HRM: Trends and forecasts of development of the world market of HRM 2009

In America still use "self-written" software

The existing data allow to say that so far HRM systems are applied generally for "covering" of needs for functions of personnel records and payroll calculation. As for such functionality as management of compensations, management of "talents" and efficiency of personnel and also management of career, a considerable part of the companies still implements it by means of the "self-written" systems.

Implementation of basic functions of HRM systems in the modern companies (on the basis of poll of 250 American companies)

Current situation and that fact that demand for solutions for "strategic" human resource management constantly grows stimulated development of the integrated and specialized solutions in this direction. Suppliers of the integrated HRM systems (mostly, the ERP systems which are a part) began to add the "missed" functions to the solutions, also the products best-of-breed for their implementation appeared. According to AMR Research, the main components of growth of the market of HRM systems are sales of the modules or products automating management of "talents" and efficiency of personnel (annual growth by 20 %) and training management (10.5 %) today. Quite good growth (12 %) is shown also by sales of means of accounting of work and working time.

Most likely, switching to "strategic" human resource management is connected with the continuing growth of cost of work in industrialized countries, increase in demand for qualified specialists, high costs for their search and attraction and also increase in volume of the possible losses connected with risk of loss of such specialists. It is more rational to find young specialists with good inclinations in these conditions and "raise" them in the company, turning into specialists of desirable level. And management of "talents", efficiency and training, as a matter of fact, is also directed to it.

Absorption, cooperation and SaaS

Need "close white spots" in functionality of the integrated HRM systems, in turn, became the reason of two concurrent processes. On the one hand, there is a merger of developers of the products best-of-breed by large vendors (for example, ADP was purchased by Employease, Kronos purchased Unicru). From other party, many large vendors begin to cooperate with developers of the products best-of-breed, often distributing licenses for their products together with the (in particular, Kronos and Workbrain delivering HRM systems with basic functionality cooperate with the Authoria, Softscape and SuccessFactors companies delivering solutions on management of "talents" and efficiency of personnel).

Other trend of the world market of HRM systems is gradation of solution providers for medium business to work on the SaaS model. As many experts note, providing software as services very much is suitable for HRM systems. As a matter of fact, the "user" level of the solutions HRM also represents the Web interface allowing employees and managers to get access to necessary personnel information from any place in the world. Thus, for end users the HRM solution "placed" with the supplier practically differs in nothing from "set" on the equipment of customer organization. And the difference between total costs on a subscription to service and total cost of ownership own system is very essential.

Outsourcing of a part of functions of HR department is also very popular with the foreign companies. Most often these functions are the exaction of personnel and payroll, allowances and assignments. Many solution providers SaaS render also services of personnel outsourcing, and quite often income from it exceeds income from providing Web services.

There is also other model when applications of SaaS from one company are used in order that with their help to render the services of outsourcing provided by other company. In particular, the known solution provider SaaS in the market of CRM, SalesForce.com company in 2005 together with Payroll Company, Inc., large service provider of personnel outsourcing for SMB, provided a set of Employee Services for AppExchange services just for this purpose.

Similar services are used also for integration of installed systems with "placed" and allow to construct a uniform system in the information plan, joining in also integration with a system, the rendering service of outsourcing.

The role of SMB amplifies

Growth of popularity of SaaS solutions speaks as their "globality", flexibility and simplicity of adaptation, and rather low cost. And the factor of reducing costs for automation came to the forefront, generally because of the shift of active sales to the sector of medium and small business which should "count money".

With respect thereto one more trend is shown. Solutions for SMB become comparable on functionality with HRM systems for the large companies, remaining at the same time available at the price. Perhaps, it became an additional factor of transition of vendors of the "heavy" HRM systems to service-oriented architecture that should make these solutions more available (it will be possible to purchase only necessary services) and flexible (it will be possible to combine solutions of different developers and to supplement them own).

Thus, the segment of SMB, the SaaS model and development of "strategic" level of HRM systems provided to the market an opportunity to grow at the rates which are 10 % a year. According to analysts of Gartner, within the closest five years of a front line today the functionality which is not always demanded will be the standard and to be used by most the companies. Respectively, after approach of this term growth of the market should slow down. Till the same time, rates of its growth should be 7 % of-10 % as predict in Forrester and AMR Research.

Development vector

Analysts of Forrester Research (Trends 2009: Human Resource Management) call several factors creating the direction and rates of market development of HR technologies:

1. Mainly there is a reduction of number of workers;

2. The efficiency of work of workers is the activity of the company defining at efficiency evaluation. In the conditions of an exit from financial crisis many companies aim to estimate objectively efficiency of work of the workers to increase quality of the made management decisions and to be competitive;

3. Within globalization the number of young and inexperienced workers grows that naturally stimulates the companies to implement technologies of training and development of talents;

Obviously, in 2009 development will get the following referrals:

• Web 2.0 will become commonly accepted. It will promote learning process of the young personnel and exchange of experience.
• The functionality of HRM systems will be focused on work with the "main" data defining lifecycle of the employee that will provide synchronization of information and will simplify interaction of subsystems of hiring, payroll calculation, talent management and so forth.
• The concept of labor power will extend due to inclusion of so-called "third parties" (contractors, consultants, volunteers and dr). Effective management of such contingent is implemented in functional unit "The interface for third parties"
• Integration of control blocks talents and labor power in HRM systems. Implementation of the complex HRM systems allows to reduce costs for support and ensuring interaction of the "external" modules implementing control functions by talents and labor power.
• Development of analytics. It will allow to develop scenarios "that-if", promoting adoption of strategichny solutions.
• Purposeful use of services of outsourcing in HRM. Use of an expanded set of services of outsourcing becomes less popular because of its high aggregate value. The selection outsourcing of HR processes, for example, salary accrual, will be still demanded.
• Popularity of the HRM systems unrolled according to the SaaS model.

HRM systems will be more business focused and less dependent on internal IT of infrastructure. Accomplishment of routine transactions will be transferred to outsourcing while the focus will be shifted to the area of talent management as strategically important condition for successful development of the company. HRM solutions are developed both for sale, and for deployment according to SaaS model that demonstrates their demand as the instrument of effective management of business.

See Also

• HRM system