Optimal Tech Stack Report

THE OPTIMAL TECH STACK
© KeyInterval Research | keyinterval.com | Page 1
About KeyInterval Research
KeyInterval is a practitioner centric market research firm. We survey practitioners in
HR and Recruiting to discover what their work with technology is like. We work at the
intersection of HR and Technology. We use a blend of quantitative and qualitative research
to see beyond the more traditional vendor centric view.
The company is driven by the curiosities of its founders, William Tincup and John Sumser.
Our goal is to provide practitioners with a clear view of what actually happens when their
peers and colleagues go to work.
We help practitioners understand what is working in the day to day business of HR. We do this by investigating
the realities of work in the HR practitioners’ world. We make maps that help practitioners to work more effectively
and vendors to supply better technology.
As long term participants in the HR ecosystem, we’ve heard a lot of stories about how things work or don’t. We’ve
originated, repeated, recycled, learned and catalogued much of the folk wisdom that passes for rational thought in
HR. We are pretty sure that the realities of HR work are substantially different from the ways they are portrayed.
We want to discover what is true and accurate. We want to separate that from wishful thinking. We are mapping
the realities of our industry. We will have better questions and better answers as time
goes on.
The explosion of technology makes it possible to replace anecdote with fact. Our work
combines quantitative research (surveys) with qualitative (interviews and focus groups).
The big vision is to replace fiction with fact and to sharpen the things that are true.
HOW TO CONTACT US
Web: keyinterval.com
Phone: 415.683.0775
Twitter: @keyintervalR
William Tincup: Principal Analyst
@williamtincup
william@keyinterval.com
+1.469.371.7050
John Sumser: Principal Analyst
@johnsumser
john@keyinterval.com
+1.415.683.0775
Copyright 2015 by KeyInterval Research, all rights
reserved. You many not copy, duplicate, or share this
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this is proprietary and protected by copyright. So don’t
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Table of Contents
About KeyInterval Research..................................................................... 1
Pocket Guide: A Quick View of Survey Data............................................ 9
Onboarding System................................................................................. 18
Analysis.................................................................................................... 21
Succession Management System........................................................... 22
Analysis.................................................................................................... 25
Total Rewards (Recognition)................................................................... 26
Analysis.................................................................................................... 29
Wellness Management............................................................................. 30
Analysis.................................................................................................... 34
Compensation Management................................................................... 35
Analysis.................................................................................................... 39
Learning Management............................................................................. 40
Analysis.................................................................................................... 43
Recruiting................................................................................................. 44
Analysis.................................................................................................... 47
Performance Management...................................................................... 48
Analysis.................................................................................................... 52
HR Analytics............................................................................................. 53
Analysis.................................................................................................... 57
HR Information Systems (HRIS).............................................................. 58
Analysis.................................................................................................... 61
Time and Attendance............................................................................... 62
Analysis.................................................................................................... 65
Benefits Management.............................................................................. 66
Analysis.................................................................................................... 69
Payroll....................................................................................................... 70
Analysis.....................................................................................................74
Notables................................................................................................... 75
Notable for Onboarding............................................................................ 76
Notable for Succession Management....................................................... 77
Notable for Total Rewards (Recognition)................................................... 78
Notable for Wellness Management........................................................... 79
Notable for Compensation Management.................................................. 80
Notable for Learning Management........................................................... 81
Notable for Recruiting.............................................................................. 82
Notable for Performance Management..................................................... 83
Notable for HR Analytics.......................................................................... 84
Notable for HR Information Systems......................................................... 85
Notable for Time and Attendance............................................................. 86
Notable for Benefits Management............................................................ 87
Notable for Payroll.................................................................................... 88
What We Missed and New Questions..................................................... 89
Responses by Region.............................................................................. 90
Responses by Level of Educational Attainment........................................ 92
Responses by Role.................................................................................. 93
Responses by Function............................................................................ 94
Responses by Industry............................................................................. 95
Research Agenda..................................................................................... 96
Acknowledgements . . ............................................................................. 96

Introduction
We are optimists about the potential of data to improve human lives. But the world is incredibly
complicated. No one data set, no matter how big, is going to tell us exactly what we need. The new
mountains of blunt data sets make human creativity, judgment, intuition and expertise more valuable,
not less.
—Alex Peysakhovich and Seth Stephens-Davidowitz in How Not To Drown In Numbers
(New York Times, May 2, 2015)
This report is the beginning of our research into the way that companies assemble their HR Technology.
We are pretty sure that the “optimal technical stack” varies by region, organizational size, underlying
business model, and industry. To fully document that, we begin by understanding what practitioners are
actually doing.
This report tells the beginning of a story. Our sample set of 785 HR practitioners is not large enough to
give us insight into every possible niche. But, we can clearly see trends by software type and business
size.
We will take you into the data in order to help you understand a new perspective. The report documents
the way that practitioners view each of thirteen categories of software.
To date, our reports have focused on the vendor perception of some of the categories. We think that the
conventional wisdom includes inflated estimates of the depth of HR Technology’s penetration.
Our research, on the other hand, errs on the conservative side of the equation.
We explain much of the dissonance to differences in roles. While 100% of people in the payroll
department know what the toolset is and who the vendors are, people in the recruiting department may
not know whether the payroll function is performed in house. While buyers are explicitly aware of contract
details, users rarely are. The executive’s view is often missing the nuance of the practitioner.
Within some HR Silos (Recruiting and Learning in particular), the very definition of what is or isn’t a
system varies as a function of expertise. The more complex the operation, the less likely that practitioners
Conventional
wisdom inflates
the depth of HR
Technology’s
penetration; our
research errs on
the conservative
side.

understand technology as a single system. That is why market penetration estimates for these two
functions may appear low at first.
In recruiting for example, tools that deliver contemporary competitive advantage multiply at
extraordinary rates. In many ways, recruiting is where innovation enters the HR function. Aggressive
recruiting shops are constantly testing and trading tools rather than polishing and improving the
procedures associated with a single system.
While much research data is groomed to highlight a specific attribute, we choose to leave this data
in its most unadulterated form. We prefer to try to acknowledge and understand the inconsistencies
that are the natural realities of complex organizations. It is our view that stark conclusions in easy to
consume information nuggets obscure the realities of the market.
We think our audience is savvy enough to understand that an accurate lay of the land is critical for
effective tactical work. Simplification before complete understanding is a risky approach to both
market and product development.
Defining the right approach for one’s organization is not a simple undertaking.
In future updates, we believe that the working realities will come into focus even more clearly. This
report paints a picture of an HR Technology Silo that shows the likelihood that other practitioners
are using the tool, how they feel about it, how long contracts last, and a sense of whether this is a
trend worth joining.
Today, we can tell you how practitioners see general software areas. The underlying data is rich
enough to offer segmentation insight by organization size. Beyond the scope of this report, we are
able to slice the data across a number of parameters. As our research matures, our insights will be
deeper and more nuanced.
One of the things we learned is that the answers to our questions change while we ask them. HR
practice is a dynamic universe with wide ranges of impact and effectiveness. HR departments are
continuous consumers of new technology so today’s line in the sand is tomorrow’s anachronism.
In many ways,
recruiting is where
innovation enters
the HR function.

For each of thirteen major areas of HR Technology, we developed an info-shot that shows:
• Market Penetration
Definition: The percentage of companies that use the tool (segmented by organization size).
The likelihood that a company of your size uses the tool. This estimate gives you a sense of which tools are
seen as important enough to include in the optimal technical stack.
• Net Promoter Score® (NPS®)
Definition: Measures the likelihood that a friend or colleague would recommend the type of software.
Most vendors have collected data about the NPS® for their company and products. Using the niche specific
score as a benchmark allows you to validate the meaning of their data. A good purchasing process should
compare the vendor’s NPS® against this standardized score.
An NPS® score can be as low as -100 and as high as +100. A score of +50 or above is often seen as an
example of excellence. A score of below -50 is understood as dismal.
• Buy Cycle:
Definition: The time between replacement purchases. How long companies keep their software.
This gives you a sense of how long your decision will last. While there is a lot of emphasis on portability (ease
of quitting) in SaaS applications, the deal is stickier than it might seem at first. When considering a purchase,
it is important to understand how long most people stick with their provider.
• Outsourcing:
Definition: The percent of companies who contract another company to perform the function.
This variable seems to vary by complexity and newness. Outsourcing is an important option to consider when
deciding to deploy a new technology.
When considering
a purchase, it
is important to
understand how
long most people
stick with their
provider.

• Part of Suite:
Definition: Whether the tool comes as a part of a larger toolset the organization uses.
There is a perennial battle among pundits and analysts about the value of a tool that is part of a larger
suite. One side argues that focused point solutions provide levels of excellence that a suite provider cannot
deliver. The other side argues that the consistency provided by a suite creates better data integration and
standardization of the user experience. Both sides have merit.
This score lets you know how many of your colleagues prefer a tool that is a part of a suite.
• Homegrown:
Definition: Whether the company accomplishes the function with internally developed tools, including the use
of standard office software to accomplish the function.
Some companies want to be sure that their special sauce dominates a particular function. Or, they have been
solving the problem since it was a small inconvenience and developed an internal specialized system for
handling the problem. This score tells you the percentage of your colleagues who ‘roll their own.’
• Desirability:
Definition: The percentage of organizations that do not have the tool that they wish they did.
This is another guide to whether or not you should be acquiring the software tool. If you are considering a
purchase, this score tells you what percentage of your peers are leaning towards the idea.
• Vendor Recall:
Definition: The ability of the user to remember the name of the vendor.
For the most part, the inability to recall the vendor’s name indicates that the tool is not heavily used. The lower
the score, the more likely it is that the software element will sit on the shelf collecting dust.
If you are making, participating in, or trying to influence a decision to make, replace or terminate a technology
purchase, the data in this report will help you understand what your peers are doing.
The optimal technology stack is the set of HR tools that meet your organization’s needs.
If you are making,
participating in, or
trying to influence
a technology
purchase decision,
this report will help
you understand
what your peers
are doing.

