HR Technology Spending Rises

C-suite sales cause headaches for HR IT professionals

By Aliah D. Wright June 11, 2014

A new study of human resource IT professionals reveals that companies worldwide are planning to spend more money on HR technology—mostly by embracing software-as-a-service (SaaS) systems, talent management solutions, HR portals and mobile applications.

Conducted by global professional services company Towers Watson, the 17th annual HR Service Delivery and Technology Survey was released in June 2014. More than 1,048 HR executives from 45 countries participated.

The new study also revealed that one in three companies plans to overhaul its HR structure in order to improve quality and efficiency.

“Despite cost-cutting in some areas of HR, we are seeing a substantial spike in technology spending,” said Mike DiClaudio, global leader of Towers Watson’s HR Service Delivery practice, in a news statement. “Companies are realizing the value that consumer-grade technology brings to HR and are willing to make smart investments that can grow and evolve with the business. It also appears that companies are splitting their investments between core HR systems, such as talent management and payroll, and next-generation technology, including HR data and analytics, and integrated talent management systems.”

Damon Lovett, a senior human capital management consultant with Knowledge Source, said his experience matches the study’s findings.

“On the service delivery front, we are seeing this demand increase exponentially,” Lovett told SHRM Online. Lovett, a former member of the Society for Human Resource Management’s (SHRM) Technology and HR Management Special Expertise Panel, is also a board member of the International Association for Human Resource Information Management.

“The human capital management vendors have gotten good at selling to the C-suite, bypassing the minutia of the HR department. Senior leaders make the purchase, push the products on HR to implement and demand the efficiency that the vendors are promising.”

That’s good and bad for HR, he added.

“Good in that HR is pushed outside their comfort zone and forced to reimagine HR service and customer experience,” he said. But “bad in that they are now on the hook for delivering on a business case they didn’t build. What this equates to is HR having to grow up quickly and get more comfortable with building and selling the business case for organizational changes and other resource augmentation necessary to deliver this change.” Of the 1,048 HR executives responding to the Towers Watson survey, 33 percent said they plan to spend more on HR technology in the coming year; 23 percent plan to increase spending by 20 percent and 10 percent plan to increase HR technology investment by more than 20 percent. Only 15 percent plan to spend less on HR technology in the coming year.

More companies are increasing their use of SaaS, too, the study found, as well as adopting more mobile technologies and HR portals. Nearly half of the respondents (46 percent) reported using mobile technologies for HR transactions, an increase from 36 percent in 2013. However, only 10 percent are using mobile access for a majority of HR transactions. Meanwhile, 60 percent of employers have an HR portal in place, up from 53 percent in 2013. Another 20 percent are in the process of developing a portal. Adoption of SaaS increased again in 2014 with 40 percent of those surveyed saying they are considering SaaS as their only solution.

Changes to HR Structure

The survey revealed that one in three companies is planning to make changes to their HR structures either this year or next. For the second consecutive year, respondents identified streamlining their business processes as the No. 1 HR priority.

“Organizations are narrowing their focus on HR initiatives as they attempt to strike a balance among people, processes and technology priorities,” DiClaudio, stated in the news release. “We attribute this shift to high-impact HR investments, such as streamlining business processes and implementing manager self-service, to a commitment to running the HR function more like a business.”

Other key ideas from the survey include:

Manager self-service. The adoption of manager self-service tools increased dramatically around the world with 71 percent of North American companies now using manager self-service tools in 2014, compared to just 61 percent in 2013. Similar adoption increases were experienced in Asia Pacific, Europe, the Middle East and Africa. Worldwide, 60 percent of organizations want to increase their use of manager self-service tools in the future.

Employee engagement surveys. About 63 percent of those surveyed stated they regularly perform employee engagement studies and use the information to improve how they hire. Companies that conduct engagement surveys have twice the satisfaction rate with the implementation of new technology, compared with companies that do not conduct surveys.

Aliah D. Wright is an online editor/manager for SHRM.


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