Perhaps the statement that we now live in a “point solution world” for HR is a bit bold. Certainly in large and medium sized organizations, ERP deployments are still strong. However, we do know that these same organizations are increasingly looking at point solutions even if they have had long term ERP strategies. Current day economies combined with lower short term costs for SaaS provide good business cases for deployments that have to happen in the next couple of years, or as bridges of functionality until a long term solution has been developed. The question in the marketplace is now “what is happening in core HR?”
Core HR is more of a commodity than ever. Truly it has simply turned into a specific set of functionality, and that which made it strategic before has been ripped out of core and placed into other applications or engines. First, let’s look at commoditization. At one time, the ability to provide table driven data validation, full effective dating, and robust compliance was the domain of a few major players. Now, these functions are a part of almost all major HRMS solutions offered at any price.
Second, we look at functionality that used to make core HR solutions strategic. I’ll call these workflow and analytics. From the process standpoint, end to end solutions no longer exist in the HRMS application. Indeed, end to end workflow barely exists at all. Point solutions have virtually disabled the ability to flow work and approvals through multiple products with different approvals in each. While it is possible to utilize a workflow engine to accomplish this, the cost is prohibitive to all but a few very large organizations, and I have not seen HR a high enough priority anywhere to deploy it. Analytics on the other hand have almost been fully removed from the HRMS application. Value can’t be provided by core HR if none of the talent, payroll and benefits data sits in other applications or outsourcers. Indeed, as the value of analytics comes from cross functional data analysis, business intelligence is really the domain of massive data warehouse applications.
Third, the old employee and manager self service systems are mature and ubiquitous. Having employees enter in their new phone number is not very exciting anymore, and the real self service functions of performance reviews or compensation processes are generally removed to the talent systems. Instead, we move to massive portal environments that remove the existing self service functions from each individual application and centralize the user interface.
If indeed the HRMS application has been commoditized in terms of functionality, then the lowest price point that offers scalability and good data architecture (not all applications out there are very pretty from the backside) would seem to suffice. Scalability obviously so that your organization can not only grow, but store greater amounts of employee effective dated rows over time. Good data architecture because the ability to port data into data warehousing applications as well as integrating to other point solutions will be made much simpler.