After a few post with minor tech focus, today I will bring a full tech focus back to this blog. It is the beginning of the year and we are all trying to figure out what to do this year, where to focus and invest. It is also the time when many Analyst reports come out. One of the topics I see getting more attention is the inflation of tech tools in the HR space. It is amazing how much money went into this space the recent years – but on the other hand, not too surprising as there were tons of money in the financial system. This money though has led to many new players entering the HR tech market with specialized solution around single topics like surveying, well-being, talent marketplaces, skills management – and many more. So what to do with this trend? Should you follow?
A brief history
The trend I describe above is nothing new. For those of you who are as long in this function, you will see remarkable parallels to the 2000s and even before. The HR tech market always sees waves of divergence, followed by waves of conversion. This is what brought us where we are today with significantly improved integrated systems like SuccessFactors or Workday (from the old PeopleSoft or SAP HCM). There are always new ideas out there that make it into specialized products to “add on” to your existing tech stack. Some of them stick, some of them are acquired and integrated into the bigger integrated platforms – and some are quickly dismissed as not value adding. This has been the game in the past, and I believe that this is what is happening now as well. With money slowly getting more expensive and scarce, many of the recent start-ups will dry up or be integrated (e.g. Peakon into Workday) into the bigger integrated systems. – but also, some will stay with us for a while.
What to do?
The question now is for every HR tech lead – but also for the HR functional colleagues – what should you do? Are these trends lasting? Is it important to have an e.g. internal Talent Marketplace? – do you need a specialized skills-solution? Of course, I cannot answer this question for you as I don’t know your current tech stack or workforce or situation. But I would like to provide my thought process around these solution and the HR tech market situation to guide any decision you might need to take.
For the last 20+ years, the integrated solutions have always resurfaced. Why is that? – It is because of its simplicity around the basics, table stakes like Master Data Management, statutory reporting as well as integration into the wider enterprise tech stack – may it be payroll systems, or identity management systems, etc. I suggest that the majority of enterprises (1000+ employees, multiple countries) should have an integrated, central, single system of records. The importance of such system for the functioning and efficiency of the wider organization cannot be underestimated. But it also is the key system for your core HR work – including your core HR self-services like personal data management.
Now, when you have such system anyway, should you build on top with specialized solutions? – I would give that more than one thought. Of course, any specialized solution gives you the “best of breed” for the specific case. But wait, all the high-glossy promises and shiny demonstrations you get from the sales teams of such solutions – will it work exactly like this in your environment? Will it therefore really bring this additional value? The answer is more often NO than yes.
First of all, any HR system to work requires data, people data – you have these people data in your integrated core system, so you need to build an interface (or do you really want to work with separate master data?). Interfaces like this are by default complex: are they bi-directional? what data do we send/ receive – which truth is stored where? – and it gets even more complex when you go for more than one system, especially if the two specialized systems are supposed to talk to each other or work from each others insights. This complexity adds a lot of workload to your HR tech team. But it is not a one off – it is a regular review and adjust as most of these systems are SaaS based and have heavy upgrade cycles of twice or even more annually. In each upgrade cycle you have to review and test and potentially adjust your integration.
But ok, this is the back-office. It is ok to be complex if the value of the specialized solutions outweighs such investment. Does it? – yes, in theory – and in the high-glossy sales presentations. Bringing the value into practice in your organization though might turn out to be more difficult.
The Experience Case
Every new technology adds not only complexity to the back-office, but also for the front-office. Employees need to know “where to turn for what”. And usually, HR tasks are not common daily tasks for them, so adding any complexity where they need to think which system to turn for what task is tricky. Employees require a simple, intuitive entry point that guides them through. Any add-on system you bring to add value will make this job more difficult and could lead to employee frustration and less likelihood of system usage. It doesn’t stop there though – every new system has a new and different UX philosophy than your other systems in place. This means that if your employees make the effort to remember where to turn to for what task, they might get frustrated as they don’t know and need to learn how to use the new system. This brings hesitancy and frustration – not ideal for a good experience and system adoption. And last but not least, depending on how you set up the integration between systems, there might be an additional layer of frustration: currentness of data. In today’s world, employees expect seamless integrations and seamless exchange of information. So, if you just changed e.g. a reporting line in your core system and then went to a separated engagement system and you cannot see this move/ change of reporting line, you get frustrated – and call for escalation of this case. The system is not working as expected.
Now, the above is not necessary your situation, but often close to what I have seen in organizations. Does the perceived value of a specialized solution continue to be superior and value adding after the above complications? – if the answer is yes, go ahead – or check out what potentially less superior but fully integrated solution your core system offers. It might be sufficient for what you need and it might be much easier to implement and achieve adoption (and potentially cheaper as well). And only adoption actually pays out, not the theoretical superiority. Sweat your current assets as much as possible, drive the innovation agenda of your current tech partners to get it where you need it to be. This is cheaper, more efficient – and very likely more effective as well.
Chief HR Officer 
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