Human resource professionals know the struggle of having to do tedious tasks every day. Luckily, HR software came along to automate these tasks and lessen the burden on your HR department. Today, the HR software market finds itself among the leaders in business software. At over $14 billion and rising according to Forbes, HR management software is one of the most important tools for a business to implement.
Following our marketing automation survey, we wanted to find today’s HR software buying trends. Over the past four months, we surveyed companies that were looking to buy HR software. The chart below shows the full breakdown of these buyers by company size:
Just as we did in the marketing automation study, we whittled the responses down to three categories: requirements, decision-making challenges and vendor failures.
First up, we wanted to identify what technology buyers look for in today’s HR software market. Unlike what we found in our marketing automation study, there was a lot of consensus in the responses. Six requirements were identified by over half of HR respondents, whereas the most identified by marketing automation buyers was 48%. This led us to conclude that HR needs are more universal than those of marketing automation. After all, marketing automation needs tend to be catered to a company’s business model and strategy. HR processes are the opposite, as payroll management and benefits administration, for example, don’t have much room to differ. The trend we saw from the responses is that the most common requirements involve features that automate frequent, time-consuming tasks. Now, to the results:
Similarly to marketing automation buyers, the biggest requirement for HR technology buyers involved the cloud. However, while marketing automation buyers were open to a cloud solution 48% of the time, 100% of HR buyers were open to the cloud. This also included 61% of respondents who identified a preference for a cloud solution. This unanimous acceptance of the cloud is surprising, however it provides even more evidence that cloud-based software is here to stay.
After the cloud, the most sought after requirements were two Core HR features. Payroll, at 69%, and benefits administration, at 63%, were the two most identified features of HR software. Payroll is one of the most time-consuming tasks facing HR professionals thanks to its repeatability. Therefore, it’s understandable that HR professionals are looking for some automation help. Benefits administration can be just as time-consuming and complicated, especially in larger organizations.
At 60%, employee access was the fourth-most common requirement. Buyers were especially interested in employee self-service capabilities from their HR solution. A portal available for all company employees was the most commonly mentioned form of employee access.
In fifth and sixth place were more Core HR features, as personnel tracking came in with 58%, and applicant tracking systems (ATS) rounded out the top six with 51%. Other notable requirements were time/attendance (39%), performance review and management (33%) and learning management (LMS) (32%).
What do HR buyers see as their biggest hurdles in making a decision? Believe it or not, there was even more consensus in this category than for requirements.
A lack of time to make a decision was the most common challenge identified by HR buyers, with 85% of respondents mentioning it as a consideration. We defined the challenge of time-sensitivity as wanting to choose and/or deploy a new HR vendor within six months. Looking deeper into why this may be the case, HR departments comprise one of the most important for any business. As the only department that deals with every employee, a bad HR system affects your entire workforce. If HR processes are inefficient, it can slow down procedures such as onboarding new employees or administering benefits. This makes it crucial to fix inefficiencies quickly, so buyers can get their HR departments back on track. In other words, their current processes are so bad, they need to get rid of it as fast as possible so they can fix the mess that their current vendor has left them.
Not too far behind time was budget considerations, which 60% of respondents identified. This one doesn’t take a rocket scientist: no company wants to shell out half of their revenue for software, even important software. To be honest, we thought this would be a little closer to time. However, the remaining 40% of respondents were open to hearing the full range of prices for new vendors.
The third-most common challenge for buyers was finding an all-in-one solution. These buyers (33% of all respondents) were concerned with finding a vendor that can handle all of their HR needs. For HR solutions especially, this is a prominent issue. There are several vendors that specialize in one feature (such as an applicant tracking system or scheduling), but not as many that are all-encompassing.
Other challenges respondents mentioned were scalability (6%) and ease of use (3%).
Lastly, why are all of these HR software buyers looking elsewhere? What have their HR management software vendors failed to do? There wasn’t as much agreement among respondents in this category, but the top three results were all related.
With 50% of respondents, a lack of features was the most common reason buyers were in the market for a new HR system. Systems that are too manual was the second-most popular complaint at 25% of respondents. And coming in third was the HR system not being centralized, at 21%.
Being too manual goes hand-in-hand with not having enough features. If a piece of software is too manual, chances are it doesn’t offer a feature that automates a manual process. Similarly, a system not being centralized refers to HR solutions that don’t offer every critical feature in a single location. This is also related to the third-most identified challenge for buyers: finding an all-in-one solution. There were several buyers concerned with finding an all-in-one solution, in part because their current vendor isn’t one.
Other notable vendor failures were the system being too complicated (11%), bad support (8%), unreliable/buggy (7%) and too expensive (3%).
What It All Means
One thing’s for sure: human resources will never be the same. Core HR features consolidated into one platform has become a necessity for businesses, and therefore vendors. These vendors are also going to need to tack on some additional features to become true all-in-one solutions. Additionally, all of those features better be available on the cloud, or else they won’t be relevant for much longer. Based on the acceptance of the cloud, they may already be irrelevant if they’re not cloud-based.
For buyers that, like many of our respondents, are concerned about the time they have to choose a vendor, take a look at our HR Leaderboard. This Leaderboard can help get your search started before diving blindly into demos and conference calls. If you still need help evaluating your options, don’t hesitate to reach out, and we’ll help you find the right HR vendor for your needs.