Today’s HCM platforms are leveraging AI, analytics, and the cloud for better results.
By Pete Tiliakos
As digital disruption continues to create waves of change across all major industry sectors and companies pivot to remain competitive, HR leaders are tasked with supporting large-scale strategic shifts. Most CHROs are facing the significant task of aligning their human capital to support these critical initiatives—and they are doing so in an increasingly complex environment where the workforce is more diverse, globally dispersed, and operating in a rapidly changing digital economy.
Cloud technology is currently at the heart of this digital transformation. More and more, HR leaders seek to leverage technology to transform operating models and support strategic initiatives by attracting, developing, and retaining top talent, increasing the demand for cloud HCM platforms.
In response, HCM platform vendors are evolving to deliver next-generation digital capabilities across their platforms that are specifically designed to support the changing workforce, increased competition for top talent, and shift to a talent-focused culture.
Key Elements of Next-Generation HCM
Next-generation HCM platforms are offering the following features to help organizations stay competitive:
- Cloud-based applications with a consumer-grade user interface and a user experience that provides a consistent experience across a variety of devices.
- A single platform with one database that is tightly integrated across modules for a seamless UX.
- Modules with the capability to support the entire employee lifecycle.
- Real-time, embedded, predictive, and prescriptive analytics with the ability to integrate with external data for comprehensive business insights.
- Intelligent technologies like artificial intelligence (AI) and machine learning that support a more guided, personalized user experience.
- Open platform approach with third-party integrations to key business applications.
A prevalent theme in today’s next-generation HCM solutions is their relentless emphasis on user experience. Legacy enterprise resource planning (ERP) applications were primarily designed for the business. In fact, many weren’t able to suit HR’s needs beyond data management and compliance. But today’s HCM platforms are being designed specifically for HR and with a user-first mantra, making them vastly more user friendly and engaging. This is something that HR leaders see as key to competing for top talent, as today’s workers desire a consumer-grade experience that rivals their personal lives and enables active, collaborative use.
In addition to the user-first focus, HCM platforms are increasingly infusing intelligent technologies throughout their modules. AI and machine learning also help enable a more personalized, guided, and prescriptive user experience. This helps empower workers to own their HR data, actions, and career needs in a manner that promotes accurate, timely, and complete transactions. This decreases reliance on HR experts and leads to improved engagement with the HCM platform for the entire organization.
With companies of all sizes keenly focused on improving talent management capabilities, demand for talent modules within HCM suites that enable recruiting and onboarding, learning management, performance management, and succession planning is rapidly rising. As a result, HR can expect end-to-end talent management capabilities that are supported by predictive and prescriptive analytics. These capabilities improve actions, including making hiring decisions; providing career development guidance; tracking on-the-fly performance interactions and providing recommendations; and proactively assessing employee engagement and well-being.
But possibly the most sought-after feature is advanced analytics reporting. With HR historically maintaining some of the most underutilized data in the organization, the ability to access that data in a meaningful and actionable way is critical for businesses that seek to become more talent focused. NelsonHall’s research finds that the analytics capabilities of today’s cloud HCM platforms are commonly at the descriptive level, with platforms rapidly moving toward the predictive level as the norm. According to the research, over 90 percent of platforms have predictive capabilities or plans to launch them within the next 12 months, with nearly 40 percent offering benchmarking capabilities as well.
What’s Next for HCM?
While cloud HCM offerings today are quite robust and packed with technology and functionality that eclipses their predecessors, vendors are clearly focused on pushing the innovation envelope even farther. NelsonHall reports that HCM technology platforms are investing 20 percent of their revenues on average into research and development. Some of the key innovation focus areas moving forward will include:
- An open platform approach. While all platforms currently offer robust integrations that connect critical business applications to the HCM platform and extend its capability, the demand for more options for connecting solutions, services, and applications is high. Currently, about half of HCM providers limit the option to build and connect applications to only their clients and partners, and about half have extended this to include third-party providers as well. An open platform approach will become standard, allowing clients, partners, and third parties to connect their applications for consumption through a marketplace app store style delivery system.
- Prescriptive analytics. With most platforms’ analytics offerings currently at the descriptive and predictive level, and with more advanced platforms already pushing toward prescriptive capabilities, the next wave of analytic reporting will focus on prescriptive as a standard. The new generation of HCM platforms will guide user interactions and help leaders make informed talent management decisions based on analytic trends, benchmarks, and forward-looking recommendations that pull from historical and predictive data.
- Natural language processing. Regarding intelligent technologies, the next wave of innovation will focus on the use of natural language processing (NLP). NLP is an advanced technology that combines AI and linguistics to allow computers and their users to communicate through conversation. While many platforms offer chatbots, NLP is still in its infancy in HR, with NelsonHall reporting that currently only about 10 percent of HCM platforms feature NLP capabilities. However, the sky is the limit with NLP as platforms seek to develop conversational HR experiences where users can communicate actions or requests to the application through speech. This will take the user experience to the next level in terms of ease of use and effectiveness.
Pete Tiliakos is principal analyst, HRO for NelsonHall.