The Skills Management Technology Solution Landscape

The term “skills management” refers to methods used to ensure a company’s workforce has the knowledge, qualifications, and technical expertise needed to execute the organization’s business strategy. The ultimate goal of skills management is to make sure employees and contractors with the right skills are in the right roles at the right time. While the concept of skills management is not new, a growing “skills crisis” is fueling massive investment in development of new skills management solutions This article provides an overview of these different skills management solutions, what they do, and when it makes sense to use them.

The article provides a brief discussion of the skills management crisis followed by an explanation of the tactical actions that skills management solutions enable and why they matter to business performance.?The article then examines skills management solutions found in SAP’s product suite and partner ecosystem. SAP has devoted considerable resources to build skills management features across the SuccessFactors platform[i]. Perhaps most notable is the recently released Talent Intelligence Hub.?There are also over 70 solutions in the?SAP App store focused on identifying, assessing, developing, and managing workforce skills. These will be discussed using a framework that shows how different solutions relate to one another.?The article concludes with thoughts about the future of the skills management technology market and what this means for organizations seeking solutions to address the growing skills crisis.

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The Skills Crisis.?

Skills management has always been challenging, but it is hitting a critical tipping point due to the twin “talent tectonic” forces of demographics and digitalization. Demographic changes in the labor market caused by declining birth rates are resulting in experienced skilled employees leaving many industries’ workforces at a rate faster than the number of skilled employees entering to replace them. At the same time, digitalization is changing the kinds of skills employees need to perform their work. An analysis of job postings found 37% of the skills requested for jobs changed in the past five years, and one in five skills is entirely new. Even if employees remain in the same job, they still have to develop new skills to be effective and this change can happen very quickly. For example, generative AI is predicted to change approximately 30% of the work tasks across all job types over the next 5 years. AI will impact all jobs at some level, completely eliminate some jobs, and create new jobs that do not currently exist. Companies must figure out how to adapt to these changes. In most cases this will involve augmenting and building upon people’s existing skills, although in some cases it will require developing new skill sets for an entirely different type of work.?

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Why do we need Skills Management Solutions?

“Many discussions of technology start by explaining what different types of solutions do. But we don’t use technology because of what it does, we use it for what it enables us to do.” – Talent Tectonics

?All companies practice skills management. The alternative would be to assign people to jobs without considering their ability to perform those jobs. But few companies do skills management exceptionally well. What makes skills management difficult is it requires orchestrating multiple activities that can be difficult and time consuming.? Skills management starts with answering the question “what specific skills does the company's workforce need in order to achieve the company’s business objectives?” It continues with figuring out how to find and hire people who have those skills or could learn them, helping employees develop new skills, moving employees into roles that make effective use of their skills, and verifying that employees have the skills they need to perform their jobs. What makes skills management even harder is the fact that the skills companies need and the employees who possess or could learn them are constantly changing.?

The following list summarizes the ten actions skills management solutions support at a tactical level.

1. Intelligence: determining what types of skills matter to the organization.

2. Description: defining the skills that an individual appears to possess based on their past experience.

3. Validation: evaluating the proficiency level individuals have with regard to specific skills.

4. Matching: linking people to job and contracting opportunities based on skills.

5. Confirmation: certifying that people can effectively apply required skills to perform job tasks.

6. Development: giving people guidance and access to resources to develop new skills.

7. Acquisition: providing training and coaching to help people learn and strengthen skills.

8. Assignment: scheduling and allocating work to employees based on their particular skills

9. Valuation: financially recognizing people for the business value of their skills.

10. Data Governance: coordinating the collection, transfer, security, and maintenance of skills data.

Most skills management solutions support several of these actions, but different solutions focus more on some areas than others[ii]. ?The following questions can help identify what kinds of skills management solutions will have the greatest value for your organization at this particular point in time.

Do we know which specific skills will have the greatest impact on the success of the organization? You cannot effectively manage skills if you do not know what skills matter. Look at your business strategy and ask what are the specific things employees must know how to do if the company is to achieve its objectives over the coming years? If you struggle to answer this question, then consider investing in solutions that emphasize Skills Intelligence.

Does our workforce possess the skills needed to support our business strategy?? What is the skill proficiency level of your current workforce? Do you have enough skilled people to support current and future business operations?? Are there places where business performance is being negatively impacted by a shortage of qualified talent?? If these questions generate a sense of concern, then consider investing in solutions that emphasize Skills Intelligence, Description, Validation and Confirmation.

