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Managing the employees and keeping them satisfied is the biggest challenge every organization faces. HR being the key asset, it has to be meshed effectively with the core IT systems. But, in most organizations, the HR automation system functions as a stand-alone entity and there is disconnect between the larger IT and HR systems. While ERP vendors offer HR as a module, due to the cost and economies of scale, only large organizations can opt for ERP driven human capital management solutions.

Moreover, some of the ERP based HR solutions are rigid. Just like every country has its unique laws like tax structures and country specific regulations, and it makes it difficult for a rigid system to meet the unique HR requirements of the user companies. While ERP today comes in customized country specific formats, certain modules can be optimized, like the HR module. Here is where the pure play HR solution providers come into play.

A dedicated HR solution brings in greater fitment with the HR as it takes into ambit just HR and not other processes like manufacturing. An ERP solution will have a great functionality for manufacturing, but will have some shortcomings on the HR service delivery part. The key difference between an ERP and pure-play HR solution is that the former is database driven while the latter is work-flow driven.

According to Forrester Research, the HCM applications are evolving rapidly from mere transactional systems like payroll, and benefits management into more strategic talent management suites. Forrester also says that recognition of the need to align business and individual performance goals, along with better tools to accomplish this, is the key driver for HCM deployments in many companies. For these reasons, organizations need pure play HR systems for effective management of their human capital.

Key Players
HCMS becomes more vital if we look at it in the context of issues like talent crunch and increasing attrition in verticals like IT, BFSI, BPO, telecom, and manufacturing. Given this, employee engagement and employee retention have started figuring big time on the CEOs wish-list. Naturally, business leaders are looking at pure HR solutions to achieve this. This awareness is heating up the HCM space which is also getting over crowded. At one end of the spectrum are small time vendors and on the other end, it is the full time ERP vendors fighting for their share in the spac

Given this, it is the mid-tier HR product companies that take a piece of the HR cake. For instance, one mid-tier company is Adrenalin, which says that its product is not just robust, but highly engaging, with complete functionality and also specialized in complete human capital management. While ERP players do have their say in this space, the pure play HR solution providers are pitching in the fitment aspect of the solution.

A look at the market landscape reveals that pure HCMS solutions have a good hold in the SMB space and companies running on ERP can look at this as an add-on for better management for their HR. While, the exact market size is not clearly known, a few leading players in the fray are doing big business, which indicates a burgeoning market for HCMS.

Shrikanth G
shrikanthg@cybermedia.co.in

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