HR software for small, mid-sized firms will come from vendor alliances
There have been a number of headline-grabbing shock waves in the HR technology sector of late. Mergers, acquisitions and hostile takeovers seem to be the norm, involving some of the biggest names in the business.
Kronos and Simplex, Microsoft and Great Plains, PeopleSoft and J.D. Edwards are but a few examples of the winds of change blowing through the HR systems industry. And the mammoth battle between Oracle and PeopleSoft is still raging on.
For many small- to medium-sized organizations, the rush to consolidate has not had a real impact. Nor does it look like it will. Many firms that service this market are too small to fear being bought out by the billion-dollar big guys. But there is extremely vigorous competition among these smaller firms that keeps the technology cutting edge and prices and customer service competitive.
HR vendors that serve the medium-sized market know that users require many of the same features available in large systems — but at a medium-sized price. This creates the difficult, if not impossible, task of funding the development, maintenance and customer support needed to satisfy continuous system enhancements.
The costs become prohibitive very quickly, which is why there will likely be formal alliances struck between providers of HR applications. These alliances will offer a core human resource management system (HRMS), with interfaces to other associated systems. This process has already begun in the areas of payroll, time and attendance and swiping systems.
Other functions that lend themselves to this model are people-scheduling systems, interfaces to Web-based recruiting applications, links to sophisticated performance review products, and possibly flex-benefit systems. All of these functions can be satisfied by existing stand-alone systems and all can be linked to a core HRMS.
Vendors in an alliance will have to regularly share information to ensure that products operate well together. Vendors will have to use a common nomenclature to describe the systems, adjust databases to provide common field sizes and formats, and alter pricing, installation and support models to reflect a more unified structure.
A salesperson from any of the vendors will have to know enough about all the products to recognize the needs, address the issues and suggest solutions in terms of another member’s product.
The end-user benefits in a number of ways. Since each vendor will be selling its own products outside of the alliance and competing with others in its product area, the incentive to develop and enhance applications will remain. Users can acquire individual systems with the confidence that future needs will be satisfied by other alliance products. It’s a building block rather than a buy-the-whole-system-at-once concept.
System modifications and enhancements, if needed, will be done by the programmers of the individual members who know their products intimately.
One argument against this approach is that the user will have to deal with multiple vendors, which could lead to “it’s-not-our-fault” finger pointing. But many multi-vendor offerings exist today and work very well. Vendors have already learned how to work with each other.
Will the above-described scenario actually develop? Will some other structure evolve or will the industry remain as it currently is? It’s hard to say, but one thing is certain: The ever-growing needs of HR users will put pressure on HRMS providers to remain creative and dynamic in their market approaches. The alliance model is a logical way to provide the required products and services.
Gerson Safran provides marketing and sales support for the INFO:HR HRMS. He can be reached at (519) 672-5984 or [email protected].
Kronos and Simplex, Microsoft and Great Plains, PeopleSoft and J.D. Edwards are but a few examples of the winds of change blowing through the HR systems industry. And the mammoth battle between Oracle and PeopleSoft is still raging on.
For many small- to medium-sized organizations, the rush to consolidate has not had a real impact. Nor does it look like it will. Many firms that service this market are too small to fear being bought out by the billion-dollar big guys. But there is extremely vigorous competition among these smaller firms that keeps the technology cutting edge and prices and customer service competitive.
HR vendors that serve the medium-sized market know that users require many of the same features available in large systems — but at a medium-sized price. This creates the difficult, if not impossible, task of funding the development, maintenance and customer support needed to satisfy continuous system enhancements.
The costs become prohibitive very quickly, which is why there will likely be formal alliances struck between providers of HR applications. These alliances will offer a core human resource management system (HRMS), with interfaces to other associated systems. This process has already begun in the areas of payroll, time and attendance and swiping systems.
Other functions that lend themselves to this model are people-scheduling systems, interfaces to Web-based recruiting applications, links to sophisticated performance review products, and possibly flex-benefit systems. All of these functions can be satisfied by existing stand-alone systems and all can be linked to a core HRMS.
Vendors in an alliance will have to regularly share information to ensure that products operate well together. Vendors will have to use a common nomenclature to describe the systems, adjust databases to provide common field sizes and formats, and alter pricing, installation and support models to reflect a more unified structure.
A salesperson from any of the vendors will have to know enough about all the products to recognize the needs, address the issues and suggest solutions in terms of another member’s product.
The end-user benefits in a number of ways. Since each vendor will be selling its own products outside of the alliance and competing with others in its product area, the incentive to develop and enhance applications will remain. Users can acquire individual systems with the confidence that future needs will be satisfied by other alliance products. It’s a building block rather than a buy-the-whole-system-at-once concept.
System modifications and enhancements, if needed, will be done by the programmers of the individual members who know their products intimately.
One argument against this approach is that the user will have to deal with multiple vendors, which could lead to “it’s-not-our-fault” finger pointing. But many multi-vendor offerings exist today and work very well. Vendors have already learned how to work with each other.
Will the above-described scenario actually develop? Will some other structure evolve or will the industry remain as it currently is? It’s hard to say, but one thing is certain: The ever-growing needs of HR users will put pressure on HRMS providers to remain creative and dynamic in their market approaches. The alliance model is a logical way to provide the required products and services.
Gerson Safran provides marketing and sales support for the INFO:HR HRMS. He can be reached at (519) 672-5984 or [email protected].
