BrazilMarket analysis: HCM software market and the key vendors
The market for human capital management (HCM) software is booming globally, with artificial intelligence, machine learning and HR analytics the key drivers of growth. This is according to a new study by Capgemini Invent.
The Dutch wing of Capgemini Invent performed a market analysis of the HCM software market, finding that the growing importance of people & change on the back of an already rapidly growing digital transformation space is lifting the software segment to record heights. Combined, leading HCM software vendors such as Oracle HCM, SAP SuccessFactors, Workday, Kronos, Cornerstone and Infor currently generate over $15 billion in revenues globally.
However, by 2025, the market is forecasted to reach $25 billion, growing at a compounded annual growth rate of 5% in the period. “Increasing digitalisation across sectors is leading to surge in the use of human resource management software,” said Marjolein Wenderich, Head of People & Organization at Capgemini Invent in the Netherlands.
The growing possibilities offered by solutions means that HR leaders are eagerly adopting modern-age systems, enabling them to inject a more data-driven approach to their traditional ways of working, while reaping significant efficiencies. While HR has been slower to digitise its core infrastructure and applications compared to for instance the finance or supply chain verticals, the function is now playing catchup across its portfolio.
The benefits of HCM
Wenderich said that HR uses systems and tools for four main purposes. First, it can transform and improve HR operations, which spans processes such as recruitment and talent management to compensation & benefits and payrolling. Here, systems can take over manual tasks more effectively, with robotic process automation – of human ‘bots’ – in particular popular as a means of handling highly repetitive and transactional activities.
Second, HCM systems – including mobile-based apps, wearables and chatbots – play an instrumental role in ramping up the employee experience. For instance, digital tools such as self-service portals can help employees manage their careers, spanning compensation & benefits, career path planning, and access to perks such as health & wellness programmes. Meanwhile, HR leaders can use digital tools to measure engagement through surveys, and use these insights to enhance policies and processes.
Third, HCM systems provide the backbone for the learning & development (L&D) pillar. Using L&D systems, HR leaders can upskill their workforce – ensuring the workforce is ‘fit-for-purpose’ – and serve a growing need for learning on the job.
Better aligning with the strategic priorities and corporate culture objectives is the fourth – and overarching – benefit. At a time when change itself has become a normal, and with people a game changing asset to any company, executives are increasingly turning to HR leaders to deliver on the human capital’s promise. HR is now expected to be a business partner, supporting with strategic topics such as workforce management, provide forward-looking insights based on data, and act as custodians of the culture.
HCM software market
Capgemini Invent’s analysis shows that the software market is about evenly distributed between on-premise solutions and SaaS solutions, with the latter understandably set to grow its share in the coming years. A benchmark of leading software vendors places SAP SuccessFactors, Oracle HCM and Workday at the fore front of the industry in terms of functionality depth and breadth. “The market however has dozens of players, with some vendors a leader in their respective niche,” said Wenderich.
One trend which is visible in the market is a shift from 'one-size-fits-all’ HR-software to more specialised systems. This is placing organisations on crossroads, said Wenderich. “They can opt to go for one major supplier, providing a unified look and feel and way of working; or a ‘best of breed’ approach which cherry picks the top vendors per HR domain; or a combination of both, a hybrid solution.”
