HR Technology Market 2019

AI, Productivity, and Focus on the
Employee Experience Will Drive Technology Investments in the Year Ahead


1 . HR Technology Market 2019: Disruption Ahead 1 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD

2 . About this Report Contents Josh Bersin has been researching the HR technology market for more than 15 years. His research is 4 Introduction based on surveys and hundreds of interviews with HR and talent leaders, vendors, investors, and other analysts. 9 Core HR Platforms Evolve from Systems of Engagement to Systems of Productivity This year’s report was conducted with support from LRP Media Group, an innovative media company 10 The HR Technology Architecture Will Change serving millions of business and education professionals worldwide. Human resource and talent leaders rely on Human Resources Executive ® and HRM Asia, two of the company’s five publications. 12 The 21st Century Talent Management Market Explodes with Innovation and AI The company produces the HR Technology Conference & Exposition®, the world’s largest technology conference for the HR and talent markets. The company expanded its global reach in January 2018 16 The Employee Experience Market: with its acquisition of HRM Asia and will launch two HR technology-focused events in Singapore and A Key to Employee Engagement Shanghai in 2019. 19 Evolution and Revolution of Employee Listening, This report, a $1,495 value, is complimentary to all premium pass delegates of the 2018 HR Engagement, and Culture Tools Technology Conference & Exposition, as well as attendees of the 2019 HR Festival Asia and 2019 HR Tech China. The report further guarantees that HR Tech attendees are fully informed and well- 22 Recruitment Leverages AI and Data Faster Than Ever equipped when it comes to formulating and executing their HR technology strategies. 24 Contingent and Gig Work Management Becomes A Marketplace Sign up now for the 2019 HR Technology Conference, which will be held October 1 – 4 at The Venetion, Las Vegas, to hear Josh Bersin live and to receive the 2020 report. Register for the 26 Next Gen Performance Management Arrives. premium pass (promo code: HTMR19) by May 15 to receive $450 off of regular registration. 29 The Reinvention of the Learning Technology Market 33 Wellbeing Becomes an Expansive Market 38 Augmented Analytics, AI, ONA, and Feedback Systems 43 The 2019 HR Technology Marketplace 2019: Explosive Growth, Ever-Changing 54 Conclusion 2 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 3

3 . not be surprised to see companies push for more ROI and • Gig and contract work. Are we ready to embrace part-time, • First, the sheer power of technology is increasing. PCs, Introduction productivity analysis when the economy cools off. gig, and side-hustle workers who want to work on their own mobile devices, and cloud services can process data, iden- terms? Can we manage contract and contingent workers tify language and speak conversations, identify stories Before I dive into the eleven seismic shifts I see taking place, within HR or should we outsource management to procure- and trends, and give us information and recommendations AI, Productivity, and Focus on the let me review the people-related challenges companies face ment? faster than ever before. Workday, for example, now offers Employee Experience Will Drive today, since these are ultimately the drivers for HR technology. an AI-based analytics tool that points out trends, variations Technology Investments in the Year While HR has always had the responsibility for staffing, payroll, • Wellbeing. Are we responding to employees’ demands for a from plan, and outlying behavior entirely based on data, employee relations, and general employee development, today more humane, healthy, and friendly workplace where they Ahead without the need for detailed analysis. a new set of talent issues has appeared, raising a new set of feel developed and rewarded while they work extra hours? HR technology is an enormous part of business today. In questions that must be addressed: What tools should we buy to support wellbeing? And where • Second, tools are being integrated into the flow of work. the United States alone, there are more than 12 million does our responsibility stop and individual ownership begin? One of the biggest trends in HR and L&D is the integra- • Fairness and transparency. Are we hiring, promoting, and employers spending over $5 trillion on payroll, benefits, tion of HR practices and learning into the flow of work. This paying people in fair, unbiased, and transparent ways? Are • Pay. Are we adapting pay and reward practices to be more and other employee programs. More than 40% of the U.S. is a new way of improving the employee experience, and I we being honest and open about the way we capture and generous, holistic, and competitive? Can we deal with workforce changes jobs every year, creating a $250 billion- believe it represents a new design paradigm for technology use employee data? demands for real-time pay and the expectation of more flexi- plus market for recruitment, advertisement, assessment, providers and HR teams. In fact, I believe workplace techno- ble rewards? and interviewing. The L&D marketplace is over $220 billion • Diversity, inclusion, fairness, and transparency. Are our logy and HR technology are coming together – ultimately a per year and encompasses onboarding training to leadership people practices inclusive, diverse by design, and respect- • Leadership. Are we actively developing a new generation positive change for employees and HR teams. development to technical and continuous skills programs. The ful of gender, age, race, educational background, and mental of leaders? Do we fully understand the requirements for • Third, the security, transparency, and social nature of data market for wellbeing, benefits, insurance, workplace tools, and and physical ability? Are we clear in our talent decisions and leading a networked organization? Do we have tools and are now business risks. Companies are capturing data, productivity systems is similarly large. are we sharing information in such a way that employees data to show leaders how to continually improve? sharing data, and identifying external data that may alienate feel a sense of trust in the company, management, and I can conclusively state that HR technology is changing at • C-suite. Are we doing our job to assist the C-suite to better employees, leak company secrets, or perhaps, through AI, leadership? a faster rate than I have ever seen. Cloud-based core HR adapt to business change and people issues? Are we guiding recommend or suggest damaging behaviors. A recent study2 systems are expanding and growing in number and an ever- • Social consciousness. Is the organization acting in a respon- decisions related to the impact of automation and AI on by major U.K. unions found that 56% of employees are afraid increasing number of new companies are building AI-based sible way for society and the communities it serves and does workforces? of workplace monitoring and more than two-thirds are talent tools to reshape the entire talent management business in? strongly negative on mood monitoring, keystroke monito- landscape. Players such Google, Microsoft, IBM, Salesforce, These are the big issues I talk about with HR and leadership ring, or other forms of data collection in the workplace. We • Productivity. In a world of never-ending digital interrup- and Facebook are entering the space, leading me to believe teams everywhere I go. Each is dependent on technology have to be more open, transparent, and ethical about what tions, are we reducing workplace clutter and distractions so the markets for HR technology and workplace technology are and some can be revolutionized by technology – making HR we do with collected employee data. employees can get their work done? Do we know how and merging. technology more important than ever this year. where employees are wasting time? Given these issues as a backdrop, let me dive into the top At the same time, companies are throwing money at HR tools, • External brand. Is our external brand authentic and relevant eleven seismic shifts I expect to see throughout 2019. searching for ways to transform their workforce, make people The Rapid Pace of Change to job candidates and employees? How do we monitor the more productive, and improve their quality of hire, skills websites where people can rate our company? While the HR technology market has certainly gone through development, and employee engagement and retention. major evolutions in the past, this year it’s changing in ways • Teams. Are we building the practices, tools, and reward Is it any wonder the market grew by an astounding 10% last we never predicted. The incorporation of automation is systems that enable the company to be agile and team-cen- year ? In fact, the amount of money spent on HR tech is in 1 explosive, bringing robotic process automation, chatbots, tric? How do we flex our ERP system to help us manage our itself a game changer. The cloud, with its many benefits, is cognitive hints and nudges, messages integrated into our work company as a network? expensive. The average large company now has 9.1 core talent environment, voice and text communication, and of course applications (up from 7 in 2018) and is spending $310 per • Careers. Are we actively helping employees upskill, move AI-based suggestions and tips. The use of cloud platforms lets employee per year -- a 29% increase over last year. While I’m not into new roles, and build purposeful, meaningful careers? technology vendors build tools faster than ever. As we look at saying this is out of line, it does feel inflationary and I would How can we improve internal mobility without requiring technology disruptions, I see three vectors of change: promotions? 1 Sierra-Cedar 2018-2019 Systems Survey 2 https://www.bbc.co.uk/news/business-45214424 4 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 5

4 . supports team- or project-based work yet, so vendors have lots easy-to-use interface that helps employees use the system Every company needs one of these platforms, and now that Core HR Platforms 1 of work ahead. for the moments that matter at work. To me this trend poses most are available in the cloud, vendors are rapidly changing a major market shift, because user engagement with core HR Evolve from Systems of their offerings. While these systems are important payroll and Let me give you an example. One of the more innovative systems is under attack, possibly commoditizing this entire record-keeping systems, they must also be useful, productive, new core HCM platforms is a product called Bob, from a Engagement to Systems and engaging to employees directly. fast-growing company called HiBob. Bob is designed as a market. of Productivity Twenty years ago, these were back-office systems designed management platform first and HR platform second, so its Before a purchase, executives are asking questions like these: entire design is focused on what information managers, Can employees easily use the system? Is it useful for day-to- to be used by HR managers, payroll clerks, and HR By far the most important and essential part of the HR employees, and executives need. day work? Does it facilitate, model, and improve the operation administrators. Over the last decade, they have become useful technology landscape is the market for core HR platforms, of teams, gig work, and a highly mobile workforce? Is it flexible for employees, with interfaces that let employees use self- While the company is still fairly small (200-plus customers), which includes cloud-based HRMS, payroll, and employee enough to accommodate GDPR and employment contracts in service functionality to manage their information, benefits, and it represents a new approach to core HR, one I believe every management systems. This market, well over $8 billion in size, Europe, rapid changes in pay and work practices in Asia, local various other tasks. major vendor will have to address. ADP, Oracle, SuccessFactors, includes large vendors (ADP, Ceridian, Oracle, SAP, Ultimate, small business needs in India, and the many other regulatory Ultimate, and Workday are all moving in this direction, but since Workday) and dozens of mid-sized companies such as HiBob, Today, vendors are struggling to evolve again and make these issues around the world? their core functionality is designed for complex global companies, Sage, Zenefits, Gusto, BambooHR, Zoho, Namely, Paycom, systems into productive management and workforce tools that such a change is not easy. While these vendors are focused Paychex, Paycor, PeopleStrong, and Darwinbox. help employees actually get their work done. While most of us Ultimately the core HR platform market will continue to grow on building out talent management features today, their core work in teams and on projects, none of these systems really in 2019, but I think buyers will become more discriminating, systems are still not always useful for day-to-day work. as ease of use and productivity take on more emphasis in To address this issue more urgently, companies are rapidly purchasing decisions. While these systems are essential snapping up employee experience platforms (EEP) such and must meet functional needs, if they’re difficult to use, as those offered by ServiceNow, Deloitte ConnectMe , TM employers will have to buy another complex set of employee PeopleDocs, and PeopleSpeheres in an attempt to create an experience software for successful adoption. Automated Talent Integrated Talent Engagement, Fit, Productivity, Management Management Culture, Analytics Performance, Teams Team and Work Management People Management Opmizing producvity, alignment, Talent Management Focus on culture, engagement, connecon of the “network of teams”, Integrated processes environment, leadership, and fit tools to make work beer. and systems, Talent as core to HR and business agenda Systems of Automation Systems of Engagement, Systems of Productivity Practice-driven solutions Empowerment solutions In the Flow of Work Automate Integrate Engage Perform 1990s-2000s 2004-2012 2012-2017 2019+ Figure 1 Figure 2 Bob Screen Shot From HCM to Talent Management to HR in the Flow of Work 6 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 7

5 . Convergence between Workplace these systems. Chatbots, messages, and real-time notifications of HR in the flow of work, and it shows how workplace and HR essentially store data so it can be represented in a network. Technology and HR Technology are appearing, bringing the HR and workplace worlds together. technology must now come together. These databases are vastly more powerful for modeling how people interrelate, search for data, communicate, and build One of the most interesting changes taking place this year I recently met the CHRO of one of Coca Cola’s biggest bottlers different types of relationships with peers, team mates, bosses, is the way workplace technology vendors such as Microsoft, in Europe. As we were talking about performance platforms, Modeling the Networked Organization: subordinates. Google, Slack, Atlassian, and Facebook are all getting into HR. she told me her team had looked at many of the hot tools New Platform Architecture Is Needed Why? Quite simply the HR tools we bought as a “destination” in the market and eventually settled on a SuccessFactors- In a graph database, all objects are defined by their Most companies are now realizing that the hierarchical work in the past are being integrated into the flow of work. driven system they then modified to plug into Saleforce.com. relationships. When you look at the image of a social network, model is useful for pay decisions and possibly for traditional Her reasoning? Since 90% of her employees’ time is spent in you can envision the many ways we could use this at work. Over the last 20 years, most HR systems were portals, apps, careers, but it does not reflect the way we actually work. Salesforce, it made sense to let employees set goals, provide and destination platforms that employees visited to apply for McKinsey research shows more than 37% of companies are Such a graph-based system could represent a company’s feedback, and do reviews while in Salesforce. The results were a job, learn, change their address, or do some other HR-related already experimenting with work models based on managing insurance plans, managerial and peer relationships, recipients a huge success; she and her team saw Immediate adoption, task. Today, as we spend more and more of our working lives in cross-functional teams, setting team goals, and valuing people and senders of emails, location information, and dozens of tremendously positive feedback, and a massive re-engineering productivity systems such as Office 365, Slack, and Workplace based on skills and connections rather than job level, title, or other data elements that need to be managed in an HCM of their feedback and coaching processes. This is an example by Facebook, vendors are putting more and more HR tools into tenure. system. One of our clients is now experimenting with a graph database representing the relationships of 70,000 employees. This type of work model is very difficult to implement in The company is concluding that while its core ERP is needed traditional HCM systems which are built on relational or for payroll and recordkeeping, it is far less useful for other USER object-oriented databases in which the objects or tables workforce management purposes. NAME represent long lists of transactions linked to each other Alice through joins. This database architecture, which has been This type of technology, coupled with blockchain identity around for 50-plus years, was designed for transaction management and security, could form the basis for an entirely Friend_of management, not complex network modeling. So none of the new industry of HCM technology over the next five to ten Friend_of Friend_of Friend_of core ERP or HCM vendors have been able to build products years. Stay tuned. that truly model the way we work today. USER USER Colleague_of USER One of the potential solutions for new models of work is an Friend_of Colleague_of NAME Friend_of NAME NAME exciting technology called graph databases. These are new Bob Jim Chad Friend_of products, pioneered by companies such as Neo4J, which Co of ll ss_ Co eagu Friend_of Bo f lle ag e_of d_o ue r i en f _o F d_o f r i en F USER USER USER NAME NAME NAME Zach Grace Dave s ve Friend_of Lo Lov Married_to Friend_of s es Married_to ve Lo USER USER USER USER NAME Disklikes NAME NAME Friend_of NAME Helen Ingrid Fred Friend_of Ed Figure 3 Modeling the Networked Organization: An Example 8 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 9

