Article: The story of HR tech and its changing nature

#HRTechMarket

The story of HR tech and its changing nature

The story of HR tech has been one of evolution. We take a look at how the domain of HR tech has evolved along with the funding and acquisitions in the HR tech space that the year 2018 saw.
The story of HR tech and its changing nature

The growing relevance of the HR function in recent years can be pinned down to the adoption of new age technologies within its processes. Always a critical arm of organizations, the HR function has been at the helm of making talent decisions. But traditionally, what all this translated into was to undertake transactional, ‘by the book’ activities which were thought to create necessary changes within the workforce, all aimed solely at meeting the business demands. Business leaders were often found to be treating their HR initiatives at best as activities with low and unpredictable ROI, or at worse as meaningless attempts to make the workforce more motivated and efficient. But the changing nature of modern day businesses meant that this trend doesn’t remain unaffected. 

Many have started calling this recent period of technological shifts within the business ecosystem as the fourth industrial revolution and the effects are for everyone to see. Today, technologies like AI, automation, robotics, and digitalization have redefined the existing parameters of operation and, in addition to lowering costs, have made processes more data-driven and efficient. This shift has not only improved how a company delivers its products but also how it operates from within, an aspect to which the modern-day HR function is no exception. 

When it comes to HR tech, it too has had its journey. From an initial skepticism on its effectiveness to now where the market is saturated with such products— all fine-tuned to meet niche demands but are often underutilized due to improper planning—HR tech has come a long way. And for many, the future is an increasingly digital one. Gartner highlights that business leaders are now aiming to improve workforce performance levels by investing more into the digitalization of their HR processes. This, in turn, reflects that for many HR leaders, one of their top priorities in the coming year is to digitalize the HR function. Gartner also reveals that for CHROs, digitalizing HR would feature ahead of other top priorities such as performance management and creating a people analytics team.

Changes, as expected

The external market forces have forced many businesses to innovate and adapt, which, in turn, has changed the traditional business models, demanded agility, and forced the restructuring of talent preferences. Skill demands have evolved and with time, as more businesses undergo a technological transformation, functions like L&D will become important in ensuring that the workforce remains productive.  This means that HR professionals are to play a more active role in working closely with business leaders to ensure it.  

In the current era of business transformation, acquiring, training, and retaining the right talent is of key importance.

Today's world of shifting demographics, the makeup of talent pools, and changing employee preferences, makes the task increasingly difficult for the HR function.

Even from an employee’s perspective, HR is responsible for enabling them to chart an often changing learning curve which would ensure their employability. 

With so much resting on the shoulders of modern-day HR professionals, it becomes imperative for HR tech to be channelized in solving such problems. Digitalization, use of AI in forms of chatbots, and using automation to do away with transactional activities have been some of the ways in which HR tech has over the years developed and ensured that HR professionals are able to build a skilled and motivated workforce. Today, digitalization has truly evolved into becoming a game changer for many organizational functions including HR. But what does this shift towards using more technology actually translate into? 

The shift

Before we begin looking into how the role of an HR function has evolved in the times of business transformation, it is valuable to look at how effectively have such technological shifts within the businesses helped create the necessary changes. While many find great use and are able to leverage digital transformation to better their productivity, a recent Tata Communications study points to a growing disconnect within the aspiration vs. reality of using the latest technologies out there. The study found that 41 percent of board members and 33 percent of C-level executives believe that they are leading their industry in adopting new technologies, in comparison to just 18 percent of directors and 14 percent of department heads. In addition, the perceived high cost of innovation, lack of skills and the threat of cyber-attacks are proving major barriers to digital transformation globally. 

These are certainly some caveats with which the growth of HR tech should be viewed and many such factors also influence how effectively the HR function is able to leverage business transformation to better its intervention. But keeping it aside for a moment, the shifts in using HR tech have been substantial. The technological landscape has evolved to meet HR needs in more efficient and direct ways. While portions of ERP and HCM in companies across the globe have shifted to cloud-based systems, a major shift in HR tech has been its new found focus to create tools to enhance workforce productivity. Rather than focusing on simple automation of activities, HR tech is now driven to make pivotal changes within the workforce mostly aimed at boosting productivity levels. 

According to Deloitte’s study on HR tech disruptions, the use of artificial intelligence (AI), cognitive bots, and intelligent predictive software within HR have all gone up and today many organizations are quickly bringing new functionalities into HRs approach to managing the workforce. With the rise in the effectiveness of HR interventions, the use of modern tech, especially in areas of L&D, performance management, and managing workforce productivity. digital feedback, analytics, and engagement tools are increasingly finding their space in today’s HR practices. Recent research by Fosway group reveals that the major players in the European market are optimistic about their investments in HR tech and 76 percent of organizations are increasing investment in HR tech. With user experience still remaining a key driving force of such a shift, it has been reflective of the aim of making HR processes more employee-centric. The other key drivers that are reshaping HR systems reportedly are lack of business agility (84 percent), level of innovation (84 percent), enhanced self-service tools (84 percent) and lack of analytics (83 percent).

The realm of HR tech has undergone many changes.

Driven both by a genuine want of improving people management practices and reducing the transactional work, HR tech is much more in synch with the demands of the industry.

During the 1970s and 1980s, HR software vendors focused on building centralized systems of records, chiefly in areas of compliance and payroll management. The aim was to integrate HR into other enterprise resource planning (ERP) systems. During the early 2000s, this focus shifted to enable HR to support recruiting, training, and performance management. As a result, integrated talent management systems emerged. Around 2010, companies began the move to the cloud, replacing their old core systems of record and building real-time systems of engagement and learning that put the onus of use on the employee. But as the grip of Industry 4.0 increases on many parts of the globalized world, HR managers require HR tech that is more in tune with their current needs. And by jumping through hoops and traversing through its own barriers, HR tech is poised to catch up to such needs. 

We take a look at the acquisitions in the Indian HR Tech market in 2018. 

 

HR_Tech_Funding_2018

Topics: #HRTechMarket, #Infographics, HR Technology

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