Are we underutilizing the skills and potential of our current workforce?? Do employees have difficulty building their skills and careers within the company?? Does it take a long time to get newly hired employees fully proficient in their roles?? If the answers to these questions are “yes” then consider investing in solutions that emphasize Skills Development and Acquisition.

Is it difficult to hire and retain the skilled employees we need to be successful? Does it take a long time to fill skilled roles? ?Has the company lost critical skilled talent? ?Is the company struggling with staffing shortages in skilled positions? If these questions reflect concerns often expressed by your business leaders, then consider investing in solutions that emphasize Skills Matching and Valuation.

Do we need to increase the agility and efficiency of our workforce in meeting changing business needs and market conditions?? Is the company struggling with optimizing workforce costs while still being able to get the right people are in the right roles at the right time?? If this is a major issue than consider investing in solutions that emphasize Skills Matching, Assignment and Data Governance. It may make sense to include solutions that support use of contractors as well as full-time employees.

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Different Types of Skills Management Solutions

The skills crisis is fueling innovation in the development of skills management technology. These solutions range from highly sophisticated tools that typically take months to deploy to point solutions that can be deployed in a matter of weeks. They include multi-functional skills ontology solutions that use massive AI enabled large language model databases, as well as highly specialized applications that do not need AI functionality to be effective[iii]. ?This section discusses different types of skills management solutions using examples drawn from the SAP solution and partner network[iv].? The goal is to provide a sense of what solutions companies might wish to explore to address their particular skills management challenges.

?When reading this, please keep in mind that there is not a one-to-one match between individual skills management solutions and the solution categories used in this review. Most skills management solutions support actions associated with multiple solution categories. Many solutions also overlap in terms of the things they do, but there can be major differences in the way they do these things. ?For example, almost every solution discussed in this review has some ability to support Skills Description.?But how they do it varies from using machine learning to mathematically infer employee skills based on data reflecting their past experiences to simply asking employees to list what skills they possess using a structured questionnaire. Although solutions may appear similar, there are usually significant differences in the methods they use, the features they provide, the data and content they utilize, the kinds of jobs they are most well suited to support, and in some cases even the countries where they can be used.

1. Skills Intelligence. These solutions guide workforce planning and organizational design decisions that depend on skills data. They fall into two general area.? Guided workforce analytic solutions like SAP Workforce Planning and Ingentis integrate information from different databases to provide insight into current workforce skills and future skill requirements.? Iterative skills ontology solutions such as Skyhive, iMocha, Cobrainer, 365 Talents, and Eightfold ?use large language model pattern recognition algorithms to collect, analyze and interpret data from digital sources to determine the nature and availability of skills found in company’s internal workforce and/or broader labor markets.

2. Skills Description. These solutions build individual profiles that provide insight into what skills people possess and their potential to acquire future skills. They roughly fall into three areas based on how they collect skills information.? Skills inference solutions such as Beamery, iMocha, Skyhive, Eightfold, Cobrainer, Whoz JobAI-lysis and Mesoor interpret digital information about people’s work history, experience and education to deduce their skill sets.? Skills collection solutions such as the SuccessFactors Employee Growth Portfolio, WorkLLama, and FITS CV Manager guide people through processes to describe their current skill levels and future skill development interests.? Soft skills assessment solutions such as Bryq, Cloverleaf, HireVue, Knockri, and Plum use psychometric instruments to provide insight into people’s workstyle preferences, interests and motives that impact their skill proficiency and learning potential.?

3. Skills Validation.? These solutions measure and verify people’s proficiency levels relevant to specific skills. There are often difference in the design of skills validation solutions based on whether they are built primarily to support candidate selection in recruiting, employee assessment for the purposes of career development, or employee testing to verify successful completion of training courses and exercises.? The basic concept of skills validation is to determine how well someone has mastered knowledge and concepts associated with certain skills.? This can be done through a variety of methods including online tests, task simulations, automated interviews and chatbots, references, and contributions to online knowledge forums. Extensive use of tests and simulations can be found in solutions provided by ?iMocha, Jobful, HireVue, Speexx, Question Mark, IkiHop, TalentPulse, Cognisco, ?Jitjato and Alpha-Test.? The use of automated interviews and chatbots to assess skills and qualifications is featured in solutions by Paradox, Sapia.ai, Impress.ai ,Apli, and HireVue. Reference checking is the primary method used by Crosschq to confirm skills and qualifications. One of the more specialized skills validation solutions, Seekout uses data gathered from online communities to estimate technical skill levels. ?

