While human capital management (HCM) is far from the hottest area of the enterprise applications market, it is gaining ground.
HCM is perhaps best defined as an umbrella term that is gradually replacing what used to be separate best-of-breed systems for human resources (core HR functions such as personnel data, benefits administration and reporting), payroll, workforce management, learning management, social learning, development, recruiting, workforce analytics and workforce planning.
Software giants such as Oracle, SAP and IBM are eager to win business in these areas, which have been dominated by niche providers. All of these companies, as well as Salesforce.com, bought HCM specialists in 2012.
According to a survey by Computer Economics, 22 percent of organizations made some kind of HCM investment in 2014, either a new software implementation or an upgrade to an existing system. That's up 2 percent from the previous year and 4 percent from 2013 – not spectacular growth, but HCM is increasing its slice of the pie.
So what are the hottest trends in human capital management?
Human Capital Management Gets Social
Social recruiting and sourcing are hot topics in terms of industry buzz, but the Computer Economics survey showed that only 14 percent of organizations investing in HCM last year included social recruiting as part of their plans.
"A lot of HR departments are using social channels to target candidates, but that doesn't necessarily translate into new systems," said Frank Scavo, president, Computer Economics. "At this point, many companies are simply buying premium access to sites like LinkedIn and Glassdoor."
Nagaraj Nadendla, group vice president, HCM Product Management, Oracle, is more positive about the growth of social HCM. She said that the last two years has seen users quickly embrace social media as a way to promote opportunities,as well as tap into employees' personal and professional networks for talent.
But with that increased employment of social media channels has come the realization that they need to move beyond the medium to focus on the message: evolving their employment brand, developing engaging content and refining their pitch to better sell themselves across these new channels. This has led to marketing techniques being incorporated more closely into social HCM practices, she said.
"This transition has spawned an adoption of best practices drawn from the marketing industry as recruiting organizations look to incorporate demand generation analytics to better understand their audience, their preferences and how they engage with content over time," said Nadendla. "We foresee this trend to continue hand-in-hand with the availability of new tools focused on increased use of video, mobile and nurturing campaigns across both social and more traditional sourcing channels.
HR with a Marketing Twist
Scavo expanded this concept into the emergence of an entire recruitment brand. Until now, an organization's branding efforts have focused on its overall identity or its product line. The idea is that you don't just buy clothing from a retailer, you are buying some kind of lifestyle experience created by its branding efforts. Whether you agree with that or not, it's how marketers see it.
Now extend that concept into recruitment. Certainly, the big recruitment websites have branding efforts -- but that encompasses their overall identity. Companies are interested in developing brands that will attract people to work for them, created specifically by or for HR. Company X, for example, might create a strong brand about caring for its employees, while Company Y's recruitment brand focuses on career opportunity.
"HR executives are beginning to understand that they need to establish a recruiting brand, just as much as the organization needs a product brand," said Scavo. "HR needs a marketing function (to establish and maintain the organization's people brand) and it also needs a sales function (to sell prospective candidates on specific job opportunities).
HCM and Analytics
Analytics was an area mentioned by several experts as being among today's hot trends for human capital management.
"There has been a big push to unify analytics with transactions on a single, real-time information system, and companies are increasingly migrating to a unified system that merges the processing power of in-memory computing with cloud and mobile applications tailored for people management," said Amy Wilson, vice president of Human Capital Management Product Strategy, Workday. "With this end-to-end system for workforce analytics, HR is driving insights for worker-specific scenarios and broader business challenges."
A welcome change for HR departments is the end of reporting nightmares. HR veterans have grown accustomed to time-consuming procedures like merging dozens of disjointed spreadsheets for a quarterly workforce report, or having to constantly call IT for support when report deadlines loom.
With the entry of workforce analytics into the picture, though, creating a report doesn't have to be so difficult. "Modern systems enable HR teams to access, extract and deliver tailored insights on a continual basis," said Wilson. "This drives better quality business planning."
With HR and HCM containing such sensitive data, it is no surprise that there was been a lively debate about whether they have any place in the cloud. After all, once a hacker has gained access to health records, Social Security numbers and email records of employees, the entire enterprise is at serious risk.
But Scavo said the debate about HCM systems in the cloud is over. The cloud won.
"Most new investments today in HCM systems are defaulting to cloud deployment," he said. "The only real exception is where an organization has significant investment in legacy on-premises HCM systems, and they are enhancing or extending them. But even in that case, companies are often choosing to deploy the new functionality in the cloud and interfacing it with the legacy on-premises HCM system."
Consumerization of Human Capital Management
Social, cloud, analytics and mobile, the same trends that are impacting many enterprise applications, are affecting human capital management, said Patrick Pickren, senior director Product Strategy, Ultimate Software.
The adoption of technologies within the consumer marketplace is fundamentally changing the expectations of workforces in what they need and want from enterprise applications such as HCM, he said. That's showing up in demand for social integration, greater mobility, simpler analytics and more.
"There's been a lot of talk about millennials in the workplace, and they have certainly influenced the entire technology world, but the fact is that everyone -- regardless of age -- now expects a consumer-grade experience from their technology at work that includes social media integration," Pickren said. "We've seen a steady rise in businesses interested in social media integration with HR -- for example, the ability for a candidate to use their LinkedIn profiles to apply for a job.
Watch for our follow-up article, a buying guide for HCM.
Drew Robb is a freelance writer specializing in technology and engineering. Currently living in Florida, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).