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

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

In 2006 the volume of the world market of solutions of HCM/HRM is estimated, according to Forrester Research at $9 billion, and its growth — at 7% annually. At the same time, analysts specify that actually HRMS is the share of a segment about a half of the specified turnover — $4.5 billion other half becomes covered by sales of licenses for specialized products (best-of-breed).

Analysts of AMR Research give even more positive assessment of growth of this market — 10% annually — and promise that by 2010 its volume will reach $8.7 billion. At the same time they estimate the present volume of a segment of HRMS at $5 billion according to AMR specified by $5 billion make 48% of total market of the automation equipment of HR departments, other 52% 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 (15%), automation systems of accounting of work, Workforce Management (14%), performance management systems and "talents", Performance and Talent Management (9%), training management systems, Learning Management (7%) and also a number of not categorized solutions (7%).

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 HRMS systems, by AMR Research estimates, grow for 3% annually, hiring automation systems — for 4%, training management systems — for 10.5%, work accounting automation systems — for 12%, and performance management systems and "talents" — for 20%.

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.

Market of Russia

First of all, specialists in HR and the full-fledged HRM systems appear in the Russian representative offices of the foreign companies, after them there are large domestic companies using the western control techniques and also the companies with a big staff turnover, the companies which are controlled "in the old manner" resort to control techniques labor resources less often.

Besides, there is a gradation of extent of use of HR functions and depending on industry specialization of the enterprises. According to us, human resource management in a manufacturing sector of economy, and most of all — in the field of service is least of all popular. Respectively, than a core activity of the organization is closer to services industry, especially expanded personnel management is demanded.

According to us, such distribution of demand for methods and management tools labor resources is caused significantly by different participation of costs for work in product cost and services in the different industries. In the field of services a share compensation can reach 70% of-80% of cost value of a ready-made product whereas in the domestic industry it often does not exceed 13% of-15%. Thus, for industrial enterprises the human capital is not a critical resource whereas in the field of service it quite so.

The same observation allows to tell why the full-function HRM systems are widespread in the leading countries of the world and only begin to be applied widely at us. It is obvious that in the specified countries бóльшая a part of the surplus value is created in the field of services, as forces to optimize staff expenses in the conditions of rather fierce competition and to increase its efficiency.

See Also

• HRM system