HR software market: The sleeping giant has awoken

by Stephanie Zillman13 Feb 2012

In one of the biggest corporate deals to hit the business headlines this year, Oracle yesterday announced the acquisition of corporate recruiting software provider Taleo – but the takeover bid spells more than just an interesting market change. The sleepy niche HR software market has awoken.

Business management software producer SAP is a frontrunner in the cloud-based software market, where companies ‘rent’ software over the internet rather than installing it on their own machines. In December last year SAP extended its reach by purchasing a leader in the employee performance software market, SuccessFactors, for a whopping US$3.4bn. According to a leading analyst in corporate HR, talent management and leadership, John Bersin, the huge SAP and Oracle deals cement three major trends happening in the HR technology space.

  1. Corporate software is well and truly moving to the cloud. Bersin said the HR, payroll and talent management software market, worth $15bn, is being revamped, and more and more companies are now starting to replace their core infrastructure software with new cloud products.

  2. The market for integrated talent management software has matured. No longer is it necessary for companies to purchase a wide variety of tools to help with recruiting, performance management, training management, compensation management, and workforce planning – all these products are now integrated into complete talent management suites, and small to mid-sized companies can gain the benefits of this software as well.

  3. The sheer availability and variety of providers offering cloud-based software means HR customers are now placed to replace old systems with competitively priced cloud software.“If you’re a buyer of HR software, the time couldn’t be better to replace your old systems. And if you’re an investor, get into this space now. It’s still early,” Bersin said.

Research by Deloitte recently found that 84% of Australian companies have either already begun transforming, or plan to transform their HR functions towards cloud computing, and the reason couldn’t be more straightforward: cost-cutting.

Organisations that already have, or will be, implementing cloud technologies cited their chief motivators as:

  • No licensing fees

  • No additional infrastructure required

  • Maintenance is automatically carried out by the provider

  • Minimal training, most use a web 2.0 style interface

  • HR can connect to all the facilities online, anywhere in the world

  • Free trial periods. Unlike traditional software licensing models where there are ongoing fees and annual maintenance costs, using a cloud means a company can move on without any strings attached.
     

-Stephanie Zillman

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