The HR Technology Market: Trends and Disruptions for 2018

Josh Bersin
Principal and Founder, Bersin™
Deloitte Consulting LLP
October, 2017
Copyright © 2017 Deloitte Development LLC. All rights reserved.
The HR tech market
reinvents itself
HR technology disruptions

HR Tech 2017 Keynote 2
90% of organizations surveyed by MIT and
Deloitte anticipate their industries will be
totally disrupted by digital trends.
Source: G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, “Aligning the Organization for its Digital Future” MIT Sloan Management Review and Deloitte University
Press, July 2016.
Digital disruption
A new industrial revolution, but people matter

Robots
Can cost as low as $25,000*
250,000 purchased globally in 2016**
*Source: Robots: The new low-cost worker, Dhara Ranasinghe, CNBC, April 10, 2015. https://www.cnbc.com/2015/04/10/robots-the-new-low-cost-worker.html
** Source: China Can’t Buy Enough Industrial Robots, Jethro Mullen, CNNTech, June 23, 2016 http://money.cnn.com/2016/06/23/technology/china-industrial-robots/index.html
The future of work
Robotics, AI, sensors are here now

Quantified self: arriving now
$1.8 billion in venture invested in wearables since 2016
Source: CB Insights

US productivity last ten years
Productivity is suffering – is technology helping?
1 billion
smartphones
iPhone
launched
100 million
Twitter users
Since 2011 productivity gains
have slowed to crawl
Source: U.S. Bureau of Labor Statistics
108
106
104
102
100
98
96
94
2007 2009 2011 2013 2015 2017
Index points
US nonfarm labor productivity

The “average” US worker now
spends 25% of their day reading
or answering emails
Fewer than 16% of companies have
a program to “simplify work” or help
employees deal with stress.
More than 80% of all companies
rate their business “highly complex”
or “complex” for employees.
The average mobile phone
user checks their device
150 times a day.
The “average” US worker works
47 hours and 49% work 50 hours
or more per week, with 20% at
60+ hours per week
40% of the US population believes
it is impossible to succeed at work
and have a balanced family life.
Sources: Deloitte Human Capital Trends 2014 and 2015
Employees are overwhelmed

FOMO
We are all suffering from…….

Average
3.2
AON research
(March 2017) shows
global engagement
dropped by 4%
Graph source: Summer 2016 Glassdoor and Bersin Research
Stat Source: 2017 Trends in Global Employee Engagement, Aon Hewitt http://www.aon.com/chile/attachments/2017-Trends-in-Global-Employee-Engagement.pdf
What are these
companies doing?
Glassdoor ratings of more than 2 million employees
Employee engagement not improving
160
140
120
100
80
60
40
20
0
1.5 2.0 2.5 3.0 3.5 4.0 4.5
Overall Rating

Steam engine Telegraph & electricity Personal computer
We build tools, then the tools change us
How technology changes us

How technology changes us
Smart badge Virtual newsSmart phone Wearables

Artificial intelligence Augmented realityVoice recognition
What’s next?

How things were How things are How things work
• Tribes, Squads, and Guilds
• Shared values and culture
• Transparent goals, projects,
and strategies
• Open feedback, any-time
• People rewarded for skills
and abilities, not position
• Collective thinking
and interdependence
as strategy
A
B
DC E
C
B
D
G
E
A
F
Source: Rewriting the rules for the digital age. 2017 Deloitte Global Human Capital Trends
The modern organization: A network of teams
The way we work has changed

• 38% of companies believe they will be “fully
automated” within five years
• In 77% of companies automation results in
“better jobs” and retraining of workers (only 20%
see job reductions).
• Over 50% of companies expect to retrain workers
to side by side with robotics and AI
• Yet, in 65% of companies
HR is not involved at all.
Source: 2017 Deloitte Global Human Capital Trends: Rewriting the rules for the digital age, Deloitte Consulting LLP and Deloitte University Press, 2017.
And the future of work has arrived

Presentation title
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14
Continued growth in
core HR technology market
1