6 . audiences and back-office HR and IT staff. The nature, type, The HR Technology 2 Architecture Will Change For much of the last decade we have purchased and and definition of these systems is changing as described in the next section, but in many cases, these applications are now coming from a core HCM vendor. ADP Oracle, SAP, Ultimate, Workday, and most of the mid-market HCM players are now heavily investing in New Talent Systems of Engagement (Standalone app or vendor) (Social sourcing, AI-based assessment, video interviewing, learning experience platforms, mobile learning, VR-based learning, social recognition, engagement, wellbeing behavioral change…) implemented HR technology in a fairly simple technology recruitment, performance management, learning, and stack. There was the core HR system (HRMS, payroll, benefits even engagement tools within their suites. The integrated Talent Systems of Record administration) and then a tapestry of talent management talent management suite market almost vanished overnight (May go into HCM Platform) systems implemented around it. These talent management (although a few companies such as CornerstoneOnDemand (ATS, LMS, Compensation, Benefits, Surveys, Rewards) tools included systems for goal setting, performance and Saba continue to flourish) as core HCM vendors built or management, learning management, compensation bought these tools. management, as well as systems for benefits administration, I’m not saying that all companies will use the talent Figure 5 and engagement surveys. How Talent Management Systems Are Changing management suites from their core HR vendor today, but many As I will describe in later in this report, all these wonderful companies will. Workday claims more than 1,000 companies talent applications are changing, and there is essentially an now use its recruitment software, for example, and SAP has What’s new about the HR technology architecture are the layering on top tools such as Entelo, HireVue, and Pymetrics to entirely new breed coming to market. But in the meantime, more than 2,000 companies using its LMS or other learning offerings in the red layers. We now fully understand that no create a more advanced recruitment solution. what used to be integrated talent management suites are now tools. So the applications in the graphic’s blue layer are more core HR system can do everything, so we need an employee Similarly, in learning, a company may choose to use the HCM being integrated into core HR platforms. competitive than ever. As a result, pricing is going down and experience toolset to sit on top. IBM would argue that this red vendor’s core LMS but then purchase a learning experience niche vendors need to be agile and innovative to survive. layer is Watson, an entire suite of services that let employees Figure 4 shows a set of talent management applications (in the platform and series of advanced learning tools to sit on top. chat, talk, and interact with core HR systems. ServiceNow, blue layer). Each is designed to meet the needs of different I think this is a major shift in the talent management market, the clear leader in this space, is now building and buying tools where much of the core record keeping for talent practices for chat, cognitive interfaces, and a range of other features migrates into the HCM system while advanced innovations that let companies build and deploy an easy-to-use system continue to flourish in new products. that embraces the moments that matter – without forcing White Senior External Collar Leaders Candidate Network employees to learn how to use the core system. These layers For core HCM vendors, this means they have to open up their are where the new “holy war” for HR tech will take place . 3 APIs to let all the value-add talent vendors access their core platform. While Workday, Oracle, and SAP can probably build Line What’s happening to these talent applications? They’re all Hourly Manager Contractors Alumni reasonably good recruitment tools, for example, they still must essentially splitting into two categories. One is the talent acknowledge the 100-plus innovative, AI-based recruitment Employee Experience Platform: Chat | Conversation | Mobile | Integration with Systems of Productivity system of record, similar to how the LMS or ATS standardizes add-ons. The core HCM vendors have to make it easy for them Case Document Transition Employee External information in corporate training or recruitment. This is the Self Service Management Management Programs Communications Services to integrate, exchange data, and sell together. This is why level of functionality that belongs in the HCM system. Workday recently opened up its platform and SAP started a Sourcing Learning Performance Engagement Wellbeing HRMS ONA For example, the enormous market for applicant tracking whole initiative to attract such tools. Recruitment Career Goals Feedback Rewards Payroll/Time Analycs/AI Assessment Coaching Succession Recognion Benefits Communicaons Workforce Mgt systems is now being subsumed into HCM platforms. All the major ERP vendors now offer applicant tracking systems, but most do not have advanced features for AI-based sourcing, video or AI-based assessment, and advanced advertisement Senior Geographic Junior Geo Talent Specialists (OD, Wellbeing, safety, HR Ops, AI and Analytics, Monitoring, Comp, Ben, HR Tech, App HR Prof Research, Market Business Partners Bus Partners sourcing, recruiting, culture,engagement, Bots, Intelligence Predictive, Rewards development Development Best Practices, analytics, so companies are buying an HCM system and then learning, organized in recognition WF Planning networks ofexcellence) 3 https://searchhrsoftware.techtarget.com/news/252448535/New-tech-trends- in-HR-Josh-Bersin-predicts-employee-experience-war Figure 4 HR Technology Architecture: 2019 and Beyond 10 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 11

7 . I’m amazed at the innovation and creativity shown by new The 21st Century 3 Performance Management Payroll - Talent Learning vendors in this market. Figure 7 shows only a small percentage Talent Management of the new vendors that have entered the market in the last five years. Market Explodes Figure 8 lists just a few of the innovations we're seeing. There’s with Innovation and AI no way the larger HCM vendors can possibly innovate in all Rewards Recognition these areas. As the list of new vendors demonstrates, there are Recruitment As I discussed in the preface, companies now face a wide many very innovative companies building these systems, and variety of new talent challenges, many of which were not many have VC funding of $10M or more. Mid-Market SMB recognized in the mid-2000s when most talent management Engagement suites were built. To address these issues a new generation of AI is a huge part of the innovation taking place. Since these new tools has now arrived. And they are innovative, creative, and vendors are often starting from scratch (and they are assuming often AI-based. that the talent system of record is in the HCM platform), they are focusing on building AI-based features. In the accompanying chart, I’ve tried to group these offerings Well Being by category. These new talent applications (and the word Xander and Compass give managers coaching based on direct “talent” is probably not even the best descriptor anymore) feedback from engagement surveys. Pymetrics assesses mental are focused on improving the employee experience from capabilities and skills through AI-based games, dramatically top to bottom – aiding recruitment, performance and goal improving hiring. Zugata assesses and analyzes functional and Figure 7 setting, learning, career management, rewards, wellbeing, and technical capabilities through surreptitious emails to peers. New Vendors Disrupting Market ultimately work itself. Butterfly.ai coaches managers based on behavioral cues and FEEDBACK & REINVENTING 21ST CENTURY NEXT GEN WELLBEING WORK-TEAM ENGAGEMENT PERFORMANCE LEARNING & CAREER REWARDS PRODUCTIVITY MANAGEMENT RECRUITMENT LEARNING AND CAREER PERFORMANCE REWARDS AND WELLBEING WORK MANAGEMENT MANAGEMENT RECOGNITION Slack, Office, Google Integration AI-based sourcing, Learning experience Continuous Social recognition, Behavioral Agile goal setting, Wellbeing video and social platforms, micro- performance social rewards, agile improvement team collaboration, Fitness Tracking Converstaional assessment, learning platforms, management tools, rewards, real-time platforms, wellbeing messaging, document Recognition Interfaces advanced analytics, MOOCs and content agile goal setting, pay, pay and reward education and and video sharing, MARKET GROWTH — ADOPTION Everywhere Competitions behavioral libraries, VR and team management, benchmarking, training, financial AI-based coaching, Social Sharing Document assessment, gig AR learning, career ONA network rewards fitness support, integrated learning Custom Rewards Management work management, portals and career analysis, AI-based customization, coaching, games and support Micro-Learning Programs Financial Wellbeing Goal Sharing contingent work development, gig development conjoint analysis of and competitions, Learning Experience Customer Fitness Merges Goal Tracking management work management planning, integration rewards ERGs, diversity and Check-ins with Recognition w/Engagement with learning content, inclusion training, Feedback Content Curation Facebook, Google, online coaching analysis, and tools Pulse Survey Conjoint Analysis Emotional, Microscoft, IBM, Agile, Open Goal Gamification Holistic Rewards Psychological Atlassian Text Analysis Management Accreditation Figure 8 Real-Time Pay Market Segment Innovations Mobile Feedback Culture Assessment Career and Rewards Planning Org Network Coaching Tools Analysis 2016 2020 PROGRESSION OVER TIME Figure 6 2019 and Beyond: A New Set of Talent Applications 12 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 13

8 . SPEECH Growth in the HR Systems Architecture business transformation consultant. He has developed a series Function of employee personas, use cases, and global process guidelines VISION from which he evaluates and selects technology. This is the Text to With all this change in technology and architecture, the HR Speech type of role almost every company needs. How Watson sees, systems architecture team has become more important than Speech hears, speaks, feels, to Text DISCOVERY ever. In most companies, the IT department cannot possibly Another of my clients is the head of HR innovation at a large translates, finds keep up with HR market changes, so an HR-IT team is needed insurance company. Not only has he served as the company’s Visual Knowledge LANGUAGE Recognition Studio to scan the landscape, evaluate vendors, and develop a long- CLO, chief talent officer, and head of HR operations, he is also Discovery term architecture. The Sierra-Cedar 2019 study found a a technologist at heart. He is making sure this global company News EMPATHY 52% increase in this internal role – often filled by one or two has a long-term, comprehensive HRIT roadmap while he Natural Language Discovery Classifier Service individuals knowledgeable about HR and L&D architectures. I simultaneously is building a massive graph-based database Tone Language think it’s an urgent priority to have such a function in any large to look at new models of employee engagement data. This Analyzer Translator company today. skillset – a deep understanding of how the organization works, Personality Natural Insights Language coupled with passion, and driven by the energy to innovate and CONVERSATION Understanding One of the companies that has done this exceedingly well is experiment -- is an incredible combination for talent leaders. Deutsch Telecom. I’ve met with the head of its architecture Converstaion team many times. He is a senior IT expert as well as a senior Service Virtual Agent Figure 9 IBM Watson Applies AI-Based Algorithms real-time feedback. Volley reads documentation and generates offers a range of AI web services that an engineering team can learning assessments automatically. Edcast recommends use to stitch together many types of cognitive, intelligent, or content based on role and experience of others. BetterUp chat-based services using IBM’s APIs without having to build identifies the best coach for an employee and monitors underlying code. So when you try to evaluate AI, you have to the coaching process based on self-assessments and work look at the vendor’s real data set, how much experience it has experience. HireVue assesses candidates on a video interview in training the AI, and how well it actually works in your use through facial expressions and language. Filtered chats with cases. learners to improve learning outcomes based on content In the case of IBM, the company is trying to build out its own and learning experiences by others. Textio improves job family of talent applications, including IBM Watson tools for descriptions by monitoring language which is most unbiased assessment, career planning, coaching, salary planning, and and best fit for similar jobs. Mya talks with candidates to interfacing with the HCM platform. IBM’s CHRO has told screen and assess them automatically. Entelo finds candidates me that the company’s internal use of AI has had a dramatic based on their social profiles and external experiences. improvement in employee career management and salary Incidentally, AI is almost a commodity to buy. It’s really how administration. The system now recommends career moves you train, apply, and continually finetune it that matters. IBM, and salary changes based on patterns of success within IBM, Google, Microsoft, and Amazon all offer AI services through demand in the outside market, and demand for skills inside the their web interfaces, so vendors can apply a wide range of AI company. Nearly any company can now avail itself of this type algorithms without hiring armies of software engineers. IBM of technology. 14 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 15

9 . As you can see, these moments are typically transactional in The Employee 4 Experience Market: A Key to Employee Engagement nature and usually handled in stand-alone, specialized systems or front-end portals built to make them easier. All this is starting to change. A set of new vendors, including ServiceNow, PeopleDoc (now owned by Ultimate Software), Deloitte ConnectMeTM, Oracle, and SAP are now building what we Learning Accreditation Promotion New Role Off Boarding Development Alumni used to call HR self-service platforms. (And a new set of startups Planning The fourth major shift is the enormous focus and interest in Parental such as PeopleSpheres are also going after this space.) These Leave the employee experience, a broad term that includes day-to- New Hire new systems include integrated case management, document Goal day work experiences, career expectations, employee- Onboarding Setting management, process management, and lots of security and Performance management relations, and HR requirements. To be sure, the Job profile integration. They can be used to manage a range of Candidate phrase “employee experience” encompasses much more than functions, from ordering a new PC, changing a desk location, and the traditional definition of “employee engagement.” invoking transactions that cross between HR, IT, and finance. The reason this is disruptive to HR technology is simple: Is this a new idea? Not really. But we never built this kind of It means we are shifting our thinking from processes and functionality in the core HCM system very well, so companies transactions to experiences and moments that matter. In other are eager to take advantage of these new offerings. words, companies no longer just want to buy platforms that Figure 11 are easy to use. They want to buy platforms that can automate I’ve talked with multiple CHROs who have spent many millions HR in the Flow of Work: Moments That Matter and simplify employee experiences, which means they are of dollars on replacement core HCM systems, only to find out actually case management, transaction management, and that the employee experience fell short and required a new ATS/RECRUITMENT SYSTEM ONBOARDING SYSTEM PERFORMANCE MANAGEMENT LEARNING SYSTEM HR SELF-SERVICE SYSTEM SYSTEM process management tools. layer of software on top. These new employee experience platforms are not only good HR self-service systems, they also Candidate assessment, Onboarding, transition Goal setting, coaching, Career planning, career Family situation Consider the experiences depicted in Figure 10, which is interview process, job management, initial job feedback, review, transition, certification, change, leave, exit, include chatbots and deep integrations to HCM, ERP, learning, based on the work I did for Deloitte's Simply Irrisistable offers, background checks, assignment, training assessment, salary review, compliance, on- the-job promotion, new role, and recruitment systems. They have development tools, employment contracts bonus, raise training, support new city, new benefits, OrganizationTM model. These moments are complex workflows alumni management, monitoring, and transaction management features as well. In in and of themselves common to all employees at various ERGs a sense, they are a new kind of middleware, designed to make points in their careers. Today we implement these moments or it easy for the HR department to design moments that matter Figure 12 experiences in stand-alone systems. and then implement them for employees. Market Segment Innovations There are many specialized vendors that fit into this interstitial to all HR systems. IBM now sells a product called Watson space. Consider GuideSpark, which has built one of the Cognitive Assistant for Workday (you have to do business with most integrated systems for employee communications; or IBM to get it). It handles some of the most complex parts of MEANINGFUL WORK HANDS-ON PRODUCTIVE GROWTH OPPORTUNITY TRUST IN LEADERSHIP HEALTH & WELLBEING MANAGEMENT ENVIRONMENT EnterpriseAlumni, which has built an integrated solution for Workday such as moving an employee from one department Autonomy Clear goal setting Flexible work Facilitated talent Mission and purpose Safety and security management of alumni; or Sequoia, a benefits service company to another through a simple conversation. I met with a environment mobility mentioned earlier. These are very important technology startup called Jane.ai which is building a completely open Selection to fit Coaching and Recognition rich Career growth in Investment in people, Fitness and health providers specializing in unique experiences for employees. I cognitive system that will interface with transactional systems, feedback culture many paths trust believe more and more big companies are going to want to use documents, and process maps to do the same. WalkMe, an Small teams Leadership Open flexible work Self and formal Transparency and Financial wellbeing these and similar systems, and they need a platform to bring amazing product that is positioned as a digital enablement development spaces development communication them together. tool, actually does this also. It monitors activities in various applications and suggests improvements. These types of Time for slack Modern performance Inclusive, diverse High impact learning Inspiration Psychological Incidentally, the big disrupter in this market may not be management culture culture wellness and support products sit between transactional systems and employees, so ServiceNow or PeopleDocs or Workday, but rather a chatbot they are all really employee experience systems. vendor that figures out how to build a conversational interface Figure 10 The Complete Employee Experience (an expanded version of Deloitte's Simply Irresistable Organization™ model) 16 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 17

