The thing about HR Technology is that if you step back and ignore the “HR” part (as most people do, as a matter of course), you’ll be able to get a much better picture of what’s coming, because it’s already happening in consumer technology.
That said, I’m not a futurist (in retrospect, I should have been so I’d never be wrong); while I’m not sure that these are necessarily the categorical imperatives of the HR Technology category, the precedent is almost always set well in advance of the trickle down economics of technology adoption. That, and I try to provide as much empirical proof of these projections as possible, but sometimes, there’s not enough actual analytics for analysis.
In general, when writing about the nebulous topic that is “talent trends,” I apologize for anything that seems overly speculative or circumstantial, but enough of the disclaimers. I know, as a “thought leadership” blogger, they’re unnecessary and often duplicitous, but I wanted to give you the heads up that I’m doing my best to do what not enough people say in this kind of content: do your own research, and think for yourself.
Not that I’m going to change your mind, I just wanted us to be on the up and up before getting into a listicle about trends. I’m sure, you’ve heard it all before, and I really hope you have some doubts about any content that’s a combination of educated guessing and click bait.
Don’t hate the player.
MAGA: Are Tech Titans Taking Over HR Technology?
It seems, in 2019 at least, that MAGA has transformed talent technology – uh, that’s an acronym for Microsoft, Amazon, Google and Apple. Uh, what did you think I meant?
Most append Facebook to this list, but they don’t really have any enterprise offerings outside of Workplace and the increasingly superfluous Ad Manager. Furthermore, Facebook stores its own data on its own servers (at least before reselling it to third parties), but has no private or hybrid cloud offering – it monetizes exclusively on personal data, and turns out, that’s a pretty good business to be in.
A headline in the Economist once stated that “Data is the new oil,” and that’s pretty much true. The market is currently strong, with automation the digital analog of fracking. The price for this commodity is directly tied to production and distribution (upstream and downstream, as they say in the oil business).
Data is also a fossil fuel; that is, while it’s constantly being generated, individual users mostly have a finite value from a data perspective, meaning that it’s imperative to continually find new sources for what’s largely a finite resource.
We generate terabytes of data every day, but the fact is, only a fraction of that data is of any value whatsoever. It’s like going through the belongings of some recently deceased relative – for every estate jewel, priceless heirloom or treasured artifact, there’s dozens and dozens of boxes of socks and sweaters and stuff you have to handle, too. You have to take the package deal.
Head in the Cloud: The Transformation of HR Technology
And so it is with the cloud. Yeah, I know it’s a nebulous concept, but what we call “The Cloud” (with a capital “C”) is really just a really big oil well, with and there are a bunch of different platforms drilling and refining the crude product that is PII.
This business, like oil, is only sustainable with economy of scale – and as with all commodity markets, the job market included – scaling, while at the same time making high enough margins to enjoy profitability, requires consolidation.
There may be a few wildcatters out there, building a proprietary algorithm or analytics product purely for a niche problem or personal use case, but when it comes to market share, they represent a small drop in a big barrel.
Like Exxon-Mobile, Royal Dutch Shell, BP or Chevron before them, the cloud is dominated by a few key players, the result of much M&A, although unlike the marriage of equals that created, entities like ConocoPhillips, the major cloud players were largely self-made, the Rockefellers of the digital economic revolution.
Storage Wars: The High Cost of Cloud Recruiting
The hockey stick growth of digital native companies like Google and Amazon, coupled with the resurgence and diversification of OG tech companies with their roots in hardware and operating system, like Microsoft and Apple, has led directly to the data proliferation upon which these companies are now casting their future bets.
And no one produces more data than enterprise businesses. This is why Amazon, Google and Microsoft are in a cloud version of the space race, a cold war that’s heating up.
The stakes are significant; Gartner estimates the market for the public cloud to reach $331 billion by 2022, or approximately the same amount of money multinationals spend per annum on leadership training, employee engagement initiatives or employer branding combined (give or take a couple billion bucks).
