IF INTERESTED #167: HR Tech Stack - A Simpler View Part I

A New Hope: Introduction to HR Technology Stack

hi,

Firstly, thank you for all the positive feedback for the latest issues, specially for “Measuring Diversity” and “Amazon” issues. It is a big motivation for me to see that IF INTERESTED adds value and starts conversations.

In this issue, I will cover HR Tech with a simplistic and from an HR Generalist view. Some of my comments will be too simplistic, and some of my technical comments might be missing details. But, I am hoping to give a more digestible HR Tech introduction for us normal people in HR : ).

HR Tech Getting Crowded: Competition is good

HR Tech is growing, it is a multi billion dollar market now with startups, incumbent players, mergers and acquisitions. It is a decent tech market which will grow 6% annually (CAGR) and reach 36 bn USD in 2028¹. The market growth is attracting competition. 6% sounded slightly low to me, given the huge amount of importance we put on HR Tech. It tells me that companies are still reluctant to invest large amounts to HR Tech. With difficult years ahead of us, the HR OPEX is not going to grow. Return on investment to HR Technology is a difficult topic.

A more interesting number is the VC funding for HR tech startups. In 2021, HR Tech received between 12 bn² and 15 bn USD funding globally. That includes more than 700 deals only in 2021, that’s a lot of startups and a lot of ideas.

In short, HR Technology ecosystem is getting crowded, fast. And as HR Professionals we need to decide on which HR Tech to buy, and how to build an HR Stack. This can’t one of those “fail fast” approaches, any HR Tech decision stays with companies 5-10 years, and has a significant impact on HR capability and employee experience.

And in HR we are outnumbered and outmatched for this challenge. We need help. Well, at least, I need help.

I am writing this in part to create a basic level of understanding of the HR Tech landscape, and hopefully create the notion that we need Enterprise IT organisations to be better partners to us.

A tip: The fastest way to get support of executives to invest in decent HR Tech is to let them use your systems themselves, and don’t allow their assistants to do everything for them. The moment they get a taste of the experience of an ordinary line manager, they will prioritise improvements.

HR Tech Stack Models in the Market

My initial go-to source about HR Tech has been Josh Bersin, his website and his latest book HR Technology 2021: The Definitive Guide, are good sources. Josh Bersin’s knowledge about corporate learning platforms is particularly good. His consultancy company and himself have also a service where they do an HR Tech workshop with HR executives of organizations. However, lately I feel like they are promoting from some of those platforms like Microsoft more than others, losing objectivity. I might be off, and maybe those platforms need to be promoted slightly more.

Josh Bersin HR Tech Stack model visual is below: (complicated for me, and a bit 1990s style)

And lately it evolved to the visual model below: (When he mentioned Microsoft Engage, the new Employee Experience platform from Microsoft. Here is the link)

The visual above is a better visual and approach. However the “Services” vs “Apps” layer is confusing for me. Surveys feedback is a service, but not an application? I get confused.

Lately I also came across a good visual from a more Workforce Planning angle, as below. I like the flow of this visual. A few things bothered me: Talent Management is complimentary tech? LMS / LXP is a small bubble? Internal mobility is great, but where is the ATS (Applicant Tracking System) and external hiring? Some of my questions.

As you can see, the landscape for HR Tech is getting confusing. Also consider that in every area in those models, there are dozens of platforms.

A simpler step by step approach:

Disclaimer: The statements below are my own experiences, I value a good application with “friction-less” experience and good user interface. That means I am a slightly picky user. I am also not a tech professional, I will avoid the technical details and leave that part to your IT Gurus. User experience is more important than the technical constraints, don’t be hostage to IT’s “this is not possible” arguments : ).

I will try and explain main elements of HR Tech Stack, and give examples of Vendors I know of together with a section of “what to look for”.

Starting Point: HCM (Human Capital Management) Systems

You probably have one in your organization. Big names are SucccessFactors, Workday or Oracle. These systems are your backbone, probably connected to ERP systems in your organisation. Also, these HCM Systems connect or enable all the interfaces of the basic HR transactions, where you store your data (hopefully in the cloud by now), feed your payroll system, and have core HR applications like Performance Management, Learning Management etc.

Choosing this partner is extremely important, because this will be the interface your HR, employees and leaders; creating a big chunk of the experience. And the backbone platform for all other HR software.

Some players in the market:

1. If you are a Finance led company, chances are that you will select SuccessFactors because of the obvious SAP relationship. SuccessFactors (in my experience) has a clunky, non intuitive interface, with good SAP HANA type data lakes working in the background. I have suffered from SuccessFactors, and the inflexibility of their teams so much, I can’t have an objective approach here. SuccessFactors is the fastest way to alienate your users (line managers mostly). You probably will use SuccessFactors as a database and for performance management, nothing more. My strategy whenever I see SuccessFactors: Run.

