The tough economy has hit IT budgets hard, but there’s one area where many companies continue to invest, and it might surprise people. According to a new Towers Watson survey, 83% of respondents said they are maintaining or increasing spending on HR software in 2010.
That’s just one eye-opening result from Towers Watson’s recently completed survey of 456 companies, two-thirds of which have more than 5,000 employees. Although other areas of software often top the trendy list (think social networking), that survey finding and others show that the market for human resource management software is also quite dynamic.
Tom Keebler, global practice leader for HR technology at research firm Towers Watson, presented the survey during a June 23 webinar hosted by Workday and moderated by Bill Kutik, co-chair of HR Technology Conference and joined by Leighanne Levensaler, Workday’s vice president of HCM strategy.
Here are some more choice bits:
- Workday may be a newcomer, but it’s already a leader. Among respondents implementing new HRMS systems, 15% said they’re implementing Workday. That means Workday is getting more business from those 456 respondents than any other vendor except SAP, which tied Workday with 15% of the market for new implementations. Workday’s performance is quite remarkable in comparison, considering it’s a small-yet-rapidly growing company, and just five years old, while SAP is as legacy as they come.
- HR SaaS is growing in acceptance. Fifty-two percent of respondents are using, implementing, or planning to implement software as a service to support HR service delivery. “We know anecdotally and empirically that these numbers (in support of SaaS) continue to march up higher and higher every year,” Keebler said during the webinar. In addition, his firm sees more and more HR solution providers moving away from on-premise offerings to SaaS. Kutik, meanwhile, conducted a real-time poll of webinar attendees on SaaS acceptance. The results: 50% responded that their organizations are more accepting of SaaS than they were a year ago; 44% said acceptance was the same; and 6% were less accepting.
- SaaS is often associated with lower costs, but it wasn’t the top-ranked benefit of SaaS. Among primary benefits of SaaS (respondents could choose up to three), 47% chose quick implementation, followed by better functionality (44%) and easier ongoing management (42%). Lower ongoing costs came in fourth place, chosen by 41% of respondents. But don’t mistake this as meaning companies aren’t seeing cost benefits from SaaS, said webinar panelist Leighanne Levensaler, VP of HCM product strategy at Workday. Workday customers, for example, are reporting cost savings of between 30 and 50 percent compared with on-premise HR software, Levensaler said. Benefits like better functionality and easier management are top of mind and get more votes because they are the things that really improve the quality of an employee’s work experience every day. In fact, benefits like these are emerging as the recognized long-term value of SaaS . Because Workday is updated three times a year, customers gain instant access to new capabilities—Levensaler pointed out that customers got real time benefit when Workday HCM added support for the Restore Employment (HIRE) Act that passed in March as well as wellness credits passed as part of the Obamacare legislation. Without SaaS, companies would have to do the software updates themselves to support those legislative changes. “The key thing for our customers is transformation and value,” Levensaler said. Customer H.B. Fuller, for example, appreciated the ability to “turn on” new talent-management features in the latest update of Workday HCM, all included in their existing SaaS subscription. “Constant innovation and value is delivered at the same cost,” Levensaler said.
So there you have it: investment on HR technology is strong, more and more of it is on SaaS-based HR software solutions, and there’s far more to SaaS than lower costs. You can view Tom’s presentation for more of the data, above. Thanks to Tom Keebler and the team at Towers Watson for providing some very interesting insights.