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When Best of Breed is the Best Choice

Lisa Rowan
Lisa Rowan
on October 13, 2015

Today's guest blogger is Lisa Rowan,Vice President of HR Research for IDC.

The battle between best-of-breed versus end-to-end HCM solutions has been going on for many years.

Harkening back about 10-15 years ago, best-of-breed was really the sole choice for talent management functionality, as many purveyors of core HR systems offered little in-depth coverage beyond the core. Best-of-breed solutions were offered by specialized firms with deep domain expertise. Naturally, buyers who sought depth would go with the specialists.

Turning the clock forward to today, best-of-breed talent management solution providers have extended their reach to offer multiple towers of talent in order to build out a full talent suite. Many have successfully done so through acquisition and organic development. However, the majority of the talent vendors have stopped short at adding core HR.

On the other hand, the core HR vendors have bought and/or developed their way into the talent management market to offer the so-called end-to-end HCM solution. The assumption on the latter's part is that more coverage is better with fewer interfaces and fewer vendor relationships to maintain.

But what does the buyer say?

In my experience the many HR buyers I've counselled over the last few years say "not so fast." The various talent functions are complex and the people who rely most on specialized functionality are choosing to hold fast to their best-of-breed systems. Nowhere is this more apparent than in recruiting and compensation.

Best-of-Breed Recruiting Solutions

Recruiting touches a diverse group of people, both internal and external to the company. Managers, employees, human resource generalists, EEO specialists, job prospects and candidates, external staffing suppliers, and the recruiting staff itself all have a stake in the function and a role to play.

Recruiting is an interesting and complex mix of marketing of the employer, sales of the position, and customer (candidate) relationship management.

Despite the broad base of roles touched, the recruiting function itself has the largest stake in the processes and technologies used. Recruiting has a tough job that is unlike many of the other HR roles and so it operates quite independently of HR in a majority of organizations.

As a result, it is not surprising that recruiting opts for a technology solution that is both broad and deep from a firm that specializes in recruiting. However, recruiting also has a clear need for solutions to leverage the innovative new technologies—such as video, mobile, predictive analytics, and social workflow—that are transforming business today.

In the war for talent, it is more important than ever that recruiting deploy the right solutions to identify and progress the right candidates while delivering an excellent brand experience.

Best-of-Breed Compensation Management Solutions

Compensation is directly touched by managers, HR generalists, and compensation analysts. Like recruiters, compensation analysts are often somewhat independent from the HR mainstream. 

The compensation analyst job is technical, keeping up with salary benchmark data on a global scale and building often-complex compensation models.

The compensation planning talent module as we know it today is actually newer to market than the other talent modules. Prior to the advent of today's sophisticated solutions, most compensation analysts managed their workload through huge, complicated spreadsheets decipherable by the analyst alone. Compensation analysts had grown quite accustomed to and comfortable with the home grown mix of tools they'd been using. 

But their home grown tools gave nothing to managers. When new solutions were introduced that served both the compensation analyst's specific needs and gave managers tools they never had before, it was a win-win. 

As a result, few compensation analysts are hungry to change solutions again.

However, there exists in compensation and recruiting a strong desire for best-of-breed solutions or add-ons to tackle complex processes that are either watered down in "good enough" offerings or simply not addressed at all.

Bottom Line: Complex Talent Functions Demand Specialized Functionality

The reality is that preferences and a compelling business case for configurable best-of-breed solutions remain. Fortune 1000 firms have an average of 23 different HR systems and services solutions in place today and 40% of respondents in a recent IDC HR survey have no interest at all in an end-to-end-solution. So, heterogeneous environments will likely prevail for the foreseeable future.

What we DO need, though, are ways to make heterogeneous environments behave as one. Integration is table stakes and I'll talk more about that next time…stay tuned.

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