The Human Capital Management (HCM) software market has hit something of a milestone, with the technology now having reached “early mainstream maturity”, according to Gartner® .

Large employers are increasingly adopting cloud-based application suites in order to manage their progressively complex business needs, which range from core HR administration, including payroll and self-service, to talent management and workforce management.

For those organisations thinking of going down a similar route, here are three important things to know:

1. Cloud-based HCM suites are set to become the default

According to Gartner, “by 2025, 60% of global midmarket and large enterprises will have invested in a cloud-deployed human capital management (HCM) suite for administrative HR and talent management”. The aim for employers in many instances is to consolidate their disparate HR systems, and in doing so, boost process efficiency, enhance how they they manage their data and improve the employee experience.

This means those companies that fail to bite the bullet due to a belief that HR is not mission-critical – despite the lessons of the pandemic – will end up in the minority.

Those that choose to embrace this technology, on the other hand, will inevitably gain access to new innovations and functionality, augmenting organisational competitiveness in the process.

2. Integration is inevitable

Companies have always experienced something of a trade-off in HR technology terms, with most either opting for a consolidated software suite that attempts to cover all their requirements – with varying success – or going for multiple, specialised applications that are hard to integrate.

With Gartner expecting employers to continue having to “source 20% to 30% of their HCM requirements via other solutions due to gaps in functionality”, this trade-off looks set to continue. Therefore, a new approach is required: plugging functionality gaps by improving the ability of their HCM solutions to integrate with other more specialised third party applications.

What this means is that finding an HCM partner with a strong integration roadmap and wide range of integration options in the shape of application marketplaces will become increasingly vital to future success.

3. Adaptability will be key to success

The pandemic, coupled with the growing complexity of the world of work, has resulted in resilience and adaptability rising to the top of the business agenda. Cloud-based HCM suites play a critical role in this context in not only ensuring ongoing service availability and performance, but also enabling organisations to adapt to changing business and employee requirements.

As a result, an approach based on a simply ‘set it and forget it’ mindset is no longer enough. Instead employers need to work closely with their HCM solutions providers to continuously improve their performance by taking advantage of new technology, implementing the latest integrations, and developing a strong data strategy.

Doing so ensures they can become truly “composable enterprises”, a term coined by Gartner to describe those organisations that are constantly able to adapt to change by employing agile, flexible and scalable technology and processes – a strategy that ultimately puts them on the path to success.

To find out more, download the full report from Gartner, ‘The Future of Cloud HCM Suites’.

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Gartner, The Future of Cloud HCM Suites, by Sam Grinter, Ron Hanscome, Helen Poitevin, John Kostoulas, Chris Pang, 22 May 2020