More Businesses Investing in HR Technology

By Aliah D. Wright Jun 17, 2015
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Global investment in HR technology continues to increase exponentially, according to the results of the newly released 2015 HR Service Delivery and Technology Survey, conducted by Towers Watson, a global professional services company.

Eighty-eight percent of respondents to Towers Watson’s 18th annual study said they intend to spend the same amount or more on HR technology and systems compared to last year. What’s more, some organizations are replacing their main HR management systems more frequently than ever before—every three to five years. Historically, they have replaced these systems every five to seven years. The survey noted that 30 percent of respondents will replace their core HR systems this year—an all-time high. Their preferred system of choice? Workday.

In an article published by the Society for Human Resource Management (SHRM) earlier this year, John A. Hinojos, VP of consulting services for HRchitect Inc., outlined how HR professionals can choose a new HR software system.

Towers Watson conducted the study in January and February 2015 and released it in June. Those surveyed included HR information technology and HR executives at nearly 800 organizations from 37 countries. Half of the respondents were from global organizations.

“Modernizing core HR technology is emerging as the primary HR service delivery priority,” Mike DiClaudio, global leader of Towers Watson’s HR Service Delivery practice, said in a news release. “While in the past, companies have mostly invested in secondary technology for talent, compensation and performance management, there has been a dramatic shift to investing in core HR systems. Many organizations are now looking at cloud-based platforms to replace traditional HR platforms. The changing environment will lead companies to take a closer look at their overall HR technology needs.”

The HR technology software market, now worth more than $15 billion, is expanding not just with growth but innovation, Josh Bersin of Bersin by Deloitte wrote in a Forbes article late last year. “We are tracking more than 100 new startups in social and referral recruiting, talent analytics, assessment science, online learning, and mid-market core HR systems. New tools to help manage employee communications, engagement, recognition, and workplace wellness are also red hot,” he wrote.

Bersin said the top 50 HR technology investment deals in 2014 accounted for more than $560 million and the top 50 learning and educational tech deals were over $800 million.

The Towers Watson survey also revealed that employer interest continues to grow in the use of HR portal technologies as well as mobile tools. More than 6 in 10 respondents (61 percent) plan to use mobile technologies for HR transactions this year, a sharp increase from last year (46 percent). The survey indicated that two-thirds of respondents now have an HR portal in place, up from 60 percent last year.

Other key findings from the survey include the following:

Changing HR structures. Four in 10 of those polled said that in either 2014 or 2015, they plan to make changes to the way their HR departments are structured. Last year, 30 percent said they planned to do so.

Shared services. About 85 percent of respondents said they are meeting or exceeding expectations with HR shared services. “Nearly nine in 10 inquiries are solved by self-service or HR shared services,” the news release stated.

Payroll. Three in 4 respondents use a single payroll system inside their headquarters country; 78 percent have multiple payroll systems/vendors outside their home country.

Relying on paper. The study also revealed that although 79 percent of those surveyed said they use technology for compensation activities, 47 percent still use paper.

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

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