HR systems found their way four decades ago with large organizations looking to automate traditional HR functions. Over the last 5 years, there has been a tremendous amount of acceptance for HR automation. Over time, HR systems have also evolved from basic automation of traditional HR functions. Now with SaaS becoming the common place, it’s revolutionizing the HR industry. Gone are the days when only organizations of certain scale and size used to worry about automation. As HR administering is getting complex by the day, and with the advent of affordable point solutions, organizations of all size are becoming very aggressive in adopting HR automation. As HR systems find way into every organization, one area that hasn’t caught up the required amount of attention is standardization. Data interoperability from one system to another system is very complex and this is discouraging lot of HR leaders to move from the traditional systems that they implemented, to the best of the solutions that are out in the market. HR-XML consortium is leading the development of HR integration standards and this will be a welcome change in the world of standardization.

SaaS Technology – Licensed, Hosted or SaaS? There are very few products out in the market which are built on Multi-Tenant architecture. With the innovations that are taking place in how an HR function is administered in the organization, it is imperative that product innovations should also keep up with the same pace. This is only possible if the system that is implemented is SaaS based, as the application of enhancements and innovations to the product is highly manageable.

Social Integration – This is one area that is going to be a forced innovation. New HR systems should start to think about incorporating the social networking element into the HR systems, making it more interactive and collaborative. With the average age of an employee in the organization going down dramatically, HR leaders have to find innovative way to keep the employees highly engaged. HR systems will play a big role in this area by incorporating Web 2.0 features such as blogs and forums.

Business analytics – HR system captures wealth of the data. This data forms the heart and soul of an organization. Now there are very few systems which provide an in-depth insight into this data which is going to help the organizations make important business decisions. In many organizations, HR department is treated as more of a transactional or a processing department than a business function.

As we know, in many organizations 60-70% of the costs are related to Human Resources (Wages & Employee Benefits) and given the percentage of cost is that controlled by the HR of an organization, it is of paramount importance that HR department starts to provide valuable insights by looking into the data trends. Today’s products have very good reporting systems which are nothing but a snapshot of data – To make intelligent business decisions, trending of this data is of paramount importance.

Outside of the large HRMS providers such as SAP, PeopleSoft, Success Factors, there are lots of niche service providers such as Minerva HRMS, Adrenalin, HR Mantra and Grey tip that are catering to SME segment in India and emerging economies. This trend is only going to increase as SME segment is going to be the backbone of emerging economies and large systems are not tailor made for the small and medium sized organizations.

There is a very fine line of difference between choosing a product and choosing a vendor. Choosing a product is based on pricing, modularity, user friendliness, customizability and scalability. Choosing a vendor is based on pricing, implementation success, service and after sales support. A combination of factors will normally lead to a final decision.