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Hello, fellow tech enthusiasts and HR trailblazers!
Fresh off the HR Tech Conference, I'm pondering a few questions that the industry should be mulling over. Let's dissect the conference's vibes and take a deeper look at the future landscape of HR Tech.
1. The Cooling of the HR Tech Market?
The conference floor wasn’t buzzing with the same energy we’ve seen over the last five years. Was it just me or was there a palpable shift? Our data shows a 33% elongation in buying cycles in 2023 versus 2022. Plus, an uptick in buyers scanning the market, only to decide against a switch. The brilliant Stacey Harris from Sapient Insights echoed these sentiments, predicting a modest budget squeeze this year.
Remember when global EOR vendors like Deel, Papaya, and Atlas made grand entrances with show-stopping booths? This year felt more... subdued. Even potential game-changers like Darwinbox kept it classy and compact. The event’s ambiance painted a picture of an industry reacting to a tighter economy, prioritizing strategic presence over flamboyant showcases.
However, before you think of pulling your HCM investments, consider this...
2. What is the Fate of Point Solutions?
In the era of low-interest rate opulence, firms indulged in best-in-class, niche tech solutions—even if they did just one thing exceedingly well. But with economic winds shifting, are these point solutions facing an uncertain future? I sense a storm brewing. There's an emerging trend: companies bundling more modules into their core HCM/HRIS platforms, veering away from point solutions.
But here’s the twist. Those point solutions that have achieved a sort of "tech escape velocity" – transforming into full-blown platforms like Beamery, Eightfold and Lattice – might just weather the storm. And for the others? They could be ripe pickings for HCM/HRIS companies looking for bargain acquisitions.
Many folks with more years of experience in the HR Tech world have told me that the pendulum always swings back-and-forth from companies opting for a more all-in-one bundled approach then back to a best-in-class point solution approach. My question: is this just one of those cyclical swings or will the platforms be able to build a moat through their secure place in companies' budgets and their ability to make discounted acquisitions?
3. AI: More Sizzle Than Steak?
AI took center stage at the conference, with every other keynote painting a rosy AI-infused future. However, when it's time to sign the check, AI still seems like the fancy dessert you skip because the main course (read: core HR functions) is hefty and fulfilling on its own.
Only 16% of companies, according to Sapient Insights, are setting funds aside for AI next year. The chorus among buyers remains consistent: get the fundamentals of payroll, time, and benefits right first. AI is garnish, not the main ingredient.
As I reflect on the conference and the year ahead, I foresee a tempering in overall HR Tech spending. But here's the silver lining: it’s not about spending less, but spending differently. Businesses will reshuffle, reprioritize, and reconsider. As the dust settles, I'm eager to see which vendors—be it massive platforms or agile point solutions—emerge stronger, having navigated the challenges adeptly.
Buckle up. The HR Tech ride is taking a new turn, and I, for one, am all in for the journey. Till next month!