2012 HR Technology Forecast

2011 was the year employees and human resources departments went mobile, recruiters embraced social networks, managers coped with increasingly virtual workforces and a hot market for HR tech mergers and acquisitions culminated in SAP’s plan to swallow SuccessFactors.

In 2012, expect technology innovations to continue sending shock waves through the HR department.

“We’re in a complete revolution of technology in general, to mobile devices, cloud computing and consumer-user interfaces,” says Josh Bersin, president and CEO of HR industry researcher Bersin & Associates. “They’re affecting our everyday lives, so they’re affecting HR. HR just can’t afford to ignore it.”

In the new year, HR executives will continue grappling with the technological demands of a multigenerational workforce, more of whom work outside the confines of the typical corporate office. Especially when it comes to younger employees, “The message is clear. This is not your father’s workforce,” says Kate Lister, a telecommuting researcher for the San Diego-based Telework Research Network.

2012 will bring more Web-based or “cloud” HR apps and more employees bringing their own iPhones and iPads to work. As a result, workplace policies governing HR tech and social media use will continue to evolve, according to Bersin, Lister and other HR industry analysts, consultants, technology vendors and experts who shared predictions for the new year with Workforce Management.

Industry watchers foresee an uptick in merger-and-acquisition activity as major human-capital management, or HCM, software vendors play catch up with competitors such as Workday—and now SAP—who’ve been quicker to offer a cloud-based, software-as-a-service, or SaaS, delivery model. In many instances, the pay-as-you-go cloud approach is seen as better, faster and cheaper than the traditional on-premises approach of installing software on company computers, buying a permanent license for programs and paying annual maintenance fees.

What’s more, after years of holding back on spending because of the recession, 2012 will also see companies buying more HR technology, experts say. Global HCM software spending was expected to grow 6.6 percent in 2011, to $6.4 billion, and hit $8.1 billion by 2015, according to Lisa Rowan, HR, talent and learning strategies program director for industry researcher IDC.

“If anything, I think the pace of change will only accelerate,” says Steve Boese, talent management strategy director at Oracle Corp. and a host of the popular “HR Happy Hour” Twitter chat. “Organizations that can move quickly to take advantage of changing conditions, supported by more nimble HR solutions that can source and attract talent, mobilize talent more rapidly, and quickly align people with opportunity will have the upper hand against their competition.”

Here’s a roundup of HR tech predictions for 2012:

Mobile devices gain ground. IPads, iPhones and their rivals will continue an aggressive march into the workplace and the HR department. Software vendors will continue to work to make their applications run on the devices. “Mobile is still in a defining phase for HR, and in 2012 I expect to see most of the major HR technology-related products introduce mobile-friendly content and user experiences,” says Elaine Orler, president of Talent Function Group, a San Diego talent management consultant.

Cloud-based and mobile apps gain ground. Cloud-based software and mobile apps are starting to be available for almost every aspect of HR, including finding job candidates, keeping tabs on field-service crews, running payroll and managing the entire department. But major corporations are still calculating when to switch, says Jim Holincheck, a managing vice president at Gartner Inc. and head of the firm’s HCM software practice. Since the beginning of 2010, Holincheck says he’s personally talked to 200 clients about upgrading from on-premise or other legacy HCM to cloud-based systems. “Not all of them will switch, they still need money to do upgrades. But clearly the momentum is in that direction,” he says.

Social recruiting gets serious. 2011 brought so much buzz about using Facebook, LinkedIn and Twitter to source candidates, some companies seemed to forget there was any other way of finding prospective hires. The craze will continue, bringing more users to a new generation of recruiting apps, including apps that live inside Facebook and other social networks. “How organizations choose to tackle it is still under construction, but the reality is, it is a shift in the way we need to attract talent,” Orler says. Companies having a hard time finding qualified candidates for open positions will lean more heavily on social recruiting to fill that gap. Forward thinkers will follow the lead of early adopters such as Taco Bell Corp. that hired social media specialists—with or without previous HR experience—to spearhead social recruiting efforts.

