Innovations are Coming to The Human Resource

Posted in Company News, M&A, Human Capital Management, Events By John Mathis

Innovations are Coming to The Human Resource

Innovations are Coming to The Human Resource

Harbor View Advisors recently hosted a roundtable event focused on the trends in Human Capital Management Technology. Participants represented a cross-section of industries and roles including HR Directors, Talent Acquisition Managers and Chief People Officers. Broadly speaking, the participant companies represent industries that make up roughly 50% of U.S. private employment[1], including: Healthcare, Transportation, Finance, E-Commerce and Utilities.

There was lively discussion on the forces impacting the HR function that ranged from the importance of engagement in the workplace to the potential shortfalls of new technologies entering the HR market. 

 In this note, we highlight three observations:

  • There is an increasing inflow of new technology in HR, but HR practitioners expressed caution in adoption.
  • The highest priority area for HR professionals continues to be talent acquisition.
  • Roundtable participants anticipate breakthroughs from AI (Artificial Intelligence) and are excited about investments in this space.

Technology Divide

There is an increasing amount of investment and development of new technology entering the HR arena; notably, HR tech has already received $5.7B in funding in the first half of 2018, nearly double the total funding in 2016 ($2.5B).  Despite the influx of providers and products to the space, 32% of HR professionals believe that some of these technologies are still too immature to implement[2]. Practitioners also face the challenge of funding a new HR system and tackling the lack of integration with current IT systems. This dynamic creates an interesting juxtaposition in the market of technologically forward products being sold into a cautious consumer base.

Talent Acquisition is Getting the Money

Given a tightening labor market and the need for recruiters to reach an increasingly mobile, distributed workforce, HR executives unanimously agreed that technology innovation is most needed in Talent Acquisition. HR professionals are looking for a platform that bridges the gap between a friendly user experience for candidates and clear reporting analytics for talent acquisition managers. In fact, user experience and administrative experience were the top two reasons for switching systems[3].

Notably, new entrants in Talent Acquisition received the most funding in the HR technology arena, securing over half of the $1.06B in VC investments in 2017[4].

Looking forward, mobile-enabled and social-enabled technology solutions in Talent Acquisition are expected to become among the most widespread technology adoptions in Human Resources[5].

Artificial Intelligence has Everyone’s Attention

Participants are excited about potential for AI. It quickly became apparent that some participants have been slower to consider the application of AI while others are already in practice. Representatives began brainstorming ways to apply AI in their own HR processes.   

The early AI adopters seemed to have an endless list of ways AI could facilitate functions from nurturing potential candidates to customizing e-learning content. However, the technology has had a slow start in entering the HR space- of the top 100 AI startups identified by CB Insights, only three companies came from the HR Tech space, representing only $69M of the $12B in aggregate funding.

 

Despite HR’s slower adoption of AI relative to other industries, AI deals in HR have grown considerably from 2013-2018[6].  Executives in the room agreed that the value add for these breakthrough technologies were well worth the investment.

[1] Employment Projections program, U.S. Bureau of Labor and Statistics

[2] KPMG HR Transformation, https://assets.kpmg.com/content/dam/kpmg/jm/pdf/hr-transformation2017.pdf

[3] Docebo E-Learning Trends Report 2017, https://www.docebo.com/resource/elearning-market-trends-and-forecast-2017-2021/

[4] Q4 HR Tech VC Update, http://larocqueinc.com/q4-hr-tech-vc-update/

[5] Docebo E-Learning Trends Report 2017, https://www.docebo.com/resource/elearning-market-trends-and-forecast-2017-2021/

[6] Artificial Intelligence Deals Tracker, https://www.cbinsights.com/research-artificial-intelligence-startup-deals
 

DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.