HR technology now A hot marketplace
Shift in investment toward new HR and workplace tools
$5.5 billion in
VC investment
in HR startups
since 2014
Source: CB Insights

1990s-2000s 2004-2012 2012-2017 2018+
Automated
talent management
Integrated talent
management
Engagement, fit,
Culture, analytics
Productivity,
performance, teams
Automate PerformIntegrate Engage
Shift from talent management to team and work management
Talent
management:
integrated processes and
systems, talent as core to
HR and business agenda
Systems of
automation
Practice-driven
solutions
People
management:
focus on culture,
engagement, environment,
leadership, and fit
Systems of
engagement
Empowerment
solutions
Team and work
management:
optimizing productivity,
alignment, connection of the
“network of teams”, tools to
make work better.
Systems of
productivity
Productivity-driven
solutions

Benefits &
compensation
Hiring
recruiting
E-learning Performance talent
Network based
applications
New systems of
engagement
Core HR is shifting its focus
Marketgrowth-adoption
2000 2018Progression over time
Compensation
HRIS
Benefits
administration
Applicant
tracking
Recruiting
sourcing
Learning
management
Workforce
management
Succession
management
Performance
management
Integrated talent mgmt
Analytics
tools
Social
recognition
Network
recruiting
HRMS + talent +
workforce management
Self-service
Apps
Personality and
pre-hire
Culture
assessment
Predictive
analytics
Real time
engagement
Mobile
apps for HR
Process
automation
Integration &
new talent apps
Analytics driven
“Systems of
engagement”
Apps that
“Make work life
better”

• Core HR Technology spending is slowing
(41% say it’s flat)
• Clients not fully satisfied: only 21% of customers
say talent systems “always meet their needs.”
• Two biggest growth areas are Learning and
Analytics (37% yty)
• Career, succession, onboarding, analytics
hottest functional needs
• User satisfaction is 2/3 lower than
vendor satisfaction
How will you upgrade
your HR technology?
Sources: Sierra-Cedar 2016–2017 HR Systems Survey White Paper, 19th Annual Edition, and Sierra-Cedar 2017–2018 HR Systems Survey White Paper, 20th
Annual Edition used with permission and 2016 Bersin by Deloitte HR Systems Research
Multiple pathways to an HR tech transformation
todays state of replacing HR technology
HighriskLowrisk
ReactiveFocused
Current state
22%
Rip & replace
Move everything all at once
to the cloud
25%
Hybrids
Move ONLY TM or WFM
apps to cloud
22%
Parallel / Patchwork
Combination licensed and
cloud solutions
19%
Hosting / Outsource
Single tenant or BPO
Shift to cloud is important, not sufficient
Rip and replace pace slows

Presentation title
19
A new generation of
people management software
(Soon Team & Work Management)
2

The evolution of management thinking
Historic perspective on performance and management
We are here
The industrial
corporation
Hierarchical
leadership
Collaborative
management
Networks
of teams
<1950s 1960s-80s Today1990s
Andrew Carnegie
Henry Ford
Netflix, Google,
Facebook, Amazon, Etc.
Jack Welch
Peter Drucker
Howard Schulz
Steve Jobs
Profit, growth,
financial engineering
Customer service,
employees as leaders
Mission, purpose,
sustainability
Operational
efficiency
2020
Industrial age
People as workers
Management by
objective
Servant leadership
Work together
Empower the
team
The corporation
Is king
The executives
are king
The teams and
team leaders are kings
The people
are king(s)
Citizenship,
growth and learning
Productivity, wellness,
networked business
Unilever, patagonia,
Airbnb, wholefoods, etc.
People, communities,
global networks
Growth &
citizenship

Feedback and
engagement
Reinventing
performance
Video-based
learning & career
Social
recognition
Well-being
Work – Team
management
2018 and beyond: A new set of disruptive applications
Marketgrowth-adoption
2016
Pulse
survey
Text
analytics
Mobile
feedback
2020
Culture
assessment
Coaching
tools
Checkins
with feedback
Agile, open
goal management
Org network
analysis
Recognition
everywhere
Custom rewards
programs
Customer
recognition
Progression over time
Video learning
Content
curation
Intelligent
learning
Career
planning
Gamification
accreditation
Well-being
fitness tracking
Competitions
social sharing
Points
gamification
Fitness merges
w/ engagement
Virtual work
management
Document
management
Goal sharing
Goal tracking
Communications
messaging

