Human Capital Management – and the HR Department -- is no longer the “red-headed step-child” when it comes to ERP purchasing. If you think about how important an ERP system has become to effectively managing (and maximizing the value of) a company’s data, you can quickly understand how the role of ERP systems have changed from managing things (commoditized items) to managing high-value, strategic assets.
So it shouldn’t come as much of a surprise that managing a business’ investment in its human capital – which according to one statistic I’ve seen puts fully loaded labor costs at 80 percent (or even more) of total business spend – has risen in value. And with the shift in focus to managing more intangible resources comes a related shift in who makes the decisions about technology purchases. No longer does Finance or IT have complete ownership of the buying process. Instead, the departmental stakeholders who know the most about the relevant business processes have a larger share in the decision making/spend.
So what options are out there?
Traditional ERP Systems
Major ERP players such as Oracle and SAP are responding to HR’s increased role by purchasing other pure-play HCM providers to address gaps in desired functionality. Oracle bought Taleo, a best-in-class recruiting solution to enhance talent management. SAP bought SuccessFactors, a leader in Performance Management.
Further adding to the complexity are cloud applications. These “next generation” solutions deliver more sophisticated capabilities which can include trendier features such as mobility and social. They also offer an easy response to updates which are supplied automatically as they become available. Workday, created by Dave Duffield of PeopleSoft, pioneered the HCM in the Cloud and has helped reinvent how we think about HR systems. Workday unifies Talent Management and HR into one system of record.
In an attempt to level the playing field with cloud applications, vendors such as Oracle and SAP have developed software-as-a-service offerings. Oracle’s Fusion, or SAP's Employee Central are designed to attract users by offering a range of deployment options.
So what will happen to the ERP industry?
With HR Departments more involved in the decision-making when it comes to technology solutions, I expect we’ll see a further move toward relevance and functionality. After all, HR wants what other business stakeholders want – a solution that’s easily accessible and demonstrates its value to the both the end-user and the organization.