Investment in HCM Systems Growing Steadily

December, 2014

Organizational success depends on people. Most business leaders today believe that while competitors can imitate best practices, identifying, recruiting, and developing the best people is a sustainable, competitive advantage. If an organization’s IT strategy is aligned with its business strategy, human capital management (HCM) systems deserve a prominent place in the application portfolio.

In Figure 2 from our study, HCM Adoption Trends and Customer Experience, we see that the percentage of companies investing in HCM technology is gaining slow but steady ground across all organizations. In 2014, 22% of organizations across all sectors were making investments in HCM, whether as a new HCM implementation or as an additional investment in existing HCM systems. This is an increase from 20% in our 2013 survey and 18% in our 2012 survey.

HCM Fig  2 - Investment in HCM Systems Growing Steadily

HCM systems are a collection of applications that serve as the system of record for human resources (employees, contractors, and other personnel) throughout their life cycle and support HR-related business processes. In the full report, we analyze the current adoption trends, investment levels, and customer economic experience for HCM technology. In addition, we analyze nine specific functions that are often performed by HCM systems. These include:

  • Core HR: the system of record that contains personnel data. It also typically includes benefits administration and organizational reporting.
  • Payroll: processing to support timely and accurate payment of employee compensation.
  • Workforce management: systems to budget for and schedule workers, optimize their schedules, collect time and attendance data, and manage absences.
  • Learning management systems: systems that manage personnel training, including curriculum, course materials, class scheduling, computer-based training, testing, and certifications.
  • Social learning and development: systems that allow personnel to find others inside or outside the organization with needed skills, to collaborate with one another, and to share knowledge.
  • Recruiting: systems that help managers identify prospective employees or contractors and manage the recruiting workflow. These systems previously were referred to as applicant tracking systems.
  • Social recruiting and sourcing: use of social media channels, such as LinkedIn, Glassdoor, Facebook, Twitter, and online communities, to identify potential job candidates and to communicate with them.
  • Workforce analytics: systems to analyze workforce data to look for statistical trends and take actions to optimize workforce metrics.
  • Workforce planning: systems to balance demand and supply for talent, considering all sources of workers and skills, including employees, contractors, and partners.

The umbrella term talent management is often used in conjunction with HCM technology. Talent management includes the functions of recruiting (including social recruiting), learning management (including social learning), and workforce planning, along with systems for managing personnel goals and performance, including personnel development, career planning, and succession planning.

Modern HCM systems are comprehensive in nature. They not only serve as the system of record for an organization’s employees but also sometimes extend to management of the contingency workforce, including contractors, temps, and personnel managed by outside service providers. In addition, HCM systems manage processes through the entire personnel life cycle, beginning with recruiting of prospective employees and contractors through termination and post-termination record-keeping. Finally, HCM systems often include record-keeping for retirees and others who receive HR benefits from the organization.

Based on our survey, the full study quantifies the current adoption and investment trends for HCM technology as well as the benefits driving companies to expand their HCM implementations. We assess these trends by organization size, sector, and geography. In terms of economics, we look at the ROI and TCO experiences of organizations that have adopted HCM along with current investment levels per employee. We conclude with practical advice for those planning new investments in HCM.

This Research Byte is a brief overview of our report on this subject, HCM Adoption Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).