Transcript
Mark:
Welcome to PeopleTech, the podcast of the HCM Technology Report. I’m Mark Feffer. My guest today is Brent Skinner, co-founder director, and principal analyst for HCM at 3Sixty Insights. Not long ago, he kicked off a discussion on LinkedIn to consider the pros and cons of full suite HCM technology versus single point solutions. I’ll ask him to expand on that, and we’ll look at how employers can navigate the question, what it means for small businesses, and the dangers of trying to be all things to all people on this edition of People Tech. Hey, Brent. It’s good to see you as always. Now, you had an interesting post on LinkedIn not so long ago. You were looking at the use of single suite platforms versus multiple suite platforms. Can you recap what you said?
Brent:
Let me see if I can recall that particular LinkedIn post as best I can, as I’m posting all the time, but I will say that this one was pretty interesting. There’s been a sort of pendulum swinging back and forth for many, many years. Honestly, probably longer than you or I have been in this space, HCM technology. We’ve gone through phases where the vendors, and maybe even the potential buyers, think, “Yes, let’s go with one suite to cover as much of HCM as possible.” Moving toward one suite to do that. You could actually make the argument that there’s been similar lurches toward, “Let’s do everything on the enterprise with one suite from one vendor,” right? But let’s keep this scoped to HCM for today’s conversation. Then the pendulum is moved in the other direction.
Look, you can’t be all things to all people. You’ll need point solutions, maybe many of them. Best of breed for various things that you do in HCM, and the best you could possibly really hope for is maybe sort of doing your payroll, possibly your WFM, your workforce management, excuse me, and your core HR with your foundational vendor, and then bringing in point solutions for all the rest. I would say maybe those are two extremes. I think what we’re seeing is that the move to be all things to all people, the move to have full suite HCM deployments be sort of the norm, and sort of busy HCM technology stacks being sort of the acceptant to the norm, I don’t think that’s going to happen. The research out there is saying, whether you look at Gartner or Sapient Insight… If you look at Sapient Insights, I forget the number, but it’s over a hundred.
Excuse me. If you’re an enterprise size organization, you may have as many as a hundred different applications in your enterprise stack. This sort of, in Gartner, is predicting that there’s going to be more points solutions, not fewer in the future. In HCM, specifically. I think we’re moving toward a world where full suite HCM, sort of the vision of a full suite HCM is maybe… I don’t want to say it’s on the wane, but I think it’s not going to be across the board as people might have thought a few years ago.
Mark:
Well, it’s funny. Josh Bersin said, I think a few years ago, that pretty much everybody was going to adopt the multi suite approach, the point solution approach. So, what’s your thought? Is there anything you can add to that?
Brent:
I think he’s absolutely correct. That was a really good prediction, and that’s why he’s Josh Bersin. But I’ll say that in terms of it adding to that, well, I think I may just have done that a minute ago. But I will say, as advice I would say, organizations need to plan for this future to be ready. There is not going to be a one HCM suite for most of your needs in the future. You’re going to be piping in lots of point solutions. You need to be ready for that, and that means being ready to handle the integrations, being ready to grill your potential vendors of various technologies for your HCM technology stack. For what their approach to integration is and these sorts of things, because cloud integration point to point API, that sort of stuff, is actually not all solved. Integration in the cloud is better than it was with on-premises solutions, but it’s definitely not solved. As you might have heard, as people might have heard out in the industry chatter, it’s definitely not solved yet.
Mark:
In terms of implementation, is it more difficult? Is it more expensive to implement a multi suite solution?
Brent:
Well, depending on how you approach it at the outset. I would say if you approach it with sort of a limited understanding of what it really entailed in cloud to cloud integration over the long run, then you are setting yourself up for a potentially very expensive future. But if you approach it from the outset with your eyes wide open, so to speak, understanding that point to point API integrations aren’t the end all, be all. It’s certainly better than what preceded them, but understanding that you need an integration strategy, and that you have to really approach it with, I like to say, a zen attitude. Where it’s not something that’s one and done, it’s not something that’s just taken care of at the outset, and you can just set it and forget it. It’s something that you’ll have to tend to over the course of the lifetime of that particular integration. Then you’re setting yourself up for a much more financially manageable situation.
Mark:
So, what about smaller companies? Isn’t it simpler for them to just implement and worry about a single solution [inaudible 00:06:53]?
Brent:
Yeah, yeah. I’m glad you asked that question. This gets into the going down the rabbit hole a little bit, right? Just as there’s not going to be a one sort of HCM suite competitors of full HCM suites that are vying for everybody’s business in the future, there’ll be a lot of point solutions. That’s too much of a simplified sort of look at it. It’s also too much of a simplified look at it to say that, “Yeah, there will be.” Nobody will be able to use full suite solutions, so I’m glad you brought up small businesses. This gets into HCM maturity. I’ve seen HCM maturity. I’ve seen it defined, and the phases of it defined differently, but let’s just say that, generally speaking, when you enter into your journey to HCM maturity, you’re starting at a point of solving for the basics of HCM.
You just want to get something down there. You want to get a take down on vinyl, right, so you can do everything that you need to do in HCM. That may very well entail everything from payroll, obviously through time and attendance, scheduling, benefits administration, core HR. All that kind of stuff. All the way through performance management to talent acquisition, and a few other things, right? Your needs are basic, they’re fundamental. They’re very much operational HR, you’re solving for that, and there are plenty of solutions out there that can definitely fit the bill. isolved is one, UKG Pro is another. Paylocity. There’s just a slew of different vendors out there that provide an end-to-end suite that’s more than viable. That’s definitely very good for a small business that’s realizing, “Hey, we can’t do all this stuff in Excel spreadsheets and email, maybe even PDFs and paper, anymore. We need something. We need to sort of digitize and get to that first level.”
