HRM: Volume, dynamics, structure of the market and the largest HRM players

The world market of automation systems of human resource management continues grow rather actively, despite the continuing consolidation. Strong players of the market hold the leading positions, competing with each other and increasing the customer base. The second factor of growth is arrival of new players and expansion of the range of the best-of-breed systems. In particular, one of catalysts of growth of the market is development of the solutions Performance and Talent Management.

The market grows Sentence structure in the market of the automation equipment of HR departments

By estimates of Forrester Research, the amount of the world market of solutions HRM/HCM by the end of 2008 should reach $6.5 billion. At the same time rates of its growth in the next 3 years will be slightly less than 9% that above, than in the market of ERP solutions growing for 3%-4% annually. Researchers of AMR Research also note that the market of HRM systems grows more than twice quicker, than in general and predict the market of industrial application programs that the threshold in $10 billion will be overcome within 5 years. If to speak about HRM systems, then their share in the total amount of the market of the automation equipment of HR departments, according to Forrester Research makes 58%. Other 42% of turnover fall on the solutions best-of-breed. The following market shares corresponding to the "niches" occupied specialized reshenyam are given: automation systems of hiring, Recruitment (9%), automation systems of accounting of work, Workforce Management (13%), performance management systems and compensations, Performance and compensation (12%), training management systems, Learning Management (8%).

Three factors of growth of the market Growth rates of income on segments of the market of the automation equipment of HR departments

As for dynamics, sales as such of the systems of the class HRMS, by estimates of Forrester Research, grow for 7% annually, automation systems of hiring and automation systems of accounting of work - for 8%, training management systems - for 13%, and performance management systems and compensations - for 17%.

According to analysts of Gartner, in 2008 Talent Management (management of development) became one of the most demanded segments in the field of control automation by personnel. In 2007-2008 HRM vendors showed good results, a number of considerable transactions on merge and absorption was complete. According to experts, results of 2009 will be weaker, but also rather positive, the tendency to consolidation of the market will remain. The aspiration of clients to cost reduction will force them to purchase and to implement solutions of a Workforce Planning segment (planning of labor power) which will help them to build the strategy of staff reduction more competently. Possibly, vendors should consider wishes of clients and also to pay attention maximum to automation in this sphere when developing new versions of the software.

Market leaders

By AMR Research estimates, in 2006 shares of top three of the world market should look as follows: Oracle  — 25 %, SAP  — 24 %, Kronos  — 10 %. In 2005 this ratio looked so: Oracle  — 26 %, SAP  — 23 %, Kronos  — 10 %, and in 2004 (before merger of PeopleSoft) the share of Oracle in this market made only 7 %.

Shares of market leaders of HRMS

According to analysts, SAP won 1 % of the market against Oracle because of higher growth rate  — 13 % a year, against 10 % at Oracle.

At the same time, it agrees to the report of Gartner published in July at the end of 2005, the share of SAP made 24.1 % while a share of Oracle  — 14.4 %. Apparently, in a share of SAP the analytical agencies practically do not disperse while the announced share of Oracle in 2005 differs almost twice. The opinion sounded that the specified difference in estimates of income is caused by the fact that AMR Research includes professional services in their sources, and Gartner  did not. However there is also an objection  — hardly Oracle gains so large income from implementation services and to support of the solutions in the field of HRM that they were equal to income from sale of licenses. The Oracle corporation confirmed officially correctness of estimates of AMR Research.

Ranking of vendors of HRM systems on number of clients *

But, except volumes of income, the situation in the market can be estimated also by other criteria. The WorkForce Management magazine made a ranking of developers of HRM systems on number of the companies using their products:

In a ranking Kronos and Sage Software advancing the solutions, generally in a segment of the medium-sized and small companies where they are in the lead also on the volume of the gained income are in the lead. As for giants, on number of clients they lag behind and it is essential  — their indicators less indicators of leaders of a ranking more than twice.

Apparently from the stated above data, 48.5 % of-59 % of market size are the share of revenues of the three of the leading solution providers HRMS. It demonstrates to the sufficient level of a maturity of this market. At the same time, the number of its participants is rather great, provision of best-of-breed solution providers rather steady, and consolidation among them, according to experts, only increases quality of the offered products and focuses them on the strategic objectives connected with personnel development. The market grows both owing to increase in number of clients, and due to emergence of new products and also the players acting in several quickly growing segments.

See Also

• HRM system
• HRM: Volume, dynamics, structure of the market and the largest HRM players of 2006