2006 Technoloy Outlook

HR.com has a new HR Technology Outlook for 2006. As usual, I don't completely agree with their outlook. My responses in blue. It's an interesting article though.

1. HR technology software applications will continue to increase in functionality. Applications must address the changing demographics and needs of the aging workforce and the global workforce.
I actually don't see HR applications addressing this to a large extent. I do see employers becoming smarter about this topic.

2. Vendors who were in “best of breed” or application “niches” will seek to expand their offerings.
Yes - this is a current trend and will continue. The "talent" suite will get better and continue to expand.

3. Mid Market organizations will be a major target of all vendors including the traditional ERP vendors who will down market, and best of breed vendors who will seek to offer new one-stop bundled solutions.
The traditional ERP's (Oracle and SAP) will not be looking down market. SAP will not care to compete for the mid HR market, and Oracle is biding it's time until Fusion comes out. If you consider Lawson a real ERP vendor in the upper end market, then you're nicer than I am. The major HRO organizations however will be looking at mid market organizations (5-10K employees).

4. HRO as a strategy will continue in its wide acceptance, now considered a mainstream approach with clear cost benefits.
The clear cost benefits part is questionable, but over the next couple of years, HRO vendors will provide opportunities to significantly lower process costs. I think the cost benefits will be clearer in 2007.

5. HRO vendor activity such as mergers and acquisitions will level off or cease in 2006. Alliances between multiple providers, though, will continue.
There are simply too many HRO vendors. 2006 and 2007 will be major years for HRO consolidation. Profits are not stable yet and processing efficiencies have not been perfected. Until this happens, and only a few major vendors remain, the market cannot sustain having a dozen major players.

6. Organizations will increase their HR Technology spend budget for 2006/7.
Yes - this is a current trend and will continue.

7. HR executives will firmly grasp the need for performance metrics and other measurements to preserve their worth and to gain credence as a strategic business partner in organizations. Driven by that desire, HR executives will seek software applications that make such metrics user friendly and easy to calculate and present.
Yes - this is a current trend and will continue.

8. Off shore deals by companies headquartered in American companies will be limited and possibly legislated against at the state level. Although mostly pertaining to IT support, HRO with off shore support will not be readily accepted by American workers.
This is very debatable. Offshoring is already widely accepted for ITO, call center support, and HRO by the public. This trend will continue to grow.

9. Privacy and Internet communications standards such as XML consortium standards will continue to be issues and will be embraced by more organizations, especially those in a global marketplace with global structures.
Technology providers will continue embracing open web standards. This is not new.

10. “Web Services” as the next new thing or wave in technology and service delivery will emerge and make a very visible initial impact on HR software delivery.
Web services is the current wave in HR service delivery. It's been in process for several years. Employers will continue to become more strategic over the use of communication tools including the web.