My 2014 HCM Predictions

I recently published My 2014 HCM Wish List of 5 things I wanted to happen in 2014, but now it’s time to look at what I think is going to happen.

1. Mobile and Analytics to grow slowly

As much as I really want customers to adopt HCM and Talent analytics, I still feel that that HR organizations are behind the times when it comes to analytics. Reporting is useful, but doesn’t give the value of analytics and certainly the value of predictive analytics cannot be understated. I do see predictive analytics heating up, but overall I believe growth will not be where it should be. This is a prediction I hope to get wrong.

Mobile has been hotly tipped but I still see slow growth in this area. The SaaS vendors have got mobility high on their agenda with some good functionality on Apple’s iPhone and iPad devices. However, Android applications are still behind their Apple counterparts despite massive growth for Android in the smartphone market. Many on-premise customers are suffering from the struggle by on-premise vendors to produce rich mobile functionality or who see mobility as an additional revenue stream for customers. With the high cost-to-implementation and inclusive mobile offerings of Cloud vendors, I don’t see this growth changing any time soon.

2. On-premise Core HRIS will continue to decline as Cloud growth accelerates

After this week’s announcement that SuccessFactors CEO Shawn Price will take over SAP’s Cloud business along with some of its on-premise operations, I feel even more confident that this prediction will ring true. Investment in SaaS HCM – particularly Workday and SuccessFactors – has already been evident over the last 12 months, with SAP HCM and PeopleSoft being the main casualties for customers who are ripping-and-replacing their core HRIS. SAP’s pre-SuccessFactors investment in on-premise SAP HCM (e.g. HR Renewal) will be nearing its end-of-life and despite SAP’s Customer Connection program that is unlikely to yield any significant functionality enhancements then I don’t see much growth in this area. Oracle’s investment in Fusion HCM doesn’t really give confidence in a strong future for PeopleSoft, especially as they want to get more customers onto their Fusion HCM Cloud product suite.

I would go as far as saying that most investments by customers will be niche sectors like defense or those customers that have been (mis)advised to go with on-premise. Customers who are not moving to the Cloud should be putting any investment on-hold while they await SaaS HCM maturity – should this be the only thing stopping them from moving. I would recommend listening to Jarret Pazahanick talk about this topic on DriveThruHR from the 5:45 mark.

3. Full Cloud HCM takes over Hybrid HCM

It has become quite evident that the level of investment to “integrate” (that’s interface to HR technology experts) SaaS solutions – particularly core HR – with on-premise ERP systems is high and time-consuming. Additionally, it is a temporary effort to keep the lights on for a little longer. The Hybrid approach has been quite popular with Talent Management, but to obtain true value customers should be looking at moving their core HCM to the Cloud in a rip-and-replace exercise. There will always be integration – especially for customers using wider ERP processes – but from a HCM standpoint it just doesn’t add up.

4. Integration will remain complex

For those customers choosing to integrate a SaaS core HRIS with their on-premise HCM systems are going to come across a myriad of integrations with varying levels of complexity, depending on what processes and other ERP functions that they are using. With payroll, financials, benefits, Environmental Health & Safety, time and attendance, etc. – and outsourced Payroll and/or Benefits providers – then things can start to get a little messy even if a customer does a full rip-and-replace of its core HRIS. Unfortunately this is an inevitability, but keeping an on-premise core HR system as the system of record below a SaaS core HRIS doesn’t make any sense. Going with the current popular hybrid model means additional complexity, cost, and time to an implementation. For talent management hybrid scenarios I have heard of some customers who are worried about integration, but with minimal data flow and with – disappointingly – many customers not yet leveraging analytics capabilities there should be little worry from these customers.

SAP are providing standard integration packages for SAP HCM on-premise and the SuccessFactors HCM suite, but this is more for a reluctant install-base and really only serves to reduce the complexity rather than removing it. But what choice does SAP have when many customers don’t yet want to lose their expensive core HR system? From another perspective, SAP are doing well with introducing standard integrations to connect SuccessFactors Employee Central with other SaaS solutions in niche spaces like Benefits, Time & Attendance and hosted/BPO Payroll.

As mentioned above, integration is a necessary evil for some customers – but if customers are going to choose a halfway state then they might be better of trying understand what is really holding them back from taking the full plunge. What fears and anxieties are keeping CIOs and CHROs up at night?

5. The war for the public sector to heat up

Public Sector – particularly higher education and healthcare – have become somewhat of an underground battlefield for SaaS HCM vendors. 2014 could be a fruitful year for Public Sector customers as vendors introduce industry-specific verticals into their existing portfolios. Many Healthcare customers are migrating from Lawson HR – historically a stronghold in this vertical – and 5 of the world’s 6 biggest Pharmaceutical companies are moving to a SaaS HCM solution. Universities in particular are looking at Learning and Public Sector customers have had a long love affair with recruiting. New functionality this year will make the difference to the vendors that focus R&D dollars in this area.


2013 was a great year for HCM. It saw the rise of SaaS as a dominant technology and the emergence of SaaS core HRIS systems, Platform-as-a-Service (PaaS), and HCM and Talent analytics. 2014 will continue much on this vein but with more substantial growth. Whether any of my predictions come true is yet to be seen, but I’m confident that we’ll see a great movement further towards the Cloud.