Category Definitions
We have examined 13 distinct types of software. Here are the definitions we used when we asked
companies about the components of their HR Technology Stack.
TECHNOLOGY TYPE DEFINITION
OnBoarding Tools used to organize, track, monitor, manage, and report on the process of bringing a new person into the organization.
Succession Management Tools used to plan for and manage changes in critical roles.
Total Rewards (Recognition) Tools used to supplement formal compensation programs with short-term recognition and motivational incentives.
Wellness Management Tools that organize, monitor and report on the activities within Wellness programs.
Compensation Management Tools that validate and administer the pricing of job categories.
Learning Management Tools used to organize, track, monitor, manage, deliver, and report on training.
Recruiting Tools used to organize, track, monitor, manage, and report on the process of acquiring new people.
Performance Tools that organize, track, monitor, manage, and report on the assignment and execution of goals.
HR Analytics Tools used to analyze, report and predict business outcomes utilizing HR Data.
Human Resources Information System (HRIS) Tools that organize, track, monitor, manage, and report on the organization’s people.
Time and Attendance Tools that organize, track, monitor, manage, and report on attendance, time worked, arrival and departure times.
Benefits Management Tools that organize, track, monitor, manage, and report on employee benefits at both organizational individual levels.
Payroll Tools to organize, track, monitor, manage, deliver, and report on the various aspects of delivering paychecks to employee.

In our research…
we asked respondents about a series
of other pieces of software. We were
surprised to find significant adoption
in the following areas. In later research
(next year), we will look deeply into these
additional areas.

Pocket Guide:
A Quick View
of Survey Data

RANK CATEGORY NPS
1 HR Analytics System 18
2 Wellness Management System 10
3 Total Rewards (Recognition) System 10
4 Succession Management System 9
5 Time and Attendance 8
6 Payroll System 8
7 Human Resources Information System (HRIS) 7
8 Benefits Management System 3
9 Compensation Management System 1
10 Performance Management -8
11 Recruiting System -9
12 Learning Management System -14
13 Onboarding System -25
A Net Promoter Score® . . .
can be as low as -100 and as high as +100.
A score of +50 or above is often seen
as an example of excellence. A score
below -50 is understood as dismal. In
this survey, we viewed the entire category
from an NPS® perspective. This gives
the practitioner a baseline against which
to measure claims from vendors, and a
way to put the specific product’s NPS® in
perspective. Note that newer, less highly
evolved areas occupy the top third of
the ranking and that the bottom third is
dominated by Talent Management tools.
Net Promoter Score®

RANK CATEGORY YEARS
1 HR Analytics System 3
2 Wellness Management System 3
3 Succession Management System 3
4 Compensation Management System 4
5 Learning Management System 4
6 Total Rewards (Recognition) System 5
7 Performance Management 5
8 Onboarding System 5
9 Human Resources Information System (HRIS) 5
10 Time and Attendance 6
11 Recruiting System 7
12 Benefits Management System 8
13 Payroll System 9
The Replacement Cycle . . .
is the amount of time between acquisitions
(purchases). Newer types of tool are
used for shorter periods of time. The
more important a piece of software is to
maintaining the status quo, the longer the
replacement cycle.
Replacement (Buy) Cycle

RANK CATEGORY DESIRABILITY
1 Succession Management System 50%
2 Compensation Management System 50%
3 Onboarding System 50%
4 Recruiting System 48%
5 Time and Attendance 38%
6 Learning Management System 29%
7 HR Analytics System 28%
8 Human Resources Information System (HRIS) 28%
9 Benefits Management System 26%
10 Performance Management 25%
11 Total Rewards (Recognition) System 22%
12 Payroll System 20%
13 Wellness Management System 18%
Desirability . . .
is a simple measure. Of the people who do
not have a particular kind of system, what
percentage would like to have one. This list
tells you how the market of practitioners
prioritize what they want. Whether not
other practitioners will purchase the
system is a cross between this measure
and the buy cycle. For example, half of
the market wants a Recruiting system.
But, Recruiting systems have a long
replacement cycle, so it is not as likely to
happen as it might look.
Desirability

RANK CATEGORY LIKELIHOOD
Having a Single Vendor . . .
and a standardized data set is worth a lot.
Companies buy software that is a part of a
larger suite for this reason.
Having a Single Vendor . . .
and a standardized data set is worth a lot.
Companies buy software that is a part of a
larger suite for this reason.
Purchased as Part of a Suite

Homegrown Systems . . .
Organizations develop their own internal
processes and procedures when:
• They can not satisfy their needs with a
vendor’s product
• They do not know there is a market
solution available
• They start solving a simple problem and
later discover its complexity.
Homegrown

RANK CATEGORY PENETRATION
1 Human Resources Information System (HRIS) 52.4%
2 Time and Attendance 47.4%
3 Performance Management 37.1%
4 Payroll System 35.5%
5 Recruiting System 33.8%
6 HR Analytics System 24.2%
7 Learning Management System 22.5%
8 Compensation Management System 21.8%
9 Benefits Management System 20.4%
10 Wellness Management System 15.0%
11 Total Rewards (Recognition) System 13.9%
12 Onboarding System 12.5%
13 Succession Management System 8.3%
Market Penetration . . .
is a measure of the degree to which the
overall market has adopted a particular
solution as a part of their HR Tech suite.
This figure tells you whether the decision
to purchase a particular solution is a part
of standard practice.
Market Penetration (Adoption)

Outsourced Measures . . .
the likelihood that a particular function is
outsourced. The decision to outsource
is based on the idea that an external
operation can perform the task more
effectively at a lower cost.
Outsourced

Vendor Brand Recall . . .
is a measure of whether the practitioner
can recall the name of her provider. Not
knowing generally indicates a lower
amount of usage, a lower organizational
importance, or (paradoxically) a level of
quality that is so high that no one ever
thinks about the vendor. The last one is
pretty rare.
Vendor Brand Recall

Onboarding System

Onboarding software systems vary in visions of completeness and complexity. The simplest executions,
usually in hospitality and retail, involve filling out immigration and work permit forms. The most complex
systems guide strategic development of critical new hires and provide complete orientation and training to
bring new employees fully up to speed.
An Onboarding System crosses the boundaries of most other HR Silos. In order to bring a new employee
onboard, almost every single system is modified to include data about the new employee. In some
significant ways, the Onboarding System is a use case for all of the other software systems.
Some emerging vendors use simple scripts and HTML to allow HR practitioners to make the Onboarding
tool an overlay on all of the other systems. These tools simply create a page of links that the new employee
must navigate.
• Market Penetration: 12%
Only 12% of all companies have a formal Onboarding System. This is largely due to the fact that
Onboarding is a cross-discipline function. There is no natural champion for the function and no natural
buyer.
• Net Promoter Score®: -25
The Onboarding segment has the lowest Net Promoter Score of any of the HR Tech Silos. It has the
largest number of detractors (people who scored the area as a 6 or less on a scale of 1 to 10) and the
smallest number of promoters.
• Buy Cycle: 5 Years
Only 20% of people who currently have an Onboarding tool plan to replace it within the next year.
• Outsourcing: 0%
Nobody (statistically speaking) outsources Onboarding. This is because Onboarding is unique to the
company, and often to the individual position and employee. It is, on one level, the very definition of a
critical ‘rite of passage’.
• Part of Suite: 62%
Almost 2/3 of the practitioners who have an Onboarding tool use something that is a part of an existing
suite.
In some
significant ways,
the Onboarding
System is a use
case for all of the
other software
systems.

• Homegrown: 5%
Interestingly, the number of companies
that build homegrown solutions for
Onboarding is lower that any other
area.
• Desirability: 50%
Half of people who do not currently have
an Onboarding tool wish they did. Only
Succession and Compensation have
similar levels of desirability. Practitioners
really want to add an Onboarding System
to their tool kit.
• Vendor Recall: 79%
21% of the companies with an
Onboarding System cannot recall the
name of their vendor. Most can.

Analysis
The Onboarding segment offers one of the most interesting opportunities for innovation in all of the HR
Tech Silos. A very low NPS® coupled with very high desirability and a long replacement cycle is a perfect
target for new products and services.
It would be interesting to consider marrying Onboarding and HR Analytics. Both areas are really use cases
for the data contained in the rest of HR. The basic integration skills are complementary.
There are some indications that the reason for the broad dissatisfaction with Onboarding involves the range
of things that are possible. In the most ambitious implementations, Onboarding’s goal is to reduce time to
productivity for critical employees. While that approach (which often involves setting meetings and making
introductions for 90 days) is time and resource intensive, it works and produces spectacular results.
One of the ways that HR can most easily contribute to the financial success of the organization is by
reducing the time to productivity for a new hire. Unfortunately, many Onboarding tools are used exclusively
to mitigate risk by ensuring that the minimum legal documentation requirements are met.
HR can most easily
contribute to the
financial success
of an organization
by reducing the
time to productivity
for new hires.

