Gone are the days when evaluating whether to adopt a cloud-based or on-premise human capital management (HCM) suite was one of the key considerations as cloud migration has now become the dominant trend, says Gartner®.

In fact, Gartner®, a company that delivers actionable, objective insight to its executive and their teams, believes that by 2025, three out of five global mid-size and large enterprises will have implemented cloud-based HCM systems to undertake administrative HR and talent management.

“As buyers look to replace on-premises systems, reduce integration challenges and provide a consistent employee experience, the appeal of HCM suites continues.”

However, they do not always offer the full breadth and depth of functionality that individual employers require. Therefore, Gartner points out in its ‘Market Guide for Human Capital Management suites’ report that, “Where functionality provided by HCM suite vendors doesn’t fulfill a customer’s requirements, they will need to either purchase specialized point solutions or extend the functionality of the suite through PaaS tools. Customers go outside the suite most often for benefits administration, learning management, workforce planning and HR service delivery.”

Another popular option will be to introduce Platform-as-a-Service tools to customise and extend the suite’s existing functionality. For example, the so-called ‘Great Resignation’ is leading to higher demand for better integration with third party applications in niche or poorly-catered-to areas, such as the voice of the employee, reporting, analytics, and career and succession planning.

Given the hundreds of vendors in this rather fragmented market though, finding the right solution is not always as straightforward as you might think. Here are three important things we think you need to consider when choosing your HCM suite and vendor, based on the report by Gartner.

1. The differing factors of each vendor

Evaluate which vendors are the most appropriate for your needs by considering a number of important factors: what is the average size and complexity of their customers, what experience do they have in industries and geographies that are relevant to you, and do their functional and technical foci align with your requirements?

Other considerations include their long-term financial viability, the size of their installed customer base, the additional products and services they offer, and their future vision. But vendors also vary in terms of whether they localise their products for a single country or region, or on a global basis – an important consideration if you plan to expand globally in the future.

2. HCM suite vs best of breed products

Each vendor’s product sets have their own strengths and weaknesses in comparison to their competitors. As a result, during the vendor evaluation and selection process, it is important to assess which are the best fit with your own requirements and priorities.

“Decide which functional modules benefit from being delivered in a suite, and which ones are best managed in point solutions. Do so by mapping out options and weighing the cost of managing integrations to meet the HR transformation vision against the value delivered by additional point solutions.”

3. Total cost

HCM suites typically vary between £4.00 and £23.00 per employee per month and also per module, based on the size of the organisation and vendor involved, plus the scope of the initiative.

“HCM suite vendors serving large-enterprise and multinational customers tend to rely on third parties for system implementation, which often results in higher deployment costs versus HCM suite vendors that offer their own implementation services.”

As a result, it is important to consider price as a major selection criteria because budget issues can rule out some larger vendors immediately. It also makes sense to negotiate with at least two vendors to ensure you get the most competitive deal.

To find out more, download the full report called ‘Market Guide for Human Capital Management suites’ from Gartner here.

*Gartner, Market Guide for Human Capital Management Suites, Sam Grinter, Ranadip Chandra, Ron Hanscome, 20 December 2021. Gartner is a registered trademark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.*