Digital Technology and HCM
A new generation of digital technologies is extending human capital management (HCM) systems, making them simpler and more productive than ever before. Our benchmark research into next-generation human resources management systems (HRMS) shows that deployment and optimal use of these emerging technologies have become a priority for all organizations considering improving the performance of their HRMS.
68% of research participants identified increasing workforce productivity as a motivating factor for evaluating next-generation technologies.
Cloud computing, for example, facilitates faster onboarding and configuring of applications, while smartphones and tablets make it simpler to provide access so that workers can update personal information themselves or receive notifications about the training they need. Mobile technology also can enable managers to easily monitor from anywhere workforce efficiency and effectiveness and the impacts of workforce changes. Deploying analytics and big data enables organizations to generate and evaluate metrics more easily to guide operations and decision-making and hit performance targets, and machine learning provides tools that analyze how people behave and then make recommendations to adapt applications and processes to suit user preferences and task responsibilities. Finally, technology-mediated collaboration enables individuals and teams to easily discuss matters of importance within the context of the HRMS, empowering individuals to discuss and adopt collaboratively better ways to accomplish tasks and hit targets.
Our research underscores organizations’ interest in embracing these new technologies to improve their efficiency and increase their productivity. More than two-thirds (68%) of research participants identified increasing workforce productivity as a motivating factor for evaluating next-generation technologies.
To reach this goal, organizations must first analyze and then optimize how employees utilize their time. In today’s business world the applications most effective in accomplishing this will, of course, be easy to use, but they also will be intelligent both in how they operate and in how they respond to HCM users’ needs.
The methods used to engage employees are becoming more digital, more intelligent and more engaging as well. Conversational interfaces like text and chatbots – automated conversation programs – make it easier and more engaging for employees to interact with applications – for example, to view their work schedule and arrange to take time off, review team performance, or get workforce analytics information. Also, the proliferation of notification-driven application processes is helping employees respond more quickly to business process changes and to internalize and act on new priorities.
These new technologies provide greater flexibility, making it easier for organizations to connect and optimize the steps in a workflow – hiring, onboarding, performance reviews and succession planning – to match their own specific processes rather than having to adapt to a vendor’s predefined approach.
The Cloud Platform and HCM
It is rapidly becoming clear that cloud computing platforms enable organizations to more easily and effectively adapt and extend HCM. Platform as a service (PaaS) technology, an innovative approach to cloud computing that utilizes a cloud-based application platform, makes it possible to personalize and otherwise enhance key HCM applications cost-effectively. Flexible, extensible platforms such as these welcome and support customer and partner applications as well as new digital approaches such as conversational interfaces to chat or collaboration environments. These platforms can make it possible to more effectively engage the workforce while providing the best possible employee experience.
More than half of organizations now use the cloud for a range of HRM applications. However, only 46% reported that their users are satisfied with cloud-deployed HRMS technology.
More than half of organizations participating in our research now use the cloud as a deployment environment for a range of HRM applications, including recruiting, learning and HRMS. However, fewer than half (46%) of these organizations reported that their users are satisfied with cloud- deployed HRMS technology. Further analysis shows that organizations want more flexibility, as some cloud-based applications can be too limited in the functionality they provide.
One aspect of that flexibility is that the underlying platform must be accessible for the specific needs of customers or partners – for example, to support workers in hospital environments who are tracking time spent in specific tasks, or to address onboarding needs related to learning and testing for job-specific tasks – through extensions that are seamlessly integrated into the core HCM application. In addition, cloud platforms should be able to distinguish the identities and associated roles and responsibilities of all application users and teams, provide appropriate access and facilitate interactions.
An organization’s HCM system should align with its business process workflow. Well-calibrated management processes are essential; our research finds that for close to four out of five (78%) organizations, improvements in management, decision-making and abilities to act are the second-most important benefit of an HRMS. The availability of a platform as a service (PaaS) and associated interfaces addresses these concerns, adding flexibility and helping ensure that organizations can integrate with HCM other applications they may need in the future.
