Changing Expectations in HR Software Applications

Amid the frenetic pace of acquisitions in the HR and Talent Management software space, an interesting theme has emerged. The companies being snatched up with the greatest exuberance seem to be focused on machine learning and predictive analytics. 

This raises the question: what is driving the demand (and corresponding valuations) for these start-ups? There is no question that "data science" is hot, and has been for some time now. But there is an apparent discrepancy between the hyped-up interest in talent analytics and the actual investment / adoption of said discipline by corporations, at least in the HR space.

Steve Jobs believed that "a lot of times, people don't know what they want until you show it to them." What made this statement profound - and prescient - was his company's ability to execute all of the supporting pieces that facilitated the frictionless consumer experience for which Apple became legendary. Without streamlined packaging, simplified pricing, predictable upgrades, unified design, etc. etc. etc., even the company's most innovative products would likely have struggled to maintain favored status and premium pricing in the face of powerful, global competitors.

So what is happening in the HR software space? I believe we're witnessing the fulfillment of a real market need (for meaningful insights and better people data) using a blunt instrument. The likelihood of a software vendor - any software vendor - figuring out an algorithm that can assimilate industry trends, competitor positions, employee mobility and the host of organizational factors and individual differences into a coherent, targeted and valid prediction model is very low.

Furthermore, as these "predictive" models are incorporated into the leading SaaS products, they will quickly become de riguer among all enterprise-grade systems and any actual advantage they may have conferred will be negated by their ubiquity.

Organizations that perform their own computations, guided by theory and actual experience will be the ones with the true, and lasting, competitive advantage. The software products available on the market today have the capability of storing and delivering much of the raw (input) data that companies need to execute sophisticated workforce analytics, but the enabling structure surrounding the acquisition of this data (things like communication, change management, training, data management, etc.) ensures that the resulting insights are accurate, reliable and relevant.

To return to our analogy, the components are already in place for one (or several) of the HR technology vendors to deliver the HR equivalent of the iPhone, but to elevate their software from mere product to predictor, their customers must invest equally in creating a data culture and analyzing the right questions for their environment.