Lots Going on in HR Tech – What Does it Mean for 2012?

Recent activity – including the acquisitions of SuccessFactors by SAP and Rypple by Salesforce – is pumping new energy into the human resources and talent management software market. Things are clearly heating up in this sector, and investors have taken note. In the last two weeks, VC funds have been flowing into the human resources software market, with large investments in SmartRecruiters and iCIMS. As such, 2012 shows much promise for the continued expansion of HR solutions into the Cloud, as well as further integration of social media functionality into HR applications.

The increasingly diverse needs of organizations big and small demand myriad options in human resources and talent management software solutions. As they continue to fight for the biggest piece of the pie, I believe more large software companies will make strategic acquisitions. I’ve taken an in-depth look at what SAP and Salesforce stand to gain from their HR acquisitions, how it will impact this dynamic software market, and where other contenders in this space might make moves of their own.
The Opportunity for SAP in HR: It’s All About the Data

Over the years, SuccessFactors added analytics and reporting capabilities to their product, in part through the acquisition of Inform Business Impact (previously InfoHRM) in early 2010. “The ability to create some telling analytics will set one vendor ahead, because that’s what it’s going to take to give HR a seat at the table,” says independent HR technology consultant Tiffani Murray. With SAP’s vast resources and experience delivering hard data in the ERP space, there’s a great opportunity here to further develop an HR analytics tool the market craves. If SAP is successful, we might expect to see more acquisitions at the intersection of HR and analytics in 2012.

Why HR Makes Sense for Salesforce’s Social Enterprise

Social tools have seen the most widespread adoption in these two markets, as CRM and HR have historically been the first business sectors to adopt new communications tools. With the evangelist support of Salesforce CEO Marc Benioff and John Wookey (previously of Oracle and SAP) heading their HCM unit, Salesforce is in a strong position to help HR departments extend social media functionality across their various applications. “This new blood drives innovation, which energizes the market,” says Murray. “It will drive the market in a new direction.”

Customers Should Prepare for More Moving and Shaking in 2012

Exciting as acquisitions are for analysts, they can certainly be intimidating for customers. How will this all affect the people who actually use these systems? Worries over disruptions in service, changes in pricing or contractual agreements, and vendor contact staffing changes are a real concern when a vendor changes ownership. When evaluating human resources software or talent management products, ask pointed questions about a vendor’s financial and strategic viability, and lock-in rates and service or maintenance terms. This can save you a headache down the line.

As legacy vendors continue their age-old ERP battle, and as innovative companies like Salesforce continue to dazzle, the moves made by these (rather different) business management providers have certainly set the stage for an exciting 2012. Customers and analysts alike would be wise to pay attention to continued movement in the market in the coming months.

For further reading, check out the full analysis and forecast on my HR blog at: http://blog.softwareadvice.com/articles/hr/the-hr-software-round-up-setting-the-stage-for-2012-1011912/. Have your own thoughts? Join the discussion, and leave a comment.

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