Succession Management System

Each organization examines the issues and complexities of Succession Management in slightly different
ways. In mature companies that have grown under the leadership of the original founder(s), how to
replace the original team takes on nearly Shakespearian overtones. Life beyond the founder can seem
unimaginable.
In more ‘managed’ operations, Succession Planning begins with rotating all managers through a series of
assignments designed to round out their skills and conceptual understanding. In this setting, the question is
more like the orchestration of a complex game of musical chairs.
In the early 2000s, some African companies pioneered the idea of managing the succession of critical roles
in a new way. The AIDS plague was wiping out categories of relatively low level workers (like truck drivers).
The future of the company came to rest on being able to quickly and easily replace low level functions that
would cripple the company if left unfilled.
Like many bits of HR Software, Succession Planning tools are really a good way to document a rapidly
changing conversation. As the organization evolves and as the key players grow and change, the right
solution to the Succession Rubik’s Cube changes.
8% of all companies use Succession Management Software. That’s less than 1 in 12. This doesn’t
mean that most companies don’t have a process for examining Succession issues. It simply means that
they don’t use a formal software tool to do so.
• Net Promoter Score®: 9
Comparatively speaking, the people who do use Succession Management Software are ‘happier’ with
their tools than other silos. It is worth noting there appears to be an inverse relationship between usage
and Net Promoter Score. In other words, the less a piece of HR Technology is used, the higher its
NPS®.
The most common buy cycle is 3 years. One third of current Succession Management tool owners will
replace their system this year.
Succession
Planning tools
are a good way
to document a
rapidly changing
conversation.

• Outsourcing: 6%
6% of companies that have Succession
Management tools outsurce them.
This seems to mean that large strategy
consultants (like Mercer and AonHewitt)
are the keepers of the conversation.
Three quarters of the practitioners who
have a Succession Management tool use
something that is a part of an existing
suite.
• Homegrown: 18%
Succession Management tools are home
grown 18% of the time. This is a reflection
of the uniqueness of the process.
Fully half of the people who do
not currently have an Succession
Management tool wish they did. Only
Onboarding and Compensation have
similar levels of desirability. Given the
short buy cycle and high desirability, you
can expect market penetration to grow
quickly.
Succession Management systems have
the highest percentage of people who
remember the name of their vendor of
any HR Tech tool.

Analysis
Expect to see a relative explosion in tools that can be used to manage and understand the process
of evolving an organization’s leadership. The combination of a relatively high NPS®, high desirability,
maximum vendor recall and a universe of home brewed solutions, the market is ready for growth in the
Succession Management segment.
It is an interesting time in the market.
Demographic shifts (primarily the departure of the older generation and key talent shortages) means that
Succession Management’s moment in the sun is here.
HR can influence both the organizations continued stability and growth by making the decisions clear
and the consequences obvious. Great Succession Management software provides the foundation for a
conversation. The topic is: “How does the organization navigate the expected and unexpected changes
that rearrange the critical chairs?”
Expect to see an
explosion of tools
to manage and
understand the
process of evolving
an organization’s
leadership.

Total Rewards (Recognition)

Total Rewards and Recognition tools are used to supplement and reinforce existing compensation
structures. In very large organizations, there is an important need to make the messaging about
performance more precise.
Traditionally, the Total Rewards market has belonged to awards and motivational gift companies.
With the advent of social media and cross-functional, horizontal communications within companies
came the notion that recognition (in the form of digital thank-yous or points) could provide important
organizational stimulation. In the past decade, vendors emerged to provide a broader range of Recognition
services. There is a grass roots feel to some of these tools that shifts Recognition from a top-down
reinforcement to crowd sourced appreciation.
On some levels this is where flatter governance structures have their origins. The emerging Recognition
tools suggest that peer recognition is a complementary force that improves engagement. The idea is that
when the team’s cohesion is improved, everyone feels like they belong, they want to show up for work, and
hopefully, they will do better work.
Recognition Systems have a powerful narrative. Harnessing loose, but positive, energy in the organization is
a low cost, relatively proven approach to morale improvement.
Although Total Rewards Systems mostly have an underlying economic model, there is a school of
thought that wants to separate Recognition from any underlying monetary incentive. Vendors also differ
on the questions of anonymity, privacy, governance, and so on. The software tends to route and handle
communications of positive feedback while keeping track of individual performance.
Although Total Rewards software has a market penetration of 14% across the board, it is nearly double
that (26%) in companies with more than 10,000 employees. It is 10% or lower in small companies
(under 500 employees). It could be argued that these tools are not really useful in organizations where
everyone knows everyone else.
Given the span of NPS® scores (from -25 to +18), Total Rewards systems have a respectable NPS®
score. When people use the systems, they like them better than most HR technology.
The emerging
Recognition tools
suggest that peer
recognition is a
complementary
force that improves
engagement.

Only 20% of people who currently have
a Total Rewards tool plan to replace it
within the next year.
• Outsourcing: 4%
Only a few companies (statistically
speaking) outsource their Total Rewards.
In those cases, a program administrator
is responsible for the program and
the software it runs on. It is often less
expensive to have someone else do the
work at a lower labor rate.
Almost half of the practitioners who have
a Total Rewards tool use something that
is a part of an existing suite.
• Homegrown: 9%
Nearly one in 10 companies build their
own Total Rewards system. Homegrown
systems tend to be used to solve simpler
problems like remembering employee
anniversaries and other traditional
Recognition programs. Purchasing Total
Rewards software is a commitment to a
deeper kind of Recognition program and
not all companies want that.

Analysis
Total Rewards software is generally more effective in larger environments. The smaller your company, the
less you will need Total Rewards software. From the other perspective, the larger your company, the more
interesting the prospects.
Installing a Total Rewards system is one way of addressing the organizational divergence that is part
of working in a big company. The more people, the more there is conflict between organizations and
individuals. Often, the two groups are pursuing conflicting objectives.
This conflict is not a bad thing. It can be the result of differences in customers, regions, or leadership style.
Total Rewards localizes (and makes more immediate) the impact of peer group (and first level management)
approval and respect. Total Rewards tools also make a great deal of sense in highly transactional
environments like data processing or retail. They provide coverage of the motivational gap between pay
periods.
There is a lot of investment going into the Total Rewards space. That is why you hear so much about it. The
data says Recognition is not yet a necessary component of your technical stack. But, there is a chance that
it could be powerful for you. Look for references from your competitors.
Only about one in five companies want to
install a Total Rewards system currently.
This suggests that the tool is more useful
in some settings than others. It would
be smart to check references for other
customers in your industry or region.
One third of companies that have a Total
Rewards program can not recall the
name of their vendor. This indicates a lack
of use once installed.

Wellness Management

Wellness Management tools encompass a variety of approaches to harnessing employee health and
wellbeing. The definition of Wellness and its relationship to productivity or engagement is elusive. That
said, there is a growing belief in management and investor circles that the combination of reduced health
care costs and the feel good quality of endorphin rushes are an adequate rationale to purchase Wellness
Management Systems.
There’s an inescapable logic to the idea that a healthier workforce is a more cohesive and adaptable
workforce. If your employees are not out sick, they certainly show up for work more.
A Wellness Management system collects and reports on data associated with individual and collective
fitness and health activities. In some cases, the definition of wellness spans the range from exercise
programs to meditation to financial education. The systems often emphasize competition between
individuals or groups of employees.
One way of thinking about Wellness Management Systems is that they are a kind of Learning Management
System for the whole person. Where most HR technologies focus directly on things specifically related to
work, a Wellness Management System offers ways for employees to manage almost the entire universe of
things that cause and relieve stress.
The systems are getting a lot of attention and investment currently. This is because of the rapid increase
in the number of wearable devices and monitoring tools. In some ways, the hardware technology has
outpaced the underlying organizational theory.
It is early enough in the evolution of Wellness Management systems that the jury is still out on key issues
like privacy, security, and what happens with the data.
In some cases,
the definition of
wellness spans
the range from
exercise programs
to meditation to
financial education.

Only 15% of all companies have a formal Wellness Management System. The idea that wellness and
fitness have a place in the corporation is still cutting edge. There is no natural champion for the function
and no natural buyer. The appeal of a wellness program covers both benefits and talent management
concerns.
The company size segments with the deepest utilization are between 201 and 500, and between 2,501
and 10,000 employees. In those settings, about 20% of companies offer Wellness tools. That’s nearly
double the rate of the other segments.
The Wellness Management segment has a pretty good NPS® given the range of scores for HR Tech
Systems. This is likely to be limited by the fact that there is no logical silo into which it can be stuffed. It
could also be that Wellness is the new Engagement, or that it’s hard to not be in favor of health.
A three year buy cycle is a good indicator of growth possibilities. The market can get used to rapid
innovation at that point. That’s a good thing because this area will have some of the fastest and deepest
changes of any silo (as the result of the high speed of related consumer technology change).
• Outsourcing: 5%
When Wellness Management Systems are outsourced, it is usually to a full service provider. Many
Wellness Management providers supply staff. This is driven by the fact that the function has no logical
home. In other words, the dynamics are in place for growth in outsourcing.
Two out of five companies buy their Wellness Management tools as a part of a larger suite. That makes
it one of the three areas that are least likely to be purchased as a part of a suite. In other words, look
closely at the point solutions in this area.
The idea that
wellness and
fitness have
a place in the
corporation is still
cutting edge.