4. Skills Matching.? These solutions match people to job opportunities based on their skills. ?Most skills matching solutions are used to support candidate and contractor recruiting. And most recruiting solutions support skills matching at some level. Many solutions support skills matching by searching through online databases to find potential external and internal candidates who possess the skills needed to perform different jobs.? Examples of solutions that tend to emphasize this “seek and find” approach include Eightfold, Beamery, iMocha, Textkernel, DaXtra, Seekout, Sniper AI, Cobrainer and? My Ally. ?Other solutions place more emphasis on building and maintaining communities of skilled talent that the company can access over time. Examples of more “talent community” focused skills matching solutions include Phenom, Live Hire, WorkLLama, ?Jobful, and Mom Project.? Although in practice all of these solutions use a blended approach that mixes “seek and find” and “talent community” based matching methods.

5. Skills Confirmation: These solutions certify that people can effectively apply required skills on the job. This is particularly critical for jobs that have strict skill proficiency requirements to ensure operational, customer, patient or employee safety and security. Many solutions focus on what might be called “check list confirmation” where an employee must demonstrate their proficiency using certain skills to their manager or another person charged with certifying they are qualified to perform a job or task. Examples include solutions from Sodales, Gavdi, and Flexso.? Other solutions focus on learning based certifications where employees demonstrate their proficiency by successfully completing required training course and exams. Examples include SuccessFactors Learning, Litmos ?and Skillnote.?

6. Skills Development.? These solutions help employees find training, job assignments, mentors and other resources that support acquisition of new skills. Because planning a skills development journey starts with understanding a person’s current skills levels, most of these solutions include features for skills description and validation.? Some skills development solutions focus on helping employees access relevant training material. Examples include SuccessFactors Learning, Go1, 360 Collaborative Learning, SkillSoft, Degreed, Rise Up, Litmos, Blend LXP. ??Given their focus on training, many of these solutions also provide tools that support skills acquisition. Other skills development solutions take a less training-centric approach, focusing on other sources of development such as job assignments or mentor relationships.? Examples include SuccessFactors Opportunity Marketplace, Beamery, iMocha, Phenom, Eightfold, Zigtal, Profinda and 365 Talents. While there are conceptual differences between these two broad categories of skills development solutions, their functionality tends to overlap quite a bit. ?

7. Skills Acquisition. These solutions support creation and use of training materials and coaching relationships that help people learn and strengthen skills. Some skills acquisition solutions provide extensive libraries of existing training content such as SkillSoft and Degreed. These solutions may also include tools to build training courses.? Others solutions connect employees to coaches who can help them develop skills such as Boldly? and Landit.? Other solutions focus on specialized types of skills learning content such as microlearning and nudges (e.g., Arist, Axonify, and FifTY), ?immersive and augmented reality training (e.g., TalesPin CoPilot and Immerse VR) language skills (e.g., goFluent and Speexx), and gamified learning (e.g., Attensi), ???

8. Skills Assignment. These solutions support managing work schedules and assigning projects and tasks to employees based on their specific skills. They tend to fall into two types.? Solutions that focus more on project management and task assignments such as Whoz and Profinda, and solutions that support workforce scheduling usually with a strong focus on frontline work such as Legion, Makeshift Workforce, BlueOpex, Work Axle, Quinyx, and Jitjato.?

9. Skills Valuation. These solutions provide guidance on the financial value of different employee skills. They can be grouped into two broad areas. First, are solutions that analyze job market data to determine the level of compensation associated with different job skills such as Skyhive and JobAI-lysis.? The second are solutions that enable companies to reward employees based on acquiring new skills valued by the organization. ?Skills-based compensation is still relatively rare, although it is likely to become more common as the skills shortage increases.? While there are no solutions in the SAP suite designed specifically for this, it could be supported using SAP Sales Performance Management. ??

10. Skills Data Governance. These solutions support the collection, transfer, security, and maintenance of skills data across different applications.? Every type of skills solution provides some data governance functionality, but they usually approach the concept of data management from a relatively limited perspective. True skills data governance solutions emphasize the sharing of data across different applications in a manner that ensures data integrity while protecting data security.? The best example of this type of solution is the SAP Talent Intelligence Hub.

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The future of skills management: Footwear & Airplanes

With some many skills management solutions currently available, one might wonder if the coming years will bring consolidation and simplification to the solution landscape. My sense is we will see increased levels of integration between solutions, but we will not necessarily see a decrease in the overall number of solutions. Some existing solutions will disappear or merge together, but new ones are likely to emerge.? We are also likely to see greater development of core HR platform functionalities to manage increasing volumes of skills data across different skills management applications.? To explain why I think this will happen, I am going to use analogies to footwear and airline manufacturing.

