Finding skilled workers is hard, retaining them is expensive – both are activities where most industries spend the overwhelming majority of their cash.
On the technology-spending front, the Human Capital Management (HCM) software market is expected to grow at a compound annual growth rate (CAGR) of 2.4% to reach $9.2 billion by 2020, according to Market Research Media.
More optimistically, IDC forecasts the worldwide HCM market to reach $15.4 billion in 2018, growing at a CAGR of 8.2%.
Topping all predictions, TechNavio's analysts forecast that the global HCM market will grow at a CAGR of 10.05% over the period 2012-2016.
Trends impacting today’s human capital management (HCM) strategy and operations include an increasingly global workforce, multigenerational workers (from Baby Boomers to Millennials), ubiquitous mobile and social connectivity, a mix of full-time, part-time, flextime and contingent workers, rising healthcare costs, an increasingly complex, dynamic and geo-varied legal environment, and a greater demand for work/life balance – to name just a few.
In light of these trends, companies are paying very close attention to what their workforce will look like in 3 or 5 or 10 years, and they are taking action with HCM deployments and enhancements to ensure their success in the increasingly heated and vital battle for talent.
Taking HCM to the cloud
A key trend in HCM is the adoption of cloud-based solutions in order to reduce costs, accelerate business transformation, and create new business value. A report from Research and Markets forecasts the global, cloud-based talent management software market to grow at a CAGR of 17.59 percent over the period 2013-2018.
Forrester customer surveys show that HR (and CRM) top SaaS applications for the enterprise, and a slew of new, cloud-based applications for talent management needs automate functions such as eRecruiting, goal and performance management, on-boarding, succession planning and workforce analytics – all without having to run complex HR systems in-house.
HCM is a central component of SAP's Cloud push – as evidenced by high-profile acquisitions such as SuccessFactors for Core HR and talent management and Fieldglass for contingent labor management.
To be sure, growing HCM needs and the inability of disparate, legacy point solutions to meet today’s challenges is driving the demand for holistic, integrated, cloud-based HCM solutions.
But while the future of HCM is in the cloud, but not everyone is moving there at the same pace.
Many SAP HCM customers want to continue to run their core HR system on-premises while adding cloud-based edge apps such as talent management, recruiting, learning management and workforce analytics.
According to Nucleus Research, the HCM market continues to evolve from one dominated by point solutions for core HR, talent management, recruiting, and learning to one where vendors compete based on a holistic approach to the employee lifecycle.
Nucleus also reports “Users are increasingly looking for a single vendor solution that cuts across functional areas and eliminates the manual handoffs between recruiting, performance, time management, compensation, and more with a single employee system of record at the core.”
SuccessFactors, which SAP acquired in 2012, provides a leading cloud-based Human Capital Management (HCM) Suite, and has been recognized by Forrester, Gartner, IDC, Nucleus, and Ventana Research as a Leader in various HCM categories.
SAP’s acquisition of Fieldglass extends its cloud-based HR offerings across the permanent & contingent workforces.
A hybrid approach to HCM
SAP offers a wide variety of HCM applications that can be deployed on-premise, hosted, or in the cloud. While the company continues to support its original ERP-based solution for core HR, workforce management, and talent management, it provides a full suite of HCM applications in the cloud consisting of core HR and payroll, HR analytics, workforce planning, recruiting, on-boarding, learning, performance and goals, compensation, and succession and development.
In an interview with Diginomica, Mike Eddling, SAP’s new global head of cloud and on-premise HR solutions, notes that approximately 18,000 customers worldwide use cloud solutions from SuccessFactors and the SAP ERP Human Capital Management solution.
Eddling points out that that while 14,000 of these customers currently use SAP’s on-premise HR solutions, the cloud-adoption trend among HR organizations is well underway.
According to SAP, SAP ERP HCM integration to SuccessFactors can be accomplished in as few as 4 – 10 weeks.
And SAP partners with the requisite experience and expertise are leading the way, quickly and easily creating a hybrid HR environment that combines both on-premise and cloud-based software.
SAP’s rapid-deployment solution for SAP ERP HCM integration to the SuccessFactors Business Execution (BizX) Suite can help automatically transfer HR data – including basic employee, compensation planning, and workforce analytics data – to the cloud.
And SAP Best Practices and SAP Rapid Deployment solutions help customers transition into the cloud with hybrid integration scenarios to retain the value of prior investments on premise while expanding and innovating in the cloud. They help with new cloud deployments and support data migration to the cloud.
For our part, NTT DATA has invested heavily in pre-configured templates with built-in best practices, project accelerators, data migration tools, bundled offerings and HCM specialists that allow our clients to significantly decrease HCM implementation timelines and costs.
Understanding that customers need to realize maximum value from existing investments, we specialize in guiding our clients through their complete HCM journey – from on-premise to hybrid to pure cloud delivery.
Contact NTT DATA to learn how we can migrate your HCM to the cloud in a way that makes the most business sense for your organization.