The People Bulletin

Over the last two years the UK business software market has changed considerably – two years ago there were nearly 2,000 generic software authors – today there are less than 600. Some business software authors sell their products directly but a large number sell their products through resellers. Two years ago there were 3,500 resellers, today there are less than 1,000. HR suppliers have not felt the full brunt of the contraction due to the recession but this sector has certainly seen massive consolidation.

These changes have brought about a significant problem for companies looking for HR software – there are fewer products available from fewer suppliers. The knock-on effects are even more worrying – what happens if you buy software from a software author that subsequently gets taken over – or from a reseller that goes out of business?

Of the HR products available in the UK many are in maintenance mode – the company now owning the product is no longer investing in its development. They will continue to support the product – add some important functionality as government requirements change, like online filing, but they will not develop the product any further. Not a problem if the customers’ systems do not change – but a major problem if the customer wants to expand, change its IT platform, or take advantage of modern IT developments.

Technology change

Over the last 20 years we have seen computing technology change from server-based systems – to networks – to Windows client-server - and now to online (Cloud) computing. Few software developers have kept up with these changes. Very often it’s only new entrants that can effectively implement the new technologies ; old legacy code rarely converts to modern technology.

Online application, or Cloud Computing as it is popularly known, is the latest trend. It’s not really much different to the bureau systems that were so popular for HR and payroll 25 years ago. Instead of using a leased line or network this new technology uses the internet with all of its strengths and weaknesses. Needless to say take-up has been slow; there are lots of new online applications but few customers at present. The cost model is also different; instead of paying up front for a software application, online customers rent the system on a per company, per user, per day, basis. Which is great at first because there is no capital cost but it could be expensive over five years.

Internet security

The scare stories about using the internet for these applications are unfounded. The government has successfully mandated online filing of PAYE, self assessment and now corporation tax with very few Internet hiccups. Many of us use online banking and share dealing tools, so why not HR and payroll. Applications such as employee expense management are ideally suited to internet access because they allow the employee to be able to input their expenses at any time and on any convenient terminal.

A lack of integration

Well that’s the good news – so what’s the bad news? The bad news is that there are very few software developers providing a total enterprise-wide solution. Most of the software developers are selling specialist applications for HR that are stand alone. Document management, expense management, human resources, payroll, and customer relations management are all modern niche software applications. Some will integrate directly with existing legacy systems, but in the most part they are designed to be stand alone – often on different platforms and databases. That can mean duplication of data in different systems (a major problem in HR) trying to keep all the various records up to date.