The Demanding World of Talent Management Systems

Movies, music, television shows - they are all increasingly available in some form or another when we want them. Need to listen to the theme song from your senior prom right now? Find it on iTunes and listen to it right away. Don't feel like going to the video store? Go ahead and rent Die Hard through your digital cable or satellite hookup. Even the TV networks have begun posting full episodes of their hit shows online, usually right after they air on TV.

While the trend may be less obvious in the business software world, it's happening there as well, with applications available "on demand" in the form of the software-as-a-service (SaaS) delivery model. It's not exactly new, of course. It's been called other things, such as application service provider (ASP) software. But it seems new because it has seen a recent explosion in adoption. Research from Gartner/Dataquest predicts that SaaS for enterprise software will grow by more than 22% by 2011 (Lager, 2008).

In this model, clients pay for access to applications stored on a vendor's network. In a traditional software model, a company pays a license fee for the software and then is responsible for installing, maintaining, and updating the system on its own network. With SaaS, the most recent version of an application is available through a standard Web browser with very little impact on the client's IT department (Fontanella & Tohamy, 2008).

SaaS has brought a lot of software solutions into the financial reach of smaller companies. Not having to budget for support and maintenance brings the cost down on the client side, and vendors are able to spread their development costs across multiple clients, resulting in lower prices. According to research from Access Markets International, somewhere between 21% and 31% of small and medium businesses are using SaaS solutions, double the rate in 2004 (“Survey Sez,” 2008).

Most of the major players in the talent management software industry have rolled out an SaaS offering. One of the benefits of this trend is the ability for clients to take an a la carte approach to the solutions they purchase. While most vendors offer an integrated solution with all of their products bundled together, clients can also pick and choose which components they need. If they need another one down the road, it can simply be turned on (Schell, 2008). Also, many vendors now tout their software's interoperability with other vendors' solutions. A client could conceivably use a learning management system from one vendor, a compensation management system from another, and tie those both into a performance management solution from yet a third provider. There is also the “anytime, anywhere” nature of the SaaS model. As long as a user has access to the Web, she or he has access to the application.

All of these benefits and advantages don't necessarily make SaaS a magic bullet. The model does present concerns, not the least of which is data security. Clients are being asked to keep all of the data they use in the applications - including employee data - on the vendor's network. This reason alone caused Gene Marks (2008) of BusinessWeek Online to call SaaS a “tech trend to ignore.”

Uptime is also an issue. While many of the larger, early SaaS adopters have redundant networks that can provide nearly 100% uptime, newer vendors to the space may not have systems that are as robust, leaving the clients at the mercy of their vendor's network (Rubenstein, 2008). Also, many in the human capital blogging world aren't necessarily convinced SaaS is the answer. That said, it doesn't appear that it is going away. In 2007, Gartner predicted SaaS growth would outpace installed software solutions sevenfold through 2010 (Inoue, 2007).

But trying to determine which human capital software systems are best for your organization can be a tricky proposition. It can be difficult, for example, to keep track of who offers what, who's buying who, and what's happening now. There are strategies organizations can use to keep an eye on the software environment: Watch what industry analysts say, read magazines and press releases, visit vendor Web sites, look at industry survey data, glean the financial status of vendors, and even scan what the bloggers are saying to get a feel for what's being said about various systems.

Admittedly, we at the Institute for Corporate Productivity have a vested interest in the subject, having recently launched what we're calling our Technology Commons, a network consisting exclusively of corporate practitioners combined with a database of vendor and human capital technology information. We're intent on helping member organizations make better and more cost-effective decisions in the future.

But whether or not organizations decide to join the Commons, they'll need to find effective ways to make good selection decisions in today's fast-changing, on-demand world. And, once they've invested time and money in such systems, they'll also need to keep abreast of the most productive ways of using them. There's too much at stake these days to use the wrong tools for the crucial work of managing talent.

Documents referenced in this TrendWatcher include the following:
  • Fontanella, J. & Tohamy, N. (2008, March). What you need to know about SaaS. Supply Chain Management Review, 12, 10-11.
  • Inoue, V. (2008, December 31). 6 specialists, 6 industry domains: Trends for 2008 and 2009. Learning Review.
  • Lager, M. (2008, March). SaaS X.0? Customer Relationship Management, 12, 20.
  • Marks, G. (2008, March 6). Tech trends to ignore. BusinessWeek Online.
  • Rubenstein, R. (2008, February). Centre stage. Total Telecom, 39-41.
  • Schell. E. (2008, April). Is SaaS for you? Multichannel Merchant, 25, 46.
  • Survey sez: SaaS takeup by SMBs has doubled. (2008, March 3). TelecomWeb News Break.
David Wentworth
David Wentworth, Senior Research Analyst
David Wentworth has been a research analyst for the Institute for Corporate Productivity since 2005. David has previously worked with digital media development and delivery, and currently researches several topics for i4cp, including workforce technology and the outsourcing of human resources. David has a bachelor’s degree from the University of Massachusetts.