10 . Could Workday, Oracle, SAP, or ADP build this type of When you think about employee experience as a holistic These tools have been transformational to businesses because Evolution and solution? Absolutely, but these vendors are very focused on building their own ERP-like and payroll solutions and they want to provide these services through open APIs. All HCM vendors now offer open platforms (even Workday is now aggressively opening up its platform and finding partners), but it’s really up to the customer to bring it all together. problem, you’ll design better solutions. I visited Facebook recently and was surprised to find a whole range of employee experience programs that bring HR and IT together. Engineers who commute to Facebook’s busy offices have free valet parking. Ubiquitous technology service desks will quickly replace any failing PC or phone without question. The whole 5 Revolution of Employee Listening, Engagement, and Culture Tools they immediately enable managers to see what people are talking about, and then, using text analytics and sentiment analysis, quickly find outliers, poor management behavior, safety, theft, and other issues. (The market has gotten so hot that in the last few months Glint was acquired by LinkedIn andQualtrics was acquired by SAP. I wouldn’t be surprised to company uses Workplace by Facebook for support, and A decade ago companies such as Kenexa, Towers, AON, see others gobbled up, too.) I’m not going to try to predict how big this segment becomes, there are chatbots and service agents 24 hours a day to help CEB, and Gallup did engagement surveys for a very high but I do see it as a radical change in the market. I spent a few Eventually every big company will have some type of internal employees with any problem. And all IT and HR related service price. Companies bought these services, waited months for days at the ServiceNow user conference earlier this year “Glassdoor” where employees can talk about what’s on staff are cross trained. results, and primarily focused on year-to-year engagement and was amazed to see that the company has almost 17,000 their minds. One of the world’s largest airlines now has benchmarks with somewhat limited actionable information. customers running its IT service management tools and almost This should be your strategy. Think about employee implemented a feedback system through a mobile app which 1,000 customers using its HR tools. Clearly this is a juggernaut, experience as an end-to-end problem, and that will enable you In the last few years, a broad marketplace of pulse and real- flight attendants use to provide feedback on airline issues, and as companies adopt these tools they take users away from to select technology in partnership with IT and finance. This, time survey tools has emerged from vendors such as TinyPulse, compliment their peers, and provide operational feedback in core HCM systems, threatening the incumbents. by the way, is one of SAP’s big themes in its newest focus on CultureAmp, Glint, Kanjoya, Deloitte EngagePathTM, Qualtrics, near real time. Why wouldn’t every company do this? SuccessFactors in the integrated enterprise. SuccessFactors, Energage, Great Places to Work, and even SurveyMonkey. Concur, and other SAP tools create an integrated approach to Organizing Self-Service and Its end-to-end workforce management. Pulse Evolution Surveys Finally, look for solutions that focus on automation, not just Finally let me add one more important point. The employee integration. I just finished reading Deloitte’s new study of experience extends well beyond HR. When I can’t get AI in the Enterprise4 and it shows the rapid acceleration of Annual Anonymous my computer to work, it doesn’t matter how well my Survey automated services as the biggest new wave of AI. While Feedback Tools payroll system works – I’m not happy. When my expense it’s important to design your service delivery function to be Integrated reimbursements are late, or my badge reader fails, or I can’t efficient and quality-oriented, the biggest trend in this area Reporng & Analycs use my phone to access a report – I’m not happy. All this is part Senment Analysis is automation, voice interaction, and using chat and other of the employee experience. Network Analysis cognitive technologies to make the function more intelligent. This is why almost 55% of companies merge their HR service Exit Performance Interviews Check-ins centers with their IT service centers, using common tools for both. ServiceNow has taken the lead in IT service automation, so of course they’re likely to be a big choice in HR also. 4 https://www2.deloitte.com/insights/us/en/focus/cognitive-technologies/state- Performance of-ai-and-intelligent-automation-in-business-survey.html Appraisals Automated Services (voice, apps, AI, nudges, intelligent proactive solutions) Self-Services Systems (portals, apps, case management, knowledge base, expertise mgt) Managed Service and Service Delivery (integrated service delivery strategy, call centers, outsourced HR services) CUSTOMER EMPLOYMENT SOCIAL MEDIA JOB BOARDS Ad-Hoc Service or No Service SATISFACTION BRAND MONITORING & ADS (deliver as needed, random, business partner driven, difficult to manage) Figure 13 Figure 14 The Evolution of Employee Experience Market Building an Enterprise Feedback Architecture 18 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 19

11 . During this market transition, a few companies got left behind. Over the next year, we will see even more advanced sensing journey into employee listening, and you’ll be moving in the Kenexa, which had old technology, was sold to IBM, which in and feedback software hit the market, much of which will be right direction in building a comprehensive architecture. turn shut down the operation. CEB sold off its engagement embedded into performance management tools. Where is all this going? It’s pretty clear that these tools are business when acquired by Gartner. And many legacy survey But rather than focus on vendors, let me talk about the turning into intelligent, real-time data collection systems, vendors realized they just couldn’t keep up with the new enterprise feedback architecture, which requires a holistic and ultimately they will move into the flow of work. Humu, technology innovations. view of where all this employee data came from. As Figure 14 a company founded Laszlo Bock, the ex-CHRO of Google, is Meanwhile, some exciting upstarts have emerged. Glint shows, there are at least six types of surveys companies use already piloting such a solution, and most other vendors will enables real-time feedback and can integrate data from many today. go in this direction5. We can’t yet predict what SAP will do types of surveys into one view of the enterprise. Great Places with Qualtrics, but I can predict they’ll be selling an integrated Just bringing these different survey types together into an to Work now has its own tool, which is being promoted by solution soon, too. integrated picture is a challenge. (Glint is the first vendor Workday. Ultimate Software acquired Kanjoya and has made that has introduced cross-survey analysis tools.) But a its offering even more powerful with integrated action plans comprehensive feedback architecture must go further to that go directly to managers. A new tool called Energage brings collect other data being collected that directly impacts together tens of thousands of company surveys in the Top engagement – such as data related to wellbeing and Workplaces program. And Humu, a company I’m very excited productivity. about, is on the brink of bringing a very innovative offering to market. I recently met with HR leaders from a large company capturing employee email metadata (who is communicating with whom), Big companies such as IBM have now made employee feedback employee badge data (location, time of day), grievances and an essential part of their operations. IBM uses sensing complaints, accidents, thefts, and compliance issues – all in one and AI technology to monitor internal bulletin boards and large, graph database. The CHRO told me they have already communications to identify areas of risk quickly. Many financial identified call center productivity drivers, retention drivers, services companies now use ONA tools such as TrustSphere and management insights they never understood before. The or Keen to monitor conversations to look for employee stress company now relies on this new database to assess employee which may result in fraud or bad behavior. Microsoft Office engagement, rather than periodic surveys. 365 includes an add-on tool called MyAnalytics that analyzes ones own work behavior and gives feedback to help improve I wouldn’t be surprised to see vendors move in this direction your scheduling. It even recommends skipping meetings if it quickly. Visier, Workday, SAP, ADP, and Oracle have enormous thinks you’re wasting your time! And anonymous real-time cloud-based analytics platforms now, and most are opening feedback tools such as Hyphen, Blind, and Waggl are growing them up to new data for applications like this. So think about in popularity. your pulse survey and engagement strategy as a multi-year Engagement 1.0 Engagement 2.0 Engagement 3.0 The top-down annual engagement survey Pulse surveys with intelligent sensing Intelligent nudges, Focus on everyone Once per year. Agile surveys as needed. Many sources of data. Focus on management. Pulse on regular basis. Recommendations driven by Benchmarked annually. Feedback on mobile or apps. nudge and suggestion. Rigid questions asked year after year. AI-based action plans. Open to HRMS, ONA, and other Immediate feedback. behavior data. Focus on benchmarking Focus on feedback. Focus on behavior change. Survey technology. Web, mobile, analytics. AI, nudges, real-time sensing. 5 https://joshbersin.com/2018/10/employee-engagement-3-0-humu-launches- nudge-engine/ Figure 15 Employee Engagement Market Evolves 20 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 21

12 . I recently spent a few days in Japan meeting with several of the Let me briefly discuss some of the major changes. Recruitment Leverages 6 AI and Data Faster Than Ever In many ways recruitment is the most important thing largest recruitment companies in the world, and all were either building or planning to build ATSs. Even Indeed, LinkedIn, and BizReach are in the ATS market because small and medium- sized businesses need the process management. The big disruptions in the recruiting market come from new • AI-based sourcing tools are hotter than ever. While some of the early vendors didn’t survive, companies such as Entelo, TalentBin, Gloat, Orderboard, and Hiretual are helping companies find hard-to-locate candidates. This includes locating internal candidates as well, which are now one of managers do. Yet many HR managers tell me that almost a tools and the enormous growth of companies such as Indeed, the biggest sources for new jobs created by automation and third of their hires don’t work out, despite extensive testing, LinkedIn, ZipRecruiter, and other job board companies. These robotics. assessment, and job fit analysis. The answer, of course, is an are “Google for jobs” companies because they aggregate, • AI and neurological assessments are here. Companies such escalating war to leverage data, intelligent algorithms, and analyze, and support job seekers continuously looking for the as Pymetrics, HiredScore, HireVue, Imbellus, andTalview are social sensing tools to make recruitment more effective. right job year after year. Their business models are incredibly making a huge dent in the market. SHL is coming back to the profitable (every job posting pays a fee and additional services A recent study by Bersin by Deloitte found that those market again after being sold to CEB and then spun out from are added for company pages and analytics tools), so the more companies leveraging advanced technology for recruiting Gartner. We can expect a new war for assessment techno- volume they attract, the more profitable they become. This achieve significant improvements in time to hire, quality of logy to emerge again. is why the Japanese company Recruit, which is primarily a hire, and cost to hire . 6 recruitment services firm, acquired both Indeed and Glassdoor. • A new category of ATS enhancements is coming. One of Because the recruiting market is so big, there are vasts We can expect this kind of consolidation to continue the most interesting companies I’ve talked with is Phenom amounts of venture capital in this segment. I estimate that (Stepstone has a similar strategy in Europe, for example), People, which has essentially built a system that combines each year more than 45 million people change jobs in the making it ever-easier for HR departments to find candidates in search, matching, candidate relationship management, and U.S. alone ; the number is at least four to five times bigger 7 these large networks. recruiter analytics all in one. All these independent catego- worldwide. Each time someone changes a job there is a job ries are likely to merge over time. Websites and tools for company ratings and professional search, a company search, a set of interviews and assessments, networking are also interesting additions to the market. Every a process for job testing and job fit, a process for background And since so much data is now available, software vendors company that builds a professional network of some kind checking, and an enormous amount of effort for face-to-face are madly building new tools for employee assessment, video eventually gets into job placement, and every company that meetings, evaluations, job offer, and then onboarding. All these interviewing, and other forms of sourcing all based on AI, starts building a company rating site does the same. It’s just steps require data and automation, so there are hundreds of neurologic and psychological assessment, gamified testing, too lucrative to ignore. Today there are hundreds of companies tools to consider. and other forms of selection. The average mid-sized to large operating specialized networks (such as 99designs, Fiverr, and company now has more than six different recruitment tools, Over the last two decades the recruiting automation market UpWork) which are essentially gig recruiting systems. The with plans to replace and/or upgrade in years to come. focused on applicant tracking systems -- tools that capture the company ratings sites are also expanding rapidly (Glassdoor, paper or online resume and manage the end-to-end process Fairygodboss, Comparably, Kununu, Vault, and Ratedly), of recruiting. The ATS market continues to be enormously and vendors are also crowdsourcing compensation as well important because there is so much data, workflow, and (Payscale, Salary.com, and LinkedIn). All this data is part of activity to manage. The companies that sell ATSs (such as the recruiting landscape and it makes the job of the talent ADP, Cornerstone, iCims, Greenhouse, JobVite, Lever, Oracle, acquisition leader more complicated every day. SmartRecruiters, SuccessFactors, SAP, and Ultimate) still The entire recruiting market is being disrupted simply by the have very viable business models because every time a new volume and quality of startup innovations. This makes it harder company is formed, it needs an applicant tracking system. and harder for HCM and ATS vendors to keep up, because there are so many interstitial tools to buy or build. 6 https://www.bersin.com/deloittes-bersin-identifies-key-talent-acquisition- practices-contribute-organizations-high-performance/ 7 https://www.thebalancecareers.com/how-often-do-people-change- jobs-2060467 22 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 23

