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The Human Capital Management Revolution Is Generating HR Changes

While the past several decades have delivered ever more sophisticated capabilities to businesses in the form of software, analytics and transaction processing tools, HR was always a bit of an afterthought.

However, according to Tim Low is the Vice President of Marketing at PayScale, it's a new era for technology in HR. Low points out, “in the past there was the PeopleSoft wave of the 90s and even an ongoing flirtation with 'employee self-service' which was really aimed at getting the employee to do the data entry so HR would not need to hire clerks. And while these systems—often closely tied to financials because the real goal was to get payroll right—provided some benefits, they were mostly administrative, not game-changing.”

As Low and others argue, HR tech is arguably one of the hottest categories in enterprise software right now. For instance, he points to Oracle's acquisition of Taleo, SAP's acquisition of SuccessFactors, IBM's acquisition of Kenexa, and the white-hot $627M Workday IPO .

Here are the reasons Low thinks this is happening:

The Global Economy is now People-Driven: Since the industrial revolution, until about the middle of the 20th century, the economy was characterized by, and focused on, improving production. That meant producing something, generally a physical good.

Today's modern economy has experienced a radical shift. While making things still matters, you've no doubt noticed that your car now comes with a good dose of software and even your coffee can now be purchased by waving your phone at the counter at Starbucks. These products and experiences require more than just production and an efficient supply chain. Increasingly, all types of products are surrounded by, and in fact dependent upon, technology and services to deliver the ultimate value to the customer.

This requires highly skilled people to conceive, design, engineer, market and maintain these new generation of products. In this economy, the ability to attract and retain talent becomes an important competitive advantage. So is the way companies engage with their employees to create a high performing culture, and the way they compensate them to reward the performance that, in turn, drives company success.

The Cloud Really is Good for Businesses: Everyone has heard of the cloud. It is a popular word and concept this that is discussed in business settings, not just technology journals. The cloud has many benefits, but chief among them for businesses (and for HR and Finance) is its ability to moves the pain of managing software back to the vendor and away from the customer.

The customer still has to figure out how to manage their processes, but the technical challenges of the past several decades of enterprise software, along with the multi-year, multi-million-dollar implementation costs, are largely eliminated with Cloud applications and services.

The Last Frontier is HR:  This sea of change in technology has in turn spawned a brand new era of modern HR applications, now under the heading of Human Capital Management software. Broadly speaking, this category includes applications for Talent, Learning, Core HR and Performance. This breaks down further into software apps for recruiting and engagement, employee collaboration and social performance management, for online learning and video interviews, for annual reviews, for creating compensation programs, etc.

In essence, this points to is a realization that in today's economy, there is enormous strategic value in these people-centric business processes. By embracing this modern era of HR technology to maximize the value of talent to an organization's success, human resources leaders have the opportunity to move beyond compliance and administration and to actually sit at the table with CXOs.

Tim Low is the Vice President of Marketing at PayScale, creator of the largest database of individual compensation profiles in the world.


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