• Homegrown: 9%
Homegrown systems track the
fundamentals of ongoing Wellness
Initiatives. They generally lack the
sophisticated layers of tracking,
competition, insights and visualizations
of the commercial products. But, there
is a move to try to expand the utilization
footprint of other tools.
Fewer than one in five of the companies
that do not have a Wellness Management
System want one. This means that the
vendors are not adequately articulating
the value of the tool or that that value is
extremely elusive. There is also hesitation
based on valid concerns about privacy
and storage and use of employee
wellness data. From a purchaser’s
perspective, this means that you have to
be very clear about what you want and
why.
29% of the companies with a Wellness
Management System cannot recall the
name of their vendor. This indicates
usage and adoption issues.

Analysis
The Wellness Management segment is the shiniest new object in the HR tech pantheon. Key cultural forces,
like the Apple Watch and other wearable devices, make the prospect of a healthier workforce a little more
real. The hype may be a little ahead of the reality.
If you are considering acquiring a Wellness Management tool, it will require extraordinary effort to get the
system to work in your culture. Generally, Wellness Management is a significant cultural change (unless
your company is hypercompetitive already). In less competitive settings, no one seems to have figured out
how to harness employee motivation yet. So you’ll be facing that problem.
On the other hand, a modestly successful program built around a great wellness communications program
(some vendors provide some of this) can turbocharge the motivations of some parts of your operation. If
you are willing to take the risk, the payoff might be interesting.
Key cultural forces,
like wearable
devices, make
the prospect of a
healthier workforce
a little more real.

Compensation Management

Compensation Management is the art and science of optimizing the connection between work and pay.
It is how jobs are ‘priced.’ In general, compensation is set by a policy that matches market supply against
demand to determine an acceptable pay range for a given job.
The underlying idea of Compensation Management is to maximize the return on talent. In effect,
Compensation Management establishes a quality ‘band’ that the organization stays within to control overall
costs. By setting a range of acceptable pay for a given position, the organization establishes the level of
quality that it wishes to acquire.
Compensation Management Systems account for salary, bonus, stock option, and benefits budgets as a
part of the total compensation picture. Some systems store and display compensation analysis studies from
data providers.
Some Systems also operate as a workbench for creating job descriptions. Although it is rarely seen, being
able to use the job description derived from the Compensation Management System as the basis of all
other job descriptions used by the company allows for clear understanding of both performance and
compensation, and also provides important information for Recruiting.
About one in four companies have a Compensation Management System in place. Very small
companies are less frequent owners of Compensation Management Systems. Very large organizations
are slightly more likely to have a Compensation System in place.
This is not to say that companies without a formal Compensation Management tool don’t accomplish
much the same thing. Rather, the move towards formal technical Compensation Management software
is a function of the desire to really perfect this part of organizational economics.
A NPS® of 1 means that about the same number of users love it as hate it. This is likely caused by the
fact that the discipline is extremely dry and accounting like. The stereotypical HR practitioner is not
much like an accountant.
Compensation is also unique to each position and company. And people generally don’t talk about
salaries of employees to others outside the company.
Compensation
Management is the
art and science
of optimizing
the connection
between work and
pay.

25% of people who currently have a Compensation Management tool plan to replace it within the next
year.
• Outsourcing: 15%
Nobody (statistically speaking) outsources their Compensation Management. Yet, Compensation
Management is the second most likely HR Tech module to be outsourced. When it is executed by
a third party, both the human being and the service are delivered, usually temporary employees or
independent contractors who are paid by the agency.
About half of the time, practitioners use software that is a part of a larger suite of HR Tech.
• Homegrown: 15%
The initial thrust to have a Compensation Management System comes from the way that compensation
evolves. In a growing company, Compensation practice is a series of exceptions to the basic payroll
and job pricing approach. Homegrown systems are used initially to track the various configurations of
compensation that make up payroll.
Then, when compensation studies are added to the mix, the compensation department has to navigate
data that is sorted by position or job title. Invariably, some aspects of compensation are always
exceptions. This accounts for the relatively high percentage of homegrown solutions.
Homegrown would be the largest vendor of Compensation Management solutions if it were a vendor.
Half the people who do not currently have a Compensation Management tool wish that they did.
Practitioners really want to add an Compensation Management system to their workflow. In the
absence of a Compensation Management system, both the information involved and decision making is
extremely complicated to administer. This suggests a fertile growth market. We expect this to become a
standard part of the HR Tech stack.
The fact that four fifths of all customers can remember their vendor’s name indicates a high level of
engagement.
Half the people
who do not
currently have a
Compensation
Management tool
wish they did.

Compensation
Management is the
second most likely
HR Tech module to
be outsourced.

Analysis
Compensation Management is a relatively dry facet of HR that has a high financial payoff. Treading the
line between penny-wise and pound-foolish is the challenge that faces compensation practitioners as they
articulate payroll—almost every company’s largest expense. This means getting Compensation right is
critical to determining company profitability. Being able to monitor market conditions, control third party
reference data, and handle conversations about exceptions is at the heart of the discipline.
As the company grows and HR matures, the Compensation Management function is one of the most
critical elements of the company. Expertise in pricing jobs usually gets the department into the business of
being the go-between from the Board to the CEO in compensation negotiation.
If there is a single place to invest in HR, this is it. The provider market is more fragmented than other areas
(and all of HR Tech is extremely fragmented). Picking the right vendor is essential and depends more on
expertise than technical functionality.
If there is a single
place to invest in
HR, this is it.

Learning Management

Learning Management Systems are in a state of flux. Since anyone can develop and publish information
and much work is recorded in some manner, the workforce itself may be the best source of training content.
Rather than a solitary function that dictates the learning and development hierarchy, the L&D Department is
now becoming more like a curator.
Newer tools are able to harness a wide variety of content sources and forms.
Learning Management Systems can include everything from content development to rating, to compliance
monitoring. The most complex tools organize and manage content delivery while monitoring attendance
and certification.
In the world where every employee comes to work with a video camera embedded in their smartphone, the
Learning Management function harnesses the knowledge and experience of the workforce.
One fourth of all companies (and 40% of large companies) have a Learning Management System. The
larger the company, the more likely this is the case. Adoption is largely driven by the overall complexity
of the training problem.
More than 80% of practitioners either do not like or do not care about their Learning Management
System. The data suggests that broad market adoption is being slowed by the user experience.
Only 20% of people who currently have a Learning Management tool plan to replace it within the next
year. Interestingly, at a time when the need for learning and development is expanding, the combination
of NPS® and purchasing cycle suggest a slower expansion of the Learning Management footprint.
• Outsourcing: 5%
When Learning Management is outsourced, the provider is generally a curriculum source with relevant
industry and profession related content.
Since anyone
can develop and
publish information,
the workforce itself
may be the best
source of training
content.

60% of companies buy their Learning
Management System as a standalone
point solution that is divorced from a
suite. The majority of companies prefer
to acquire a tool that meets their specific
needs in spite of the extra procurement
work involved.
• Homegrown: 10%
Homegrown systems would be the
largest single vendor if it were a vendor.
The Learning Management system
market is extremely fragmented as
companies focus on meeting their
individual needs.
About one third of companies without a
System wish they had one.
22% of the companies with a Learning
name of their vendor.

Analysis
The Learning Management segment seems hungry for a new paradigm. Customers are unhappy, market
adoption is stalled, and the buyer favors point solutions. This suggests a flurry of new providers who
compete based on their affinity with specific niches.
The generational shifts in the workforce are driving the adoption of collaborative grassroots content that
may not have the same level of professional development as existing courseware. The marketplace is
beginning to favor bite sized trainings with local experts delivering the material. New market entrants seem
to favor tools that resemble social media even though the proof points for the approach are somewhat
suspect.
The Learning Management System must fit the cultural norms of the company that hosts it. Even if
collaborative forms seem to represent the latest and greatest approach to learning, the question is whether
the existing political and cultural infrastructure will support it. The more hierarchical an organization is, the
less likely that new training approaches will be successful.
It is easy to believe that the level of dissatisfaction with Learning Systems is really an indictment of
the adequacy of the underlying content. It is easy to blame the delivery tool for the weaknesses in the
curriculum. No doubt, that is partly true. But part of the issue is also that many work processes are
changing faster than anyone can develop the training for them.
When introducing tools that have a significant crowd-sourced component, there is an important question:
How do you determine and define training adequacy when the content comes from organizational
grassroots? While you can rely on the organization to generate guides to routinely experienced problems,
there is no natural champion for the core routine processes that define industrial operations.
The role of the curriculum developer is growing, changing, and expanding. With new learning tools, the L&D
department is being given with greater responsibility. We see that increasing with time.
When considering
a purchase, it
is important to
understand how
long most people
stick with their
provider.