A new talent management market emerges
Market evolution becoming disruptive again
Social recognition
Well-being
LearningTraditional
Payroll - talent
Culture
Performance management
Mid-market SMB
Recruitment
Examples of firms

Reinvention of the talent acquisition market
From application tracking to recruitment success
Applicant
tracking
Candidate
marketing
sourcing
Ai-based intelligent
recruitment
Redefining
assessment
and interview
Onboarding
manager
tools integrated
sourcing
Alt
Examples of firms

Video and AI based assessment arrives
Cell phone camera can identify 40,000 facial
location points
Video-based assessment can capture up to
1 million data elements in a 15 minute interview
Facial recognition has been studied since the 1960s
and is now well understood
Cartoonists have understood how faces reflect
emotion since 1950s
Language Tonality Facial
Expression
Source: http://www.apa.org/science/about/psa/2011/05/facial-expressions.aspx

Smart chatbots are here
AI comes to HR (hourly and shift work)
What Pay?What Role? What Shifts?What Experience?

Personalized AI as coach
Examples of prescriptive assessments and learning

Presentation title
27
New industrialized tools
for performance management
3

New generation performance tools are here
The new
World of
performance
management
Check-ins
Transparent
goals
Peer
feedback
Feedback
to manager
Engagement
survey
Individual
assessment Team
assessment
Continuous
micro-
learning
Regular
evaluation
Integrated
into workflow
Mobile
app
Vendor
A
Vendor
C
Vendor
D
Vendor
E
Vendor
G
Vendor
F
Vendor
B
Annual process Continuous
Manager-centric Team-centric
Hierarchical Multi-directional
Competitive Developmental
Subjective Data-driven
Secret Transparent
Single rating Richer rating
Fundamental changes are enormous

And… continuous performance management works
27 companies that redesigned their process, found
overwhelmingly positive outcomes:
• 100% said conversation quality improved
• 83% said conversation frequency increased
• 90% said employee engagement increased
• 91% say data for evaluation is better
• 96% say tools are easier and simpler
• 77% expect continuous feedback
• 45% are using check-ins to assess managers
• 50% say training process is easier and shorter
• 67% doing feedback quarterly
• 80% expect employees to drive check-ins
Source: NeuroLeadership, Is Transforming Performance Management Worth It?

Deloitte feedback process helps drive performance
Feedback = performance
1. I am really enthusiastic about the mission of the firm
2. At work, I clearly know what is expected of me
3. In my team, I am surrounded by people who share my values
4. At work, I have the chance to use my strengths every day
5. My teammates have my back
6. I know I will be recognized for excellent work
7. I have great confidence in the firm’s future
8. In my work, I am always challenged to grow
3
Baseline
Bottom quartile
Top quartile
1
2
4
5
6
7
8
4.4
3.2
4.2
4.0
3.8
3.6
3.4
Pulse survey items
Questions that help predict high performance at Deloitte
Source: Deloitte pilots FYs14-15 Questions © Marcus Buckingham Company.

Presentation title
31
Wellbeing market explodes4

Workplace culture is hot: well-being
Google trends search for wellbeing since 2004
0
25
50
75
100
January 1, 2004 February 1, 2008 March 1, 2012 April 1, 2016
Jump since 2008 recession
Source: https://trends.Google.Com/trends/explore?Date=2004-01-01%202017-10-09&q=wellbeing

Employeevitality
Business performance
Cost reduction Labor productivity Retention Productivity Collaboration Team performance Leadership
Health
Monitoring
Employee
assistance
Medical
benefits
Fitness
Challenges
Nutrition
Exercise
Sleep
Stress
Sustainable performance
Recognition
Skills and
training
Work
environment
Rewards
Leadership
Management
Clear goals
Growth
opportunities
Drive
Wellbeing
Self discovery
Career
Purpose
Mindfulness
Abundance
mentality
Positive thinking
Culture fit
Family
From wellness to wellbeing to performance