13 . Based on more than 10,000 respondents in over 36 countries, Performance Management 36.5% Contingent and Gig 7 Work Management Becomes A Marketplace The U.S. Bureau of Labor Statistics reports that about 40% of the 2018 Deloitte Millennial study concluded that 43% of 12 all younger workers plan to leave their employers within two years (61% of GenZ workers), and 62% of young workers believe gig work is a viable alternative. Among senior leaders in the survey, 70% stated that gig workers are reasonable hiring alternatives. Negotiation of work arrangement Training Onboarding Contracting 45% 54.3% 51% 58.7% U.S. workers are in non-full-time work situations (contractor, Interviewing/Selection 64.5% part-time worker, gig worker, or contingent worker). A detailed It’s clear that the stress people feel to increase their pay to academic report in 20168 reported, “A striking implication of keep up with cost of living is creating a huge market for what Sourcing Candidates 61% these estimates is that all of the net employment growth in the we now call side hustles – people doing work on the side, Figure 17 U.S. economy from 2005 to 2015 appears to have occurred weekends, or evenings to supplement their income. Deloitte’s HR Involvement in Gig Workforce in alternative work arrangements.” ADP recently shared with research says that 14% of millennials already do this and 64% me the interesting fact that from 2000 to 2015, there was a plan to do so (15% of GenZ today). platforms, and crowd work platforms will explode. ADP Consider the data in Figure 17, captured from the 2018 4% drop in the number of W-2s filed (annual employment tax My studies of this topic lead me to a simple conclusion: acquired WorkMarket this year, SAP acquired FieldGlass last Deloitte Human Capital Trends report. Outside of sourcing, reporting) and a 23% increase in the number of 1099s filed Contract, contingent, and gig work is here to stay, and it is year, and new vendors such as Fuel50 (FuelGig platform), interviewing, and selecting candidates, HR is involved in this (used by independent contractors). increasing steadily despite our recovery from the recession. RallyTeam (acquired by Workday) and others will soon be workforce only about half the time or less. This “shadow The 2017 BLS report on contingent work concludes that 10% 9 If these statistics are even partially accurate, it can mean that bringing new products to this market. workforce” is simply not being managed well, so there will be of the workforce participates in the gig economy on a regular more than 60 million people in the U.S. alone are participating an enormous growth in tools to make this easier. There are quite a few categories of contingent work platforms basis. A report by the Federal Reserve states that contingent in this type of work today. My daughter, for example, teaches today. Vendor management systems help companies manage We also see challenges with the management of companies’ workers make up approximately one-third of the workforce10. yoga on evenings and weekends; many of her friends sell vendor contracts; more than 75% of companies manage internal gig work. I estimate that approximately two-thirds of A new study by BankRate shows that 40% of workers now do products online or buy and sell clothing to make money (look at contractors through the purchasing department, not the HR companies want to increase internal talent mobility to improve side hustles to make extra cash11. the explosive growth of Poshmark!). The economy has become department. Contingent work systems such as WorkMarket leadership skills, give people more development opportunities, a workforce of scrappy, imaginative entrepreneurs, often help companies set up gig and contingent pools. Time and and increase the agility of their teams. The platforms and tools 8 https://krueger.princeton.edu/sites/default/files/akrueger/files/katz_krueger_ working full time and part-time to make ends meet. cws_-_march_29_20165.pdf labor systems ( SAP, Oracle, and Workday) let companies set to manage such activities are very hard to find. 9 https://www.nytimes.com/2018/06/07/business/economy/work-gig-economy. For HR tech, this trend means that the market for vendor up part-time hourly workers, and many new gig management html Oracle, SAP, Workday, and ADP all have some features to management systems, contingent work systems, gig work systems are coming. The company Legion13, for example, is 10 https://www.federalreserve.gov/publications/files/2017-report-economic- help companies build projects or teams in their platforms, but wellbeing-us-households-201805.pdf building an amazing new tool to manage hourly work schedules none have fully built out a human capital management system 11 https://www.bankrate.com/personal-finance/smart-money/side-hustles- 12 https://www2.deloitte.com/global/en/pages/about-deloitte/articles/ across retailers, and it will likely become a contract or gig survey-june-2018/ millennialsurvey.html that understands or optimizes a world of work where people platform of its own. Companies such as WorkGig focus on part- move from project to project on a regular basis. The product time temporary hourly projects. Standout by ADP does this for performance management (as BIGGEST FREELANCE WEBSITES SIZE TOTAL TRANSACTION VOLUME HEADQUARTERS GLOBAL WEB RANKING In our research among HR organizations, we found that does BetterWorks and a few other tools), and Fuel50 does Freelancer.com 30 million users in 247 $588 million+ Australia #1337 only 8% of respondents believe their companies are ready this for developmental assignments, but no real solutions exist countries to manage gig or contract workers well, yet 65% now see it yet for internal gig work management. When such a solution Upwork.com (formerly 14 million freelancers in $1 billion∞ United States #488 as critical or very important and 41% say gig and contract becomes available, I believe it will be tremendously important Elance-oDesk) 180 countries* workers are a significant part of their workforce. Why is this and popular in the marketplace. Millions of creatives in $350-400 million Israel #405 such a challenge? Companies simply do not have the right tools Fiverr 190 countries and platforms to do this well. 99Designs.com Tens of thousands of $200-300 million Australia #4838 designers 13 https://techcrunch.com/2017/09/27/legion-raises-10-5m-to-roll-out-an- automated-employee-scheduling-tool/ Figure 16 * https://www.freelancer.com/about Largest Freelance Websites + https://www.freelancer.com/about/investor-pdf.php?id=58254758&name=FLN%202017%20Financial%20Report%20v14%20FINAL ∞ https://www.prnewswire.com/news-releases/snagajob-appoints-former-upwork-ceo-to-board-of-directors-300417689.html 24 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 25

14 . market, including those developed by all the HCM vendors, how do we implement a continuous performance management Additionally, these tools and related practices give companies 8 Next Gen Performance Management Arrives I’ve been writing about performance management for over but these are the vendors with the most innovative new approaches. In the HCM market, SuccessFactors has a continuous performance management offering now being used by more than 200 companies. Oracle has introduced a more agile system that is goal-oriented for sales professionals, highly developmental for leaders and managers, very collaborative for consultants and other service workers, and simple and easy to use for line workers? No one system is always best for all categories of workers, so most bigger organizations are evaluating multiple options. tremendously better data, insights, and transparency into their entire talent processes. Employees receive feedback from multiple people; their check-ins give them and managers better reflection on why they did or did not receive the ratings or raises expected. Features for social recognition bring much new data to the process, and tools that automatically 12 years, and it continues to be a highly dynamic market. performance system, and Workday has finally released its collect development feedback are immensely valuable. Almost Today there are at least 20 well-funded new vendors building agile performance tools. Workday has taken the processes Deloitte's BersinTM analysts have written many case studies of all executives tell me these tools increase management tools for continuous performance management, while the it uses internally (focused on contribution, capabilities, companies such as Patagonia, New York Life, Adobe, and even communication and also give HR leaders a much better sense large HCM vendors (SuccessFactors, Oracle, Workday) are all career, compensation, and connections) and is now showing Deloitte itself discussing implementations of such systems. of the strengths and weaknesses of managers and employees. evolving their platforms as well. companies how to implement a similar model. Workday is also Most of these companies have purchased one or more vendor reselling benchmark data from Great Places to Work to let products and then often build integration tools around Continuous performance management is disruptive to the Some performance management vendors focus on agile goals employees assess their companies and their managers against them. My recommendation to any company evaluating these HR technology market because the process is not hierarchical and goal transparency; others focus on social recognition and benchmarks, creating management feedback in the process. vendors is to do a strategy workshop first. Before rushing to or linear like most systems were designed to automate. It is rewards; still others focus on feedback and check-ins; and While the HCM vendors are moving fast into continuous buy, sit down with your business leadership and walk through a continuous, looping process that might take place in teams, some focus on skills assessment and coaching. Each of these performance management, the third-party market is very your philosophy of performance management, talk about departments, or across divisions. Data must be aggregated vendors has started in a different space, so they each have advanced so I think we will see a lot of multi-vendor solutions how frequently you want people to check-in with managers, by business hierarchy as well as by manager, team, and different strengths. for the next few years. how transparent and aligned you want goals to be, and how often function across projects. These new systems also From my own personal research, I see the major new players important the development, coaching, and evaluation process capture organizational network data to determine who is Smaller organizations can easily implement one of these as BetterWorks, Fifteen Five, Fuel50, Impraise, HighGround, will be. This will be a multi-day experience, but you’ll come out giving feedback to whom and how feedback patterns vary. systems and find them very complementary with their core HR Glint, Lattice, Reflektiv, 7-Geese, Small Improvements, of it with some philosophical decisions that you can then use to They also often have pulse surveys built-in, so one can see platforms. But large organizations grapple with a quandary -- StandOut, and TinyPulse. There are many more tools on the map against vendors. which manager is driving higher levels of engagement and which manager may be more biased or discriminatory, while Nearly every company that implements a more continuous enabling users to understand more about the nature of goals process has positive results. Just creating a more regular, VENDOR and feedback and the types of development plans people are A Transparent Integrated into transparent process for performance management and Goals Workflow implementing. evaluation is a good thing, even though it always takes time to Social train managers and employees to feel comfortable giving and One company I know did a feedback analysis and found that Check-ins Recognition Major Cultural Change receiving feedback. employees with more frequent check-ins were statistically VENDOR VENDOR B F Major Cultural Change Continuous Peer Manager-Centric Team-Centric Feedback The New World of STRATEGY AND EXECUTION DAY-TO-DAY WORK PERFORMANCE COACHING AND IMPROVEMENT PERFORMANCE MEASUREMENT AND REVIEW Performance Management Rewards Heirarchical Multi-Directional & Perks 1 2 3 4 5 VENDOR Competitive Developmental GOAL QUARTERLY CHECK-INS FEEDBACK COACHING & PERFORMANCE VENDOR G SETTING BUSINESS REVIEWS (1-1’S) DEVELOPMENT REVIEW C Subjective Data-Driven (DATA) Feedback to Manager VENDOR Real Time Feedback System E Secret Transparent VENDOR Continuous Coaching and Development System D Single Rating Richer Rating Micro-Learning Engagement Survey 6 7 Team Periodic Development Next Individual Compensation Plan &Activities Assignments Assessment Assessment Review Figure 18 Figure 19 Next-Generation Performance Tools The Continuous Performance Management Process 26 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 27

15 . the way of the mainframe. It has not disappeared, but it’s now The Reinvention of the 9 Learning Technology Market Skills, career development, and learning have become top of in the basement doing the things it does well. It processes compliance training, tracks and stores learning completion data, runs business rules and management approvals, and handles certification, customer training paths, and revenue generating training. In other words, it’s like a learning and training ERP system. mind for business leaders. This year’s Conference Board CEO survey found that CEOs are more worried about the skills Employees, on the other hand, now have the opportunity to Engagement Performance Learning & Recognition Wellbeing Feedback Coaching Rewards & Work Management and capabilities of their workforces than anything else. And use a new range of systems, as categorized in Figure 22. the problem has become a growth blocker – many companies Surveys Goal Management Video Learning Social Recognition Financial Fitness 1. Learning Experience Platforms: This is a market segment Engagement Tools Feedback Gamified Onboarding Customer Based Physical Fitness simply cannot find the talented people they need. I identified a few years ago, and it represents tools such Mobile Feedback Check Ins Self-Assessment Recognition Fitness Challenges Customer Feedback Perks Awards I met with the CHRO of one of the world’s largest auto as Edcast, Degreed, and Fuse along with new entrants Personality Assessment Career Planning Diet Wellness Pulse Survey Performance Review Training and Certification Affinity Groups Health Behavior Change companies this Fall and he told me his company expects to be from Cornerstone, SkillSoft, and Instructure. These are Engagement Analytics CoachingMentoring Work Events Travel Time Management short 50,000 mechanical engineers over the next ten years. systems that aggregate content from any source (including Anniversaries In Japan, where the company is headquartered, there are no internally developed content); they use machine learning more such engineers to hire. So he is looking at building an to recommend content to each individual; they let L&D Figure 20 entirely new engineering facility in Vietnam. I suggested to professionals build learning paths; and they try to assess the Convergence of Talent Applications Ahead him that he build an engineering college of his own, a trend I’m skills of each individual through their activities. seeing in many large companies. higher performers. These systems help managers see when an feedback tools. It has always bothered me that performance In some ways they are designed to be in-the-flow systems, My article “Learning in the Flow of Work14” discusses why employee is checked out and even identify when a flight risk management software was developed as if it is a standalone but in reality, they are more YouTube- or Netflix-like systems we are in a new era of corporate learning technology. While is starting to develop. All this is far more advanced than the application. In the real world, the only reason to do that are easy and fun to use and highly engaging. Where they companies have purchased more than $8 billion of LMS old end-of- year forms or cascading goals developed by talent performance management is to help people improve, so we fall short today is in the context of learning and work flow. technology over the last decade, the LMS is no longer the management vendors in the early 2000s. need these systems to take a more holistic view – which in turn They are not good for progressive learning experiences; they center of corporate learning. As I like to explain, the LMS went means there will likely be acquisitions and lots of consolidation are often used as portals in front of the LMS; and they are Ultimately these systems have to focus on business again, just like we saw in the last wave. 14 https://joshbersin.com/2018/06/a-new-paradigm-for-corporate-training- not yet micro-learning oriented. That said, they’re explosive, performance, not just individual goals. The Taj Hotels, one learning-in-the-flow-of-work/ of the most highly esteemed hospitality companies in the Already we’ve seen Glint, TinyPulse, and Ultimate Software world, recently changed its performance process to focus get into the engagement and feedback market. YouveEarnedIt every employee on his or her team’s success. There are no merged with HighGround, bringing together recognition, We Are Here more individual reviews for Taj hotel employees. Everyone is rewards, and feedback. Companies such as BetterWorks evaluated based on the success of the local property. The Taj and Reflektiv are working on more advanced analytics and E-LEARNING TALENT CONTINUOUS DIGITAL LEARNING IN FLOW & BLENDED MANAGEMENT LEARNING LEARNING OF WORK CHRO told me the company has seen tremendous increases development planning systems. And Fuel50, the leading career Course Catalog Learning Path Video, Self-Authored Micro-Learning in engagement and alignment, to say nothing of the benefits management platform, is now getting into goal management, Formats Online Univesrity Career Track Mobile, YouTube Real-Time Video Courses Everywhere to customers. Think about a Taj hotel employee who sees a coaching, and gig work management to help companies build Instructional Design Blended Learning 70-20-10 Design Thinking broken light or spill in the hotel lobby. Rather than delegate better development experiences. Philosophy Kirkpatrick Social Learning Taxonomies Learning Experience Learning in the Flow of the fix to another person, every employee is motivated to Users Self-Study Career Focused Learning On Demand Everyone, All the Time, Work In the next two years, I believe the winners will acquire some of Online Learning Lots of Topics Embedded Learning Eveywhere jump in and fix the problem. This is what we want performance the tangential vendors on this chart, and we will see this new LMS as E-Learning Platform LMS as Talent Platform LMS as Experience LMS Invisible management to do! System Platform Data Driven, Mobi 21st century talent platform market take shape. Finally, as I discussed earlier, these tools must come 1998-2002 2005 2010 2018 2020 together with career management, recognition, and other Figure 21 How Corporate Training Has Evolved 28 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 29

