HR Tools To Tackle Top Tech Demands

While the general view is that most businesses have installed a human resource management system and the market is saturated, Hagel says he still runs into prospects that have no HR system.

The $3 billion market for human resource/human capital management software (based on license and software-as-a-service subscription revenue) is growing 7 percent annually according to a Forrester Research report last year. Sales of core human resource management system software, including payroll, benefits management, and time and attendance applications, account for about one-half of the total market and are growing only around 3 percent a year, says Hamerman.

But sales of apps for recruitment, learning management, compliance and performance/talent management are growing more quickly -- 20 percent for the latter.

Open Season
No one vendor has a lock on the HR application market. Oracle with its Oracle E-Business Suite and PeopleSoft applications and SAP with its mySAP ERP Human Capital Management are major players. NetSuite debuted its on-demand NetSuite Employee Resource Management apps in December. Ultimate Software is the biggest pure-play HRMS software supplier, according to Forrester, but it doesn't sell its on-demand applications through channels. Particularly popular with VARs are Sage Software's Abra HRMS, which Forrester says is the leading HR system for companies with fewer than 1,000 employees, and Microsoft's Dynamics ERP applications that include HR capabilities.

"PeopleSoft is probably our biggest [HR application] seller," says David White, VP of client strategy and enablement at Beacon Technologies. But the Madison, Wis.-based solution provider also resells Microsoft Dynamics GP and open-source HR applications from Compiere. Beacon, in fact, uses Compiere for its own human resource management chores and has been recommending it to customers more frequently because of its flexibility. "It's very competitive with commercial packages like PeopleSoft, particularly if the customer is doing heavy customization," White says. The company also uses FlashRecruit, an open-source job posting and applicant tracking application.

For solution providers too small to use an enterprise-class HR system, there's no shortage of options, including SimpleHR, People-Trak and Administaff's HRtools.com. For midsize companies there are software-as-a-service HR management applications from WorkDay (started by PeopleSoft founder Dave Duffield) and Employease (acquired by payroll processing giant ADP last year).

While the market for core HRMS applications is strong, the real action is in what Forrester calls "strategic" HR applications: Performance and talent management applications for employee performance evaluation, succession planning, and compensation and rewards management; recruiting applications for applicant tracking and new-hire processing; and learning management applications for employee training administration.

It's no surprise such capabilities are in demand given the difficulty businesses " including solution providers " have finding job candidates with critical technical and business skills.

"We're just constantly looking," says Bacon at Remy Corp. A 2006 report from industry research firm Computer Economics found that 40 percent of nearly 200 company executives surveyed said that IT recruiting was either "much more" or "somewhat more" difficult compared to just one year earlier. And the median cost of recruiting a new IT employee rose to $5,000 from $3,000 in 2005.

Solution providers, like all companies, also need help retaining IT employees. A survey of nearly 1,000 IT workers last August by the Computing Technology Industry Association found that 58 percent were looking for new jobs. Many were looking for higher pay, but two-thirds of the surveyed tech workers also cited the lack of opportunity for advancement in their current job. And seniority is no guarantee of loyalty: Nearly 60 percent of those looking for new jobs had been with their current employer for three years or more.

To provide help with recruiting and retaining IT workers, Oracle and SAP have been expanding their core enterprise HRMS software to include talent management applications. In January Oracle unveiled PeopleSoft Enterprise Human Capital Management 9.0 with recruiting, performance management, employee development, and competency management capabilities. SAP's ERP Human Capital Management suite includes applications for managing employee performance, succession and compensation; the SAP Learning Solution for managing training programs; and the E-Recruiting system for employee recruitment.

NEXT: Consolidation among some players.