Wellness apps now used more than Twitter
290% reduction in
workers compensation claims
65% more engaged
than non-users
9% greater
work productivity
Source: VirginPulse Client Research, 2017

Presentation title
35
Culture and engagement:
“always-on” feedback
5

How does feedback work today?
Engagement
Survey
Senior Management Team
Employees
Line Managers | HR
Performance
Review
Filtering and Cleaning
Time
Per
Year

Building an enterprise feedback architecture
Social media
monitoring
Job boards & adsEmployment brand
Customer
satisfaction
Pulse
surveys
Performance
appraisals
Integrated
reporting & analytics
Sentiment analysis
Network analysis
Anonymous
feedback
tools
Annual
survey
Performance
check-ins
Exit
interviews

Presentation title
38
New generation of learning market
growing rapidly again
6

Video is now >55% of all internet traffic and mobile is
now over 60%
(KP Internet Trends 12/2015)
35 Million people have enrolled in MOOCs in the
last four years, with 2015 enrollments doubling 2014
(Class Central)
Over 50% of learners use mobile for more than 1/3
of their learning
(Degreed)
India is estimated to be a $3-4 billion market for
corporate learning and MOOCs
Video and mobile has taken over learning
Expert and user authored video
Bersin High
Impact Research:
The Net-Promoter Score
for L&D is now
-8 and lower
for non L&D professionals
The MOOC Report, Summer 2016

We are here
E-learning
& blended
1998-2002 2005 20172010
Self-study
online learning
Course catalog
Online university
2020
Intelligent
learning
Intelligent,personalized,
machinedriven
Instructional design
Kirkpatrick
LMS as
E-learning platform
Talent
management
Career focused
Lots of topics
Learning path
Career track
Blended learning
Social learning
LMS as talent
platform
Digital
learning
Everyone, all the time,
everywhere
Micro-learning
real-time video
courses everywhere
Design thinking
learning experience
LMS invisible
Data driven, mobile
Continuous
learning
Learning on demand
Embedded learning
Video, self-authored
mobile, YouTube
70-20-10
Taxonomies
LMS as experience
platform
Formats
Philosophy
Users
Systems
From e-learning to digital learning in one generation
Evolution of L&D has been blindingly fast

Result: explosive growth in micro-learning
Micro-learning Macro-learning
I need help now. I want to learn something new.
• 2 minutes or less
• Topic or problem based
• Search by asking a question
• Video or text
• Indexed and searchable
• Content rated for quality and utility
• Several hours or days
• Definitions, concepts, principles, and practice
• Exercises graded by others
• People to talk with, learn from
• Coaching and support needed
Is the content useful and accurate? Is the author authoritative and educational?
Videos, articles, code samples, tools Courses, classes, MOOCs, programs

Career models in disruption
58% of companies are
redesigning or planning to
redesign their career model
83% of companies expect to
have an “open” or “highly
flexible” career model within
the next 3-5 years
While 33% of companies
promote vertical career
moves, 67% now promote
horizontal or project based
career progression
31% of companies expect
careers to be 3-5 years long
60% expect them to be
10 years or less
Learning and career
management software is the
#1 fastest growing segment in
HR technology
(Sierra-Cedar 2016– 2017 Survey
HR White Paper)

The learning tech market starting to shake out
Learning experience
platforms
Degreed, Edcast, Pathgather
SAP Jam, Fuse, etc …
Program experience
(delivery) platforms
Intrepid Novoed
Edx, Everwise, Openedx, etc…
Micro learning
platforms
Axonify, Grovo, Qstream, Practice,
Rehearsal, etc…
LMS platforms
Traditional: Cornerstone, Saba, Successfactors, Sumtotal
Modernized: Workday, Oracle Cloud Learning, Litmos, Docebo, etc
Assessment, development,
delivery tools
Video authoring, intelligent assessment, spaced learning,
gaming, virtual reality, collaboration, simulations, etc…
Content libraries
Lynda, Udacity, Coursera, Edx, Udemy, Pluralsight,
Skillsoft, Crossknowledge, hundreds of others
Learning
record store
Grassblade, Learning Locker,
Saltbox, Watershed, etc…

Major new learning announcements!

