ISG Survey Finds Enterprises Struggle to Show Business Value From HR Technology
April 20 2023 - 9:00AM
Business Wire
Eighty-seven percent of organizations are
achieving cost savings from HR technology
Increased expectations, lags in process
transformation hamper business value realization
A clear majority of enterprises are realizing cost savings from
HR technology transformations, but fewer than half can demonstrate
clear business value from their investments, according to results
of a new biennial survey released today by Information Services
Group (ISG) (Nasdaq: III), a leading global technology research and
advisory firm.
The 2023 ISG Survey on Industry Trends in HR Technology and
Service Delivery found 87 percent of organizations are achieving
savings of 10 percent or more on total HR administration costs from
their HR Software-as-a-Service (SaaS) platform, and 20 percent of
companies are achieving savings of 40 percent or more.
However, only 46 percent of organizations have achieved clear
business value by adopting HR SaaS technology, a drop of 18
percentage points from the prior study, conducted in 2021, when 64
percent of respondents said HR SaaS had brought measurable
value.
“Enterprises have seen a drop in business value realization from
technology implementations in part because HR buyer expectations
have increased,” said Stacey Cadigan, partner, ISG Human Capital
Management and Enterprise Transformation, and co-author of the
study. “Beyond improving the user experience, organizations are
seeking improved functionality that translates directly to greater
operational efficiencies, reduced cycle times, improved employee
retention and other measures of business value.”
For more than half the survey respondents, the drop in achieved
measurable success is directly linked to the failure to change HR
business processes (35 percent) and/or change the HR service
delivery model (21 percent) when implementing new systems.
“Increasingly, organizations recognize the need to evolve their
business model to take full advantage of SaaS technology and
functionality. However, the time and support needed to make this
transformation can be a barrier,” Cadigan said. “Organizations need
to become more adept at aligning their technology strategy to their
business strategy, budgeting for ongoing improvements and
continually evaluating new technology. Simply put, investing in
business processes leads to higher business value.”
The survey found impacts from the pandemic, shifting business
priorities, workforce challenges and a desire to extend the
investment of current solutions have slowed the journey to HR SaaS
for some organizations.
Fifty-seven percent of respondents to the 2021 ISG survey
expected to be using a subscription-based SaaS or hybrid solution
by 2023. In the latest survey, the number of organizations
expecting to be on a subscription-based SaaS or hybrid solution in
2025 sits at almost half (48 percent) of those surveyed.
The current talent shortage may help drive adoption of HR SaaS
technology solutions, ISG said. “Our survey found improving the
ability to attract, develop and retain talent is the top priority
for 36 percent of respondents,” said Saskia Goods, director, ISG HR
Technology and co-author of the study. “Innovative talent and
recruitment technology solutions have helped organizations find the
right talent in a tight market for business-critical roles and
skillsets.”
As organizations begin or continue significant technology
transformation, the survey showed strong interest in shared
services or outsourcing to lower costs, improve service quality and
support HR functions. Sixty-eight percent of organizations expect
to begin or increase their reliance on shared services – up from 55
percent in 2021 – and 60 percent expect to begin or increase their
reliance on outsourcing, up from 50 percent in the previous
survey.
Seventy-seven percent of survey respondents that rely on HR
outsourcing agree that it improves service quality, and 59 percent
agree that it reduces costs. Organizations most likely to state
that HR outsourcing improves service delivery quality and reduces
costs are those that are leveraging mobile-enabled employee and
manager self-service (ESS/MSS) and live chat capabilities.
The 150 companies surveyed for the 2023 ISG Survey on Industry
Trends in HR Technology and Service Delivery report represent a
cross-section of industries operating in key geographic regions
around the world and range in size from 5,000 employees to more
than 50,000 employees. The report tracks enterprise priorities and
future plans, the evolution of market trends based on prior
research and examines the maturity of organizations as they
progress in their transformation journeys.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including automation, cloud and data analytics; sourcing advisory;
managed governance and risk services; network carrier services;
strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,600
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20230420005324/en/
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978 518 4520
isg@matternow.com
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