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In the ever-evolving world of HR technology, trends come and go, often with much fanfare and even more speculation. As we navigate 2024, a familiar pattern is emerging—one that many HR and talent acquisition leaders will recognise from years past. The question at hand: Are we moving away from the "best-of-breed" approach that has dominated the past decade, only to circle back to the platform plays of old? Let’s revisit the hype cycle and explore whether history is repeating itself or taking a new turn.
The Innovation Trigger: A Rebirth from the .com Ashes
The early 2010s marked a significant shift in HR technology. Rising from the ashes of the .com bubble burst, a new generation of cloud-native, best-of-breed HR and recruiting solutions flooded the market. These innovative, agile solutions promised to revolutionise talent management, recruitment, and workforce planning, catching the attention of established ERP (Enterprise Retail Planning) giants like SAP, Oracle, IBM, and Workday.
In response, these ERP behemoths embarked on a buying spree, acquiring niche players to bolster their HR offerings. SAP snapped up SuccessFactors (and later Fieldglass for contingent workforce management), Oracle acquired Taleo, and IBM purchased Kenexa Brassring. However, the integration of these acquisitions often fell short, leading to clunky user experiences and disjointed systems that failed to deliver on the promised efficiency and cross-functional insights. The first great HR Tech consolidation had begun, laying the groundwork for what would later become the platform wars.
The Peak of Inflated Expectations: An Unattained Summit
Despite the hype surrounding these platforms, the industry never really reached that promised golden age. The well-intentioned promises of seamless integration, big data-driven insights, and end-to-end HR management systems were rarely realised in practice. Instead, companies found themselves grappling with complex, hard-to-navigate systems that did little to enhance the end-user experience.
From a talent acquisition perspective, many organisations struggled to extract meaningful value from their investments. The grand visions of integrated HR ecosystems were undermined by poor implementations, rigid data structures, and limitations in the technology itself. The result? A slow but steady descent into the Trough of Disillusionment.
The Trough of Disillusionment: A Reality Check
As the initial excitement wore off, organisations began to realise that their shiny new platforms were not living up to expectations. User feedback was overwhelmingly negative, with complaints about poor candidate experiences, and the lack of truly integrated functionality. A reality check was in order.
These platforms failed to deliver the cross-functional insights and operational efficiencies that had been touted as their main selling points. As companies struggled to make the most of their investments, many began to question whether the "all-in-one" approach was really the best solution for their needs.
The Slope of Enlightenment: A Shift Towards best-of-breed
In response to these frustrations, the industry began to shift their approach to talent tech. Over the past eight years, many organisations have moved away from the all-in-one philosophy, opting instead for a "Hub and Spoke" model. In this model, a central system (the hub) is complemented by multiple niche solutions (the spokes) that address specific needs within the HR function.
Theoretically, these “best of breed” solutions could be seamlessly integrated via open APIs, allowing organisations to build a tailored HR tech stack that met their unique requirements. But the reality was often more complicated: open APIs, while touted as the key to integration, were not always as open as advertised. Integrations were costly to build and maintain, and many organisations found themselves once again grappling with fragmented systems that failed to deliver the promised efficiencies.
The Plateau of Productivity: Is it Just a Mirage?
As we look ahead, it’s tempting to imagine that the hub and spoke model might finally get us to that Plateau of Productivity. But the cynic in me wonders if we may just be on the cusp of a renewed hype cycle. The more successful and well-funded players are once again buying up specialised point solutions, with the aim of creating comprehensive platform plays reminiscent of the earlier days of HR tech consolidation.
At the same time, new technologies are emerging that promise to reshape the HR landscape once again. Artificial Intelligence (AI) and large language models are being integrated into HR platforms, offering the potential for greater efficiency and more sophisticated analytics. Workflow Automation is also making waves, automating routine tasks and freeing up HR professionals to focus on more strategic initiatives.
Moreover, there is a growing push from procurement and IT teams to reduce the maintenance burden associated with managing multiple vendors and systems. With budgets tightening, the appeal of a single, integrated platform is stronger than ever. A platform that can deliver the full range of HR functionality—from recruitment to performance management to workforce planning—without the need for costly and complex integrations.
Are we Repeating, or Rewriting History?
It’s no longer a matter of speculation, we are indeed moving towards all-in-one platforms in HR tech. This shift is not just a trend; it’s becoming the new reality. However, as we revisit this familiar territory, we must confront an uncomfortable truth: history is repeating itself, and we may be heading straight into the same pitfalls that plagued us during the last era of platform consolidation.
While the allure of an all-in-one solution is strong, especially when budgets are tight, it’s important to remember that best-of-breed approaches are usually the better choice. These specialised solutions offer the flexibility, agility, and innovation that today’s HR challenges demand. In contrast, the seemingly cost-effective nature of all-in-one platforms can be deceptive. They may appear cheaper upfront, but the long-term costs, both financial and operational, are often steep. The more a platform embeds itself into your processes, the harder it becomes to disengage, leading to a complacency that can lock your organisation into suboptimal systems.
As we proceed down this path, the question isn’t whether we’re moving towards consolidation, it’s whether we’ve learned enough from the past to avoid repeating its mistakes. Best-of-breed solutions, despite their complexities, often provide the best path forward, unless constrained by extraneous circumstances like a limited budget. Those who carefully consider the long-term implications of their technology choices will be better positioned to navigate the evolving landscape of HR tech without falling into the traps of the past.
Which is right for your business?
In conclusion, the best-of-breed approach offers flexibility, innovation, and differentiation by allowing organisations to choose specialised tools for specific HR needs, but it comes with challenges in integration, maintenance, and hidden costs. On the other hand, all-in-one platforms provide simplicity, consistency, and initial cost savings by consolidating multiple HR functions into a single solution. However, they can lead to long-term costs, lack of flexibility, and difficulties in switching vendors, potentially resulting in complacency and suboptimal systems.
If you’re having trouble deciding, we have managed countless Talent Tech implementations across both best-of-breed and all-in-one solutions. We can support your organisation to make the right choices and design a tech stack which solves your problems and enables your strategy.
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