A lot of organizations, frankly, they kind of stay there for a long time. For a long time. There’s definitely a market for that, both those types of solutions. But then you kind of move along through the phases of HCM maturity, and there’s some middle phases there, but you eventually get to sort of what I’ve seen some vendors describe as full engagement, right? You’re HCM. Now, you’re sort of operating on a very strategic level when it comes to HR and your human capital management, and you’re thinking about not just protecting the employee experience from a basics kind of standpoint, but sort of engaging your workforce and figuring out who the next leaders are. Maybe even in deploying AI, these sorts of new things out there.
This is where these, excuse me, full suites sort of reach their limitations, and organizations find that they need to pipe in various different best of breed, excuse me, point solutions, but if I may just kind of back up again. Let’s say you’re a relatively small company, but you have perhaps a very complex sort of need related to scheduling, for instance. You may still need to pipe in something. Depending on who you use for your full suite HCM, you may still have to pipe in something that can handle that level of complexity with scheduling. There are some AI-based solutions out there, or machine-learning based solutions, such as Legion. Legion is one. There are others in that realm that you might need, or you may have some needs in talent acquisition, for example.
That’s where we see a lot of the point solutions coming in. Recruiting is so complex, and no matter how small the business is, they just need something just a little bit more sophisticated so that they can capture the attention of potential new hires, and bring them through their process, and get them hired before their competition does. I hope that starts to answer that question.
Mark:
Yeah. Well, let me ask a similar question from the other side. I wanted to ask about vendors. What about smaller vendors in the market? It would seem to me that the multi suite approach is going to give them more opportunities, and startups more opportunities. What’s your sense of the dynamics of that? Small companies playing against big vendors, and all of that?
Brent:
I think you’re absolutely right. The reason being is that they’re actually not competing one to one, head to head with the full suite vendors. There’s actually a lot of opportunity for them, because they’re actually just competing with their potential customer’s needs, right? They’re answering that need. One would think that because there are a lot of these sort of established, full suite players out there that the point solutions might have trouble sort of rising above the tin and whatnot, but I think we’ve gotten past the point where they’re combating this, what I think is, a no longer existing predilection for full suites. I think we’ve moved past that, and so they’re no longer combating with that trend or that perspective. The word is escaping me, but the listeners would probably think of the word that I’m trying to think of right now. But in any event, they’ve that moved past that. The users are actually looking for those solutions, looking for those. They have those needs, and they’re finding out that their full suite vendors don’t really have that horsepower to be sort of deep and sophisticated in all areas.
This just brings us to another point, though, that I think is interesting. Well, there’s actually two points I want to make. The first one is that every full suite vendor of HCM technology, of full suite HCM technology. Not every one of them, but most of them. You could probably look at any one of their modules, or areas of their functionality, and say, “That’s where they are best.” They’re good enough in all the areas so that they can provide a suite that works for some cross-section of the market, but they’re really good in that area. We’re seeing, actually, in our conversations with users. We’re always speaking with users here at 3Sixty Insights. We’re actually uncovering use cases where organizations are going to some of the full suite vendors just to pipe in one piece of their functionality. City of Memphis is an example. They have an Oracle HCM cloud deployment for the city of Memphis.
We actually did a case study on that a couple of years ago. But more recently, they reached out to UKG, which, of course, was formed from a Ultimate Software, and also Kronos. It’s the latter of those that’s really interesting here, because they’re actually piping in. They decided to pipe in Kronos, excuse me, UKG for time and attendance for their hourly workers, because they found that they just didn’t have the level of sophistication they needed to handle, say, union workers and all these sorts of things. Or presumably through Oracle HCM Cloud, and so they turned to UKG. Of course, that’s legacy Kronos. Of course, obviously, innovated since the merger of those two companies to be something even better than it was. But as we know, having been in this industry for a while, Kronos has always been known for having a highly capable time and attendance solution capable of sort of handling those union rules and all that kind of stuff.
I think it would behoove most full suite HCM vendors to do a self-inventory, kind of look some inward. Some introspection, let’s put it that way, and say, “Okay. Where are we absolutely the best in our suite,” and then just prepare. Be aware that there’s going to be a ever so slowly, but inexorably dwindling opportunity for full suite deployments, and you’re going to want to sort of bolster that by ramping up maybe your outreach and your prospecting. The sort of stuff around what you’re best at. That’s the first point I wanted to make.
You talked about some of the smaller startups, and this being an opportunity for them. This is sort of just an interesting observation that I had right off the cuff here that occurred to me. It’s unclear to me what, if any, sort of prospects there are for small startup, full suite HCM vendors today. I think if you’re an entrepreneur today, entrepreneur, excuse me, today, and you’re looking to sort of break into the HCM technology market space, I don’t know if I would necessarily do so by trying to start a brand new, full suite HCM technology.
Mark:
Actually, that was my last question.
Brent:
Oh, it was?
Mark:
Yeah.
Brent:
Oh, wow.
Mark:
Brent, thanks a lot. It was great to talk with you, as always, and I hope we’ll talk again soon.
Brent:
Oh, thank you very much. Likewise, Mark. Always great. Pleasure to speak with you.
Mark:
My guest today has been Brent Skinner, co-founder, director, and principal analyst for HCM at 3Sixty Insights, and this has been PeopleTech, the podcast of the HCM Technology Report. We’re a publication of RecruitingDaily. We’re also a part of Evergreen Podcasts. To see all of their programs, visit www.evergreenpodcasts.com. To keep up with HR technology, visit the HCM Technology Report every day. We’re the most trusted source of news in the HR tech industry. Find us at www.hcmtechnologyreport.com. I’m Mark Feffer.
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