Presentation title
45
People analytics
becoming mainstream
7

2017: where people analytics is going
Projects Based on
Problems and Strategies
Embedded Applications That
Drive and Inform Work
Interesting experiments,
models, and studies
Practical, useful
dashboard and tools

Progress steady and accelerating
% Change
Plan
Performing multi-year
workforce planning + 23%
Correlate
Correlating people data
to business performance + 56%
Predict
Using people data to predict
business performance + 50%
% of Companies “Good or Excellent” Increasing
(Deloitte Human Capital Trends 2017)

But… new types of data, and new issues arise
Markets Converge:
Text Analysis | Sentiment Analysis | Organizational Network Analysis | Feedback Systems
8% of companies are now
doing some form of
Organizational Network
Analysis (ONA)Scan
Badge

Emergence of “relationship analytics”
Organizational Network Analysis (ONA)
Teams Organizations The Enterprise

AI based diversity, coaching, recruitment systems
AI, analytics, sentiment, and organizational network analysis will converge

Presentation title
51
Bringing it all together
A new architecture emerges
8

believe their
employees are fully
aligned with the
corporate purpose
23%
believe internal
processes for
collaboration
are working well
14%
are excellent
at building
a differentiated
employee
experience
22%
are using design
thinking as part
of crafting the
employee
experience
10%
Say problem
is urgent
38%
Culture, engagement, and beyond
Focus on the employee experience
Source: Deloitte and Facebook, “Transitioning to the future of work and the workplace,” November 2016

Where Is This All Going?
Systems
of Record
1980s
HR Systems
Client/Server
Menus, Screens
Systems of
Engagement
2000s
Cloud, Web
Talent Management
Panels, Dashboards
Systems of
Productivity
2020+
Predictive,
Intelligent
Agents, Nudges
Conversations,
Messages

From human centered to humanity-centered design

Self Service Intelligent ServicesCase Mgt. AI/Voice App Interfaces
Engagement
Feedback
Recognition
Learning
Career
Coaching
Performance
Goals
Succession
HRMS
Payroll/Time
Communications
Analytics/AI
ONA
Workforce Mgt
Wellbeing
Rewards
Benefits
Sourcing
Recruitment
Assessment
White collar Hourly Senior leaders Line managers Candidates Contractors External network Alumni
Senior Geographic
Business Partners
Talent Specialists
(OD, sourcing, recruiting, learning,
organized in networks of excellence)
Wellbeing, safety, culture,
engagement, recognition
Analytics, Monitoring,
Predictive, WF Planning
HR Tech,
App development
Research, Market
Best Practices,
Comp, Ben, Rewards HR Prof DevelopmentHR Ops, AI and Bots,
Intelligence
Junior
Geo Bus Partners
Teams@Work
(productivity, services, team
management, wellness, feedback,
recognition, learning)
People@Work
(productivity, services,
team management,
wellness, feedback,
recognition, learning)
Candidates@Life
Candidates (products,
jobs, projects,
opportunities)
Leaders@Work Alumni@life
The HR Technology Architecture Of The Future

Source: HR Technology Disruptions for 2018: Productivity, Design, and Intelligence Reign
Bottom line: the HR technology market is reinventing itself

HR Tech 2017 KeynoteCopyright © 2017 Deloitte Development LLC. All rights reserved. 57
How are you transforming the way you work,
navigating the complex digital landscape, and
creating a differentiated experience to capture the
workforce of the future?
Share your insights on the 2018 Deloitte Global
Human Capital Trends survey today:
deloitte.com/hctrends-survey
Your insights needed:
Help chart the future of work

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a
detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public
accounting.
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial,
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The HR Technology Market: Trends and Disruptions for 2018

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