16 . 1 2 3 Learning Experience Platforms Program Delivery Platforms Micro-Learning Platforms (adaptive) Micro-Learning Macro-Learning Degreed, EdCast, Path Gather Intrepid (Vitalsource), NovoEd Axonify, Area9, Grovo, Qstream, Practice, Rehearsal, Jubi, I need help now. I want to learn something new. Jam, Fuse, Percipio, Cornerstone, Valamis, Tribridge EdX, Everwise, OpenEdX, Blackboard, Instructure Wisetail, Mindtickle, Trivie, Echo, EduMe • 2 minutes or less • Several hours or days • Topic or problem based • Definitions, concepts, principles, and practice 4 Assessment, VR, Development Tools 5 Search by asking a question • Exercises graded by others Content Libraries • Video or text • People to talk with, learn from Video authoring, intelligent assessment, spaced learning, gaming, virtual reality, LinkedIn, Udacity, Coursera, EdX, Udemy, Pluralsight,SkillSoft, CrossKnowledge • Indexed and searchable • Coaching and support needed collaboration, simulations • Content rated for quality and utility 6 Digital Adoption and Workflow Learning Tools Is the content useful and accurate? Is the author authoritative and educational? WalkMe, EnableNow, Microsoft Teams, Slack, GSuite Videos, articles, code samples, tools Courses, classes, MOOCs, programs 7 LMS and Content Platforms 8 Learning Record Store Traditional: Cornerstone, Saba, SuccessFactors, SumTotal GrassBlade, Learning Locker, Saltbox, Yet, Watershed Modernized: Workday, Oracle, SAP, Bridge, D2L, Litmos, Intellum, Docebo Figure 23 Explosive Growth In MicroLearning Figure 22 New Learning Tech Market Segments Arrive work and it demands quite a smart platform. library to meet everyone’s needs. The problem with many Most vendors are inching in this direction. Skillsoft and libraries is ease of access, and, of course, the instructional highly valuable to corporate learning, and represent a new learning oriented and 48% is micro-learning oriented. So this Edcast have browser and Slack plugins to deliver appropriate design itself. paradigm past the traditional LMS – beyond the course is a big space. Many LMS systems perform this functionality, learning. WalkMe and EnableNow can deliver context- catalog you may say. including those cited in Figure 22. sensitive learning for software and computer applications. I’m a big fan of buying content from vertical specialists Instructure is building functionality like this. So look for this because they bring amazing depth of IP. So if you buy an They are also proven. HP, Bank of America, Mastercard, Hot vendors in this market include CrossKnowledge, adaptive, prescriptive learning functionality in future vendor LXP or other open platform, you then have the opportunity Visa, Deloitte, and hundreds of other companies are using Coorpacademy, Nomadic Learning, Intrepid, Novoed and searches. to pick the best content and make it easy to find. (Note that these systems now, making these vendors more like LMS others that focus on delivering a total content experience Cornerstone has now come to this conclusion. The company 4. Assessment, VR, and Virtual Learning: This space is amazingly companies every day. This new paradigm has encouraged (including content, community, gamification, assessment, is selling and promoting content and just acquired Grovo to exciting. For instance, STRIVR is a vendor that has Workday and Oracle to build front-ends that behave like and more). I am beginning to believe that the LXP market, build more content of its own.) developed a complete development and delivery solution for these systems. SuccessFactors JAM can also perform as exciting as it has been, will be replaced by these more 3D-, video-, and audio-based virtual learning that will blow 6. Digital Adoption and Workflow Learning: Leaders in this this function. So this niche category, which started as an integrated platforms, as companies now realize that just your mind. Wal-Mart, United Rentals, and JetBlue all now category are WalkMe and EnableNow; other vendors will experiment, has shifted the entire market and forced every “finding content” is not enough. We also need to deliver an use the system for all sorts of high-risk, high-cost, high-value soon offer plugins to Microsoft Teams, Slack, Workplace learning platform company to adapt. integrated learning experience. training applications. Think about all the situations in your by Facebook. This is an amazing technology base and there 2. Program Platforms: While we’d all like to have a YouTube 3. Micro-learning Platforms: Companies such as Axonify, Grovo, company in which an employee must perform a high-impact are probably 100 or more tools that let you add interactive system at work, there are times when we need a MOOC- and to some degree Fuse, Smartup.io, and Filtered fit here. task that is difficult to simulate. VR can be the solution. help, inline video, and other context-sensitive content to a like platform for learning. A MOOC, unlike a single video These companies are building adaptive learning paths that Companies are even using it for diversity training to show particular job role. Like the LXP segment, I think this is an course, steps you through an entire curriculum and actually deliver relevant and appropriate learning based on one’s what feels like to be a diverse candidate. area where every company needs some type of solution. delivers you at a point where you have truly learned a new learning history, job, or some other work-related activity. I 5. Learning Content: This market segment is vast and always 7. Learning Management Systems. The vendors shown in the body of knowledge. Sales training, leadership development, believe this will be explosive and fundamental going forward. changing. LinkedIn Learning has become a major player. chart are all well run, rapidly advancing companies and onboarding, supervisory training, and engineering are such Skillsoft, Udemy, CrossKnowledge, O’Reilly, Pluralsight, their products are growing in capability. The core features domains. Axonify, for example, can deliver safety training to a worker Harvard, and hundreds of smaller vertical players are of an LMS -- course administration, tracking, compliance in a prescribed and intelligent path, in five-minute chunks growing. In many ways the LXP market is enabling and processing, business rules, and revenue-generating learning I have been working with O’Reilly, a leader in technical each day, and then ask the learner how confident he or freeing up companies to buy more content, and you now – are all important. I don’t see any huge changes in the publication and training, and executives shared with me the she feels in the material. Through its machine learning have much better information about what people are using. market with the exception of Workday. Newer vendors such data from the company’s vast offering of technical education algorithms, the system can give employees just enough All my work in L&D has shown that a very small percent of as Instructure and Docebo are putting a lot of pressure on and books. It has found that 52% of all activity is macro- learning to finish the goal. This is truly learning in the flow of content is used, but in a large company you do want a large incumbents such as Saba and SumTotal, but all are advancing 30 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 31

17 . their platforms rapidly. You must do an RFP with specific use We need to architect systems that enable all these new are helping to fit this need with education, coaching, individual cases to evaluate these products well because they are all changing so quickly. 8. Learning Record Store: This is a category of tool that stores all learning-related and activity data without an LMS. More and more companies are buying these because they believe the technologies and apply them directly to job role and business problems. I find the most advanced L&D teams now partner directly with their business counterparts such as those in sales and engineering to build highly specific learning environments. 10 Wellbeing Becomes an Expansive Market One of the most exciting and interesting developments is assessment, loans, and advisory support. Because earnings have not kept up with inflation, many employees are also asking for more frequent pay, so a set of new vendors has emerged to help companies pay employees weekly, daily, or even based on work completion. ADP recently lives of their LMSs are limited. They work well and give you The L&D team at Tesla, for example, worked with its sales the explosive growth in the corporate wellbeing market. acquired Global Cash Card16, a company that provides cash real-time analytics we never had before. leadership to help re-engineer its entire sales organization The Global Wellness Institute15 assessed the market at $43 awards and many options for digital payments through gifts, – changing roles from product specialists to integrated sales billion in 2017, and it is growing by more than 6% per year. cash, and other benefits. This market is exploding. Vendors The big changes in this market segment are many. Workday is teams, with a much stronger focus on the sales process and In a recent survey completed by Wellable, more than 35% of such as WePay, BlueFin, Achievers, and Fond now offer working hard on its LMS, and over the coming years is likely not just the product. This transformational effort was a real companies are investing in this segment. What does corporate employers a wide range of instant pay and gift payment to build out a fully functional system. Today the system is an consulting project, teaming L&D with sales leadership. That’s wellbeing include? The list continues to grow, and companies options, essentially reinventing the traditional payroll and amazing video learning and content management platform, so I the future of L&D. are shifting from wellbeing as a health benefit to wellbeing as a compensation analysis tools. The two biggest payroll vendors, think most Workday customers will buy it and use it for micro- performance improvement strategy. ADP and SAP, are both re-designing their core payroll systems learning, onboarding, and many other forms of communication. Also, I do believe companies should consider their own to facilitate real-time pay. academies to build skills internally. For instance, Capital Almost two-thirds of employees cite overwork and stress Products such as GuideSpark, which are designed entirely One now has digital skills academies in which subject matter as significant challenges to work productivity. Therefore, In the areas of mental health, mindfulness, and stress for the complex world of employee communications, are experts take a teaching and leadership role to build employee employers are being asked to deliver a full range of service to management, there are literally hundreds of providers who somewhat similar. GuideSpark and Workday both use skills faster. To me, this is a real solution to the skills crisis. help employees stay fit, rested, focused, and healthy. offer app-based coaching, training, event management, campaigns to communicate with employees (similar to what mediation support, and more. Vendors such as Mequilibrium, CRM systems do), allowing users to push content to employees I’m working on research with Pluralsight and General Assembly The areas with the most growth today are financial wellbeing Whil, as well as platform companies such as VirginPulse, in a very prescriptive or activity-driven way. now to explore this further. Already we’ve seen a six-fold (61% of companies are increasing spending in this area), Limeade, United Health Group (Rally), and Provant offer reduction in cost for internal development versus external mental health (65% are increasing spending), mindfulness SAP continues to build out a wide variety of learning solutions, behavioral change tools to help people slow down, sleep better, hiring. So don’t be afraid to bring this kind of project forward. and stress management (57% are increasing spending), and including EnableNow, Jam, and its LMS. The company has a meditate, and focus. (There are 751 wellness tech vendors telemedicine or remote care (64% are increasing spending). vast engineering team working on LXP interfaces, new mobile listed in the CBInsights directory.) Also in this market are Each of these broad areas is spawning dozens of technology interfaces, and action and embedded learning, so I don’t count hundreds of training providers, and many are now nearly free. and service providers. them out. But you have to figure out which pieces you need, Aided wellbeing technology will explode in the coming years because the company has such a broad range of offerings. When it comes to finances, more and more evidence shows as AI-powered tools start to give us hints and nudges that that workers need help. Vendors such as Best Money Moves, will make us better at work. Humu and Microsoft are both I also believe systems that enable real-time practice (Practice EduKate, Sum180, Financial Finesse, Learnvest, and Daily pay by Instructure, Rehearsal, and similar functionality from 16 https://www.marketwatch.com/press-release/adp-acquires-global-cash-card- solidifies-leadership-position-in-employee-payments-and-extends-payroll- Desire2Learn) are vital and offer value. differentiation-with-acquisition-of-proprietary-digital-payments-processing- 15 https://globalwellnessinstitute.org/press-room/statistics-and-facts/ platform-2017-10-05 AI-based systems are also here. Filtered, which creates an AI-based chatbots for learning, has tremendous potential. PHYSICAL WELLBEING MENTAL WELLBEING FINANCIAL WELLBEING FAMILY WELLBEING SOCIAL WELLBEING Volley and Jane.ai both read documentation and develop learning without the need for human instructional design. I Fitness subsidy and in- Counseling, assessment, Consulting, wealth Dependent care, maternity Employee resource know of a startup that is building context-specific learning house programs, healthy mindfulness, yoga, sleep planning, investment management, paternal groups, sports teams, foods and diet coaching, training, pet support and advice, legal counseling, and maternal leave, egg competitions, social directly from email traffic and communication patterns. So we health coaching, health risk pets in the workplace, tuition reimbursement, harvesting, adoption groups, volunteer can expect some very smart systems to appear next year. assessment, preventive employee assistance discount programs, debt support, counseling days off, volunteer care, workplace exercise programs, stress planning, low interest sabbaticals, and fitness management, concierge loans, training, real-time reimbursement With all this “learning in the flow” technology now available, services, sabbaticals pay for social work, you have to flip your L&D team into an agile, design-thinking community activities operation. We can’t just buy and publish content to get value. Figure 24 Wellbeing Becomes an Expansive Market 32 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 33

18 . US Suffers from Financial Illiteracy • 40% of adults rated a C, D, or F on personal finance literacy Recognition $1.7 Billion • 1/3 of Americans only pay minimum credit card balance and average credit card debt is $15,000 Drive Venture Capital • Median retirement balance is only $3,000 Skils and Training Invested in 12 Months • 50% of American householdsave no savings Work Environment This Has Huge Imapct on Work • Financial stress lowers productivity by $250 billion per year SUSTAINABLE • 15% of college graduate salaries goes to student loan debt Family PERFORMANCE • 64% of millenials feel financially stressed, 32% say it impacts their daily work Self Discovery Rewards • 33 peer reviewed studies correlate financial stress to health and heart attahcs Career Purpose Leadership Figure 25 Major Gaps in Financial Wellness, Source: The TIA Institute – GFLEC Personal Finance Index WELLBEING Exercise Management Mindfulness Sleep FITNESS Financial needs Physical networks Abundance Clear Goals Loans or cash Financial advisors Mentality Stress Disease Medical specialists HEALTH Intelligent Positive Injuries Wellbeing Trainers Nutrition Monitoring Thinking Stress Yoga Mindfulness teachers Growth Matching Opportunities Diet, exercise Fitness coaches Medical Employee and Coaching Benefits Assistance Challenges Culture Fit Personal development Personal coaches Psychological support Pyschologists Cost Labor Team Family Support Professional Coaches Reduction Productivity Retention Productivity Collaboration Performance Leadership Business Performance Figure 26 Wellbeing Matching Opportunities Figure 27 From Health to Wellbeing to Performance developing tools to monitor work behavior and give employees Intelligent Matching Networks tips to make us happier and more focused at work. One of the biggest opportunities in wellbeing is the cloud. In HR managers. I can see a scenario in which smart HCM part of a new performance and productivity suite. In telemedicine and remote care and coaching, there is a every part of the wellbeing framework, there are people who vendors such as Sequoia build interfaces to these systems so The chart illustrates the evolution of this market. Just as new set of Uber-like products to help us find coaches and need to be matched to individuals or companies that provide they can provide one-stop shopping to their customers. HighGround was acquired this year by YouEarnedIt,a social mental and physical health. These vendors include BetterUp, services or expertise. Companies such as Betterup and Spring recognition company, one can envision a market in which SpringHealth, and Everwise. BetterUp is an AI-based coaching Health, which build AI-based assessments and develop a The Shift from Wellbeing to wellbeing tools become integrated with goal and performance platform that diagnoses an employee’s performance or work- network of providers, can quickly and intelligently match related issues and connects the individual to one of thousands employees with the services they need. Performance management systems, eventually becoming part of the 21st century management platform. Today the two leading platform of coaches. SpringHealth does the same for psychological Given all this focus on wellbeing, one has to ask whether These types of networks are typically acquired and used by players in this space are VirginPulse, which has acquired support. Comcast and others are now funding and building companies will pay for all these benefits? I think the answer is healthcare providers. But as companies get more and more multiple companies over the past year, and Limeade, which companies such as Brightside, which helps people manage yes because we are moving from a focus on health and fitness frustrated with the high cost of insurance, many are going is a very well-run, steadily growing company with successful their financial fitness, and Spring Health, which helps people to a new focus on employee engagement, productivity, and directly. Most of these vendors now sell directly to corporate clients. Both offer behavioral change platforms that collect find the right psychologist performance. So over time I believe these tools will become 34 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 35