Companies get real about mobile and social media policies. Companies that haven’t already adopted a “bring your own device” policy will need to decide where they stand. And they will have to let go of overly restrictive policies governing what devices and apps employees can or can’t use, especially where Facebook and other social networks are concerned. “The reality is, if it’s meeting a business need, people are going to find ways around restrictions,” Holincheck says. Companies already are at risk of losing millennial employees to nontraditional pursuits, and onerous HR policies could be the nudge that pushes them out the door, says John Sumser, the longtime HR technology analyst and editor of the online-only HR Examiner magazine. “Ultimately, the idea that a social-media policy needs to be longer than two words—respect others—will be understood as the last gasp of the old way of managing things,” he says.

The virtual workplace edges closer to mainstream. More companies will embrace mobile workers, whether they’re telecommuting or part of virtual work groups housed at shared co-working facilities. Even large organizations will show more of an interest in using co-working facilities. “It’s reached beyond the ability of a freelancer finding a space to work for a day,” Chris DiFonzo, CEO of OpenDesk Inc., a startup website that matches co-working spaces with companies looking for desk space. “Everyone’s trying to figure out how to apply it in their own organization.”

Online tools connect far-flung workers. As the workplace goes virtual, look for increased use of video job interviews and videoconferencing, which is dropping in price. Collaboration software, such as Yammer, Chatter and Jive and other online tools that enable the virtual workforce to get the job done are also on the rise. However, training to help office-bound managers lead employees they don’t see in person on a regular basis will continue to lag technological innovation.

HR technology spending increases. After a recession-induced spending diet, companies will once again start budgeting for HR software upgrades. But don’t expect across-the-board increases. Rather, large companies that haven’t updated HCM systems in a decade or more will shell out for critical upgrades, says Keith Strodtman, HR services consultant with HfS Research in Minneapolis. “The emergence of SaaS and the promises it brings coupled with an increased awareness of the importance of better talent management processes is going to drive an increase in technology spend as companies think about how they’ll maintain a competitive edge,” Strodtman says.

SAP’s SuccessFactors purchase sets the stage for more high-profile deals. In the aftermath of SAP’s $3.4 billion bid for SuccessFactors, HR industry analysts talk about similar deals not in terms of “if” but “when.” Popular predictions are that the deal will prompt Oracle to buy talent management market leader Taleo Corp. or that Automatic Data Processing Inc., better known as ADP, will add Cornerstone OnDemand to a growing menagerie of acquisitions. Big players will continue to buy startups for their research and development. Private equity firms with portfolios built around HR tech vendors could add to their holdings. “The medium-sized companies of $10 million to $200 million are buying the small ones to stake out enough territory to survive the onslaught of Oracle and SAP,” Bersin says. (For more on what’s happening with major HCM vendors, see “HCM Vendor Scene Heats Up.”)

HR departments dig deeper into analytics. Using analytics to measure workforce productivity, social-recruiting success rates or other HR initiatives isn’t widespread, but that’s changing. That’s because lack of HR analytics is hampering companies as they try to roll out other technology innovations. For example, a global Fortune 100 company Stodtman knows delayed starting a program last year to give workers credit cards for buying supplies because it didn’t have a basic employee system of record. “The HR leader was embarrassed and concerned that they [couldn’t] identify where employees lived and what they did,” he says.

Online rewards and recognition systems gain clout. Current performance management practices are broken—hence the almost constant cry from HR bloggers for an end to traditional performance reviews. More vendors are offering interesting alternatives, including social media-style rewards and recognition programs, says Sumser, the HR tech analyst. But don’t expect too much too soon. “We’re still a couple of years away from real insights here, but the players will get louder as their investors clamor for profitability,” he says.

Michelle V. Rafter is a Workforce Management contributing editor based in Portland, Oregon. To comment, email editors@workforce.com.