Dave Lefkow recently wrote about the future of TAS systems and I’d like to put my thoughts down as well. Here are his comments:
Where the industry will go and the strategies successful vendors will employ are dependent on a lot of things. Will organizations invest in talent management? (My guess: yes, but not immediately) Will RPO’s become ubiquitous? (My guess: mostly for project-based work, not full outsourcing) Is there a profit that can be turned selling applicant tracking to small businesses? (My guess: yes, and potentially a big one – but it remains to be seen if enterprise vendors can down-scale) Will companies look to ATS vendors as respected consultants? (My guess: it depends on how happy or unhappy they are with the software itself) Can ATS vendors really cross over into a world of Monsters and CareerBuilders where much bigger dollars are? (My guess: not likely based on past experiences)
Lefkow, Dave, January 18, 2006. “The future of the ATS industry.” Retrieved from http://jobster.blogs.com/lefkow/ on January 21, 2006.
Quite some time ago I also wrote about my opinions on the ATS market here. It’s interesting that I still believe most of my opinions from last year. Summary of last years comments:
- Consolidation must happen. ATS/TAS vendors – they are all in a finite marketplace. If you are selling $300-700K/year solutions, there are only so many companies around who can buy at that level.
- They are all losing money. Some of them are also losing clients, or at least not growing their base.
- However, there really is potential here as point solutions make a play. Since everyone is going back to point solutions vendors have to have great back end integration.
RPO really wasn’t on my radar last year. This year, I do think it’s going to take off. As Dave says, there are certain places where it makes sense, and others where it doesn’t. Where some organizations have a large static pool of requisitions or high turn positions, RPO will work – large salesforce requirements, healtcare, manufacturing, etc. I don’t think RPO will work for director level positions and higher or specialized job requirements simply because it’s too difficult to develop a candidate pool for something this non-generic. Once you put a specialized position into RPO, the cost advantage will vanish.
I still firmly believe that there simply isn’t enough space for this many vendors to all make a profit. Only some many companies will spend a $million on talent acquisition. More and more, the vendors are going to need to sell down market, and possibly leverage a larger salesforce by merging with a TMS vendor. Talent management has already begun to swallow the talent aquisition sub-space and I see this continuing. There will always be some small ATS vendors out there, but to really be successful, a larger salesforce will need multiple products to cross-sell.
Having said that, I’m not entirely sure I believe that talent acquisition belongs within a talent management suite. Sure, TAS is certainly a sub-set of the larger TMS theory. But if you really think about it, there isn’t a whole lot of necessary integration between the TAS data and the TMS data. Let’s take performance, compensation and succession as examples. Performance review scores and competencies should absolutely be tightly integrated with compensation management, incentive payouts and merit increases. Similarly, succession, workforce development, and performance are also areas where real time data sharing would be most meaningful for decision support. But if we look at talent acquisition, tight integration doesn’t seem to be a necessity to me. Additionally, it might be advantageous to allow the market to pick the best in calss TAS systems independently of a larger talent suite. ERP may not have worked because they were stretched too thin (among other reasons). Perhaps this is another case where TMS could get too big and broad.
From a business perspective, I just don’t see many talent acquisition vendors surviving out there alone. From a systems perspective, I don’t see much advantage to them merging with talent management suites. We’ll see what happens.
2 responses to “The future of the ATS”
The one point I would disagree with is the lack of need for integration between TA and performance.
This is really the missing link in all of the discussions happening on quality of hire – if you can tie recruiting, recruiters and hiring managers to performance, you would have a full-lifecycle talent picture and begin to make the individual contributors to this picture more accountable to real business goals. That doesn’t really qualify as deep integration, but a cursory link between the two datasets could have a big impact. Tie that in with profits and revenue per employee and you really have something there.
Dave – I’m going to have to concede on this one and agree with you. Unfortunately at the time (I think) I was talking about direct data integration which would have been an inadequate way of thinking about this. You’re absolutely correct that the future of talent acquisition is not in simply obtaining talent, but integrating talent acquisition into talent management as a process. To do this, the talent acquisition practitioners really need to ensure their hires are sticking around and actually performing to expected levels. If not, then the learning, development and competency practices need to kick in.
It may be too granular, but I see this type of analytics coming out of a OLAP business intelligence too (read data warehouse) rather than application integration.
I suppose my point that the applications (as a suite, TMS does not need to be integrated with TAS) did not reflect my agreement with you – the practices are closely related and one must flow into the other seamlessly. To close, I talked about the market and the systems, but I mistakenly ignored the process. Thanks for pointing it out.
-Dubs