19 . to-use HR platform; they want wellbeing, education, and development services, too. As the job market continues to grow and employees’ expectations continue to increase, HR departments will look for more integrated experience platforms – those that can bring together traditional HR transactions with wellbeing, benefits, development, coaching, and financial support. I can’t predict how this market will evolve yet, but one could see these Engagement Performance Learning & Recognition Wellbeing Feedback Coaching Rewards & Work Management kinds of integrated benefits companies being acquired by the big ERP vendors. Surveys Goal Management Video Learning Social Recognition Financial Fitness Engagement Tools Feedback Gamified Onboarding Customer Based Physical Fitness Mobile Feedback Check Ins Self-Assessment Recognition Fitness Challenges Customer Feedback Personality Assessment Career Planning Perks Awards Diet Wellness Pulse Survey Performance Review Training and Certification Affinity Groups Health Behavior Change Engagement Analytics CoachingMentoring Anniversaries Travel Time Management WorkEvents Figure 28 Convergence of Talent Applications Ahead enormous amounts of employee data and can be used to physical location. These new tools give employers an enormous analyze performance and productivity, point out accident and amount of private information about employees, driving the health risks, and give employees a very useful tool to make need for a strong and well-managed analytics team to care for their work lives healthier. the data. We also have to be transparent about what data we capture and what we plan to do with it. Oracle clearly sees this coming and has been investing in a wellbeing platform and tools for employee competitions and It’s very clear to me that over the next several years many contests in its core HCM platform. SuccessFactors has done of these markets will start to come together. Already the the same by offering a variety of wellbeing training programs domains of stress, financial health, and coaching are converging in its core platform and recently launched a new platform as studies show that one of the biggest causes of stress at work with Thrive Global. Workday has provided API integrations to is a lack of financial security. Think about how these wellbeing VirginPulse and other vendors. topics are also impacted by management behavior, our ability to learn and grow, and the way we understand and achieve our One of the tricky issues with these tools is the confidentiality work-related goals. All of these areas overlap, so over time of data. While most of us would love to have a work-provided HR departments will demand that they can be addressed in a platform to help us lose weight, reduce stress, and improve holistic way. our sense of vitality at work, we are all very nervous about our employer knowing how much we sleep, what mental or Sequoia, a mid-sized benefits and employee services company physical problems we face, and how we struggle to focus or serving the high-tech market in California, understands this stay happy at work. A U.K. study found that more than half of well. Sequoia has learned that the fastest growing companies, employees fear such workplace monitoring and almost three- 17 many of which are technology-based and highly dependent quarters do not approve of an employer monitoring of mood or on intellectual property, want a wider and wider range of employee services to succeed. They don’t just want an easy- 17 https://www.bbc.co.uk/news/business-45214424 36 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 37

20 . acquisition of Stories.bi19, which provides AI-based “stories” This entire technology area, called augmented analytics20, As illustrated in Figure 29, there are literally hundreds of data Augmented Analytics, 11 constructed from data, automated by software. is now becoming a big market, and I think this technology elements we can analyze in the analytics or talent intelligence can be the most revolutionary change in analytics in a long AI, ONA, and system. Luckily tools are making data collection and analysis I think this particular acquisition is significant because it totally time. AI-based tools can find data and show us problems we easier. Vendors such as Visier and OneModel specialize in changes the paradigm for analytics in HR. For years we’ve Feedback Systems bringing data together and both are growing rapidly. Many of had to build data warehouses, run reports, and decide what didn’t even know we had, so I suggest you look at these tools carefully. the large HCM vendors, most notably kinds of analysis to run. Stories.bi, which is being integrated I can’t write about technology without explicitly discussing into the Workday platform, automatically looks at all types Vendors already in this space include Sisense, Birst, and the world of analytics, AI, and cognitive processing. People Workday, have also updated their analytics solutions to make of system data and identifies outliers, changes, and trends. It Looker, and we can expect all the existing players (Tableau, analytics continues to be a big topic in the HR world and is now this easier. then presents this to you in a conversational interface. When Microstrategy) to jump in. I still believe Visier and OneModel the fastest growing sub-domain of the HR profession (25% of applied to HCM, Stories.bi can discover issues such as what are the vendors almost every major company should be talking companies are hiring employees into this role18). Workday’s Prism system, built on the Platfora application, areas have highest turnover and in what functional areas with. These companies have been laser-focused on the HR gives companies a Hadoop-powered data lake more or less The technologies are making analytics easier than ever, but the diversity measures are lagging. market for years and have out-of-the box solutions that can out of the box. This summer, Workday also introduced a major number of data elements and scope of problems we’re trying integrate and produce analytics and actionable reports with upgrade to its analytics suite and introduced its data-as-a- to analyze is expanding at the same time – continually creating service benchmarking. While benchmarking is a difficult and 19 https://blogs.workday.com/workday-advances-augmented-analytics-stories- 20 https://medium.com/analytics-for-humans/augmented-analytics- new challenges. bi-acquisition/ demystified-326e227ef68f often imperfect exercise in HR, this offering gives Workday The question to ask is, “Are we organizing and using this data to customers an out-of-the-box way to compare talent mobility, improve performance, engagement, and wellbeing?” Typically retention, diversity, and other talent measures against other not. Workday customers. The company also announced the 18 Sierra-Cedar 2018-2019 Systems Survey Customer to Staff Customer to Bot Career Job history, learning, skills, career goals, career progression, development plans Produc vity/ Recruitment Resume, Wellbeing prior experience, Location, travel, references, work output, expense social connections spending, accidents, health CORE HR DATA Role, job history, payroll, benefits, level, performance, training, job location, address, age Customer to Staff with Bot Oversight Human First: Customer to Staff then Bot Feedback (real time coaching / offline reporting Bot First: Customer to Bot, then Staff (24/7) Engagment data, Leadership performance check-ins, Readiness, pipeline, exit interviews, ad-hoc succession, surveys, manager performance, reviews assessments Rewards Play, benefits, perks, mobility benefits, other financial data Customer to Bot to Customer (anonymising P2P broker) Figure 29 Figure 30 Data Available for Analysis Chatbot Interaction Models 38 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 39

21 . almost no IT support. It’s impossible to list all vendors in this area because they are I believe ONA is moving from geeky, consultant-led projects to gelist. You should have your HRIT architect or functional so numerous. On a recent trip to India, I met almost a dozen Incidentally, since we are now so focused on pay equity, productized solutions, and therefore, we can expect more and HR manager ask this person some questions, and see how chatbot vendors focused on the HR space. I suggest HR buyers diversity, and fairness in job progression, the analytics teams more vendors to display HR and talent-related data in graphs deeply he or she understand the HR domain. Such a conver- start to familiarize themselves with these tools, and if there are moving well beyond engagement into these important to make ONA useful. When combined with AI to give us even sation will yield valuable insights into the company’s long- is an interest in implementing, look for a vendor that has areas. Many vendors have solutions for these fairness issues, smarter analysis of this data, and we can then produce nudges -term strategy and level of HR knowledge. customers similar in size, global scale, industry. but most companies have not yet leveraged them. to employees – such as recommending that a scheduled 5. Does the vendor have long-term viability? Successful HR meeting isn’t necessary or an email might be too long –to The other technology that is clearly exploding with growth is tech vendors have many strengths that go well beyond the ONA Goes Mainstream actually help improve work. chatbots, which are a natural extension of the way we speak product. They have senior leaders that bring focus, passion, and talk. Research firm Cognition reports that today there are In the past, organizational network analysis was an arcane and customer intimacy; they have financial strength – more than 500 billion text messages sent each day, indicating process consultants used to determine how companies whether it’s profitability, committed investors, or a solid how natural it is for us to chat. got work done. Consultants sent hundreds of surveys to Wrapping Up recurring revenue stream; and they have a strong and employees to figure out who they communicated with and then enduring company culture. Chatbot technology, which provides bots with the ability to With all this new technology, how do you make sense of it built charts to show communication patterns. They used the converse, is now a commodity, with more than 1,000 different all? My experience with clients and a sharp look at data from information to redesign management practices, workflows, bot vendors. The core functionality is easy to find; how the vendor surveys and the recent Sierra-Cedar report shows me and organizational structure. In fact, ONA was always part of HR in the Flow of Work technology is applied differentiates the applications. A chatbot that there are five key questions to consider. organizational design … until now. must be training it so it knows what questions will be asked, As most HR professionals know, it’s impossible to manage 1. Does the product or system appeal to users? As simple as how to answer these questions, and what the follow-on actions Today ONA is a real infrastructure solution. With the use of people without tools. We desperately need systems for record- this sounds, it’s the killer issue. It doesn’t matter if the HR and answers will then be. a graph database to capture the data elements included in an keeping, pay, recruitment, learning, and many other things. department thinks the system is sophisticated or the IT email (such as from, to, subject line, date, reply), a company The question is how to manage all this technology in the most Deloitte, which has implemented hundreds of ERP systems department likes the technology. What only matters is if can create a database that reflects the way employees effective, streamlined, efficient way. and consults heavily in HR transformation and organizational employees like it enough to actually use it. Do lots of pilots communicate in real time. Facebook and Google do this with redesign, has an enormous database of typical HR questions to assess usability of the system. their own proprietary technology. I think the answer is clear: HR in the Flow of Work21. If you employees ask and is now training chatbots for clients to 2. Does the vendor have the culture of support you need? sum up all the challenges we face, the overall strategy is to perform employee self-service. IBM’s cognitive assistant for Today most ONA tools come from smaller vendors Some vendors are very sales-driven, but not very flexible make more and more HR technology become invisible to Workday is another example of such a solution. (TrustSphere, Syndio, Polinode, Worklytics, Keen, Humanyze, with their products. Other vendors are more consultative employees. If technology is useful to employees and managers Innovizer) but companies such as Microsoft, with Delve In the area of recruiting, the problem of communicating with a in nature. In today’s market, you want the latter – a vendor and it fits into day-to-day work life, it will be adopted and embedded into Office 365, now offer this out of the box. I candidate is enormously important to solve. Vendors such as that strives to understand your needs in an honest way and everyone, including HR, will benefit. If employees find it to be recently wrote an article describing Genpact’s tremendous Mya and Xor.ai and Textrecruit are building tools to address has the integrity to tell you if its product doesn’t fit your an interruption in their work and have to learn how to use it, success using ONA to study performance and retention, and such recruiting needs, and they already have great utility for needs. HR won’t gain as much value. I’m finding more and more examples of this every day. candidates looking for certain job shifts, locations, or types of 3. Does the vendor have referenceable customers like yours? Most of the tools and technologies discussed in this report jobs online. It’s nearly impossible to search most online career The important point is that more and more of the data we want I continually coach vendors to pick and focus on their core bring us further in this direction. AI, chatbots, analytics, and portals, so these tools are becoming indispensable for talent to analyze is in communication and performance systems, market. The marketplace is so huge that a vendor can feedback systems are all growing because they fit into natural acquisition. again reminding us how important it has become to think about quickly get spread too thinly it targets too broadly. If a human interactions at work. Just as consumer software HR in the flow of work. If an employee’s email data finds that he For internal HR uses, the market is more immature but we’re vendor doesn’t have three to five customers just like your companies have to compete with thousands of apps and or she is much more influential and valued than realized, should seeing advances. IBM, for example, has been using Watson’s company, then the reality is that you will be a pilot customer. websites when they try to get buyers’ attention, so must HR we then look at performance feedback, 360 assessments, and chat technology to serve its 300,000-plus employees and the That may be fine with you, but make sure you find this out in systems compete with many other work-related activities to other data to identify the employee’s readiness for promotion, HR team has told me it now has a highly trained team that can advance. gain employee mindshare. increased responsibility, or higher pay? Vendors such as coach and train the bots, which are getting smarter every day. HUMU would have some of this data, as would BetterWorks 4. Does the vendor have a product team you can relate to? Most of my conversations with HR leaders indicate that the bot and Impraise. But what is needed is to efficiently bring all data Somewhere in the selection and sales process, you should will be used as a supplement to the existing HR service center. together. talk with a true product manager, not a technical sales evan- 21 https://joshbersin.com/2018/09/hr-in-the-flow-of-work-a-new-paradigm- has-arrived/ 40 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 41

22 . is growing at an explosive rate. Added is the fact that AI, I think we are in one of the most exciting and transformational times in HR technology. We have shifted well beyond systems The HR Technology advanced analytics, sentiment analysis, chatbots, and cognitive tools are now in production – and you have a rapidly growing of record and systems of engagement to an era in which HR Marketplace 2019: Explosive technology typhoon. systems are truly systems of productivity. If HR teams can architect, select, and implement technology so it stays simple Growth, Ever-Changing Additionally, companies are going through a massive shift to users and truly increases productivity, everyone will benefit. toward a new model of management. People now work in Developed in partnership with LRP, this report addendum is teams; they communicate across the organization in real time; designed to help you make sense of the mind-boggling number they are working more hours and under more stress; and of vendors and tools in the market. As my wife once said when business executives have even higher expectations for growth. she went to a big HR tech trade show, “All these companies look alike to me!” The goal of this section is to help you sort I’ve observed over my 40 years in business that when the out the players, as well as the coming trends. economy is growing, the pressure on CEOs is higher than ever. Shareholders and investors expect above-market growth, The Major Market Dynamics which is harder than ever when every company competes The typhoon Jebi that hit Japan in 2018 was one of the largest for talent, brand, and customers. Innovation now reigns, so storms ever recorded. It formed from the energy created customers want to buy tools that make employees more through thermal stress and created a vortex that took on a life creative, service-oriented, and happy. of its own. How big is the HR technology market? The International Labor The current HR technology market is very similar. Driven by Organization22 estimates that there are approximately 3.3 the tenth year of economic growth, a very tight labor market billion people working around the world (2 billion men, 1.3 for hourly and salaried employees, and a tremendous need to upskill, reskill, and reinvent our skills, the HR tech market 22 https://www.ilo.org/global/lang--en/index.htm Figure 31 Typhoon Jebi: An Analogy for the 2019 HR Tech Market 42 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 43

