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As a business leader exploring human capital management (HCM) systems, you have an opportunity to drastically transform how your organization attracts, manages, develops and retains talent.
Implementing software to streamline administrative HR tasks while providing workforce analytics has become a competitive necessity. Top solutions can now even leverage artificial intelligence and machine learning to provide predictive, personalized insights that drive employee productivity like never before.
This comprehensive guide will explore all facets of HCM software to ensure your company selects and implements technology that maximizes results. Let’s get started!
The Case for Human Capital Management Software
Before evaluating vendors and features, it’s important to understand what exactly HCM software enables, along with the proven benefits:
What Problems Does HCM Software Solve?
HCM platforms tackle a variety of workforce management headaches, including:
- Tedious, manual processes for payroll, compliance, benefits management
- Disconnected HR data residing in siloed spreadsheets
- Limited visibility into workforce productivity and costs
- Poor candidate experience during talent acquisition
- High turnover and challenging retention amidst the “Great Resignation”
As you can see, human capital management software directly answers frustration for HR leaders today – allowing them to fix both tactical headaches and higher-level talent strategy issues.
Key Benefits of HCM Technology
With this problem context in mind, below are five core areas where HCM systems make an impact according to Forrester Research:
| Benefit | Typical Improvement |
|---|---|
| Increased productivity | Adding back the equivalent of 2.5 working weeks annually through automation |
| Improved compliance | 89% reduction in compliance audit failures |
| Higher employee retention | 28% better talent retention rates |
| Bigger cost savings | 22% lower HR administration costs |
| Enhanced data security | Up to 100% of sensitive employee records securely stored |
And these metrics often translate directly to your bottom line. Nucleus Research found that on average, every $1 invested in HCM technology yields a $4.18 return driven by those benefits above.
As you evaluate solutions for selection later in this guide, keep those problem areas and modeled outcomes top of mind.
HCM Software Market Overview and Trends
Before diving into features and vendor comparisons, let’s ground ourselves in market sizing, adoption rates and latest innovation trends shaping human capital management:
Steady Growth Trajectory for HCM Software
Multiple research firms size the total global human capital management software market at $20-$30 billion in value as of 2022. But more importantly, the sector is expanding at healthy clip annually:
| Year | Estimated Market Value | Annual Growth Rate |
|---|---|---|
| 2019 | $16.7 billion | Over 11% |
| 2020 | $21.1 billion | Over 14% |
| 2021 | $24.3 billion | Over 15% |
| 2022 | $30.4 billion | Over 25% |
Driving this accelerated adoption is the desire from business leaders to leverage technology to upskill and retain talent amidst widespread skills gaps, remote work complexities, rising labor costs and retention challenges resulting from “The Great Resignation.”
Further, core HCM functionalities like payroll and compliance which previously lagged in cloud adoption are now being modernized for competitive advantage. Expect growth to remain over 10% annually through 2025.
AI and Machine Learning Usher in the Intelligent HCM Era
While HCM software has delivered immense value for decades, the latest wave of innovation is the incorporation of artificial intelligence (AI), machine learning (ML) and predictive analytics.
According to Gartner’s 2022 Hype Cycle for Human Capital Management Technology, leading solutions are leveraging these technologies in areas like:
- Virtual assistants answering common employee/manager queries
- Chatbots aiding recruiting and enhancing candidate experience
- Intelligent dashboards spotlighting workforce trends
- Predictive modeling calculating flight risk probabilities for retention
- Personalized recommendations to nourish careers based on skills/interests
- Automated real-time coaching for managers tied to team engagement data
And this focus on using data, automation and digital assistants to provide proactive guidance instead of just being system of record for HR transactions will define next-generation human capital management software.
Essential Features and Capabilities
Now that the business case is clear and you understand high-level trends, what specific functionality should you look for in human capital management systems as you evaluate options?
Below are 10 core feature checkboxes your selected software should have:
Core HR – At a minimum, centralizes and digitizes employee data with self-service access
Payroll – Automatically calculates earnings, deductions, withholdings each pay period
Time and attendance – Tracks hours worked, PTO accruals, schedules and automates recordkeeping
Talent management – Recruiting, onboarding, learning administration and related modules
Benefits administration – Enrolls workers, handles life event changes, ACA compliance
Performance management – Aligns employee goals to business objectives, facilitates regular feedback
Advanced analytics – Real-time reports and dashboards spotlighting workforce metrics
Mobile access – iOS and Android apps allowing manager/employees completion of workflows on-the-go
AI capabilities – Personalized insights, predictions leveraging artificial intelligence and machine learning
Compliance – Helps adhere to labor regulations like FMLA, ADA, FLSA, EEOC and state laws
Stacked together, these solution areas enable you to both eliminate administrative hassles while making strategic talent decisions driven by data – all from a unified platform.
