HR TECHNOLOGY

will be embracing employee experience, talent marketplace and more in 2023

HR analyst Josh Bersin sees much for the sector and HR tech market to be optimistic about this year.

Human resources technology spending grew by almost 35 percent over the last three years and nearly every company is looking to spend more. A recent study by Sapient Insights found that more than half of all organizations are increasing their HR tech budgets, and fewer than 15 percent are cutting back. There is a good reason for this. Over the last decade, historic amounts of venture capital have gone into this space, all focused on making work more productive, giving employees better information and tools, and helping HR departments better manage skills, recruiting, engagement and retention.

It’s time for a major realignment: category consolidation

As a result of all this growth, companies now have too many tools. In fact, according to OKTA , the average employee now uses 88 different systems. Companies have dozens of systems for learning, recruiting, benefits and multitudes of tools for collaboration, document sharing and even feedback. As the economy slows, buyers are simply saying ‘slow down’, and this will force the HR tech space to become more rational.

During the 2008 slowdown, we saw similar cau- tion, and what we can expect is what I call ‘category consolidation’. Rather than buy ten tools for corporate training, ten for recruiting and dozens for other applications, vendors start to run out of money, investment dries up and the larger vendors buy the smaller ones. I expect this to happen next year.

The winners will be larger vendors with strong recruitment platforms (Eightfold, Beamery , iCIMS , Phenom ), those with strong learning platforms (Cornerstone, Docebo , Microsoft ), those with strong career systems and AI platforms (Gloat) and major players in employee experience ( ServiceNow , Oracle , Workday , and Microsoft).

The human capital management (HCM) vendors ( ADP , Workday, Oracle, SuccessFactors) are all likely to be consolidators, and they are each trying to compete. Consider Workday’s recent acquisition of survey and assessment vendor Peakon (for a very high multiple). Workday simply decided it was faster and easier to buy its way into employee listening than to try to build it itself. I expect we’ll see more of this in the year ahead.

Get set for next-gen HCM

In parallel with consolidation, get ready for next-gen HCM. Most companies replace their core HR platforms every seven to ten years or so, and when there’s a disruptive change it can sometimes happen faster. Well, disruption has arrived.

Most core HR systems are designed as massive data management and workflow-based transaction systems. They manage payroll, employee recordkeeping, organizational hierarchy and all sorts of historic data about people.

The problem they have is they were all designed around hierarchical job architectures, with workflow, security and reporting aligned this way. While this is often the way companies operate, more and more companies now operate as ‘project teams’ and ‘cross-functional teams’, rendering much of this hierarchy less important. How do you model a company filled with projects and teams in your core HR system? There’s little or no information about it at all.

Cisco once found that the company had more than 4,000 different teams operating around the world. When they looked in their core HR system they realized that none of these ‘teams’ were really represented. This means that most of the important things Cisco managers wanted to do, such as select a team, start a team, set goals for a team, manage a team, understand the skills of a team, decide a bonus for a team, had to be done outside the HCM platform. So the real utility of this class of system has declined.

Coming next are a new wave of HCM platforms that focus on team enablement and management, let the company set up many teams and manage them in many ways, support conglomerate companies and companies with dif - embedded in recruiting and sourcing, and beginning to incentivize people based on skills.

I believe that the talent intelligence concept is taking off across HR, as well as more use of artificial intelligence (AI) in recruiting. In the last year we’ve seen that AI has proven itself in recruiting far more than in any other part of HR. I believe there will be a lot of consolidation in a crowded market.

And we’ll need AI’s help in supporting another seismic shift in modern HR: the rise of internal mobility and the internal company marketplace. The reason the internal marketplace concept is taking off is why Airbnb does so well; it facilitates a way for people to move to where they and the CEO wants them to go without significant investment. In the past, you designed a career path and told people here’s your career pathevery two or three years you’ll get a promotion, and we’ll take care of you from pre-hire to retirement.

That’s not how careers work anymore, and we need ways for people to move around companies that are intelligent, beneficial for them and that we can leverage for the strategic change and reorganization 21st century business is defined by. And the right career path is more likely to be discovered by AI than invented by managers sitting around a meeting room.

HR-led change

ferent overlapping organizations, and offer native support for goals, projects and mobility that crosses hierarchical boundaries.

Today new tools like Darwinbox, ADP Next-gen HCM, HiBob and the new release of SuccessFactors are designed for this. Oracle and Workday have yet to release such features, but we have to believe they will be coming. What else can we expect in 2023?

I expect skills tech to continue to play a big factor in all our lives. In every company skills tech is not only a part of the learning infrastructure, it’s part of the talent mobility and talent marketplace infrastructure, and increasingly being

The last trend I want to call out is more of a business trend than a tech one, though it will need technology to make it work: the rise of the career pathway. A career pathway is a branch to a new career based on skills as opposed to a current career. I expect a huge growth in organizations re-training people in danger from automation to address gaps in the skills base or working with external parties to re-skill employees into a completely new occupation.

There’s more to look out for in 2023, from new directions in learning and development content, performance management and the rise of the Metaverse. I hope you agree that for all the strong headwinds the economy is facing, HR remains an amazing place to make the difference for a company.

All change! How are the Big 4 responding to increased demand for business process design and change management rather than tech implementations?

