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Boese: 3 realities about today’s HR tech market

Steve Boese, HR Tech Conference chair
Steve Boese
Steve Boese is HRE's Inside HR Tech columnist and chair of HRE’s HR Technology Conference®. He also writes a blog and hosts the HR Happy Hour Show, a radio program and podcast.

It’s great to be back writing for Human Resource Executive after a little bit of a break in 2020. Well, in fairness, while I may have taken a break from the Inside HR Tech column, there certainly was not much of a–if any–break from talking about HR technology solutions latest year. In fact, due to the impact of COVID-19 and the full stop of business travel and in-person events, I probably did more HR tech demos on Zoom in 2020 than I had in the last two or three years combined.

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I will have lots more to share about the 2021 Top HR Products of the Year program soon, but I wanted to take the opportunity to share a few observations from all of these recent demos. I hope they shed light on the current state of the HR technology market and offer HR leaders guidance for making decisions about HR tech at your organization.

1. On the whole, HR technology has never been better.

I had a demo just last week from a relatively lesser-known HR tech solution provider that primarily targets the mid-market customer: organizations with 500-1,500 employees. The combination of the breadth of capability, the user interface and the advanced features in HR analytics and reporting were honestly not that dissimilar to the highest-end enterprise solutions in the market, and light years ahead of what would have been available to relatively small organizations a decade or so ago. And this was just the most recent example I have seen of extremely powerful HR technology that is accessible and affordable for a wide range of customers. Are the solutions from the big, “enterprise” providers broader, with larger R&D budgets and TV commercials? Sure. But the level, maturity and power of the HR tech solution market up and down the scale has never been more impressive.

One last note, as part of the 2020 Top Products for HR process, we had an incredibly difficult time making our final selections. We could have easily included another 10-12 solutions and, if we did, I would not have felt like we diluted the winners’ pool at all. That’s how many strong and capable solutions we reviewed.

2. Over time, HR technology capabilities converge.

During the Top Products process, I saw at least six demonstrations of “on-demand pay,”–i.e, the capability for employees to request and access their earned pay prior to, or on a different cadence from, the “normal” pay cycle. While each provider had its own spin on the capability, and at least one had a very unique approach to the problem, the sheer number of providers showcasing this capability is instructive of an important concept: Given time, HR technology providers and their capabilities converge.

There are a few reasons for this. Providers are adept at monitoring their competition and they often will build features to “keep up” with the market. They often see the same RFPs asking for specific capabilities in the sales process and take cues from them. Finally, it’s telling that, across the landscape of Tier 1 and Tier 2 HR technology providers, many employees in high-level product development and strategy roles jump from provider to provider. I’m not saying any of these providers “copy” or steal ideas from each other, but rather that, over time, many HR tech solutions are not that distinguishable from each other, at least on a pure functionality level. They are all, for the most part, very capable, and often, very similar.

See also: How tech can help HR, employees recover in 2021

3. HR leaders have to look beyond features to make the best decisions.

In recent years, we have seen a trend away from traditional, 100-page RFPs as a critical part of the HR technology buying and decision-making process. The main reason for dropping RFPs was more a nod to the inherent flaws in that approach: They took too long to create and too long for providers to respond to, and they often resulted in endless pages of “Yes” answers no matter what question or capability was being queried. They had, and still have, limited value.

The other main reason HR leaders have to think more broadly when making tech decisions is being driven from my observations above–as a whole, solutions are getting better, while simultaneously growing more similar, especially across the larger, enterprise solutions. Assessing a solution strictly on the capabilities it has today is limiting. These providers will continue to “keep up” with each other, either through native development, acquisitions or enhanced partnerships.

So, what can or should HR leaders consider beyond simple functionality? They should look at the areas where true differentiation can exist–implementation services, support, customer communities–areas that are not simply coded but are defined and delivered by people and governed by a provider’s overall philosophy. While I tend to think that, at a slightly abstract level, most of the “big” HR tech solutions are more alike than they are not, pretty important differences exist in the customer experience across the market. These differences are just as important as, if not more important than, boxes checked on an RFP.

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Let us all hope for a great year in HR technology!