Why skills management solutions are like footwear.? There are hundreds of thousands of different types of shoes and thousands of different shoe manufactures. All shoes perform the same function of protecting our feet, so why do we need so many different types of shoes? The answer is we need different types of shoes for different situations and different kinds of feet. People appreciate the value of having the right shoes for every occasion. The same thing can be said about skills management solutions. While at one level they perform the same basic things, the best way to do these things varies depending on the type of skills being managed, the job context, the technological resources available, the nature of the company, and many other factors. This is one reason why SAP has so many different types of skills management solutions in its partner network.? Many solutions work particularly well for certain countries, industries, or job types. ?This is also why I believe we will also see a steady stream of innovation leading to new types of skills management solutions. Skills management solutions are like shoes – one size does not fit all.

?Why skills management solutions are like airliners.? Airliners tend to be associated with a single airplane manufacturer such as Boeing or Airbus. But these manufacturers only contribute a subset of the parts that go into a plane’s construction. The other major contribution these manufactures make is to provide a structure that integrates parts built by different companies to create a well-functioning airplane. The same concept can be applied to skills management solutions. The full range of solutions necessary to support skills management in a large organization is unlikely to come from one technology provider.? What companies need are core HR systems that can effectively support and coordinate the use of multiple skills management solution providers. This is why I believe one of the most critical applications for ensuring effective skills management is development and adoption of Skills Data Governance solutions such as SAP Talent Intelligence Hub.

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Going from concepts to action

When building a skills management technology strategy, two things should be kept in mind.? First, most skills management solutions support multiple skills actions. For example, solutions that support skills matching inevitably have features that support skills description. But solutions vary in terms of the sophistication of these features. When selecting solutions, find ones whose features best align with the particular needs of your company. Whether it is understanding what skills the company needs, hiring people with those skills, developing those skills in the current workforce, or effectively assigning skilled talent to different job roles. Second, put thought into what solution you will use for overall Skills Data Governance. Large organizations are likely to need multiple types of skills management solutions to support the needs of different business areas.? The more skills solutions are deployed in the company, the greater the value of having a single skills data “source of truth” to manage and share data across skills management applications.

?For a company to be successful, it needs employees who have the skills required to execute its strategy. Conversely, employees cannot have successful careers if they do not have the skills needed to perform their jobs. The skills crisis is creating challenges for companies and employees alike.? Fortunately, there are hundreds of technological solutions available to help with skills management. Given the range of solutions available, it is likely that every company could and should do something to improve skills management. So my final bit of advice is simply to do something as its almost certainly better than doing nothing.

End notes

[i] The following are some of the skills management features that have been incorporated into the SAP SuccessFactors Talent Intelligence Hub.? Attaching skills to roles posted in Dynamic Teams. Ability to rate skills or traits in Performance Forms. Auto-updates skills ratings in Growth Portfolio. Ability for peers to rate skills or traits in 360 Forms. Integration of skills, competencies, and traits into the Intelligence to recommend target roles in Career Development. Ability to find Successors by searching on skills. Ability to tag skills to learning courses and pass proficiency ratings upon completion. Ability to showcase skills in an employee’s profile. Preconfigured analytic reports showing available talent with skills and skill gaps against expected skill ratings. Team Portfolio view for managers to show, add, edit capabilities for skills and skill gaps across their direct reports. Ability to mark certain skills as critical to the organization and promote attention to these throughout the suite.? The list here is focused on newer features, and does not include the hundreds of other skill-related capabilities that have been built into the solution over the years.

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[ii] Efforts to improve skills management are not always helped by the way skills management vendors describe their solutions. There is a tendency to use grandiose sounding but poorly defined phrases about improving workforce agility, increasing employee engagement, or unlocking human potential that include some mention of AI and machine learning, but which leave potential users wondering, “but what does this solution actually do?”.

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[iii] It strikes me as a bit silly how much emphasis HR technology vendors place on sharing that their solutions use AI/ML methods.? First, the term AI/ML is so poorly defined that saying a solution uses AI/ML is akin to saying a solution uses math.? Second, we don’t buy technology solutions for the programming algorithms they contain, we buy them for the results they deliver.

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[iv] This is my interpretation of these solutions based on the information provided in the App Store. Many of these solutions contain dozens of different features and could be placed in multiple categories. In the interest of brevity, I focused on putting solutions in categories that I believe best exemplify their core capabilities. This article makes no assertion or implications about the quality, value, or effectiveness of these solutions. I have worked with many but not all of these solution providers and in my experience they are all committed to doing excellent work on behalf of their customers.

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