Wednesday, December 28, 2005

2006 HR Technology Outlook – last post of 2005

As my last post of the year, I was going to do the standard year end list. But then I thought better and rather than putting in time that very few people are going to read, I thought I’d drag out a rather old article on the HR tech outlook for HR technology. As usual, I’m opinionated, I disagree, and I’m willing to write about it.

But first, another usual item from me – the disclaimer: I’m in agreement with most if this article.
Observation 1:
HR technology applications will continue to expand, with a strong emphasis on recruiting, staffing, scheduling and employee performance management.(from Miller, Mark, September 5, 2005. “Outlook for 2006 Technology,” Retrieved December 8, 2005 from )

Ok – I’ll go with that. Basically this is a continued expansion of the TAS (talent acquisition), TMS (talent management) and TLM (timekeeping) suites. No brainer here.

Observations 2 and 3:
Vendors seek to expand market penetration and their software offerings for HR applications.

Ok – I’ll go with this one too. We’ve already seen it with the large TMS vendors expanding their offerings in 2004 and ’05. No doubts this will continue.
Observations 4 and 5:
HRO becomes mainstream and almost a necessity. Vendor consolidation in the HRO space will taper off in 2006.

I reject the first point. In the last 10 years, there have been fewer than 100 HRO deals going live. It costs too much, is too hard to implement well. I’m going out on a limb and saying that by 2010, we’ll still have fewer than 1000 HRO deals.

I accept the second point. There simply isn’t much to consolidate any more. My post last week on a potential buyer for ACS doesn't count since it's not a merger between BPO organizations.
Newly formed entities such as ExcellerateHRO, ACS/Mellon, will join the global giants IBM, Hewitt/Exult and Fidelity in offering one-stop end to end HRO services using either ERP applications from SAP, PeopleSoft or Oracle, or their own home-grown HRMS. This is supported by onshore or offshore call/support centers and strong case management capabilities.
ADP, Accenture, Convergys, Arinso and Aon will continue to focus on mid- to global-market solutions.

I reject the text above. Accenture is certainly not a mid market HRO vendor even though I’ve been the one saying they are trying to break into the mid market space. All their deals to date have been huge. Convergys is also not a mid market player and I’m not sure they want to be yet. On the other hand, I’m not sure Fidelity is a “global giant” and ExcellerateHRO is unproven.
PEOs will start to gain a foothold in HRO as well. Vendors like Administaff, Gevity, and Checkpoint HR will make some noise in 2006.

I reject the text above. I’ve talked about the differences between HRO and PEO’s before. Let’s not compare the two. It’s like saying the horse-and-buggy are getting into the NASCAR market.
Observations 6 and 7:
HRT spend will increase. Money will be earmarked for purchasing applications providing metrics and other measurements which will help HR executives gain strategic impact.

For those of you who know what I do and who I am, you know I’m kinda counting on this happening. But hey – we say HRT spending will increase ever year, don’t we?

Observation 8:
Off-shoring initiatives in U.S.-based companies will hit a culture barrier. Eastern European countries, though, will gain favor as an offshore site for IT support.

I actually think this is nonsense. The American economy is on the upswing and we are usually more accepting of things like observation 8. I think we’ll see more off shoring in 2006 with steady growth until the next economic downturn. In my opinion, off shoring has been growing for years with little to no resistance.
Observation 9:
Privacy concerns along with other Web communications standards will gain visibility.

No comment – not really my area.
Observation 10:
The “Web Services” era of software applications begins to take shape.
The concept of a pay as go, pay for what you use software application model first adapted by the likes of will move into HR technology in 2006. With a user interface modeled on and a search engine approaching Google-like capabilities, this approach will incorporate technologies under the heading of “Web Services.” Using Java script, limited tables and having endless adaptability, new software will emerge. Already some niche providers are taking this approach. In Workforce management, year-old uses this technology.

Hmmm… not sure about this one… Funny thing is that I’ve already written my first 4 posts for next year, and it all revolves around web services. His observation is right on until you start reading the detail. I’m not sure he knows what web services is. At the very least, it is not dependent on on-demand software.

Industry pioneer Dave Duffield, the co-founder of PeopleSoft, is now actively using this technology to build a new ERP platform. During 2006 we should see his group’s early efforts attract a very visible beta client. This is guaranteed to raise the excitement level in HR Technology as Mr. Duffield’s first application has historically been in HR.

I can’t fault him for this paragraph. It would have been my assumption too. When I first saw that payroll was on the list, I assumed HR was as well (even though I didn’t see it). I have it from a good source that HR is not in the first release. Oh yeah – We’ve known the company was going to be called workday for months. We've been talking about here for months.

Hey – any day I only get on someone for 30% of their comments is a good day. We’ll call it a present for the holiday season. Everyone have a great year end, and we’ll see you in 2006.