A major wave of HR software buying going on, but it’s just a repeat not a revolution

According to research by Bersin by Deloitte, the long-delayed purchase of human resource (HR) solutions by many companies is finally going to happen: 61% of HR leaders surveyed last year said they plan to replace aging systems in the following 18 months. As reprinted in CIO Journal by Deloitte

As reported in “Managing Talent through Technology: HCM Buying Trends in 2013”, 40 percent of the 308 senior HR executives surveyed have budgeted more than $500,000 to replace a core human resources management system (HRMS). The same percentage has allocated more than $750,000 to purchase and implement an integrated talent management suite.

In a majority of cases (53 percent), existing HR systems are seven or more years old. Among large enterprises, the number of HR organizations using 7-year-old systems or older rises to 63 percent. Many of these systems are homegrown or heavily customized, and users perceive them as outdated and expensive to maintain.

If we needed proof that companies are operating in the present with the tools designed for a distant past, this is it. These are systems that were designed over ten years ago, in general, prior to the rise of the cloud, and which lack basic functionality, like analytics (57% report this as a major issue with their existing systems), inability to integrate with other systems (54%) and business goals cannot be met using these technologies (54%).

The problem is that we are at the turning point of vastly different notions of the world of work, and most of the newest and most profound thinking is not baked into the systems available today. So, the massive transitional approach to HR — and other enterprise software — locks companies into these decade-long periods of stagnation.

One thing companies could do, is to adopt Reid Hoffman’s Netflix approach to tracking vacation time: don’t. Let people take as much as they want, so long as their work is getting done and co-workers are good with it. Likewise, Netflix policy for expensing travel, entertainment, gifts, and travel, which is five words: act in Netflix’s best interest. That eliminates a bunch of make work and HR staff. (I have a post coming later this week on Netflix’s principles and what we can learn from them.)

At any rate, I expect that while some of the obvious issues of the last generation of HR software will be remedied, I can’t help but think that this is just another turn of the screw, and not a revolution, alas.