23 . LOCATION NUMBER OF WORKERS LEVEL OF HR TECHNOLOGY The growth rate in HR technology is also astounding. In 2018, Payroll systems must manage country, state, county, and 54% of companies surveyed were increasing their spending, local taxes. They must accommodate many types of benefits Developed Countries 572 Million High 42% were staying steady, and only 4% were decreasing. Of this and garnishments. They must address hourly, contract, and spending, the fastest growing areas are talent management wage employees. They must interface with many different Developing Countries 295 Million Medium systems, core HR systems (which are rapidly being upgraded benefit, retirement, and insurance systems. These and other with cloud platforms), business intelligence and analytics, and requirements make them difficult and complex systems to Lower Middle-Income Countries 1.2 Billion Low workforce management and payroll systems. build. Interestingly, as much as the cloud is enabling companies to Among the biggest payroll providers are ADP, SAP, Ceridian, Under-Developed Countries 1.27 Billion Little to none consolidate platforms, the number of applications per company Oracle, Workday, NGA, and CloudPay. But in this robust continues to rise. In a 2017 survey, large companies had an economy, we also see dozens of smaller providers such as Figure 32 average of seven HR systems of record: this year they have Paychex, Gusto, Paycom, Intuit, Paylocity, Namely, Trinet, Estimated Global Workforce Sizes over nine. So the market is diverging into an ever-expanding Zenefits, and Sage. If you are a small or mid-sized business, number of new tools and systems, making it more confusing it’s important to select a provider that does business in the than ever to understand. states and countries you are likely to have employees. If you FUNDING # OF are a global company, you will most likely use multiple payroll AMOUNT $ DEALS This happens whenever the economy is growing and talent providers, including local providers in different geographies. becomes scarce. Today we’re in the peak of an up-cycle in 3B 700 which venture capital firms and private equity firms have The payroll market is changing rapidly. With more than 40% invested more than $16 billion in startups and new ventures of the U.S. workforce now engaged in gig or contract work, More than half 600 2.5B are brand new: over the last five years . I can tell from the number of 24 payroll providers must accommodate many forms of pay – 25% seed 31% series A vendors I hear from on a daily basis and the number of booths shifting particularly toward what we call real-time pay. Real- 500 2B and startup pavilions I encounter around the world, it’s easier time pay implies employees get paid the day they work, for $6.5B last two years 400 than ever to build a new technology company. When the the hours, shift, or gig completed. Real-time pay places an 1.5B economy slows and businesses spending declines, we will see enormous burden on the payroll provider, but vendors are all 300 an enormous amount of consolidation. working to move in this direction. 1B 200 There are also a wide variety of new digital pay services available, and these are in very high demand from workers. 500M 100 Twelve Categories of the One of the biggest is ADP’s new Wisely brand of services, Market which lets employees receive pay in a cash card and also automatically reserve and segment portions of their pay into 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Because there are so many elements to hiring, managing, different sub- accounts (such as accounts for vacation savings, Funding Amount ($) Number of Deals Source: CB Insights paying, and developing people, there are now many categories taxes, or mortgage payments). In fact, ADP’s research shows of this market. To simplify the world for buyers and investors, I that younger workers often have multiple debit cards and Figure 33 categorize the market into 12 major categories. have very little loyalty to traditional banks, so digital pay is an Investments in HR Technology important trend to engage younger employees. Core HR and Payroll Core HR, the software that manages employee records, job billion women), and this number grew by almost 7% last year. of $176 to $310 per employee per year, and this only covers history, performance, training, and other demographics, is They are distributed as follows: core platforms. If we assume that developed countries spend Every employee, contractor, or gig worker has to be paid. So also a critically important part of this segment. It is nearly an average of $200 per employee on core platforms and among the thousands of HR systems companies buy, the most According to the Sierra-Cedar study of HR technology usage , 23 impossible to run a company without an HR database, so these developing countries spend an average of $150, the total important is typically the HRMS and payroll application. And which is focused primarily on the developed economies in systems are used by millions of businesses. They are also market for only these two segments alone is $158 billion. while many may consider this part of the market simple and North America and Europe, large companies spend an average very complex applications, because they must manage the While this is a very broad estimate, you can get a sense of how transactional, it’s one of the most innovative and complex. company business structure, and they must hold many forms 23 Sierra-Cedar HR Technology Study https://www.sierra-cedar.com/research/ big this market is. annual-survey/ 24 CB Insights proprietary data of employee data. More advanced systems such as Ultimate 44 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 45

24 . AI-based employee Core HR & Payroll Compensaon, Workforce Integrated experience services HRMS Benefits, Rewards Management Talent Management Payroll Compensation management Time & attendance Succession management Benefits Administration Graph database Real- me and Compensation data Workforce scheduling Alumni management Self-Service, Compensation benchmarking Productivity and project mgt. Competency models architectures digital pay Case Management Conjoint analysis Leave management Career management Employee Communications Cash payment, cards External gig work Job redesign Employee Experience Social recognition Internal gig work platforms Daily pay and pay advances VMS Vendor management Gig and alterna ve work Wellbeing and agile rewards Talent Acquision Performance Corporate Learning Wellbeing systems Applicant Tracking Candidate relationship mgmt Management LMS LXP Management Internal gig Core HR Vendors Goal management Wellbeing behavior change Onboarding, transition mgmt Succession management LCMS Wellbeing assessment projects Sourcing Learning content libraries Wellbeing coaching Feedback management Engagement 3.0 Candidate assessment MOOCs Wellbeing training and content Managerial assessment Career portals & mgmt Sales or service training Wellbeing health networks and nudge Candidate referral Managerial coaching Chat and search Con nuous Wellbeing analytics engines Recruitment analytics Leadership development Microlearning platform Financial services and advice reskilling, Video interviewing Video learning platform Daily pay services Job boards Digital performance support career mobility Organiza on as Augmented analy cs Engagement & Diversity & Inclusion, Analycs & Planning Workplace network and unbiased AI Culture Transparency Talent analytics and AI Producvity not hierarchy Survey and survey platforms D&I tools Recruitment analytics Collaboration and messaging Performance management Engagement services D&I benchmarking Workforce planning Video and audio collaboration of teams and projects Benchmarking D&I assessment HR benchmarking Document management Culture assessment AI and machine learning Content management D&I job analysis Nudge engines Team management D&I analytics Organizational Network Analysis Behavior change tools Team project management ERG management Organizational Design Tools Figure 35 Engagement consulting Financial services and advice Digital performance support Disruptions Coming to Core HR Daily pay services pace of innovation is quickens, I expect this trend to continue. Because of all this change, Sierra-Cedar research shows that Figure 34 (Another study found that L&D departments have 22 tools of 28% of all companies are planning on replacing their core New HR Tech Categories their own, to say nothing of the number of add-ons recruiters HRMSs this year. While this percentage is slightly down from are buying.) last year, it represents a tremendous movement to cloud- Software and HiBob provide manager-level dashboards to help a system that links together heterogeneous HRMS systems based, integrated platforms. Those companies upgrading have managers understand all the issues on their teams. into a virtual network to avoid replacing existing systems.) Quite a few changes are taking place in the core HR segment. used their systems for approximately 8.5 years, so they are Not only are laws and regulations constantly changing, but In the 1980s and 1990s these systems were back-office Most of the core HR and payroll vendors have decided to build often at the end of their useful lives. The features that often new HR issues are forcing core vendors to adapt to evolving IT applications and employees rarely saw them. Since the talent applications as well. While this appeals to buyers, they drive these upgrades include cloud implementation, AI-based business needs and technology expectations. birth of the cloud, they have now become employee-facing struggle to stay competitive. The talent market segments are analytics, chatbots, contingent workforce management, and systems, and the most popular ones are as easy to use as enormously innovative and core HR vendors often find they The biggest potential disruptor for core HR vendors is the need upgraded talent capabilities. a social network. Vendors of talent management software don’t have the resources or product management expertise to build network-oriented data management systems that can Contingent and gig work is also changing the market. (Cornerstone, Saba, SumTotal) have often avoided building to maintain world-class features in recruitment, learning, manage multiple teams, cross-functional projects, internal Considering that 40% of U.S. workers are contingent and core HR systems, but the market has now proven that engagement, wellbeing, and many of the emerging spaces. and external gig workers, and flatter, more interconnected almost 70% are “deskless” in segments such as hospitality, companies do want their talent applications tightly integrated According to this year’s Sierra-Cedar survey, the average large organizational structures. Many HR leaders are frustrated retail, healthcare, and manufacturing, there is a lot of with their core HR systems, so more and more of these HR department has more than nine systems of record, so many that their core HR systems do not adequately model the way innovation ahead in the core HR space. technologies are coming together. (Cornerstone HR is actually companies continue to buy best-of-breed systems. As the their companies operate. This is why ADP is building an HRMS built on a graph database, and Workday’s architecture is network-oriented. 46 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 47

25 . Key Market Shifts As I described earlier, the heterogeneous nature of HR ways to provide health and benefits. Companies in the rewards which was dominated by Kronos. Today, there are gig network technology now makes it mandatory to build a service layer in market such as OC Tanner, Globoforce, and Fond are now vendors which are actually marketplaces for gig workers and • Growth in SMB and mid-market HRMS and payroll system front. Consider how Amazon.com, Facebook, or Google make it expanding their solutions as apps, which companies can deploy gig software providers that sell tools. vendors, many of which may not survive in the next down- easy to use their platforms. As consumers we have no idea how and use for pay, rewards, recognition, and other forms of turn (or will be acquired). As I look through the 1,400-plus startups and early stage many back-end systems there are behind the scenes, yet they employee feedback. vendors in my HR provider database, it’s amazing how many • Re-engineering of payroll to be more flexible, real-time, and all interact and provide us an easy-to-use front door. This is In the pay area, the core HRMS systems continue to evolve and are now focused on workforce planning, niche gig worker holistic. what companies are trying to do for their employees. improve their pay platforms every year. Oracle has significantly marketplaces, and other forms of industry-specific workforce • Digital pay solutions that pay by debit and credit card. The vendors in the market are now building case management, improved its rewards application and is often considered one management applications. This makes sense. Every hospital knowledge management, and intelligent tools to route of the most fully functional in the market. Workday has moved in the world, for example, has a unique set of requirements to • Focus on contingent worker management in core HRMS. requests to the right agent and even use AI and chatbots to into financial management through several acquisitions and is schedule, organize, and pay its nurses. This is similarly true for • Shift to network-based team models and new organization return answers. Over the next few years, this will become one now building an integrated financial planning and pay system. manufacturing, retail, and many other industry segments. structures. of the biggest infrastructure markets in HR, until consolidation Vendors such as Mercer, Willis-Towers, and AON Hewitt For example, Infor now has more than 6,000 hospitals as occurs sometime in the future. ServiceNow already has almost continue to sell compensation planning and data solutions. • Embedded analytics and augmented analytics . clients and is continuing to build workforce management tools 1,000 HR customers and I expect its growth to continue. And companies like Deloitte are now offering various forms of for the healthcare industry. Legion, a fast-growing startup • Attempt to build ecosystems, because of inability to keep up conjoint analysis to help companies determine which elements The explosive demand to improve the employee experience focused on retail, is building a multi-employer workforce with talent management tools. of pay are most valued to different employee segments. has the potential to impact many vendors in the market, management tool that lets workers schedule time between and most are scrambling to decide how to build more agile The entire world of pay has fallen behind the rest of HR. In the multiple part-time employers. Comprehensive workforce portal technology along with tools for case and knowledge BersinTM 2018 High-Impact Rewards study, the company found management it is now an essential part of human capital Employee Self-Service or Employee management, communication, chatbots, and process that only 11% of executives believe their companies’ pay practices management platforms. Experience management to give customers a unified employee experience. are fully in line with their business strategy. The problem? Pay The second major category, which we used to include in I do not believe the ERP vendors will be able to do this systems are not holistic enough, they are not customized for Integrated Talent Management HRMS, is employee self-service. This whole market is being well, leaving the market to vendors such as ServiceNow, individual needs, they are infrequently reevaluated, and rationale redefined by vendors like ServiceNow, PeopleDocs, Deloitte, PeopleDocs, and dozens of other startups. for pay levels is poorly communicated. Integrated talent management software was the rage around and PeopleSpheres to deal with the need to create a single, 2010, but it has fallen out of favor as companies look for ever- Given that more and more data about pay has become integrated, employee service experience. While self-service more innovative solutions in recruiting, career management, Pay and Rewards transparent (ADP, LinkedIn, Payscale, Glassdoor, and many other portals used to be included in core HRMS systems, they are learning, wellbeing, and engagement. That said, the vendors in providers now crowdsource pay information), over the next few now independent products and this segment is growing very The pay and rewards market is exploding in several dimensions. this market continue to grow. years companies have the opportunity to vastly re-engineer their rapidly. First, there are now dozens of companies that provide perks to pay practices, leverage the new digital pay systems in the market, The biggest end-to-end talent management companies are employees as gifts, social recognition programs, or alternative and make pay much more customized for each individual. And Cornerstone, Saba (which has acquired both Lumesse and more and more companies now tell us that while base pay may Halogen), TalentSoft (a fast-growing European provider), not change more than once a year, incentive and rewards are SumTotal, Infor, and several others which have been through being paid quite frequently, making the world of recognition and private equity buyouts. My research indicates that larger Automated Services (voice, apps, AI, nudges, intelligent proactive solutions) rewards a new, dynamic part of HR. organizations continue to buy best-of-breed products, but mid-sized organizations want an integrated talent platform. Self-Services Systems The challenge these vendors have is that Oracle, SAP, Workday, (portals, apps, case management, knowledge base, expertise mgt) Workforce Management Microsoft, and many other vendors are jumping into this Managed Service and Service Delivery Given the accelerating growth of gig work, part-time work, space, so the competition is fierce. (integrated service delivery strategy, call centers, outsourced HR services) contingent work, and other forms of alternative arrangements, The market for these systems is as large as the market for core Ad-Hoc Service or No Service companies want systems to manage the time, projects, billing, (deliver as needed, random, business partner driven, difficult to manage) HR and payroll systems, but since there are so many different hourly wages, and scheduling of their diverse workforces. For ways companies can buy these products, the integrated suite Figure 36 many years this was handled by time and attendance systems, The New World of Employee Self-Service 48 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 49

