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Our observations of the HR Tech space after spending three days at the national HR Technology Conference
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The HR Tech Conference is different than your typical HR conference (say, a SHRM event) in that the vendors in attendance are as interested in meeting each other, as they are in generating new business.
Walking the halls of a typical HR conference, you’ll see fully staffed vendor booths and you have to be careful where you make eye contact, because the slightest unintentional glance can get you reeled into a long product pitch that you weren’t expecting.
But at the HR Tech Conference in Las Vegas this past week, it wasn’t uncommon to see half-empty booths. Oftentimes, when you ask the few people manning the booth where your contact was, the answer was “Oh, he/she is in meetings right now.”
The one word driving all of those vendor-to-vendor meetings: integrations
One major theme of the HR Tech Conference was that nearly every vendor was seeking out more partners to add to their integrated partner network.
This lines up with a huge trend that we’re seeing from buyers: companies are tired of having multiple systems that exist in silos.
Employees get frustrated when they have multiple logins and have to remember which system is used for which task. HR teams hate that they have to manually move data from one system to the other, and struggle to generate reports on their whole organization without downloading and manipulating multiple files.
For years, the solution to this problem was all-in-one. If you simply purchase every module from a vendor, then the system should (in theory) be integrated.
The problem with this line of thinking is two-fold: not all systems are truly integrated on the back-end and if you buy every module that a vendor offers, some will be great, some good, and a few bad.
Now, the buying trend seems to be to chase a best-in-class integrated suite. Buyers are seeking out only the best modules from their main HCM vendor, and then trying to fill in the gaps with integrated, best-in-class point solutions.
Taking this approach makes sense from a buyer’s perspective, but it’s very hard for vendors to deliver on the increased demand for integrations. Building integrations can be costly and time-intensive. Most vendors have a long list of integrations they’d love to build, but not enough resources to build and maintain those integrations.
The most amazing thing that I saw at the HR Tech Conference came from a background screening company. And, if you know much about the background screening industry, this should come as quite a surprise.
Verified First is nominally a background screening company based out of Boise, Idaho. But it might be more accurate to call them an integration company that just happened to have made their initial product background screens.
In order to succeed in the background screening business, it’s critical to have integrations with leading ATS’s. However, there are thousands of background screening companies in the space and only a couple dozen major ATS’s, so the competition for those integration resources is sky high.
Instead of chasing costly back-end integrations, Verified First built a front-end browser plugin that accomplishes the same task, in a much more elegant way. An end user can install the plugin in less than 30 seconds, refresh their ATS and have the integrated background screening button immediately visible.
This technology makes Verified First a unique provider in the background screening space, but the real power of their technology will come into focus as it’s used to connect more and more layers of the HR technology stack.
I have a feeling that we’ll be saying “remember when Verified First was a background screening company?” in the same way we talk about Amazon being a bookstore.
If you visited the start-up pavilion or listened to the pitchfest, you can quickly get a sense of where the industry is heading.
Everyone wants to solve the employee disengagement crisis. The same buzz words appeared on every pamphlet and display: “employee engagement”, “employee experience”, “retention”, “development”, etc.
When you hear a demo and watch a founder speak, all employee engagement platforms seem to make a lot of sense. But the challenge they all face is becoming just another infrequently-visited tool in a crowded tech stack.
Companies entering this space need to get better at: integrating naturally into existing workflows, coming up with creative ways to make employees want to visit the platform and creating data that can tell real business stories that execs care about.
More than anything, solving a problem that is this deeply human will require a deeply human solution. I’m skeptical of any company that thinks that they can take a fully tech-centric approach to this problem.
It’s encouraging to see so many entrepreneurs trying to tackle such an important business problem. However, I believe this space still has a long way to go before it can deliver on its promises.
Another major buzz word that could be seen all over the HR Tech Conference was the phrase: “AI-powered”
Here’s a dirty secret for you: I worked at a well-funded SF tech start-up earlier in my career, and we offered an “algorithmic-matching” tool that could help companies hire faster and smarter.
The way our algorithm worked was a product manager would go into the system each night and manually match candidates to employers. That’s it. No algorithm. No AI.
Creating true artificial intelligence is one of the biggest challenges in engineering today, it requires immense amounts of data and engineers who are at the very cutting edge of the industry.
So it probably stands to reason that the thousands and thousands of companies who claim to have built an AI matching system, may be embellishing a bit.
One of the few examples of actual AI that I saw at HR Tech came from Eightfold.ai - which unsurprisingly has a database of over 100 million profiles and engineers who built the news feeds at Facebook and Google.
Unless you see that level of competency and breadth from a vendor, I’d recommend a bit of skepticism about any AI claims.