Recruiting

Recruiting ranges from simple administrative operations to complex, branding infused, competitive
scrambles. As the HR Department’s only market facing function, recruiting operates differently from the rest
of HR.
Recruiting is where innovation happens most frequently in HR.
When we initially reviewed the data for Recruiting Systems, we were alarmed by the low level of market
penetration (adoption). We then realized this is because advanced recruiting practitioners use a range of
specialty tools rather than a single system. Our qualitative interviews clarified the fact that experienced
recruiters do not think of their tool set as a system. It is more like a toolbox.
With between 12 and 20 sub-processes, recruiting operations rarely use all of the same tools in the same
sequence. Unlike other HR functions, recruiting techniques vary by job, industry, region, corporate culture,
and, business model.
Only 34% of all companies have a formal Recruiting System.
A single Recruiting System is useful in very specific settings. The market penetration figures reflect that
reality. The rest of the market uses a more complex array of point solutions.
Only 23% of practitioners have a positive take on their Recruiting System. This seems to be an
additional reflection of the problem with Recruiting Systems. If Recruiting is really all about using
specific tools for specific purposes, then practitioners will experience the system as a constriction of
effort rather than a way to be liberated from drudgery.
Only 14% of people who currently have a Recruiting System plan to replace it within the next year. In
other words, once you are committed to a Recruiting System, you will have it for a long time.
• Outsourcing: 8%
Recruitment Process Outsourcing is a common approach to Talent Acquisition. At 8%, the recruiting
process is in the top 1/3 of HR Systems that are outsourced. Because recruiting is complex, companies
with broad expertise are often a reliable alternative to purchasing technology.
Advanced
recruiting
practitioners use a
range of specialty
tools rather than a
single system.

Almost half of the practitioners who have
a Recruiting Tool use something that is a
part of an existing suite.
• Homegrown: 10%
Interestingly, the number of companies
that build homegrown solutions for
recruiting is lower that any other area.
Nearly half of the people who do not
currently have a Recruiting Tool wish
that they did. Only Succession and
Compensation have similar levels of
desirability. Practitioners really want to
add a Recruiting System to their workflow
if they do not currently have one
Only 14% of the companies with an
Recruiting System cannot recall the name
of their vendor.

Analysis
The idea that practitioners do not like their Recruiting system is deeply held in both the practitioner and
vendor communities. When you contrast that reality (and an NPS® of -9 supports the idea) to the 7 year
term of ownership, you have to scratch your head. What is it that makes something no one particularly likes
so sticky?
The answer has to do with the actual utility of the Recruiting System. At its core, this is where the records
are kept for review by the Department of Labor. Recruiting Systems are the place where hiring records are
kept. When there is a government audit or investigation, this is what they want to see. If a company does
business with the government, a Recruiting System is usually required to collect and keep hiring data.
No other tool in the HR Tech Stack is so conflicted. Practitioners routinely expect innovative results and
performance from a system that is designed to mitigate legal risk. It is just like putting a fish in a blender
(remember SNL’s Bassomatic?). While you can do it, the results are always suspect.
Recruiting departments routinely purchase ‘the next thing’ in their ongoing quest for competitive
advantage. That is how operations like large social media companies can build a billion dollars of recruiting
revenue seemingly overnight. The new tools do not replace the need for a record keeping system for hiring.
Rather, they keep the organization’s options open in an ever competitive market for talent.
Practitioners
routinely expect
innovative results
and performance
from a system
designed to
mitigate legal risk.

Performance Management

Performance Management Systems can be as simple as a shared to-do list and as complex as a
hierarchical cascading goals program. The underlying premise is that the organization is best able to
achieve its objectives when all employees understand their part in things. Generally, the process is annual
with quarterly updates. In many places, Performance Management is executed only once a year.
There is growing discomfort with the idea that company goals are achieved through reviewing past
performance of individuals. In reality, no organization gets anywhere with an inflexible system that assumes
that a goal can stay fixed for a specific period of time. Businesses survive and thrive when they can adapt.
Thus, the Performance Management System approach can be at odds with agility.
Yet, there is an additional use for the tools. Every manager from first level supervisor up has to manage a
raise pool. The money allotted for compensation increases never stretches as far as desired. So, managers
are required to make difficult decisions about scarce resource allocations. Who gets which level of raise is
a tough problem.
Performance Management Systems quantify the dilemma and allow decisions that at least have the
appearance of rationality.
Part of the challenge with Performance Management Systems is that they bear little resemblance to the
way work actually gets done. There is no system in the market that makes an assessment of whether or not
a specific employee can carry her load of goals. Since goals emerge through cross functional teams, there
is little tie to the functional manager who is ultimately responsible for compensation.
Meanwhile, alternative structures (from ad hoc governance in a holocracy to crowd sourced short
term feedback systems) are presenting themselves. It is yet another area where the best thing for the
organization is both industry and culturally dependent.
Assessing performance is different in a factory than it is in a law firm (or a coal mine, bank, hospital,
or call center).
The challenge is
that Performance
Management
Systems bear little
resemblance to the
way work actually
gets done.

Almost 2 in 5 companies have a Performance Management System in place. In the largest companies,
that number is half. The problem of documenting and appraising performance is more important in
settings with a quantitative output. The idea is a little harder to execute in service environments.
Practitioners are generally unhappy with their Performance Management system. This has to do with
suitability for purpose. Systems don’t work well when their fit to their purpose is inefficient. In software,
sometimes dissatisfaction comes from the software. Sometimes it comes from the problem being
solved another way.
Dissatisfaction with software does not always translate into replacement. Only 1 in 5 plan to replace
their system this year. It is challenging to get resources to change something that does not work very
well.
• Outsourcing: 3%
When Performance Management is outsourced, the contractor provides the administration of the
program. This is usually done to reduce cost.
Slightly less than half of the practitioners who have an Performance Management Tool use something
that is a part of an existing suite.
• Homegrown: 12%
Interestingly, the number of companies that build homegrown solutions for Performance Management
is lower than in any other area.
Only one quarter of practitioners who do not have a Performance Management system would like to
have one.
21% of the companies with an Performance Management System cannot recall the name of their
vendor.
It is challenging to
get resources to
change something
that does not work
very well.

Fewer companies
build homegrown
solutions for
Performance
Management than
in any other area.

Analysis
The Performance Management software segment is fractured for a clear reason. What works in one setting
does not in another. One way to read this data is that more than half of companies cannot find value by
automating performance management.
When purchasing Performance Management technology, it will be important to check references
from organizations with similar cultures. A sizeable portion of firms find it better to document this with
homegrown tools. A good purchasing process will begin with a very clear understanding of the company
and what it is trying to accomplish.
At the surface level, Performance Management should be at the heart of the company’s strategy. It is
the single HR tool that directly promises to leverage the full potential of Human Capital. Performance
Management is where HR should be able to demonstrate its importance and relevance. This is an
administrative process that promises both essential information about what is happening in the company
and real results for the business.
Yet, Performance Management systems have a tendency to become politicized and get used narrowly.
Performance Management often just means a review of whether goals of the past were met and whether
someone gets a raise, instead of being used for development of people in their jobs for the future. Like
Learning, Performance Management has room for growth and redesign to be used in new and interesting
ways. But it does not appear that we are there yet.
Purchasing a Performance Management System can easily become one of those exercises where idealism
is trumped by the reality of the trenches.
Performance
Management is the
single HR tool that
directly promises
to leverage the full
potential of Human
Capital.

HR Analytics

In practice, there is little differentiation between Reporting and Analytics tools. In theory, Reporting is
the process of organizing data into informational summaries in order to monitor how different areas of a
business are performing. Analysis is the process of exploring data and reports in order to extract meaningful
insights, which can be used to better understand and improve business performance.
The two activities, reporting and analytics, are inextricably linked. More often than not, the trigger for a deep
analysis of a problem is something that emerges in routine reports. Although there are plenty of cases of
deep investigation resulting from someone’s intuitive hunch, the majority of data analysis comes as a result
of a change in the regular report.
Some Analytics tools start with this premise and use visualizations as a way of navigating the data
beginning with the routine report. In those settings, HR Analytics are a gateway to a constantly improving
capacity to predict human performance.
More often, ‘analytics’ is used interchangeably with ‘reporting.’ Today, most vendors claim to have an
analytics capability. In reality, what is being sold is a repurposed version of the existing reporting packages,
perhaps with additional drill-down functionality.
Many vendors offer preformed reporting that looks at specific HR Tech performance variables. One vendor
published a dictionary of HR Analytics that featured 250 primary measures with about 10 variations of each.
That is 2,500 possible HR measurements. It is not unusual to find preprogrammed reports on some or many
of these variables being sold as analytics.
The promise of ‘big data’ and the ability to ‘directly measure HR’s impact on the business’ is creating a
heightened demand for analytics tools. This is another area where sound purchasing depends on being very
clear about what you want.
The promise of
‘big data’ directly
measuring
HR’s impact on
the business
is creating a
heightened
demand for
analytics tools.