Setting Apple aside, as iCloud is an almost exclusively consumer product, these erstwhile ERP competitors have realized that anyone with the drilling rights to the data pools generated by enterprise employers can not only make a nice chunk of change by selling cloud services, but more so, from controlling and aggregating the proprietary data that they’re hosting and integrating that data directly into other product and services offerings.
This makes migration more difficult and implementation more expensive, as most HR Tech buyers already know; they also know that having one platform instead of a “Frankensuite” (terrible buzzword, but descriptive enough) of a bunch of point solutions bolted together is way more convenient, and way more effective.
Microsoft and Google, in particular, have emerged as not only the most formidable challengers in the cloud space, but two of the most dominant (and crucial) players in talent technology as well. This is evidenced not only by Microsoft’s acquisition of LinkedIn and Github, or Google’s release of their Jobs and Hire products (talk about creative naming conventions).
It’s evidenced in the fact that the traditional tier one HR Technology providers are actually moving to the same business model upon which Azure and Google Cloud were built – aggressively positioning their own proprietary cloud products as a secure, reliable and pre-configured solution for storing their business data in general, but their people data in particular. SAP, Oracle and Workday all offer their own hybrid cloud solutions.
This is a two part challenge (except for Workday, which was developed as a SaaS platform instead of on premise).
The first part of this problem is convincing their customers to migrate, often at considerable expense to that customer, from their legacy systems to their cloud solutions; the complexity and volume of the different data (and different data structures) generated at most multinationals takes a lot of resources and time, and causes a lot of headaches.
This challenge is one of the major reasons, ironically, that so many customers are still running such anachronistic HCM systems, but those systems seem set to finally try to force their hands, particularly since the far greater challenge will be staving off AWS, Microsoft and Google.
At Your Servers: The Future HR Technology Stack?
Presumably, no one is going to want to use productivity platforms built by HR Technology companies, which is why while the traditional players are building marketplaces to address capability gaps, their consumer grade competition is reverse engineering the same problem. Fitting that technology for an HR use case instead of an ERP provider configuring third party offerings, seems like a far more tenable approach for long term success.
With the consolidation and disintermediation of data from in-house systems to cloud solutions, HR will no longer be the buyer of HR Technology. A company whose data is hosted by Azure and runs off Office 365 and Windows will essentially be a few configurations away from turning on Microsoft Dynamics for Talent (or LinkedIn’s long rumored ATS, which they’re supposedly, finally, launching at the upcoming Talent Connect event two years after first announcing it).
Similarly, a company running off of GSuite and Google Cloud will be able to deploy Google Hire at the enterprise level without a ton of trouble (and at a far better price than a standalone ATS), and certainly, in an environment that’s more secure, and with far more advanced analytics capabilities, than any incumbent provider in the enterprise technology space.
Those who use dedicated talent acquisition platforms, like iCIMS and SmartRecruiters, will still find themselves, and their data, with a viable cloud solution – it’s just AWS isn’t making a direct play for talent acquisition, since they don’t have to, really.
With roughly 40% of the enterprise cloud market, they’re already hosting enough talent data to let their customers do the heavy lifting on the front end by building their own solutions – standalone HR technology platforms – and generating the obvious and intrinsic value in hosting all that data for all those HR Tech providers.
That said, there’s a good chance Amazon will eventually become a player in HR Tech, if not as a dedicated platform, then the marketplace where most marketplaces more or less maintain their infrastructure. If candidates are customers, no one does online merchandising and behavioral targeting better. Cha ching.
But for now, the cloud wars are just heating up, and obviously, the major players have the HR and talent organizations squarely in their sights. It’s just that the decision, and implications, of this major shift in strategic focus means that HR Technology moves from a specialized standalone to just one more module hosted on a single enterprise technology instance.
But while we might not remain the primary customers or custodians of our HR Tech stacks, the good news is, we’re consumers, too – and having consumer grade technology will make a world of difference in the world of work in the fairly immediate future.
