Thinking about an HR tech purchase? Look beyond the technology

In the competitive HR tech marketplace, it is the service commitment of vendors that sets them apart from each other, Steve Boese writes.
By: | January 30, 2023

I will start with a disclaimer: Nothing in this piece should be considered a recommendation for any specific HR technology provider. You know your environment best and, ultimately, what the “right” HR technology provider is for your specific situation. Columns like this, analyst “rankings” or even industry recognition for any given product should only be used as singular inputs into a comprehensive selection process that considers technology, service, culture fit and organisational alignment—all before you commit any significant resources to purchase new workplace technologies.

Having said that, I hope this piece will be among those inputs—the one to remind you that the “software” is only one part of the equation of buying new tech. And it is often less important than the “non-software” aspects of your partnership with your HR technology providers.

Innovation in HR tech tends to get copied

The HR technology industry, while seemingly big, is in many ways pretty small—and a little bit insular. If you follow the industry closely, you cannot help but notice the frequent job moves and changes of HR technology professionals from one HR technology provider to another. It is not uncommon to see very senior product leaders at one HR technology company move, sometimes immediately, to a role in product development or product strategy leadership at another, often competing, HR tech organisation. Some of these most experienced, innovative and successful leaders are even in their third or fourth different HR tech companies.

The movement of this tech talent from one provider to another, combined with the more generally accepted idea that in business almost every good idea soon gets copied, works together to create a market that tends to converge on itself—at the same time as it is expanding at the edges. Whether it is an innovation that emerges from the start-up community, or from established HR tech providers, most new innovations end up being incorporated into the baseline or expected functionality of Tier 1 and even Tier 2 providers. Look no further than the recent examples of employee earned-wage access, internal gig or “opportunity” marketplaces, or artificial intelligence (AI)-powered skills graphs or ontologies, which have all moved from cutting-edge innovation status to largely mainstream capabilities in just a few years.

Experienced providers generally support most requested requirements

When developing a list of required functionality for any new HR technology solution, most organisations—probably even yours—will end up with a list that is remarkably similar to another organisation. Certainly, the basic capabilities of any HR technology system will be standardised over time (like a detailed employee profile, configurable workflows to facilitate employee movement and even mobile device support for all important HR employee or manager actions), and are all supported, more or less, by almost all providers. The HR technology market is too established, too competitive—and, as I mentioned above—too derivative, for most any provider to survive for very long if it cannot support the 80% of functionality requirements that most organisations will request.

For the record, I am not saying that there are no capability or functionality differences among HR tech providers. Some providers, especially the larger, “enterprise” providers, will possess a wider range of applications and capabilities than newer or smaller providers. And it is also true that many of the emerging start-ups will offer some unique capabilities that the established providers have not (yet) copied, cloned or acquired. But at the core, the functionality gaps between providers are relatively smaller than we often think—and, in my opinion, should not be the most important factor when assessing new HR technologies. Capability is important, but it is not the only factor that matters.

What else should you consider, then?

A few years ago, when deploying enterprise technology to customers via the cloud was still a relatively recent phenomenon, the product leader of a very large, Tier 1 HR technology provider shared with me the company’s philosophy of how to be successful in a SaaS delivery and deployment model. In their opinion, the second “S” (for “service”) was actually more important than the first (for “software”). At the time, this leader told me that, in their view, once the software—whether innovative or not—was released into the world, it would only serve as a competitive advantage in the market for a very short time. They had seen almost all of their company’s innovations in the last few years disperse across the provider landscape. This leader even admitted that their organisation had also “copied” good ideas they discovered from their competitors.

Product feature “wars,” then, never end and often have no winners, this leader felt. What would truly be a differentiator for both the provider and the customer was the level of customer service and support, care and commitment to customer success, and dedication to customers and their community; unlike software features, these are much more difficult to mimic. Finally, this leader told me, at that time, their large development organisation was equalled in headcount and budget by their customer success and service departments. It was this strategy that, they felt, set them apart from others in the HR tech market, and what their customers based their purchase and renewal decisions on.

These are important thoughts to keep in mind if you are looking at undertaking an HR technology evaluation and purchase in 2023. Of course, make sure that your “must-have” capabilities are met by any potential provider, but think about and ask tough questions about the second “S” as well. The software is really what happens before the contracts are signed. The second “S” is almost everything that happens after that. And it is typically where success or failure is determined.

I expect 2023 to be another year of innovation and new discoveries in HR technology. While we all get excited about the latest in HR technology (no one more than I!), it is good to keep in mind that just about everything that is innovative today will become more widely available soon. And then, if it is truly an important breakthrough, it will become just another commodity feature or capability in relatively short order. Technology is easy to copy or clone, but service commitment, investment in your success and acting like a true partner to customers are much less common and much harder to copy.

About the author: Steve Boese is HRE’s Inside HR Tech columnist and chair of HRE’s HR Technology Conference. This article was first published on Human Resource Executive.