Only one quarter of all companies have a formal HR Analytics System. This is largely due to two factors.
One, HR Analytics is a cross-discipline function. There is no natural champion for the function and no
natural buyer. Two, claims and expectations about HR Analytics functions vary widely.
The HR Analytics segment has the highest Net Promoter Score® of any of the HR Technology Silos. It
has the lowest number of detractors (people who scored the area as a 6 or less on a scale of 1 to 10)
and the highest number of promoters. In spite of the underlying market confusion, this is curently the
hottest area in HR Tech.
Organizations replace their HR Analytics tools faster than any other segment.
• Outsourcing: 5%
When Analytics are outsourced, the contractor provides an analysis shop that manipulates the
company’s data on its behalf. There is an emerging argument that outsourcers are more likely to be able
to discover insight.
This is where you can see a significant difference in approach. Using the analytics toolset embedded
in a suite guarantees a reduced level of hassle for data integration. Using a point solution opens the
possibility of greater insight. The market is roughly split on which approach is better.
• Homegrown: 9%
Compared to other HR solutions, the organization is less likely to build its own HR Analytics function.
A higher percentage of practitioners would like to have a Learning Management system. For all of
the excitement, a new HR Analytics system is in the middle of the wish list. This is due in part to a
stereotype that HR practitioners are incapable of working effectively with statistics and data.
21% of the companies with an HR Analytics System cannot recall the name of their vendor.
In spite of the
underlying market
confusion, this
is currently the
hottest area in HR
Tech.

For all the
excitement, a
new HR Analytics
system is in the
middle of the wish
list.

Analysis
The hardest part of any HR Analytics implementation is the data integration component. That is the driving
force behind the choice to use analytics that come as a part of a large suite. Data integration can be quite
difficult. It is unpleasant to be the HR practitioner who has to tell management that the question can not be
answered because the data is there but not available.
In our qualitative interviews, it became clear that HR practitioners are ambivalent about some aspects of
the emerging analytics discipline. Many people in HR spend their time moving data between spreadsheets
to generate insight. They have adapted to the inefficiencies of the software around them and succeed by
being human data integrators.
It would be easy to dismiss that approach as something to be automated with a great cost savings. The
business of examining and reexamining data is the central component of a great analytics process. Several
organizations have made the tactical error of assuming human insight will not be needed.
Then, it often turns out that the new tool requires the same old approach and does not actually provide
analysis of anything.
HR Analytics are being cast as a foundation for a utopian world in which data can be used to eliminate the
vagaries of human involvement in work. The promises largely remain unfulfilled. Choosing to acquire an HR
Analytics System brings risk that is difficult to manage and requires a great deal of time and attention. This
is one area where a Tech acquisition requires new and more work instead of trying to save work.
That said, this is the hottest segment in HR and the place where future leadership careers are being mined.
Many in HR have
adapted to the
inefficiencies of the
software around
them and succeed
by being human
data integrators.

HR Information Systems (HRIS)

An HRIS can be as simple as a repository for employee contact information and as complex as a system
the combines most employee data, payroll, benefits, scheduling, workforce management, recruiting and
compliance. Sometimes, the term is used to describe all HR Technology activities in a company. Sometimes
it refers to a simple ‘system of record’ that other systems rely on for data standardization.
We asked an open-ended question without regard to the underlying functionality. This data measures what
practitioners say they have at their companies. The answers indicate that having an HRIS is directly related
to the size of the organization.
The fuzziness in definitions is at the heart of a large communications problem. When definitions do not
synch up, it is challenging to expand, replace or improve the core functionality.
There a many offerings emerging that combine social data, employee profiles, a communications
functionality and directory/contact information into a single employee profile. As attractive as these new
offerings are, they seem to lose sight of the more complex and secure data that HR is responsible for. Both
employee health and personnel records have a range of security constraints associated with them.
52% of all companies have a formal HRIS.
The HRIS segment has a slightly favorable NPS®.
Only 20% of people who currently have an HRIS plan to replace it within the next year. HRIS is a
workhorse and rarely seen as a sexy tool in need of improvement. It is a challenge to demonstrate the
strategic impact of an HRIS. It is record keeping straight up.
• Outsourcing: 5%
Nobody (statistically speaking) outsources their HRIS. This is due to the fact that HRIS is unique to the
person and perhaps to the individual. It is, on one level, the very definition of a critical ‘rite of passage’.
The answers
indicate that having
an HRIS is directly
related to the size
of the organization.

Almost 2/3 of the practitioners who have
an HRIS tool use something that is a part
of an existing suite.
• Homegrown: 13%
At 13%, the number of companies with
Homegrown solutions is significant. To
some extent, the smaller the company,
the more likely the HRIS is a kluge of
spreadsheets and documents.
Slightly more than a quarter of the
companies without an HRIS want one.
We think this is an area where naming
conventions have affected the data. As
companies increase in size, keeping
track of employees becomes both more
difficult and more important.
Our best guess is that the HRIS functions
are being performed by other software
(like Payroll, Benefits and Scheduling).
Some suites that offer core HR functions
deliver HRIS functionality without ever
actually calling it that.
Only 16% of the companies with an HRIS
have trouble recalling the name of their
vendor.

Analysis
The HRIS is a gateway to the most complex aspects of data in the HR Technology stack. The lines between
payroll, scheduling, benefits management and HRIS are hard to clarify and depend heavily on the way a
vendor organizes their technology.
Differences between the claims and realities of competing products are challenging to understand on
one level. On another, there is very little real difference between providers. It is mostly a question of the
language being used to describe the product.
Purchasing an HRIS should involve a clear definition of a comprehensive set of use cases. Rather than
attempting to specify complex functionality, the purchasing process should revolve around a group of
mandatory use cases.
Our data reflects the confusion in the market. In a nutshell, practitioners have to solve that question on
their own. It is another place where the idea of checking references provided by companies in similar
circumstances is essential. In this area, organizations will have to rely more deeply on their vendors.
Purchasing an
HRIS should
involve a clear
definition of a
comprehensive set
of use cases.

Time and Attendance

Time and Attendance Tools range in complexity from simple time clocks and spreadsheet-like tracking
to complex arrays of time keeping and project management time accounting. They are far more common
in companies with hourly employees, where adequate tracking of time is both a compliance and
compensation issue.
With salaried employees, project tracking and billing are less dependent on time spent. The amount of time
a salaried employee spends on a given task is a matter of recollection and perception (unless they bill by
the hour).
Time and attendance is one place where mobile technology is really making a difference. Having the
capacity to interact with the Time Keeping System from the smartphone or tablet eases managerial
workload and increases employee flexibility.
About half of all companies have a formal Time and Attendance System. The likelihood that a company
has a Time and Attendance System is inversely related to company size. The smaller the company, the
more likely they have a system.
The Time and Attendance segment has a relatively high NPS®.
Buying a Time and Attendance system is a long term arrangement. Only one in six current system
owners are planning to replace their system.
• Outsourcing: 4%
Time and attendance is most often outsourced as a part of a larger Payroll outsourcing project.
Time and Attendance is a part of a suite for half of users.
Time and
attendance is
one place where
mobile technology
is really making a
difference.

• Homegrown: 13%
Smaller companies are more likely
to build their own system. There are
some interesting cases of organizations
that partner with a vendor to build a
homegrown system.
Two in five organizations that do not have
a Time and Attendance system wish that
they did.
17% of the companies with a Time and
Attendance System cannot recall the

Analysis
The Time and Attendance segment is changing because mobile technology (phones and tablets) open
the area to innovation. When employees can use self service to schedule shifts and report to work,
management workloads associated with those administrative tasks decline. The smaller the
company, the
more likely they
have a Time
and Attendance
system.

Benefits Management

Benefits Management software gives employees an interface between the company’s benefits plan and
the benefits providers. The core idea is to present all of the options in a single, consistent workflow and
interface. The most sophisticated tools provide for a two way exchange between providers and employees
in the framework of company policy.
Having all benefits transactions occur in a single framework allows the organization to optimize its benefits
spend while encouraging employees to customize their end of the arrangement.
A Benefits Administration System creates and maintains an enrollment profile for every employee, keeping
track of information such as the date hired, marital status, number of dependents, total hours worked, and
attendance records.
The majority of companies outsource benefits administration to either a provider or an intermediary.
The distribution of software utilization peaks in the middle of the company size spectrum. Companies
smaller than 500 employees manage benefits in house and manually, while companies over 2,500
usually use a third party to execute.
The Benefits Management segment is evenly balanced between promoters and detractors. With nearly
50% of practitioners being passive, practitioners do not care about Benefits Management Systems in
the same way that they do not care about Learning, Succession, and Total Rewards.
Slightly more than one in ten companies that currently have a Benefits Management System are
considering replacing it.
The data suggests that practitioners make a distinction between outsourcing benefits management
and outsourcing all of benefits selection and administration. That means that when all of the work
associated with providing employee benefits is outsourced, the Benefits Management component is
simply a part of the larger issue.
The core idea is
to present all of
the options in a
single, consistent
workflow and
interface.

Nearly two in five companies use Benefits
Management Tools that are a part of a
larger suite. In other words, the majority
of companies use a point solution.
• Homegrown: 7%
There are two types of homegrown
solutions. For small companies, keeping
a log of benefits expenses as a part of
accounting is a common approach. In
larger companies, using spreadsheets
to integrate the data between multiple
providers of benefits is common.
About one quarter of the organizations
that do not currently have a Benefits
Administration Tool wish they did.
21% of the companies with an Benefits

Analysis
Benefits management is one of the HR disciplines that is well beyond the core capabilities of most
companies. The combination of execution and regulatory complexity make it an ideal candidate for
outsourcing. Many benefits providers are willing to take on the entire administration process in order to win
the core benefits business.
In the benefits world, the cost of administration is dwarfed by the actual cost of the benefits being
administered. That is why third party providers are willing to take on the workload. In other words, the
choice to acquire or replace a Benefits Management System is inextricably linked to a larger benefits
execution discussion.
The argument for local embedded management of benefits programs is that costs are more actively
controlled by an in-house practitioner. The argument against begins with the reality that the cost manager
will have to deliver customer service directly to employees.
The combination
of execution
and regulatory
complexity
make Benefits
Management an
ideal candidate for
outsourcing.

