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We just can't get enough of workplace apps. According to Okta's 2023 Business at Work Report, companies now use an average of 89 apps, a significant jump from 58 in 2015. Larger enterprises upped the ante, managing an average of 211 apps each.
Human resource departments are responsible for 16.25 of those solutions, spanning critical domains such as workforce planning, talent management, ERP, recruiting, payroll, employee sentiment, mantal health, DEI and learning management systems. While the adoption of multiple apps is often done in the name of heightened productivity, it introduces new challenges in the forms of the "toggling tax" and confusion over which app to use for which function.
One HR Platform to Rule Them All?
The more HR apps intoduced, the greater the complexity, according to Ben Eubanks, chief research officer at Lighthouse Research & Advisory. “The clarity into what's happening operationally within the HR function gets muddier because users have data scattered across so many different systems," he said.
At a time when 77% of workers express a yearning for a simpler life, 39% report increased life complexity due to pandemic-triggered changes, according to a 2023 Aprimo survey. The prevailing belief respondents shared in the survey is that leveraging apps, especially in HR, can streamline processes.
However, amid the myriad of HR platforms, apps, and tools covering everything from core HR to background checks, benefits administration, employee experience, onboarding, payroll, mental health, mentoring, recruiting, ATS, job boards, pre-employment assessment tools, video interviewing, staffing services, time and attendance, absence management and workforce management, the challenge of app management looms large. One potential strategy to mitigate this is to opt for a single vendor offering a suite of services and then augmenting them as necessary to address specific needs.
Do experts favor this approach?
"It depends," said Jason Averbook, co-founder and CEO of Leapgen and senior partner at Mercer. "From a vendor management point of view, the fewer the vendors, the better. But there is not one organization in the world that uses a single vendor for their HR technology. It is important to select vendors that truly meet needs or create competitive advantage and try to minimize the number of vendors you work with."
Holger Mueller, vice president and principal analyst at Constellation Research, said that in modern enterprises, there is no contest between HR platforms and best-in-class solutions, noting, "Enterprise software suites have always won. As long as all functional parts are good enough … that is the tricky part. At the moment, the suites pretty much rule."
Related Article: How Employee Experience Became Table Stakes for HR Technology
And Then There's the Shelfware
When faced with the decision between several best-in-class point solutions and HR suites, Eubanks advises caution. Lighthouse’s research reveals that while employers use more tools and technologies across the HR spectrum, the operational intricacies within the HR function become muddled due to data scattered across diverse systems. Eubanks attributed this to business users often purchasing software that solves a particular problem, ignoring its broader capabilities.
Averbook agreed, highlighting the prevalence of shelfware in organizations, where only 10% to 15% of a software's capabilities are used. This is often tied to a "go-live" mentality that ignores the "betterment" mentality of continuous improvement, driven by a focus on projects rather than products.
The issue of redundant apps adds another layer of complexity, particularly in recruiting. Mueller said that in some departments, a cycle of introducing new tools with each change in leadership results in an accumulation of unused software, representing a recipe for inefficiency.
Surprisingly, even with IT often approving purchases, there is a lack of scrutiny regarding how incoming software aligns with organizational needs. Eubanks shared an example where a CEO refuses to approve a new product purchase unless the business agrees to eliminate two existing products.
Related Article: How Organizations Can Subtract Their Way to Success
Are Your Systems Speaking to Each Other?
Beyond the financial aspect of investing in underused solutions, the interplay of products and their relationships within organizations often goes ignored. Averbook said while most HR solutions can communicate with each other, organizations frequently fail to leverage this capability strategically. He pointed to the significant distinction between data integration and process/journey integration, highlighting that while vendors provide this capability, most organizations lack a structured approach to optimizing it for the best experience or visibility of information.
Mueller offers a slightly different perspective, identifying a significant integration problem. He said that many systems assume they are the only one unless they serve functional pieces such as recruiting, time and attendance, or workforce management, which needs to sync data with payroll.
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The question of risk is also a factor when purchasing point solutions from new vendors that promise significant benefits. On this front, experts unanimously agreed with Averbook's point, "It is an impossibility to know this (whether the software will be acquired or go out of business), with any degree of certainty based on how fast the market is moving and changing." Instead, they recommend evaluating the breadth and depth of offerings, ensuring a robust vendor roadmap and examining a vendor's customer base. Even if a company goes out of business, it will often be acquired by another organization that values its customers and its built and deployed solutions.
Yet as always, examples to the contrary exist, where companies have acquired human resources tech firms for the sole purpose of acquiring talent or customer lists. Examples include MapR and HP, Insight Software and Exago, Pivotal Labs and VMware, Microsoft's failed acquisition of a Quantive and more. These instances underscore the uncertainties in the technology landscape and emphasize the age-old saying — buyer beware.
