Talent management software is the hottest area of HR investment in IT, according to a new study by IDC, with most HR executives naming recruiting as their top priority and preferring to get it in suites that handle recruiting, performance management and compensation management.
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While all 14 vendors in the study's rankings provide that functionality, including leaders Cornerstone, Halogen, Oracle, SuccessFactors and Taleo, users complained they often fall short in integration.
IDC only compared talent management software vendors that offer complete suites with the three closely related functions. It found all of them had the customer-aligned software features and long-term strategies needed to make the top two categories as either "leaders" or "major players" in its MarketScape ratings chart.
"It's heavily skewed to the right-hand corner, and that's significant of a market that's mature," said Lisa Rowan, IDC's program director for HR, talent and learning strategies research.
Better integration across talent management modules and with core HR systems was the most common complaint of the 512 HR executives that IDC contacted, according to Rowan. Typically the problem is that the "system of record" for each employee is split between core HR applications such as Oracle's PeopleSoft and the talent management software. Synchronizing the two is often accomplished through offline downloads and uploads, Rowan said. "I think buyers would like that to be more seamless."
Talent management software vendors acknowledge the problem and are working to improve integration by making their application programming interfaces (APIs) more standardized, according to Rowan. In addition, the Society for Human Resource Management is working on global standards. "But legacy HR systems have been so customized, it's a difficult thing to do," she said.
SuccessFactors, Taleo already leaders before SAP, Oracle acquisitions
IDC's analysis of talent management software and vendors had to be completed last December, so the rankings don't reflect two high-profile mergers in the ERP market: SAP's acquisition of SuccessFactors and Oracle's purchase of Taleo.
"SuccessFactors emerged as a leader, as did Taleo, and that was on the merits [before the acquisitions]," Rowan said. "Oracle was itself a leader prior to the acquisition, SAP less so."
Cornerstone lead the "capabilities" rankings by developing all three major components on its own instead of acquiring them, an approach SuccessFactors and Taleo took before being bought themselves. SuccessFactors acquired its learning application, while Taleo bought both its learning and its compensation modules, according to Rowan.
Close behind, but with slightly stronger strategies are Halogen, Lawson Software, Taleo, Oracle and SuccessFactors, with the latter two having significantly larger market shares. The major players segment includes ADP, Kenexa, Lumesse, Peoplefluent, Saba, SAP, SilkRoad and Sumtotal.
The acquisition route often leads to integration challenges. "It's a little harder to smooth it all together," Rowan said. In comparison, Cornerstone stands out by running the three legs of talent management on the same database and integrating them well. "That's goodness," she said.
Compared to last year's MarketScape, Rowan said Halogen entered the leaders segment for the first time. It targets mid-size companies with fewer than 10,000 employees.
Mobility, talent analytics among tech trends
Rowan said the talent management software market, like most, is strongly affected by four technologies that IDC has identified as pillars of an emerging IT platform: mobile, analytics, "big data" and the cloud.
Of all the HR applications, Rowan said talent management software has made the biggest push into cloud-based Software as a Service (SaaS), a move that dates back more than a decade to online job boards and recruiting sites. As for mobile, some vendors are adding mobile applications for recruitment managers, but a larger market is still emerging, she said.
It's great for recruiting, for one. "Recruiting is an area that is social as it stands," Rowan said. Recruiters already scan social media sites such as Facebook and LinkedIn, and it has become almost standard to be able to apply for positions by using profiles created for those sites, she said.
On the performance management side, supervisors can get feedback about employees by gathering comments posted by colleagues. The learning component of talent management is also benefitting, as workers can more easily convert their knowledge into formats that are easily shared with colleagues, Rowan said.
She advised purchasers to first understand whether their organization has a "talent culture" that will, for example, benefit most from strong recruiting tools, or a "learning culture" that emphasizes employee development and training. Then find a suite vendor whose strong suit fits that culture. "Most of the vendors started with different expertise," Rowan said. "Maybe you can kind of let the other functions be a little less robust."
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