Payroll

The complexity of Payroll problems is directly proportional to the size of the organization. The greater
the span of professions and locations, the greater the array of compensation models and regulatory
requirements. In the United States alone, there are more than 400 laws (from local to national) that regulate
everything from minimum wage to pay periods, overtime, tax withholding, garnishment and what has to be
on the pay stubs.
Global firms have even greater problems. Very few vendors (almost none) are able to provide
comprehensive international payroll services. Within the roughly 200 sovereign nations are conflicting laws
covering who gets paid what, when, and in which currency.
Payroll, which is a critical function in every organization, is singularly difficult to get right. Most organizations
that execute their own payroll process in house, begin making trial runs nearly a week in advance of the final
payroll run. Still, something inevitably goes wrong.
Perhaps the toughest thing about payroll is how personal its outcomes are. In an organization of five
hundred, 99% accuracy means that five people’s pay checks are screwed up. While the execution is nearly
perfect, those five employees are profoundly affected. Even a 99.5% effectiveness rate is damaging to
organizational morale. Payroll requires perfect execution.
There is an energetic universe of outsourcing vendors for payroll. The float (the difference between the time
the vendor receives payroll funds and has to disperse them) is a powerful element of the equation. Even if
the financial benefits of handling the float (short term interest and large bank accounts) is discounted or set
aside, handling that much money has a clear impact on the vendor’s service proposition. The salary and
demographic data is even more enticing.
New systems are arriving on the scene. They reduce the friction associated with payroll execution by
providing real time trial runs.
Payroll, a critical
function in every
organization, is
singularly difficult to
get right.

Only 36% of all companies have a formal Payroll System. There is an inverse relationship between size
of the company and the likelihood that it has a Payroll System. Over half of small companies have one.
Slightly more than a quarter of large companies do.
While errors are painful and damaging, more people like their payroll provider than not. A full 33% of
Payroll System customers give their providers high marks.
Once you acquire a Payroll System, you tend to have it for life. Organizations keep their payroll software
longer than any other HR software. This is largely because the change can be so traumatic. No one
wants the high error rates a transition will inevitably bring.
As companies grow, they tend to outsource payroll.
Half of all companies that have a Payroll System in house use something that is a part of a larger suite.
• Homegrown: 6%
The 6% of organizations that use homegrown solutions are mostly smaller companies.
One in five of the people who do not have a Payroll System in place wish they had one. These are
mostly small companies.
15% of the companies with a Payroll System cannot recall the name of their vendor.
Once you acquire
a Payroll System,
you tend to have it
for life.

There is an inverse
relationship
between size of a
company and the
likelihood it has a
Payroll System.

Analysis
Considering a Payroll System offers an important array of decision making. All companies have to pay their
employees. Therefore, all companies have some form of payroll function. While small companies try to
accomplish the function in-house, most companies choose to outsource the entire function. That makes
the issues associated with compliance go away.
With either outsourcing or a Payroll System, a company gets help with making sure that employees are
paid on time in the right place, in the right amounts, that withholdings are calculated correctly, and that the
information that is required by each state, and often cities, is provided.
However, no payroll company or Payroll System can fix issues with worker misclassification or inaccurate
time keeping by humans. Still, it is a huge service to have someone else keep track of all of the wage hour
reporting requirements.
No Payroll System
can fix issues
with worker
misclassification
or inaccurate
timekeeping by
humans.

Notables
In each of our surveys, we ask practitioners to name vendors who are ‘Notable” in specific areas. The
question uses a blank, fill-in-the-box format. No prompts are offered. The practitioner must answer the
question based on unaided recall.
This is our third attempt to portray the practitioner view of the marketplace. We know that it will be vastly
different from the vendor’s perspective. Like two sides of the same coin, the two vantage points are radically
different while describing the same reality. It is important to understand that practitioners rarely make some
of the distinctions that vendors do when they characterize their market or the HR Industry.
For instance, while practitioners are aware of vendor names, they are rarely aware of which market segment
or niche a particular vendor serves. This means that the practitioner view is an aggregate view. These word
clouds reflect that view.
From the vendor’s perspective, the market is composed of the other people who go to the same trade
shows and engage the same demographic. At KeyInterval, we have a list of 1,000 vendor names that we
generally expect will show up on that list.
The vendor perspective is largely about direct competitors in the same niche.
Most other analyst firms present a picture of the vendor landscape that resembles the vendor point of view.
The practitioner perspective is different. Formed from a combination of marketing inputs and direct
experience, practitioners are more interested in the tools that they use than an analyst’s view of what
matters. Name recognition and reputation are built from the grassroots. In the practitioner’s view, the buyer
and the vendor can be somewhat indistinguishable (depending on how far removed they are from the
process).
That is why vendors who might be perceived as smaller made it to the top of our first list. Practitioners can
only tell us about their experience. There is no incentive for them to have or maintain the analyst/vendor’s
view of the universe.
There is a Second . . .
dimension to the question.
Every single HRTech vendor works
in some sort of niche. They only serve
customers that have a certain size and
complexity. They fare better in one industry
or another. They have deeper reach in
some geographies. Their audiences are
limited.
The practitioner audience is not niche
specific.
None of the companies paid to be
mentioned in this report.
In each of the following sections, the
word cloud and Top 10 list reflect the
practitioner’s perspective on the subject.

Notable for Onboarding
10 Most Notable Vendors . . .
for Onboarding Systems are:
1. ADP
2. Taleo
3. InHouse
4. Oracle
5. UltimateSoftware
6. Icims
7. SAP
8. Enwisen
9. ExactHire
10. SuccessFactors

Notable for Succession Management
for Succession Management Systems are:
1. Microsoft
2. ADP
3. Halogen
4. IBM
5. InHouse
6. Ultimate
7. Oracle
8. SumTotal
9. 9Box
10. CornerstoneOnDemand

Notable for Total Rewards (Recognition)
for Total Rewards (Recognition) Systems
are:
1. InHouse
2. Microsoft
3. Kronos
4. Oracle
5. TotalRewardsSftwr
6. Globeforce
7. OCTanner
8. SAP
9. AwardCo
10. CorporateRewards

Notable for Wellness Management
for Wellness Management Systems are:
1. Microsoft
2. CSISoftware
3. MindBody
4. IBM
5. InHouse
6. SoftTech
7. UnitedHealthCare
8. ADP
9. Anglo
10. Atena

Notable for Compensation Management
for Compensation Management Systems
are:
1. ADP
2. InHouse
3. Microsoft
4. OracleHCM
5. PeopleSoft
6. SAP
7. Cisco
8. Halogen
9. IBM
10. Workday

Notable for Learning Management
for Learning Management Systems are:
1. InHouse
3. Microsoft
4. Skillsoft
5. SAP
6. ADP
7. HewlettPackard
8. Saba
9. Blackboard
10. Capterra

Notable for Recruiting
for Recruiting Systems are:
1. Taleo
2. InHouse
3. Microsoft
4. ADP
5. Icims
6. Oracle
7. Monster
8. PeopleAdmin
9. Recruiterbox
10. USAStaffing

Notable for Performance Management
for Performance Management Systems
are:
1. Microsoft
2. Halogen
3. Oracle
4. InHouse
5. PeopleFluent
6. ADP
7. Workday
8. IBM
9. SuccessFactors

Notable for HR Analytics
for HR Analytics Systems are:
1. OracleHCM
2. Microsoft
3. Aquire
4. IBM
5. Visier
6. HewlettPackard
7. PeopleSoft
8. InHouse
9. Tableau
10. ADP

Notable for HR Information Systems
for HRIS are:
1. ADP
2. Oracle
3. InHouse
4. Microsoft
5. PeopleSoft
6. Workday
7. IBM
8. Kronos
9. SAP
10. Sage

Notable for Time and Attendance
for Time and Attendance Systems are:
1. Kronos
2. ADP
3. InHouse
4. Microsoft
5. SAP
6. IBM
7. Paychex
8. Sage
9. TimeForce
10. Oracle

Notable for Benefits Management
for Benefits Management Systems are:
1. ADP
2. Oracle
3. Microsoft
4. InHouse
5. Zenefits
6. Kronos
7. AonHewitt
8. BambooHR
9. Ceridian
10. Cisco

Notable for Payroll
for Payroll Systems are:
1. ADP
2. Intuit
3. Kronos
4. InHouse
5. Paychex
6. Oracle
7. Microsoft
8. Cisco
9. PeopleSoft
10. APS

What We Missed and New Questions
Great research asks new questions or provides new insights on older questions. Our goal is never to
reaffirm the status quo. Our research is designed to stimulate thought and discussion. We are looking
for new insights that can make the industry’s conversations more effective.
In this research, we wanted to reframe the current dialog about software’s utility and the idea that every
company needs the same toolset. We know that there are differences between companies driven by
business model, size, industry, and region. The goal of this project was to illuminate the differences and
define an optimal technology stack for an HR department.
We expected that we would be able to have a good picture of what works for whom based on those four
elements (business model, size, industry, and region).
We are getting there. It’s going to take more and deeper research over time. This report is a powerful
beginning that will be supplemented and expanded in the coming years.
One of the biggest surprises was the meaningful number of software silos that are important to the HR
story. We missed seven or eight important categories of software. We will fold those in to the next studies.
(They are defined in the categories chapter.)
Overall, market penetration was much lower that we expected. The world of the analyst is an idealized
universe in which every company does everything. What we are finding is much more interesting than that.
Instead of 13 basic types of HR software, there are 20 or 21. And, if you count some of the more complex
types of recruiting tool, the number of different possibilities may be as high as 30.
Some companies use that many different tools. Others don’t. The range of probable scenarios is much
greater than we thought. The actual practice of HR is far more variable than we have been led to believe.
The actual practice
of HR is far more
variable than we
have been led to
believe.

