Tighter labour market drives greater HR app adoption

While HR applications have been around for a long time, they were never considered a big IT priority – until now.

Talent management suites are emerging as C-level executives become increasingly concerned about attracting and retaining talent in a tightening labour market.

The HR or IT department tends to drive the deployment of organization management applications, but the drive behind talent management is coming from above.

“It’s not really a pain point for HR, but it’s very much a pain point for the C-level suite,” said Tak Kusano, vice-president of global alliances with Nakisa Inc., a developer of workforce management software based in Montreal.

In the West, the oil and gas business is booming, and there aren’t enough people to fill all available positions. In the technology industry, it’s predicted there will be a shortage of skilled workers in the next few years.

“The demand is just unbelievable out there, not only in the Americas,” said Kusano. “There’s a growing demand in some markets where perhaps we wouldn’t expect it, like India and China where they’re growing so quickly, there’s a dearth of quality people.”

SAP AG has partnered with Nakisa to sell its visual workforce management solutions as part of its overall suite. Nakisa’s software integrates with SAP ERP Human Capital Management, so users can graphically view and modify talent inventory and align talent goals with business strategy.

Nakisa has been a long-time SAP partner, holding its highest levels of certifications, and SAP is also a Nakisa customer.

“There is a tightening of the labour markets worldwide, even in Canada,” said Harry West, product management director for SAP Human Capital Management. “Business continuity and succession planning is seen by shareholders as very important, and that’s going to continue to drive spend in this area.”

HR has historically been low on the IT spending priority list, but now that spend is growing, he said, because it’s become a C-level concern. “It’s not about HR, it’s about being competitive, and in many businesses and industries, if you can’t identify the most pivotal roles in your organization and protect them and reward those people, you’ll get beaten by your competitors,” he said. Nakisa has no business processes around its product, nor does it have a database behind it, said Kusano, and that’s how it differentiates itself from the more than 200 vendors playing in this space. Customers have already made a multi-million dollar investment in their SAP infrastructure, he said, so Nakisa pulls this data together from different sources and provides a single interface.

“The Nakisa applications have a composite nature to them,” said West. “They make use of the data that our customers have built up over the years that’s sitting inside SAP already, and they make that data actionable for decision-makers.”

Typically a talent management suite includes a set of connected applications, such as recruiting, applicant tracking, performance management, compensation management, training and developing and succession planning.

“Talent no matter what industry we’re talking about is a very hot commodity,” said Morgan Chmara, research analyst with Info-Tech Research Group. “Ensuring alignment between talent and a business’s strategy is what in the long-term produces substantial improvement and ultimately affects the company’s bottom line.”

The strategy also saves the cost of hiring new employees. The Society of Human Resource Professionals found in a study last year that companies spend an average of $4,700 for each new employee they have to hire. These costs include the time spent by recruiters and managers and time spent training new hires. “That’s a very high number considering that’s on a per applicant basis,” said Chmara.

Holding on to core talent is becoming increasingly important as baby boomers retire. Many of these boomers hold influential executive roles, so organizations want to make sure they have someone to come in and take over – and get the training while the boomers are still available.

HR departments are becoming less administrative and more strategic, and we’re seeing HR play more of a role in the long-term strategy of an organization by finding talented individuals, getting them on board, and ensuring they grow – and don’t leave the company. “Talent shortages or the fear of talent shortages appears to be the main push behind this,” she said.

A lot of vendors are coming out with talent management solutions, from smaller, niche vendors that focus on one aspect of talent management to suite vendors like SAP and Oracle that offer talent management as a piece of their enterprise-wide solution.Chmara said software-as-a-service offerings are also starting to appear in the space.

Organizations should make sure they know what they need; both now and in the future, said Chmara. This, she said will allow businesses to quickly rule small, niche-focused vendors.

“If you want something you can grow into, you might be out of that first tier of vendors and looking at some of the pure play and suite players,” she said.

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