Gartner on making the business case for HR tech

HR leaders, don’t miss out: Join us in Las Vegas for free as a VIP guest at UNLEASH America.

The global economy is in flux – and the outlook is not looking good. Inflation has reached forty-year highs in the US, as well as across Europe and Asia-Pacific.

In this challenging economic context, businesses are focused on efficiencies, particularly in the realm of HR.

This is where HR tech comes into its own; the challenges of “high inflation, competition for talent and changing employee demands” are pushing employers to use “technology to cut costs, create efficiencies and innovate”, Gartner director analyst Josie Xing tells UNLEASH.

And research confirms this. Gartner’s survey of 138 HR leaders found that driving business outcomes was the number strategic priority of HR tech in the next three years (44%). Cost optimization was another priority (17%).

This explains why “HR technology will be a top investment priority for HR teams in 2023”, as Xing notes. 46% of HR leaders said they planned to increase budgets for technology despite the wider economic context.

Making the case for tech investment

The challenge is persuading the C-Suite that the specific HR tech investments will achieve these efficiency aims. Gartner’s data shows that HR leader’s biggest hurdle around technology is justifying the investment (46%).

Xing explains: “The current economic challenges mean the technology investments of HR teams are coming under greater scrutiny from senior leaders and they are being expected to justify it with measurable outcomes.”

“If a HR leader can demonstrate clear impact for helping a business improve its economic fortunes long-term, then it will help them safeguard technology spending”, adds Xing.

HR also needs to focus on “highlighting the economic benefits and outlining the risks of not investing to senior leaders”.

To resolve this problem, HR teams also need to work to overcome the tech adoption challenges they are facing (57% said this was the biggest hurdle).

“Without adoption, technology is a dead weight – it provides zero value while incurring ongoing costs”, notes Xing. HR will struggle to continue to make the business case on technology if employees are not actually using it to their benefit.

To help here, HR must work their vendor partners to ensure that any HR tech they are investing is easy and intuitive to use. Currently, just 43% of leaders believe that employees are satisfied with the HR tech they use in their organization.

Further to this, HR leaders need to ask employees for “end-user feedback to improve technology incrementally”, according to Xing. Data is key to ensure that organizations are getting the most of their HR tech investments.

Embrace L&D tech and AI

The Great Resignation is showing no signs of slowing down. The phenomenon is almost two years old, and even economic uncertainty isn’t stopping it in its tracks.

The resulting talent shortages are “one of the most significant challenges that organizations face” – and HR teams are under pressure to find solutions; they are turning to technology.

While recruitment tech has a role here to drive efficiencies (it can automate manual work for HR teams, leaving them more time to do more strategic tasks), Xing notes: “HR leaders should be thinking about all the areas of the talent pipeline”. This includes internal mobility.

Josie Xing, director analyst, Gartner.

A major cause of the Great Resignation is the lack of career development opportunities – employees are aware they can not just get more money, but they can get a promotion more easily if they get a new job.

This makes sense as the Great Resignation pushed employers to shift “investments away from initiatives supporting existing staff to measures to attract new ones” – but this only made the situation worse, and “exacerbated skills shortages”, notes Xing.

According to Xing, “with the economic downturn set to reduce hiring this year, businesses are having to restore efforts to support employee experience” if they want to avoid losing more workers and widening skills gaps.

As a result, organizations need to scale scaling up their learning and development (L&D) programs, and technology.

Therefore, it is no surprise that Gartner found the top technologies for 2023 are all linked with L&D: skills management tech (51%), learning experience platforms (41%) and internal talent marketplaces (32%).

Beyond L&D tech, which can “importantly upskill employees to tackle critical skills gaps”, Gartner also sees artificial intelligence (AI) as playing a key role in 2023 and beyond.

The newest iteration of AI, generative AI like ChatGPT and BingAI, are coming to the fore, particularly are more and more HR tech vendors integrating this type of AI into their products. Latest examples include Beamery and HireEz.

“Foundation models are gaining prominence due to how the model scales, how easily it can be trained on any kind of sequential data and how many cases offer a high level of accuracy,” concludes Xing.

Watch this space.

The International Festival of HR is back! Discover amazing speakers at UNLEASH America on 26-27 April 2023.