Will Spending on HR Technology Grow in 2008? Three Studies on the Subject.

An article in the July Workforce Management eNewsletter titled "Studies: HR Technology Spending Still Growing" references two studies that say spending on HR technology is likely to keep growing this year. These studies define HR technology as a category that includes HR software expenses plus internal and external staffing costs.

The two studies are from AMR Research and Towers Perrin.

- The AMR study expects the HR software market to grow 13 percent in 2008. These results are based on a survey of HR vendors, not buyers (end-user organizations).

- Towers Perrin's survey says 30 percent of organizations expect to increase their spending on HR technology in 2008, while 55 percent plan to keep it the same. This survey has a little more credibility since Towers Perrin surveyed end-user organizations - not the vendors.

Like the Towers Perrin study, a third study by HRmarketer.com surveyed end-user organizations. The report, titled The 2008 Buyers' Behavior Report says the economy is undoubtedly impacting the HR department, with 74% of respondents saying today’s uncertain economy will affect their HR products and services purchasing decisions.

Our HRmarketer.com report took a slightly different angle on asking about companies intended spending plans for HR Technology. Because "HR Technology" can be a nebulous term these days with so many different HR and employee benefit products/services incorporating technology in their offerings, we focused on specific product categories. Our findings?

When asked which HR products and services a company was going to evaluate and purchase in the next six months, the top five included:

1. Employee Benefits (31.9%)
2. Training and Development (25%)
3. Compensation/Incentive programs (20.6%)
4. Recruitment and staffing (17%)
5. (tie) Performance management/succession planning and HRIS/ERP
solutions (16%)

The HR products and services least likely to be purchased over the next year include:

1. Employee engagement/relations (1%)
2. PEO (professional employer organization) (2.9%)
3. Compliance (3%)
4. Payroll (4.5%)
5. (tie) Outsourcing and Workforce Planning (5.9%)

However, all three of the above studies were done a few months ago and I can guarantee you things have changed the last two months.

BTW, I really liked and agree with the AMR analysis that stated “While the bulk of this market to date has been in core HR records, benefits and payroll administration transaction automation, the scales have tipped significantly this year into the strategic HCM process areas of workforce acquisition, management, development and assessment. Together, these areas represent 62 percent of the market.” We're seeing the same thing and posted a blog about it a few months ago.

Posted by Mark Willaman

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