How Modern HR Tech Will Transform the Enterprise

Overview: Brian Sommer discusses a fundamental market shift in HR technology priorities. For 20–30 years, HR systems focused on transaction processing and operational efficiency. Today's chief HR officers demand solutions addressing immediate 2025 challenges centered on business growth outpacing GDP and cost-of-living increases—not the efficiency problems of the 1990s.

Modern HR Challenges: HR executives cannot fill open positions today, and manufacturing firms must rescale or replace as many as 85% of their workforce within five years. The critical factors are talent acquisition, deployment, and continuous upskilling—not transaction processing.

Modern Solutions and Bot Technology: Smart buyers seek solutions eliminating manual HR work through "really smart bots" with workflows and exception handling designed for all employees, not just HR professionals. A successful example is Startup One Day's "new baby" chatbot: when employees input a life event, the bot congratulates them, walks through relevant policies (family leave, tax withholding), and launches workflows—representing "HR designed for non-HR people."

Legacy Vendor Problems: Established vendors face structural obstacles. Many recently moved to the cloud via acquisitions without integration. Their core data models were designed decades ago when technology was expensive and constrained. Activist shareholders and private equity pressure force them to return capital to shareholders rather than invest in R&D, limiting innovation.

The Expectation Gap: Customers face a critical disconnect: mature enterprises want next-generation capabilities but encounter vendors either solving 1990s problems (legacy firms) or undercapitalized startups. Companies often retain HR software longer than their marriages, postponing necessary marketplace evaluation.

Vendor Selection Strategy: Before contacting vendors, enterprises should: (1) scan the marketplace to understand possible solutions; (2) reimagine critical processes using combinations of new technologies (AI, machine learning, bots); (3) design future-state processes; (4) evaluate vendors against reimagined requirements; (5) look beyond current vendors. Many vendors are "long on hyperbole and short on delivery," though some emerging solutions offer genuine transformation requiring deeper evaluation.