Methodology
Responses by Region
The 785 responses were spread across the United States in a representative fashion.
The following tables and maps illustrate the underlying structure of the data.
Our 785 Responses . . .
were driven using a variety of means.
Social media campaigns, targeted
emails, promotions in trade journals, and
purchased panel responses all played a
role in the process.

Responses by Region, cont’d.

Responses by Level of Educational Attainment
EDUCATION RESPONSE %
Less than High School 0 0%
High School / GED 41 5%
Some College 88 11%
2-year College Degree 86 11%
Trade/Technical/Vocational School 17 2%
4-year College Degree 383 49%
Masters Degree 146 19%
Doctoral Degree 12 2%
Professional Degree (JD, MD) 12 2%
TOTAL 785 100%

Responses by Role
All of the various roles in HR are represented in the responses.
ANSWER RESPONSE %
CHRO 26 3%
SVP 13 2%
VP 30 4%
Director 134 17%
Manager 317 40%
Business Partner 40 5%
Recruiter 78 10%
Other 147 19%
TOTAL 785 100%

Responses by Function
All HR functions except University Relations are represented in the 785 responses.
HR FUNCTION RESPONSE %
Benefits 58 7%
Business Partner 40 5%
Compensation 29 4%
Compliance 25 3%
Diversity 4 1%
Employee Relations 138 18%
Generalist 120 15%
Organizational Development 47 6%
Payroll 86 11%
Recruitment 89 11%
Safety 7 1%
Talent Management 34 4%
Training and Development 58 7%
University Relations 3 0%
Other 47 6%
TOTAL 785 100%

Responses by Industry
The 785 total responses came from 104 different industries.
Accounting 12 1.5%
Airlines/Aviation 3 0.4%
Alternative Medicine 2 0.3%
Animation 1 0.1%
Apparel & Fashion 3 0.4%
Architecture & Planning 3 0.4%
Arts & Crafts 4 0.5%
Automotive 14 1.8%
Aviation & Aerospace 4 0.5%
Banking 20 2.5%
Biotechnology 4 0.5%
Broadcast Media 5 0.6%
Building Materials 7 0.9%
Business Supplies & Equipment 12 1.5%
Capital Markets 3 0.4%
Chemicals 5 0.6%
Civic & Social Organization 2 0.3%
Civil Engineering 5 0.6%
Commercial Real Estate 3 0.4%
Computer & Network Security 4 0.5%
Computer Hardware 2 0.3%
Computer Networking 5 0.6%
Computer Software 15 1.9%
Construction 20 2.5%
Consumer Electronics 5 0.6%
Consumer Goods 14 1.8%
Consumer Services 8 1.0%
Cosmetics 1 0.1%
Defense & Space 2 0.3%
E-learning 1 0.1%
Education Management 61 7.8%
Electrical & Electronic Mfg. 9 1.1%
Entertainment 3 0.4%
Environmental Services 4 0.5%
Events Services 1 0.1%
Facilities & Services 3 0.4%
Facilities Services 2 0.3%
Financial Services 18 2.3%
Fine Art 1 0.1%
Food & Beverages 8 1.0%
Food Production 1 0.1%
Furniture 1 0.1%
Government Administration 35 4.5%
Government Relations 8 1.0%
Graphic Design 1 0.1%
Health, Wellness & Fitness 36 4.6%
Higher Education 3 0.4%
Hospital & Health Care 42 5.4%
Hospitality 23 2.9%
Human Resources 73 9.3%
Individual & Family Services 2 0.3%
Industrial Automation 1 0.1%
Information Services 3 0.4%
Information Technology & Svcs. 18 2.3%
Insurance 8 1.0%
Internet 1 0.1%
Law Enforcement 3 0.4%
Law Practice 2 0.3%
Legal Services 5 0.6%
Libraries 1 0.1%
Logistics & Supply Chain 2 0.3%
Machinery 9 1.1%
Management Consulting 13 1.7%
Market Research 1 0.1%
Marketing & Advertising 4 0.5%
Mech. or Industrial Engineering 2 0.3%
Media Production 2 0.3%
Medical Device 3 0.4%
Medical Practice 8 1.0%
Mental Health Care 1 0.1%
Military 4 0.5%
Mining & Metals 5 0.6%
Museums & Institutions 2 0.3%
Nonprofit Organization Mgt. 24 3.1%
Oil & Energy 5 0.6%
Online Publishing 1 0.1%
Outsourcing/Offshoring 3 0.4%
Package/Freight Delivery 1 0.1%
Packaging & Containers 1 0.1%
Paper & Forest Products 2 0.3%
Pharmaceuticals 12 1.5%
Photography 1 0.1%
Plastics 3 0.4%
Printing 2 0.3%
Professional Training 6 0.8%
Public Relations 1 0.1%
Real Estate 11 1.4%
Religious Institutions 2 0.3%
Renewables & Environment 1 0.1%
Research 1 0.1%
Restaurants 5 0.6%
Retail 38 4.8%
Security & Investigations 3 0.4%
Staffing & Recruiting 1 0.1%
Supermarkets 1 0.1%
Telecommunications 9 1.1%
Textiles 2 0.3%
Transportation/Trucking/Railroad 9 1.1%
Utilities 4 0.5%
Veterinary 1 0.1%
Warehousing 4 0.5%
Wholesale 8 1.0%
Wireless 1 0.1%
TOTAL 785 100%
Industry No. % Industry No. % Industry No. % Industry No. %

Research Agenda
KeyInterval Research is mapping the complexities of practitioner experience in the HR Tech universe. We
help HR understand what’s possible and what fits best. We do disciplined, pragmatic research to help
practitioners separate fact from anecdote.
Here is our research agenda.
One: What Is The Ideal Vendor Relationship? Purchase Report
There is a diverse range of possible ways to build a relationship with a vendor. We’re
eager to discover what works and what doesn’t. As we map the area, we expect to find
amazing success stories and examples.
Two: Why Do Implementations Succeed? Purchase Report
We are going to seek and discover exemplary success stories. We are really curious
about the factors that create memorable successes. What are those drivers? Is there a
difference between a great success story and something merely adequate? What’s the
difference?
Three: What Is The Optimal Technology Stack?
The HR Stack is all the software, data and apps in a company’s HR Department. No two
are the same. Every instance is truly unique... like a cultural fingerprint. We will map
what’s being purchased and by whom.
Four: Is There a Best Data Strategy?
The future of HR is anchored to its ability to harness data. We aim to map the optimal
data model and its critical components. These are the early days of HR data mastery.
We can't wait to report what we learn.
Five: Do Users Love Your Software Purchases? (Software Engagement)
Enterprise HR software users can LOVE the software you purchase. They can also hate
those purchasing decisions. What makes an optimal environment for love of enterprise
software? We are on it.
Acknowledgements . . .
We are blessed with a team that makes
this look easy.
Raymond Sumser is responsible for
the amazing graphics.
Anne Hill is the reason the report has
such a great look and feel.
Heather Bussing takes chunky raw
material and shapes it into useful insight.
Reinhard Joelli watches the data and
makes sure our statistics make sense.
Stacey Harris provides a level of depth
that makes the research sound.
Our network of advisors and practitioners
is extraordinary. 73 people offered time
and important feedback to the qualitative
questions the data.
Our customers make this all possible.

Six: How Does This Go Together?
We’ll summarize the data and try to understand and explain how each variable can make
for a better HR department. We will also include M&A and Transaction data. We review new
ideas and products.
Seven: What Is The Model Purchasing Process?
Most companies have a sophisticated way to buy software. We want to understand the
Purchasing Process. Changes are afoot. We’re excited about staying on top of the evolution
as it happens.
Eight: What Is The Perfect HR Budget?
The further we look into HR’s budget, the more we understand that this is the best way to
explore the overall organization’s commitment to HR and its issues. The budget is a good
way to understand what matters.
Nine: Do Employees Use The Software? (Adoption)
We are researching how much, how often and why employees use HR Enterprise Software.
We think that organizations that get optimal User Adoption also achieve the maximum ROI.
Ten: Which Metrics and Analytics Are Useful?
We research which HR metrics and analytics are working under what conditions. We
are fascinated with the emergence of HR as a quantified discipline. This area will grow
significantly in the coming years.
Eleven: Are HR Processes Effective?
Exploring the relationship between HR and its customers has our attention. We’re pretty
sure that increased accountability is a part of HR’s immediate future. We are excited to see
it unfold.
Twelve: What Has Happened? What Did We Learn? What’s Coming?
We hold ourselves accountable and examine the cumulative understanding of our research
agenda. We will be soliciting questions ongoing to be answered in this report.

Optimal Tech Stack Report

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