Workforce.com

Core HR Technology Takes Center Stage

October 3, 2007
To most vendors of HR technology, core HR software—the human resource management systems that hold such basic employee data as name, job title, supervisor and salary—is merely a backdrop to more important things. It’s yesterday’s news.

    But Lawson and Workday see it as a foundation in need of fixing—and a potentially lucrative product area.

    "The system of record really needs to be more flexible than it has in the past," says Christine Ferguson, vice president of human capital management strategy at HR software provider Workday.

    The market for core HR applications is forecast to grow 7 percent annually between 2006 and 2011, to $4.2 billion, according to AMR Research. Core HR software revenue accounted for 47 percent of human capital management application revenue in 2006, the research firm says.

    Large companies often use core HR applications from the giants of the field—Oracle and SAP. While a host of smaller vendors sell software for tasks such as recruiting and performance management, HRMS has been a sleepy market.

    But to Lawson and Workday, core HR products are dated and deficient. The two vendors are working on or have released new HRMS products designed to make it easier to manage fast-changing global organizations.

    This year, Lawson plans to introduce a set of HR applications that includes core HR software. Larry Dunivan, Lawson’s vice president for global human capital management, says the new HRMS is built to handle the needs of global corporations. It also allows organizations flexibility in defining organizational structure, jobs and work assignments, and supervisors, he says. As a result, Dunivan argues, it will help firms manage the ad-hoc projects common today and better run a "matrixed" organization, where employees may have more than one manager.

    HRMS products have long been considered administrative, but Dunivan pitches the features in Lawson’s forthcoming HRMS as "strategic" in nature because they will help companies optimize their workforces.

    "These are all vital to talent management," he says.

    Another key to the new HRMS products from both Workday and Lawson is that they are designed to be delivered over the Internet. This "software as a service" approach promises to reduce upfront costs and limit the implementation, upgrade and maintenance hassles of traditional software deals, where vendors charge for a "perpetual" license and the code runs on client computers.

    Founded in 2005 by legendary PeopleSoft leader Dave Duffield, Workday launched a core HR product last year. The company also plans to build a payroll application—another tool typically left to longtime vendors such as SAP.

    Among the strengths of Workday’s core HR application, Ferguson says, are that it facilitates rapid changes in organizational structure and the creation of new teams. It’s also designed to be global in nature and to be used by employees generally, not just HR specialists. Ferguson says Workday already has upgraded its user interface to add interactivity, similar to the way Google or Yahoo sites enable visitors to drill down into much of the content.

    "That’s the kind of experience users expect on the Internet, and that’s what users will get with Workday," she says.