Spotlight

Report:

The Forrester Wave™: Human Capital Management, Q2 2023

How does Forrester define the Human Capital Management market in 2023?

HCM suites are cloud-based solutions that support the fulfillment of an organization's employment contract (e.g., payroll, time and attendance, benefits administration, employee records management) and its people strategy by helping attract, develop, understand, and retain talent (e.g., talent acquisition, learning and development, performance management, career management, talent intelligence and analytics). The current business environment, characterized by competition for talent amid low unemployment and rising interest rates, has accelerated demand for greater support of operational agility and workforce mobility. Leading HCM suite providers have adapted their messaging and platform capabilities to utilize workforce data to surface prescriptive actions for practitioners and end users in the flow of work, bolstering organizational agility by supporting personas beyond the HR team to collaborate and utilize data and tools for extensibility in the platform.

Key Facts for The Forrester Wave™: Human Capital Management, Q2 2023 in 2023

How did the Human Capital Management market evolve in 2023?

What product features are required to be included in this year's evaluation?

What are the common features of top products in the Human Capital Management space?

No common features specified.

Scope Exclusions

Inclusion Criteria

Vendors must, among other requirements:

Offering Strengths — Relative Weighting

Strategy Strength — Relative Weighting

FAQs

Q: What does this research cover?

A: This research covers a comprehensive evaluation of 11 major HCM suite providers across 28 criteria, including functional capabilities (talent acquisition, HR management, payroll, total rewards, workforce planning, talent management, learning, HR service delivery, workforce management, and people analytics) and platform characteristics (trust, intelligence, extensibility, connectivity, inclusiveness, delivery, resiliency, usability, commercialization, and employee experience). The evaluation focuses on cloud-based HCM solutions that support both the fulfillment of employment contracts and organizational people strategy.

Q: Who should use this research?

A: HR professionals and IT collaborators should use this research to select the right HCM provider for their organizational needs. The report helps buyers understand vendor positioning (Leaders, Strong Performers, Contenders), evaluate vendor strengths and weaknesses, and match solutions to specific organizational requirements such as payroll complexity, global operations, vertical industry needs, workforce management capabilities, and organizational agility requirements. Buyers can use the included Excel-based vendor comparison tool to adapt criteria weightings to their specific priorities.

Q: What are the mandatory features of vendors included in this market?

A: Vendors must offer a comprehensive cloud HCM suite that supports both the fulfillment of the employment contract (payroll, time and attendance, benefits administration, employee records management) and the organization's people strategy (talent acquisition, learning and development, performance management, career management, talent intelligence and analytics). Cloud must be the primary delivery model with native payroll support for at least one country.

Q: What are some reasons for not being included in this report?

A:

  • Cloud is not the primary delivery model
  • Lack of native payroll support for at least one country
  • Fewer than 200 live cloud customers with at least 1,000 employees as of December 31, 2022
  • Insufficient mindshare among Forrester's clients in inquiry, briefings, and consulting engagements
  • Offering does not support both employment contract fulfillment and people strategy requirements
  • Point solution providers that lack comprehensive HCM suite functionality

Q: What should buyers consider when evaluating products in this market?

A:

  • Look for providers that clearly delineate automation and AI with transparency about AI/ML capabilities and ethical application
  • Seek solutions that reduce friction in delivering talent solutions through human-centered and holistic approaches that leverage skills as a foundation throughout the employee journey
  • Evaluate vendors' ability to tailor to organizational needs through hyperpersonalization for both employees and organization, including vertical-specific features and low-code/no-code practitioner tools with platform extensibility (PaaS) and API support
  • Assess cohesiveness in user experience (UX) that enables seamless transition between channels and collaboration in the flow of work
  • Consider the vendor's ability to integrate learning management systems (LMSes), goals, and engagement tools that employees ultimately direct

Q: How has the Human Capital Management market evolved in 2023?

A:

  • Competition for talent amid low unemployment and rising interest rates has accelerated demand for greater support of operational agility and workforce mobility
  • HCM system intelligence increasingly serves as the catalyst to cohesively align functionality across the HCM suite
  • Investment in bringing additional use cases for large language models and generative AI is accelerating and will more deeply engrain AI in the HCM suite
  • Leaders leverage skills as a foundation prior to onboarding and throughout the employee journey
  • Features for specific verticals have evolved from mere marketing into impactful solutions
  • Low-code/no-code practitioner tools in tandem with greater platform extensibility (PaaS) and API support enable scale with diminished technical liability
  • Prepersonalized solutions that require less customization are generating broader adoption and reducing time to value

Q: What differentiates Strength of Offering vs. Strength of Strategy?

A: Current Offering (vertical axis) evaluates the strength of a vendor's current product including functional capabilities (talent acquisition, HR management, payroll, total rewards, workforce planning, talent management, learning, HR service delivery, workforce management, people analytics) and platform characteristics (trust, intelligence, extensibility, connectivity, inclusiveness, delivery, resiliency, usability, commercialization, and employee experience). Strategy (horizontal axis) evaluates the strength of vendor strategies including product vision, innovation roadmap, planned enhancements, market approach, performance, supporting products and services, and partner ecosystem.

Reference

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