Comparison of Top HCM Software Solutions
Now to the core of this guide – detailed overviews of leading options to consider across the human capital management landscape:
| Software | Best For | Starting Price | Top Integrations | Mobile Apps | Free Trial |
|---|---|---|---|---|---|
| Gusto | SMB payroll and benefits | $40/month + $6/person | Intuit, G Suite, Slack | Android and iOS | No |
| BambooHR | Recruiting and onboarding | $4.95/employee/month | G Suite, Slack, Salesforce | Android and iOS | Yes |
| Workday | Global enterprises | Custom quote | Adaptive Insights, Salesforce | Android and iOS | No |
| UKG Pro | Mid-market HCM | $4/employee/month | LinkedIn, Office 365, Jira | Android and iOS | Yes |
| SAP SuccessFactors | Performance management | Custom quote | SAP, Workday, Salesforce | Android and iOS | Yes |
| Oracle Cloud HCM | Global core HR | Custom quote | Taleo, Netsuite, PeopleSoft | Android and iOS | Yes |
| PeopleSoft | Public sector HR/payroll | Custom quote | Hyperion, Oracle EBS | Limited | Yes |
| ADP Workforce Now | Multinational payroll and benefits | Custom quote | MS, Google, ADP platforms | Android and iOS | No |
This table provides a representative sampling of solutions for organizations of varying sizes and geographic footprints. Below are key distinguishing capabilities that set each apart:
Gusto – Ideal for smaller businesses (1-200 employees), it‘s an intuitive platform encompassing payroll, benefits enrollment, expense reporting, employee surveys and compliance.
BambooHR – A standout for SMBs focused on professional hiring practices powered by AI, Bamboo centralizes applicant tracking, eSignatures, custom reports and employee self-service portal access.
Workday – For complex global businesses, Workday offers unified HCM, financials and planning with machine learning features for skills gap analytics, career development and tailored learning content.
UKG Pro – Created specifically for mid-sized firms (50-5000 employees), it brings together payroll, HR, scheduling, timekeeping and robust workforce analytics with an elegant UX.
SAP SuccessFactors – Performance management thought leaders, SuccessFactors enables continuous employee feedback, goal alignment visibility and LMS tight integration – all utilizing advanced AI.
Oracle Cloud HCM – Part of a broader cloud-based ERP ecosystem, Oracle HCM allows massive organizations to scale while providing predictive guidance on retention risk, successor identification and team composition optimization.
ADP Workforce Now – As one of the largest payroll and HCM technology firms, ADP offers specialized industry solutions addressing unique use cases from construction firms to hospitals – all with fluid international support.
This cross-section shows the extensive options on the market – but be sure to get hands-on demos with 2-3 partners tailored your unique size, industry and requirements before deciding.
Proven Implementation Strategies
After selecting your ideal human capital management software, executing a structured rollout is crucial for driving adoption across managers and employees alike. Consider these best practices:
Start with executive buy-in – Project sponsorship from the CEO/CFO conveys priority status for participation expectations. Have them participate in demos and regularly communicate support.
Involve department stakeholders – Get input from executives, HR staff, IT leadership, line managers early on must-have capabilities so the system addresses specific pain points.
Map out in-scope modules – Clearly define which HCM modules are absolutely essential vs. nice-to-have. Limiting initial scope prevents cost/timeline overruns. Additional functionality can be activated later.
Clean underlying data – Flawed employee datasets lead to reporting inaccuracies which frustrate users. Audit for duplicate records, invalid entries in old systems and fix prior to importing.
Test configured system – Thorough testing by department heads using real-world scenarios ensures on-screen workflows align to your true approval chains, milestone sequences etc.
Train heavily pre-launch – All employee types should complete tutorials for basic navigation, key tasks before rollout. Consider incentives for completion before go-live to spur participation.
Staying diligent both in your software selection and follow-through will lead to HCM technology that takes your business‘s workforce optimization to new heights.
Key Takeaways and Next Steps
The wide array of benefits – from refreshed administrative processes to data-driven talent decisions – propel increasing investment in human capital management solutions each year. Maturing platforms are now incorporating innovations like machine learning and predictive analytics to provide guidance beyond merely transactional system of record functionality.
While navigating the myriad of options during selection might seem daunting, this guide provided an analysis of top-rated solutions across the SMB, mid-market and enterprise landscape. Be sure to get hands-on demos showcasing how each aligns to your niche requirements – allowing informed selection. Lastly, establish executive sponsorship coupled with cross-functional participation to pave the way for a smooth launch driving adoption.
Now equipped with a framework encompassing market trends, distinguishing capabilities, leading options and deployment best practices – what next step resonates most to continue your HCM software evaluation? Reach out below for follow-up guidance tailoring the research here to your organization’s unique needs.