BY CHRISTINE HORTON

Tech investment today isn’t being driven by feeds and speeds, but on the business outcomes that customers want to achieve. Technology is no longer at the heart of transformation; it is a business enabler. At the same time, most ERP software today comes out of the box as standard. The upshot for global systems integrators (GSIs) is that there is now very little technical work for them to do for clients – unless it’s developing extensions.

Put simply, there is little or no technical complexity for them to manage.

“As infrastructure complexity is being abstracted by the cloud and development is being led by citizen developers leveraging lowcode or no-code platforms, the complexity the GSIs used to manage is reducing,” says Steven Dickens, senior analyst at Futurum Research.

This has changed the game for those firms. Previously engaged in technical assignments, the lion’s share of their work is now focused on business process design and change management – which of course requires completely different skills and delivery model.

There have been some corresponding operational shifts within the ‘Big 4’ consultancies in 2022 – EY, Deloitte, KPMG and PwC – as they react to changing market needs. We’ve seen the launch of new divisions and even a break-up of the business in the case of EY. But how are the likes of the Big 4 adapting to these particular changes to how they engage with clients – and what do they mean for customers? We spoke to some of those firms to find out how they are steering their businesses into 2023 and beyond.

Precipice of ERP transformation

Lisa Caldwell, EY Americas business consulting leader, believes that many organizations today are on the precipice of significant ERP transformation.

“The biggest change we have seen is the move away from outdated thinking that pegs ERP as a technical exercise,” she says.

Caldwell maintains that technology has now matured to the point where firms are moving towards an enlightened approach that connects ERP to better business outcomes.

“Outdated thinking paints ERP as a cost center, a tool to be purchased and deployed. In reality, it can be an important value creation vehicle that empowers an organization’s stakeholders with a reliable and credible single source of truth. Now, leaders must begin thinking differently about the data behind an ERP. How can we get our ERP information into the cloud to generate greater visibility across the business? How do we use it to create more agile, joined-up applications? Answering these questions allow firms to capture and collate data from across the organization, then use these insights to build speed, flexibility and resiliency into their operations as a whole.”

At the same time, a study by EY and Oxford Saïd Business School confirms the need for strengthened change management and people-focus when it comes to transformation. It found that organizations that put humans at the center of their business strategy by investing in the adaptive skills of their workforce are 260 percent more likely to succeed in organizational transformation.

“Ultimately every transformation has a people impact,” says Caldwell. “Employees need resources to continually evolve and adapt their skill sets over time to adjust to new technologies and processes and to stay current in their profession. Such efforts benefit both the individual and their professional development but also the company, which reaps the rewards of in- creased productivity and enhanced employee morale.

“Developing approaches that involve active listening, rethinking your talent strategy, creating new career paths, investing in individualized learning and actively seeking to create a groundswell of enthusiasm and involvement from the grassroots will be the transformations that best succeed.”

Interestingly though, it seems employees are also growing more resistant to change - in 2016, the Gartner Workforce Change Survey showed 74 percent of employees were willing to change work behaviors to support organisational

Demand for change management

Looking to another of the Big 4, Todd Lohr, head of technology consulting at KPMG US, confirms the company is evolving its business to meet the changing needs of clients, particularly when it comes to transformation.

“While technical implementation is still a part of what clients are looking for, we’re seeing an even greater demand for wider transformation and change management support. After doing the hard and rewarding work of a functional transformation, our clients want to ensure their technology can readily adapt to market conditions, regulatory changes, new technologies, and process improvements.”

Lohr says that’s why KPMG created Powered Evolution, an on-demand service to help clients “optimize their functional transformation.”

“We’re also forming strategic alliances with key technology providers, working together to utilize each other’s skill sets and expertise to solve complex business challenges,” he says. “Our approach to alliances enables us to advise clients on the best solutions for their business, and we work closely with the technology providers on implementation to provide a

“Our alliance ecosystem is designed with a global view and to help address today’s top issues, trends and priorities, while also monitoring the market and emerging technologies to identify new alliances and

Next generation of technical consulting

Jag Bandla, principal and leader of Deloitte’s AIOPS.D business argues that the current generation of consulting services actually go beyond just business model and change management. They can extend into pro - viding services faster, better and more accurately by enabling digital and cloud-based ERPs and light RPA (robotics process automation) for clients.

“RPA can certainly allow clients to perform single tasks faster on/in their ERP ecosystems, while there are still the same number of steps required to get things done,” he says.

In fact, Bandla says the next generation of technical consult-

According to Dickens, the pace of transformation is only likely to increase, especially as complexity shifts and Line of Business executives become more comfortable with no code tools and process orchestration software, from the

“The challenge will be ensuring that data, and the insights from that data, keeps pace, and the complexity of data silos is collapsed,” he explains. “While line of business execs can take the lead, this leaves a lot in the hands of the underlying cloud providers.”

A potential shift of power to the cloud providers will see them with a stronger hold over IT than ever before –which could cause issues for consultancy firms.

“The Big 4 will be uncomfortable with this dynamic as they currently control the C-Suite and bring in vendors piecemeal,” agrees Dickens.

Ultimately, says Caldwell, there is an increasing need to ensure that change, including the ability to adapt and manage change, is ingrained

“By building this into the company’s transformation structure from the start, organizations can ensure they are providing their people with the skillset they need to manage both the technical and business aspect of the

It’s a cliché of course, that the only constant is change. But the ongoing transformation efforts of organizations do demand partners with the right skills help them navigate those changes. The Big 4 clearly recognize this and are evolving their own businesses