For those of us who have been working in and around HR technology for a while, the last two years have been remarkable in terms of the pace and scope of market consolidation. No fewer than a half dozen significant learning and performance management companies have been acquired by other vendors and are now in various states of being cobbled together, prodded and cajoled into their respective acquirers.
The change in the landscape for the prospective buyer is real. First of all, there are simply fewer names to slap on that RFP list.
Second, there are tangible implications in terms of functional offerings – for example, it seems that every performance or recruiting vendor suddenly got the urge to add an LMS to their suite (hey, learning does matter after all!). Separating talent management vendors on the basis of what silos of functionality they offer just got harder.
However, for buyers, the biggest issue of all might well be this:Is your technology vendor really a Frankenstein patchwork of acquired and merged companies and technologies? And if so, what does this mean in terms of product and service delivery?
Grilling the Vendors: Key Questions for Buyers to Ask
If you are looking at the market for talent management software today, you’re lucky in the sense that there are fewer options and therefore fewer vendor evaluations to slog through. But the simplicity stops right there. Deeper investigation will likely show many of these companies are actually cobbled together through a lot of recent merger activity.
Some key questions as you navigate the turbid waters of HR tech:
Questions to Ask Vendors
How are the various pieces of your talent management software connected – pass-throughs, patched data feeds, and work-arounds? For example if the LMS and EPM systems come from different acquisitions, what’s the real story on how they work together?
Is the user experience and interface consistent across the talent management system? If not, where does it change? If you click out of succession planning and into performance reviews, for example, does the user interface suddenly change? If so, how will this impact end-user training, engagement, adoption rates and overall experience?
How does the vendor support their products from different legacy software acquisitions? Are there different support teams for the LMS and EPM and succession planning and compensation tools? Does supporting multiple acquired products under one roof raise the overall costs of support?
Reporting & Data
Can the talent management system produce consistent reports from every part of the system? Is the reporting tool the same across the suite? Are the underlying data models the same across the system – and if not, can the vendor explain how this will impact your ability to generate timely and useful reports?
Upgrades & Maintenance
If the talent management system is pieced together, how will this impact product upgrades and enhancements? How are different versions and interfaces synchronized? Can the user interface and data model across the talent management spectrum be upgraded at the same time?
Administration & IT Support
If the system is cobbled together from different user interfaces, administrator interfaces, data models, and customer support teams, does this increase headaches for admins or IT? How many touch points are you going to have to deal with (and what’s the true cost of all that switching around)?
The press release that trumpets the announcement of the latest HR technology company merger always includes lofty proclamations about how the new, combined systems will change the world. But savvy buyers know that that piecing together different software platforms is never as easy as it sounds.
Integrating multiple software tools (and corporate cultures) under the same roof is hard work – it often takes years to complete, and, even then, the combined system is often a patchwork of different user interfaces, data models, upgrade paths, and customer support options. The lesson? Buyer beware.
Going Organic: Is This Broccoli or Enterprise Software?
By organic we also mean "homegrown." Call it what you like, the idea is software developed in-house and by the same development team over time. The entire talent management suite (from learning to performance to succession to compensation to social networking) is the same software, developed and supported by the same people.
Why does this matter? Plenty of reasons:
- One system means tighter functional integration across processes
- One customer support team for all products
- One user interface (lower training costs, flatter learning curve)
- One data model
- One reporting environment
- One upgrade and maintenance path
Evaluating enterprise software requires buyers to be ever-vigilant about market dynamics. It also requires checking under the proverbial hood to make sure you get the real story about a potential software partner.
In the talent management software market today, it might just pay to go organic.