To maintain agility and gain a competitive edge, an organization’s HCM system must address every need of its workforce. In our research, improving business processes is the most-often cited factor motivating a change of HRMS (for 89% of organizations). HR processes that companies often customize include recruiting, hiring and onboarding, each of which has steps that are unique to the company and people involved in those processes.
Advanced cloud platforms enable users to configure applications easily and adapt them to specific business and industry requirements. A cloud platform must be as secure as existing on-premises applications. Also, it must support building unique cloud-based applications that meet the needs of any given vertical industry, be it retail, healthcare, banking, insurance or government. Finally, application developers should be able to utilize the platform’s services to design applications that can run on whatever devices users desire.
Priorities for a Digital Future
Organizations should assess their HCM needs based on where they are going, not where they have been. In the future, HCM will consist of more than just an assemblage of traditional individual applications; the HCM cloud platform will be optimized for digital tools and applications and will be flexible and adaptable to technologies still being developed. How stakeholders interact with applications will vary widely, so platforms must be adaptable to the competencies and skills of individuals, regardless of whether the interaction occurs through a web browser, a mobile device or talking and texting via a collaborative channel.
Deploying an agile HCM cloud platform will help ensure that the benefits of investments endure. Our research finds that specific motivations are driving such investment in new technologies. Organizations want to see improvement in the efficiency of HR applications (cited by 27% of participating companies), alignment to company objectives (22%) and effectiveness or quality of work (12%).
In choosing investments, organizations should seek those that will enable them to adapt to future application, workflow and automation needs across the organization. No single vendor owns innovation, so organizations may choose to invest in products from several technology providers that operate in the same ecosystem but offer unique capabilities to extend and complement their existing efforts. To do this, they should develop evaluation criteria that represent the requirements of the entire business, not just the features or capabilities of the platform.
Among the evaluation criteria our research explored, several are often cited as very important. A focus on usability ensures that the application can adapt to the range of requirements of individuals and the organization and will deliver a superior user experience. This is a very important criterion for three out of four (76%) organizations. Manageability measures how easily a business will be able to manage its own deployments and configuration to meet its needs; 69 percent of organizations cited this criterion as very important. Reliability measures confidence that the application will provide the levels of performance and scalability expected; 64 percent of organizations rated it very important. Adaptability measures the capabilities of applications to connect and integrate with processes specific to the needs of the workforce; it is very important to 45 percent of organizations.
Organizations are striving to optimize performance and the employee experience; the digital future of human capital management will offer innovations that utilize intelligent cloud platforms to help them achieve these goals. Advancing toward the digital future requires assessing one’s organizational and individual needs and making technology choices that enable more flexible and effective management of human capital. Forward-looking organizations that adapt to the rapid advances in business and technology can take advantage of innovations that help them engage their workforces fully, provide the best possible experience and profit from the increased productivity of satisfied employees.
About Ventana Research
Ventana Research is the most authoritative and respected benchmark business technology research and advisory services firm. We provide insight and expert guidance on mainstream and disruptive technologies through a unique set of research-based offerings including benchmark research and technology evaluation assessments, education workshops and our research and advisory services, Ventana On-Demand. Our unparalleled understanding of the role of technology in optimizing business processes and performance and our best practices guidance are rooted in our rigorous research-based benchmarking of people, processes, information and technology across business and IT functions in every industry. This benchmark research plus our market coverage and in-depth knowledge of hundreds of technology providers means we can deliver education and expertise to our clients to increase the value they derive from technology investments while reducing time, cost and risk.
Ventana Research provides the most comprehensive analyst and research coverage in the industry; business and IT professionals worldwide are members of our community and benefit from Ventana Research’s insights, as do highly regarded media and association partners around the globe. Our views and analyses are distributed daily through blogs and social media channels including Twitter, Facebook, and LinkedIn.
To learn how Ventana Research advances the maturity of organizations’ use of information and technology through benchmark research, education and advisory services, visit www.ventanaresearch.com.