Organizations adopting cloud solutions realize measurable business value.
The human resources sector has been witnessing a strong demand for HR technology over the past few years. However, organizations could not move to cloud and SaaS as quickly as they wanted to due to several reasons. However, last year, the COVID-19 pandemic pushed HR organizations to accelerate the shift to cloud and SaaS solutions.
According to ISG’s 2021 Survey On Industry Trends in the HR Technology and Service DeliveryOpens a new window report, 46% of HR organizations used either SaaS or hybrid solutions in 2020, up by 26% compared to 2018. This is also higher than what was predicted in ISG’s 2019 survey (41%). Further, 57% of organizations expect to use a SaaS or a hybrid solution by 2023.
ISG surveyed 260 companies across key geographic regions worldwide. The report analyzes how the HR technology market trends are evolving. According to the survey, the most critical outcomes organizations gained or expected to gain from adopting SaaS solutions are improving user experience, reducing IT dependency, reducing HR administration costs, and improving data and applications integration. Coming out of the pandemic, organizations also expect SaaS solutions to help them support the virtual workforce, engage employees better, improve productivity, and enable a more agile model for HR.
Also read: IT Leaders Are Reimagining Workforce Tech Experience To Be Future-Ready, Reveals New Study
More Organizations Achieve Business Value From SaaS
The ISG report found that more HR organizations that adopted SaaS solutions achieved measurable business value in 2020. In fact, 64% of respondents said they achieved business value in this year’s survey compared to 41% in the previous year’s survey. Organizations achieved significant improvements in terms of productivity and cost savings. 37% of respondents achieved more than 20% HR cost savings. Only 10% of the respondents said that they had either spent more or achieved no savings. Further, 61% of the respondents achieved more than 10% savings in technology operations, maintenance, and support.
HR Technology Enabled Organizations To Respond During the Pandemic
Many organizations that invested in HR technology could utilize these tools to react and manage priorities effectively through the tough times due to the pandemic. A few primary ways these technologies brought value included:
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- Enabling real-time, data-based decision-making
- Monitoring performance, productivity, and engagement
- Fostering connections and collaboration with employees
- Streamlining workflow and enabling remote working
- Enabling virtual recruiting, onboarding, and offboarding
Many HCM solutions also quickly added specific functionalities during the pandemic to track the cases, comply with new payroll legislation, and manage return to work.
Organizations Prioritize Experience Suites for Their Future Investments
Respondents of the ISG survey were asked to rank their highest priorities over the next two years for their IT investments. Experience suites, including knowledgebase, HR portal, and case management solutions, emerged as the top investment areas for several organizations. This was closely followed by HCM (SaaS) and analytics/reporting solutions. An interest in the experience suites indicates that organizations are looking for solutions that can help them unify the end-to-end employee experience, support a more effective HR delivery model, and further enable self-service.
Besides these investment areas, organizations have started treating employee wellness as a foundational area. With increased anxiety and stress levels during the pandemic, many organizations realized that employee health is a critical area that they should address. About 28% of the organizations surveyed considered this as a top investment area over the next two years. Robotic process automation (RPA) is an investment area that has started to gain priority to achieve HR efficiencies. Interestingly, the adoption of artificial intelligence (AI) and cognitive technologies remains low.
Also read: How Is HR Tech Market Evolving During the COVID-19 Pandemic?
Organizations Have Moderate Success at Maintaining HR Technology Roadmap
The ISG survey analyzed the HR technology environment maturity in companies and how the technology adoption, optimization of HR processes, and the associated service delivery implications affect organizational capability. The survey found that most organizations have moderate success at maintaining an HR technology roadmap, aligning the technology strategy to organizational objectives, and leveraging technology to respond to business needs. An organization having a three-year technology roadmap is more likely to incorporate new technologies, review and take advantage of new functionality, and achieve measurable results.
Further, approximately two-thirds of organizations have had some success in driving material process harmonization, efficiency, and compliance across the organization to date. ISG also found a strong correlation between an organization’s success at aligning its service delivery model and processes with its new HCM platform and its ability to achieve business results. With the speedy shift to SaaS, several organizations could consolidate disparate technology into a single source of HR data. ISG found that analytics are increasingly being embedded as part of the HR process.
Also read: 6 Tools Companies Should Invest in To Transform Employee Experience in 2021
After a year of massive changes and uncertainties, organizations are moving forward at a rapid pace toward HR SaaS. Many have also achieved measurable value in the form of productivity, and HR and IT cost savings. Given the benefits organizations are realizing through HR technology, we can expect a continued vigor in the investments over the next few years.