The human resource management system (HRMS) has long been the nerve center of HR operations, providing a single source of information for employee records, payroll and benefits administration, talent management applications, and workforce analytics. But in the past few years, these core platforms have evolved to add functions like contingent worker information, employee profiles and directories, social collaboration tools, and more on a unified system.
The evolution reflects HR executives' and HRMS managers' desire to have more capabilities available in one seamless architecture, with the idea of simplifying user access, improving system integrations and enhancing usability for both the human resource staff and the workforce. Industry vendors serving large as well as midsize and small companies have responded by focusing more of their HRMS platforms on the employee experience and continuing to transform core products into cloud-based solutions.
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Adoption of Unified Solutions Grows
The growth of one-stop-shop, SAAS-based HRMS platforms is reducing organizations' need for "point" solutions or specialized HR technologies, according to recent research. A 2017 study from Forrester Research on the HR vendor landscape found that as more HRMS platforms expand into recruiting, onboarding, time and attendance, learning, employee engagement, and more, companies are reducing the number of point solutions they use to support those processes. In many cases, HR leaders are investing in unified platforms to simplify procurement and governance of their technology systems.
"HR leaders are increasingly looking for a unified platform experience and unified reporting, while still selectively plugging individual best-of-breed systems into their technology ecosystems," said Mollie Lombardi, co-founder and CEO of Aptitude Research Partners, a research-based analyst and advisory firm specializing in HR technologies.
Lombardi expects vendors to focus on "employee-focused innovation" by adding new features to HRMS platforms like employee profiles and organizational charts, more mobile-friendly self-service applications, and other tools that enhance user engagement or productivity. For example, Aptitude recently completed a comprehensive study on payroll practices that found more cloud-based systems are automatically rolling time-keeping data into payroll, allowing workers in some industries to be paid the same day they complete work.
Sierra-Cedar's 2017-2018 HR Systems Survey found that more than 50 percent of respondents now have cloud-based core HRMS solutions versus on-premise products, with large and midsize companies also rapidly moving their payroll solutions to the cloud. For the past few years, the survey has reported more HRMS replacements than upgrades, a further indication of ongoing migration to cloud and SaaS solutions.
Some organizations also have begun to seek new capabilities from their HRMS. According to a 2017 report from research and advisory firm Gartner, globalization is increasingly affecting mid-market organizations as much as larger enterprises, with those companies needing to operate in multiple countries with diverse regulatory, data access and privacy requirements. As a result, more midsize companies are looking for HRMS platforms that can maintain a robust and consistent repository of demographic, organizational and talent data across multiple geographies.
Buyers also are now seeking mature "augmented intelligence" tools in their core HR systems, said Christa Manning, vice president and solution provider research leader at Bersin by Deloitte Consulting, an HR research and advisory firm. Augmented applications differ from artificial intelligence in that they supplement rather than replace human knowledge.
"For example, if a user of a core HR and payroll system is consistently logging in and looking at one thing, the next time they log in, the user interface will present recommendations of what they could do in the system," Manning said. "This kind of augmented intelligence helps users be more productive and can make it easier for them to quickly get in and out of systems."
Areas of Concern
The Sierra-Cedar survey found that while a core HRMS is central to HR's ability to understand a workforce and effectively communicate with it, only 17 percent of respondents felt their current HRMS solution "always met" their business needs. These HR professionals said their greatest challenges were reporting functionality, lack of customization, integration issues, poor user experience, and substandard service and support.
The survey found the new "non-negotiables" in an HRMS for prospective buyers were the user experience, a vendor's road map strategy and tailored relationships. The last two factors reflect a growing desire to partner with established and trusted vendors who continue to innovate and provide a high level of customer service.
Lisa Rowan, research vice president of HR, talent and learning strategies at research and advisory firm IDC, conducted a survey in March that queried HR technology systems buyers about their primary reason for changing to a new HRMS platform. "Far and away, across every industry and company size, the top factor was a desire for more modern technology," Rowan said. The survey included responses from 500 HR technology systems buyers in the United States.
The second most-cited reason for changing platforms was vendor viability, or a concern that a current vendor might not have staying power, she said. Concerns about customer service also played a significant role in switching vendors, her research found.
Lombardi has seen improvements in analytics capabilities, particularly in data visualization tools. "Data is only as good as the story that HR can tell with it, and the visualizations that are a part of dashboards have gotten better and more useful in the past few years," she said.
Rowan said the ability of HRMS platforms to turn workforce data into easily understood charts and graphs helps HR leaders address a long-standing challenge: being better prepared to answer questions from executives about workforce metrics.
"In the past, HR hasn't always had a good handle even on simple measures like overall head count or turnover rates parsed by region, division or department, partly because it was using manual or outdated systems to pull together and analyze that data," Rowan said. The ability to automate and enhance that process with modern analytics is a step forward, she noted.
Tips for HRMS Buyers
Those in the market to replace their HRMS should consider some key criteria when comparing providers, experts said. If you're replacing or supplementing an on-premise system with a SAAS model, you'll want to determine how many software updates to expect from the vendor. "When you're talking to references, ask them how smooth the new release or update process is," Rowan said. "Three or four software updates per year can be disruptive to HR if not done efficiently."
Determine too if the prospective vendor will implement a system itself or rely on a partner. "If most implementations are done by partners, you'll want to conduct thorough due diligence on them, since implementation is a key to success and high user adoption rates," Rowan said.
Manning said investigating a vendor's customer service model and integration capabilities also is vital. "Buyers often focus on features and functions at the expense of customer service, but if the vendor doesn't have the support infrastructure to ensure people learn how to use and adopt the system as well as quickly address any problems, it will be an issue."
While many HRMS vendors will claim they have application programming interfaces (APIs) that allow for easy integration with other talent or non-HR systems, Manning said buyers shouldn't take that promise at face value.
"I joke that API sometimes stands for 'almost providing integration,' " Manning said. "Just because a vendor has an API doesn't mean integrations will be seamless and effortless or continue to be effective over time. You still actually have to make those integrations happen, whether it is on the front end of the system with a voice-response tool or on the back end in pulling workforce data out of one system and placing it in a broader analysis pool to correlate it with business outcomes."
Dave Zielinski is a freelance business writer and editor in Minneapolis.