0.4%Alternative Medicine 2 0.3%Animation 1 0.1%Apparel & Fashion 3 0.4%Architecture & Planning 3 0.4%Arts & Crafts 4 0.5%Automotive 14 1.8%Aviation & Aerospace 4 0.5%Banking 20 2.5%Biotechnology 4 0.5%Broadcast Media 5 0.6%Building Materials 7 0.9%Business Supplies & Equipment 12 1.5%Capital Markets 3 0.4%Chemicals 5 0.6%Civic & Social Organization 2 0.3%Civil Engineering 5 0.6%Commercial Real Estate 3 0.4%Computer & Network Security 4 0.5%Computer Hardware 2 0.3%Computer Networking 5 0.6%Computer Software 15 1.9%Construction 20 2.5%Consumer Electronics 5 0.6%Consumer Goods 14 1.8%

Consumer Services 8 1.0%Cosmetics 1 0.1%Defense & Space 2 0.3%E-learning 1 0.1%Education Management 61 7.8%Electrical & Electronic Mfg. 9 1.1%Entertainment 3 0.4%Environmental Services 4 0.5%Events Services 1 0.1%Facilities & Services 3 0.4%Facilities Services 2 0.3%Financial Services 18 2.3%Fine Art 1 0.1%Food & Beverages 8 1.0%Food Production 1 0.1%Furniture 1 0.1%Government Administration 35 4.5%Government Relations 8 1.0%Graphic Design 1 0.1%Health, Wellness & Fitness 36 4.6%Higher Education 3 0.4%Hospital & Health Care 42 5.4%Hospitality 23 2.9%Human Resources 73 9.3%Individual & Family Services 2 0.3%Industrial Automation 1 0.1%

Information Services 3 0.4%Information Technology & Svcs. 18 2.3%Insurance 8 1.0%Internet 1 0.1%Law Enforcement 3 0.4%Law Practice 2 0.3%Legal Services 5 0.6%Libraries 1 0.1%Logistics & Supply Chain 2 0.3%Machinery 9 1.1%Management Consulting 13 1.7%Market Research 1 0.1%Marketing & Advertising 4 0.5%Mech. or Industrial Engineering 2 0.3%Media Production 2 0.3%Medical Device 3 0.4%Medical Practice 8 1.0%Mental Health Care 1 0.1%Military 4 0.5%Mining & Metals 5 0.6%Museums & Institutions 2 0.3%Nonprofit Organization Mgt. 24 3.1%Oil & Energy 5 0.6%Online Publishing 1 0.1%Outsourcing/Offshoring 3 0.4%Package/Freight Delivery 1 0.1%

Packaging & Containers 1 0.1%Paper & Forest Products 2 0.3%Pharmaceuticals 12 1.5%Photography 1 0.1%Plastics 3 0.4%Printing 2 0.3%Professional Training 6 0.8%Public Relations 1 0.1%Real Estate 11 1.4%Religious Institutions 2 0.3%Renewables & Environment 1 0.1%Research 1 0.1%Restaurants 5 0.6%Retail 38 4.8%Security & Investigations 3 0.4%Staffing & Recruiting 1 0.1%Supermarkets 1 0.1%Telecommunications 9 1.1%Textiles 2 0.3%Transportation/Trucking/Railroad 9 1.1%Utilities 4 0.5%Veterinary 1 0.1%Warehousing 4 0.5%Wholesale 8 1.0%Wireless 1 0.1%TOTAL 785 100%

Industry No. % Industry No. % Industry No. % Industry No. %




Research AgendaKeyInterval Research is mapping the complexities of practitioner experience in the HR Tech universe. We help HR understand what’s possible and what fits best. We do disciplined, pragmatic research to help practitioners separate fact from anecdote.

Here is our research agenda.

One: What Is The Ideal Vendor Relationship? Purchase ReportThere is a diverse range of possible ways to build a relationship with a vendor. We’re eager to discover what works and what doesn’t. As we map the area, we expect to find amazing success stories and examples.

Two: Why Do Implementations Succeed? Purchase ReportWe are going to seek and discover exemplary success stories. We are really curious about the factors that create memorable successes. What are those drivers? Is there a difference between a great success story and something merely adequate? What’s the difference?

Three: What Is The Optimal Technology Stack?The HR Stack is all the software, data and apps in a company’s HR Department. No two are the same. Every instance is truly unique... like a cultural fingerprint. We will map what’s being purchased and by whom.

Four: Is There a Best Data Strategy?The future of HR is anchored to its ability to harness data. We aim to map the optimal data model and its critical components. These are the early days of HR data mastery. We can't wait to report what we learn.

Five: Do Users Love Your Software Purchases? (Software Engagement)Enterprise HR software users can LOVE the software you purchase. They can also hate those purchasing decisions. What makes an optimal environment for love of enterprise software? We are on it.

Acknowledgements . . .

We are blessed with a team that makes this look easy.

Raymond Sumser is responsible for the amazing graphics.

Anne Hill is the reason the report has such a great look and feel.

Heather Bussing takes chunky raw material and shapes it into useful insight.

Reinhard Joelli watches the data and makes sure our statistics make sense.

Stacey Harris provides a level of depth that makes the research sound.

Our network of advisors and practitioners is extraordinary. 73 people offered time and important feedback to the qualitative questions the data.

Our customers make this all possible.


https://www.keyinterval.com/downloads/individual-report-ideal-vendor-relationship-v1-0/

https://www.keyinterval.com/downloads/individual-report-successful-implementations/



Six: How Does This Go Together?We’ll summarize the data and try to understand and explain how each variable can make for a better HR department. We will also include M&A and Transaction data. We review new ideas and products.

Seven: What Is The Model Purchasing Process?Most companies have a sophisticated way to buy software. We want to understand the Purchasing Process. Changes are afoot. We’re excited about staying on top of the evolution as it happens.

Eight: What Is The Perfect HR Budget?The further we look into HR’s budget, the more we understand that this is the best way to explore the overall organization’s commitment to HR and its issues. The budget is a good way to understand what matters.

Nine: Do Employees Use The Software? (Adoption)We are researching how much, how often and why employees use HR Enterprise Software. We think that organizations that get optimal User Adoption also achieve the maximum ROI.

Ten: Which Metrics and Analytics Are Useful?We research which HR metrics and analytics are working under what conditions. We are fascinated with the emergence of HR as a quantified discipline. This area will grow significantly in the coming years.

Eleven: AreHRProcessesEffective?Exploring the relationship between HR and its customers has our attention. We’re pretty sure that increased accountability is a part of HR’s immediate future. We are excited to see it unfold.

Twelve: What Has Happened? What Did We Learn? What’s Coming?We hold ourselves accountable and examine the cumulative understanding of our research agenda. We will be soliciting questions ongoing to be answered in this report.


optimal tech stack report

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