2. Workday has a better look and feel, a much more intuitive flow than SuccessFactors (low bar). They are a bit pricey and also became a bit arrogant and falling behind on niche functionalities like workforce analytics.

3. Oracle. I heard good things about Oracle and their willingness to get business and customer orientation. They have one advantage here: I haven’t used them, so I am saving my “harsh comment” rights.

4. Smaller players: If you are a startup or a small size company around 200-300. There are really good simple HR Tech solutions that you can buy in the market. I don’t have any experience with them though.

What to look for in HCM:

• Customer centricity. This is critical. Most of those HCM will be the nicest people during the sales part and you will never see them again. Every questions becomes a change request and a huge amount of money.

• Use their standard modules, do not customize. And for that, you need to make sure their standard approaches to performance management, req opening etc are in line with your HR processes.

• Intuitive, frictionless and user friendly interface. I don’t think any of the HCM has those. Screens are mostly unintuitive and confusing. A decade behind the daily consumer experience we are used to with Netflix / Amazon etc. But select the best from the bunch, make sure you test the flow logic like: “how many clicks does it take for a line manager to create a req”

• Data lake / Cloud capabilities in the background.

• Easy integration to your payroll, time management type of hygiene and transactional HR modules.

First Stop after HCM: ATS (Applicant Tracking System)

ATS is where you reach, manage and keep track of your candidates for external and internal hiring. Because the HCM’s (workdays, succesfactors etc) have really poor applicant tracking systems, this sub-market became a huge hit the last decade. The very basic “list of applicants” approach evolved to skill based talent pooling, automated emails for candidates and interview note storing, AI based candidate stack ranking and many more gimmicks are added to the features. Some players:

1. Eightfold: They are relatively new but have been very successful, especially with their easy to use interface, AI based candidate match ranking and easy use for recruiters. My experience with Eightfold is that they are very responsive to market dynamics and jumped on the wagon of Talent Marketplace and caught up with Gloat, which was leading the area. One failure I have personally experienced is the failure of integrating Eightfold to HCM. Integration partner plays a huge role here, and also the internal team that leads the integration. But Eightfold is definitely someone you need to talk to before deciding your ATS partner. Plus their name reference to Buddhism is always a plus : ).

2. Gloat: Even though Gloat doesn’t exactly introduce itself as an ATS, they are leading talent marketplace area. So, it is worth a mention here, but also please note that they won’t be a perfect ATS for you. Their AI based career guidance, candidate stack ranging, development advises to internal employees are impressive. Like Eightfold they are very receptive to customer needs and market dynamics. Unlike SuccesFactor and similar bigger and slower HCM’s. Since Gloat is so focused on internal talent marketplace, their external part is either non-existent or weaker than Eightfold. Good to check.

3. Avature: I was also impressed by the list of features of Avature. They have evolved a lot, as far as I know, they are one of the first ATS in the market. Their interface seemed slightly clunky 2-3 years ago, but they have a good understanding of what a recruiter needs to do his / her job well.

4. Other players: There are so many ATS in the market right now, it is a 3.2 bn USD market in 2026. Jobvite, Zoho, Cornerstone are only a few of them. I don’t have first hand experience with those though.

What to look for in an ATS:

• Intuitive and easy use for hiring managers and recruiters. This is crucial, I would always ask the recruiters for their choice.

• Good information storage capability in terms of leader feedback, candidate match, recruiter notes etc. Easy to exchange notes between recruiter, peer reviews and hiring manager.

• Good candidate experience management tools, automated emails going to candidates, integrated outlook / calendar tools to setup interviews, AI based candidate feedback enablement etc.

• Good integration with the HCM. Example: Whenever a job requisition is posted, which is usually in HCM, then it should be updated real time with the ATS.

• Decent AI / Machine Learning algorithms to stack rank candidates, that are transparent to you. Probably good to understand the capability of the vendor to explain the algorithm details.

ATS is only the start of HR Tech stack, and a start to Talent Acquisition Tech Stack. TA Tech has its own rabbit hole with platforms like video interview software like hirevue, job ad editors, etc. I have touched upon some of those platforms in my previous issues.

I also want to emphasize again that the AI used in ATS and any HR platform is a “black box” and I see the algorithms that have been learned from past practices as a huge risk to our talent. AI and ML (Machine Learning) algorithms of all these platforms have to be regulated and checked much more rigorously.

All ATS should be integrated to HCM, (real time bilateral information flow). Your HCM probably has an ATS module on its own. Ask any recruiter or hiring manager, and they will tell you their own horror stories about the HCM ATS. If you have money, best to invest in a decent ATS and not use your HCM (SuccessFactors / Workday) ATS.

Here I end part one, and we will continue with learning platforms, workforce planning, employee listening on Part II and III.

If Interested : )

1. https://www.fortunebusinessinsights.com/human-resource-hr-technology-market-105437

2. https://pitchbook.com/news/articles/human-resources-hr-venture-capital-diversity-remote-work