26 . vendors must market themselves well to compete with many Talent Acquisition Allyo, and PhenomPeople are being bought by small to functionality in learning, coaching, goal management, social well-funded startups. mid-sized companies as well as startups. recognition, and even team productivity. The High-Ground/ This marketplace is well over $200 billion in size. The software I believe the integrated talent management suite market is YouEarnedIt acquisition is a trend we will see continue. and platform part of the market, estimated at well over $5 The complimentary tools for recruiting, which I described nearing the end of its run and will soon be replaced by next- billion, is comprised of online advertising, assessments, above, are growing in number. New tools for sourcing, video Finally, as Microsoft Teams, Slack, Workplace by Facebook, and generation systems, built on next-generation engagement, interviewing tools, and many AI and recruitment management assessment, reverse job auctions, special talent network other productivity tools become even more popular, I believe performance management, analytics, and learning tools. tools. It is one of the fastest-growing parts of the HR (networks of teachers, hourly workers, IT professionals, these performance management tools will become deeply When I look at the disruptions taking place in those markets, tech market right now, primarily because the job market minorities, women, etc.), and many innovative AI tools for integrated into the systems of productivity. Most vendors I see an opportunity for investors or big companies to buy is so competitive worldwide. In Russia and Romania, the recruitment automation and assessment are in the market. Of are working on this now and soon enough these tools will and integrate these next-generation talent tools over the unemployment rate is below 3%, and in Japan is it closer to 2%. the 1400-plus vendors I have in my database, almost a third disappear into the background and manifest themselves in the next few years, essentially creating a 21st century integrated Growth is also driven by the volume of new AI-based solutions, of them are in the area of recruitment, talent networks, or core applications we use to get work done. talent management market. While this has not quite happened ranging from chatbots to intelligent search engines to various AI-based systems for assessment or fit. yet (HighGround was acquired by YouEarnedIt), when the advanced forms of assessment, bias management, and process economy slows down and VC money dries up, I believe we will Corporate Learning management. see this change. Performance Management The L&D tools and platforms marketplace is undergoing a We are in the middle stage of a massive replacement of legacy Meanwhile, the vendors in this market are growing at low Performance management software is an enormous niche renaissance. There are hundreds of new vendors developing systems such as Oracle/Taleo and IBM/BrassRing today. These double-digit rates and they are doing an excellent job of finding market that has emerged over the last five years to help video authoring, micro-learning, mobile-learning, virtual two vendors at one point commanded almost 40% of this customers with older ERP systems who do not want to embark companies replace traditional end-of-year assessments. It’s reality, search, AI-recommendation engines, and even chatbots market (they are still over 20%) but more and more companies on the massive effort it takes to upgrade their core HR systems an innovative marketplace filled with small and mid-sized for learning. Given that global U.S. L&D spending is around are starting to replace their solutions. SmartRecruiters is in order to get the talent products of their core vendors. technology firms providing offerings for feedback, goal $220 billion and roughly 12% of this goes into various forms of capable of enterprise-scale functionality now, and offerings management, and various types of team management. tools, this market is over $40 billion in size. from new vendors such as Greenhouse, iCims, Lever, JobVite, While it’s not clear how much these companies will grow, I The biggest shift in the market is the move away from the LMS do observe significant interest by the many companies I visit as the core learning platform to an architecture in which the because core ERP vendors lack such innovation. Currently, the LMS is one important part. Learning management systems still market for these next-generation tools is less than $1 billion in play an enormously important role in this market but as other Total Worldwide L&D Spending by Program ($ Billion) size, but as market consolidation starts, I believe it will grow. platforms – such as those for LXP, micro-learning, video, and program management -- collect learning-related data, over Basic skills The key trends here are a new-found focus on agile goal Product Education time the LMS will play a smaller role. LMS vendors are very $6.13 Tuion Reimbursement management (often called OKRs) and the development of $12.69 creative companies and they are evolving their products to be $26.96 enterprise-scale feedback and check-in processes to manage Customer Service $12.69 more open, more functional, and more essential to the market. people. Managers have always had one-on-one meetings That said, I believe the percent of global L&D technology US: Executive/leadership Managerial – often at their discretion. But today these and other such $141 Billion $14.59 $29.61 spending going to LMSs will shrink and more money will processes are institutionalized and incorporated into agile be spent on these exciting emerging categories -- creating Global: Soft skills, development practices. The vendors in this space are finding interpersonal the dynamic, self-directed, intelligent learning experiences $211 Billion that companies want these tools integrated into the flow $16.50 employees want. Compliance of work, so they are building systems that look more like IT and desktop $16.71 $23.26 work management systems and less like HR performance management tools. As this shift continues in 2019, I think some Corporate Wellbeing Professional (engr, acct, legal) Process/Procedure of these vendors could get very hot and many may be acquired. $16.92 $21.15 The $40+ billion market for these solutions is expanding in Onboarding/ Sales There is also going to be a trend toward consolidation. Most many directions. Not only are there a myriad of apps to give orientation $19.03 $17.34 companies that purchase a new performance management employees nudges, online training, resources, assessments, tool later realize that the system needs a complementary and various forms of fitness tracking, the market now Figure 37 L&D Market Size 50 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 51

27 . space will be those that provide niche solutions and those that almost every other talent practice in HR. I believe this type of Most plan for different workforce segments independently, can provide a highly customizable, employee-specific offerings. functionality belongs in every HR system, and over time this and often the only plan that exists is an annual budget and will become a mandatory set of features. And let’s not ignore headcount allocation. In the new world of highly contingent the role of AI: Even Slack now has software that identifies bias and specialized talent, it’s critical that HR departments have Diversity and Inclusion in chat messages25 (also known as mansplaining!). Every HR systems capable of total workforce planning. D&I is now a technology category. For example, almost every tool will help us reduce unconscious and conscious bias over Finally let me revisit the issue of the graph database, which I recruiting platform now has a set of features, reports, and time. mentioned earlier. If you really want to advance your analytics AI recommendations to identify and reduce bias and help function, the team should be looking at the entire network companies recruit minority candidates. SuccessFactors Analytics and Workforce Planning relationship within your organization, and this includes ONA includes an entire suite of products to identify bias in pay, data, engagement and feedback data, location and travel promotion, interviewing, and hiring. LinkedIn just announced Virtually all major HR technology players now have solutions data, as well as data collected through wellbeing tools and an offering called Diversity Insights embedded within its Talent for analytics and workforce planning. Microsoft Workplace traditional HR systems. Companies are now building this as a Insights system that lets companies benchmark diversity in Analytics, Workday Prism, SAP’s analytics offerings, and data lake and I believe it will become more and more common any job, role, location, or other demographic. And vendors LinkedIn Talent Insights have all matured significantly, making every year. such as Textio, Pymetrics, and STRIVR Lab sell specialized it possible for companies to analyze employee data in new technology that can assess candidates in an unbiased way and and more detailed ways. Most of these systems are also give managers VR experiences to teach them how to reduce starting to collect and manage organizational network analysis Workplace Productivity hiring bias. data, opening up a large market for smaller players such as This technology category perhaps represents the biggest Figure 38 TrustSphere and Keencorp. A new study be RedThread research breaks the market down disruption taking place in HR technology today. Microsoft, D&I Technology Impact, by RedThread Research, in Partnership with Mercer into categories and lists more than 100 vendors that cover The biggest vendor in the standalone analytics space remains Google, Facebook, Slack, and LinkedIn are all pouring money or support this space. The research demonstrates that many Visier, which is a company I’ve been a fan of for many years. into HR technology. Since the IT departments of most has a variety of fast-growing network providers offering vendors have added D&I reports, analyses, screening tools, Visier continues to help companies aggregate and integrate companies is likely doing business with at least one of these psychologists, medical specialists, coaches, mentors, and other and other offerings that make diversity easier to implement, all different types of employee data and provide out-of-the vendors in a big way, HR technology buyers should be aware forms of wellbeing. monitor, and enforce. So I now see this more and more of a set box reports for managers, leaders, and HR using built-in AI of their products and understand how they may complement One of the wellbeing-related issues HR leaders tell me about of features than a set of vendors. and augmented analytics. A similar company, OneModel, or replace some of the specialized and expensive HR tools is doing too much. There are so many vendors selling so many now offers end-to-end data connectors between many of the potentially under consideration. The specialized vendors in this space are growing quickly. products, the market can feel like a giant retail store where off-the-shelf HRMS and talent platforms. Some of the more interesting ones include FairyGodBoss, In learning, for example, Microsoft Teams has video authoring buyers keep adding to their baskets. However, I don’t think this Jopwell, PowerToFly, HiringSolved, InvolveSoft, Panopy, While the market for standalone analytics tools remains large, and translation capability that far exceeds many of the features will continue. Companies do not want to offer and manage Blendoor, and Noirefy – all of which have focused solutions it will never be as massive as that for traditional IT analytic of dedicated LXP or video providers. In engagement and huge sets wellbeing programs (Deloitte, last I checked, had 97 to drive diversity in hiring and candidate selection. Jopwell, tools. As data management solutions get better, I think the feedback, tools that plug into Outlook, Slack, or Teams will offerings). Instead, they want a curated set of programs that which was founded by a Goldman Sachs alum, has built an market for independent tools will remain limited, except for a be far more successful than those operating from standalone meets the needs of key workforce segments. entire social network focused on professionals of color – which few vendors which focus on HR-specific solutions. apps. As Facebook starts to market and sell Workplace, the For instance, a large beverage manufacturer recognized that is an enormous market and hiring segment which companies company’s collaboration and team management platform, In the area of workforce planning, there are more than 30 its road-warrior sales reps used few of the programs developed have a hard time addressing. FairyGodBoss is doing a similar I see more and more HR vendors building plugins for its startups building systems to help companies manage the entire for office employees, but they desperately wanted exercise play for women, and tools like HiringSolved, Entelo, Talvista, environment. This is the embodiment of HR in the flow of work tapestry of workers: full time, part time, gig, contract. I expect and fitness advice tailored to people who travel for work. The and Pymetrics are providing diversity-focused and diversity- and it will be the future. these vendors to grow rapidly as HR departments come to same company has a large workforce located in Mexico, where free tools for sourcing and assessment. grips with the fact that they must be more involved in the total This also begs the question of what happens when companies employees were desperate for basic drug treatment support At the enterprise level, SuccessFactors suite of Business workforce planning effort within their companies. Currently, expand their use of team and project management tools such because providers there are fewer and more expensive. HR beyond Bias tools give organizations a wide set of reports, fewer than 35% of companies have a total workforce plan. as Trello, Basecamp, and Asana. These team productivity departments have to understand what employees really want analyses, and tools to help identify bias and remove bias from systems make up a multi-billion-dollar market and offer great before buying. I believe the fastest growing vendors in this 25 https://qz.com/work/1238413/slack-analytics-will-soon-know-if-you-speak-to- selection, promotion, pay review, succession management, and men-and-women-differently/ ways to learn, collaborate, set goals and work plans, and give 52 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 53

28 . feedback. I believe employee self-service, wellbeing, and many your peers? This is now possible and it’s clearly a direction this About Josh Bersin of these other HR-related markets will begin to manifest marketplace is going to go. themselves in such platforms. Josh Bersin is an internationally recognized analyst, educator, and thought leader focusing on The head of HR for one of Europe’s largest retail distributors Conclusion the global talent market and the challenges impacting business workforces around the world. He recently told me her company put its entire suite of HR studies the world of work, HR and leadership practices, and the broad talent technology market. I’ve now researched the HR technology market for 15 years technology into Salesforce. They have selected and developed and plan to continue my research for many years to come. I tools that let people set goals, look up various benefits and He founded Bersin & Associates in 2001 to provide research and advisory services focused on hope this report gives you insights into the marketplace and HR data, and do most of their compliance and learning within corporate learning. Over the next ten years, he expanded the company’s coverage to encompass some strong signals about where the market, its vendors, and Salesforce. It has been a tremendous success. This type of HR, talent management, talent acquisition, and leadership. He sold the company to Deloitte in products are going. My goal is to help buyers make educated 2012, when it became known as Bersin™ by Deloitte. Bersin left Deloitte in June 2018, but he implementation will become common in the year ahead, giving decisions, vendors better plan for growth and change, and continues to serve as a senior advisor and contributes to major research initiatives. He also sits on the productivity platform vendors a major role in the HR investors become even more successful. the board of UC Berkeley Executive Education. technology landscape. As always, I appreciate your feedback, corrections, or any Finally let’s not underestimate the impact of Microsoft on Bersin is frequently featured in talent and business publications such as Forbes, Harvard Business debate about my findings and predictions. 2019 will be an the whole HR tech market. Office 365 with its new features Review, HR Executive, FastCompany, The Wall Street Journal, and CLO Magazine. He is a regular exciting year in HR technology, and I look forward to doing my (Teams, The Office Graph, Workplace Analytics) are a powerful keynote speaker at industry events around the world and a popular blogger with more than part to increase understanding and identify innovations that 700,000 followers on LinkedIn. set of organizational analysis, networking, and development can bring real value to employees and organizations around tools. While Microsoft does not yet position them as HR the world. His education includes a BS in engineering from Cornell University, an MS in engineering from Stanford University, and an MBA from the software, more and more companies are asking themselves, Haas School of Business at the University of California, Berkeley. “Why can’t we use Microsoft Teams for learning?” or “Why can’t we plug our performance management tool into Outlook or Teams?” As HR technology vendors try harder and harder to build systems that operate in the flow of work, they are going to collide with Microsoft, which has the largest set of corporate infrascture tools of all. I met with a Canadian bank early this year which standardized all its internal learning tools on YouTube and Google Hangouts. While I wouldn’t have expected the G-Suite products to provide enough functionality for end-to-end employee development and learning, they found they could add enough plugins to essentially build an entire suite of onboarding, development, and internal knowledge sharing applications entire on the Google suite. These big vendors now understand the potential in the HR domain, so in the next few years I believe they will jump in much more aggressively. Already Microsoft and LinkedIn are collaborating on recruitment scheduling integration, employee profile and identity integration, and soon the recommendations for LinkedIn learning within Microsoft products. Imagine if Office 365 recommended learning based on your interactions with 54 HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD HR TECHNOLOGY MARKET 2019: DISRUPTION AHEAD 55

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