U.S. Public Sector Adapts to Change by Modernizing HCM

Rhea-AI Summary

The 2023 ISG Provider Lens™ report highlights the accelerated adoption of advanced human capital management (HCM) software platforms by U.S. public sector agencies due to workforce changes, retirements, and new expectations. Agencies are centralizing HCM to address talent retention, diversity, equity, and inclusion challenges, seeking efficiency and modernization.

Insights

Human Resources Technology Expert

The integration of advanced human capital management (HCM) platforms within U.S. public sector agencies signifies a pivotal shift in how these entities approach workforce management. The move towards these systems is indicative of a broader trend where organizations, in response to dynamic work environments and evolving employee expectations, are leveraging technology to gain a strategic edge in talent acquisition and retention. Advanced HCM platforms offer a suite of tools that not only streamline HR operations but also provide valuable analytics to inform decision-making processes.

From a technological standpoint, the adoption of such platforms can lead to increased efficiency and productivity. The ability to automate routine tasks frees up HR professionals to focus on more strategic initiatives, such as workforce planning and employee development. Moreover, the use of analytics can help identify trends and patterns within the workforce, allowing for more informed decisions regarding talent management and potentially enhancing diversity, equity and inclusion efforts.

Public Sector Management Analyst

The report's findings on the U.S. public sector's adoption of HCM platforms underscore a critical response to an aging workforce and the subsequent talent shortages. As retirements surge, the need to attract younger, tech-savvy professionals becomes more acute. Public agencies are recognizing the necessity of modernizing their HR systems not only to manage their current workforce more effectively but also to appeal to the next generation of employees who expect digital proficiency in their work environments.

Furthermore, the standardization on centralized HCM platforms reflects a strategic move to mitigate risks associated with decentralized and outdated HR systems. By centralizing HR functions, agencies can ensure a more consistent application of policies and procedures across the board, which is crucial for maintaining compliance with new regulations and standards. This transition is a significant undertaking for the public sector, which often operates within tight budgetary constraints and faces scrutiny regarding the allocation of resources.

Financial Analyst

The financial implications of public sector agencies adopting modern HCM platforms are multifaceted. Initially, there is a significant investment required not only for the software purchase but also for the implementation and ongoing maintenance. Most agencies opt to outsource these services due to a lack of internal resources, which can add to the cost. However, the long-term financial benefits may justify the upfront expenses. Enhanced HR operations can lead to cost savings through improved efficiency, reduced turnover and better management of human resources.

Investors and stakeholders in companies that provide these HCM solutions should monitor the adoption rates and satisfaction levels within the public sector, as these could be indicators of future market growth and potential revenue streams. The report suggests a growing market for HCM platforms in the public sector, which could have positive implications for the stock performance of companies in this industry.

Agencies roiled by retirements, talent shortages and new regulations standardize on modern, centralized HCM platforms, ISG Provider Lens™ report says

STAMFORD, Conn.--(BUSINESS WIRE)-- U.S. public sector agencies have accelerated their adoption of advanced human capital management (HCM) software platforms in the face of multiple changes that have impacted the sector in the past few years, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ HCM Technology Platforms report for the U.S. Public Sector finds that changes in the composition and location of workforces, new employee and constituent expectations and a wave of retirements have forced agencies to modernize human resource management. Two of the steepest challenges today are attracting and retaining talent and promoting diversity, equity and inclusion, but agencies recognize other challenges will emerge.

“Public sector organizations are turning to centralized HCM platforms so they can take a more holistic approach to staff management,” said Nathan Frey, partner and lead, ISG Public Sector, in the U.S. “What affects one aspect of human resources can influence others, and they want the agility to address future needs.”

State and local governments and educational organizations in the U.S. are seeking improvements in HR operations, management and efficiency, the report says. Their goals span several functional areas, many of which have languished in these organizations due to outdated systems, tools and interfaces.

Typically, public agencies begin by buying and implementing a core HCM platform, which may be decades ahead of the systems it replaces but still have limited built-in capabilities, ISG says. Later, the agencies add modules for specific functions. Many projects involve purchasing software and then outsourcing implementation and maintenance, for which most agencies lack the resources.

To address challenges around talent, organizations are implementing solutions that automate processes and use analytics to make data-driven decisions about recruitment and retention, the report says. In payroll management, new HCM solutions are automating routine tasks and providing better oversight and regulatory compliance, reducing the risk of costly errors and penalties.

“Transparency is critical for taxpayer-funded organizations,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “New HCM platforms provide real-time access to data, which can help agencies increase accountability and public trust.”

The report also explores other HCM trends in the U.S. public sector, including the rising importance of remote workforce management and mobile access to HR data for employees and administrators.

For more insights into the HCM challenges facing the U.S. public sector, including talent shortages and diversity mandates, and ISG’s advice for addressing them, see the ISG Provider Lens™ Focal Points briefing here.

The 2023 ISG Provider Lens™ HCM Technology Platforms report for the U.S. Public Sector evaluates the capabilities of 36 providers across three quadrants: Core HCM Platforms Plus Talent Management, Payroll Management Solutions and Recruiting and Retention Solutions.

The report names CGI, Infor, Oracle, SAP SuccessFactors and Workday as Leaders in all three quadrants. It names ADP, CivicPlus and HR Acuity as Leaders in one quadrant each.

In addition, Circa, Dayforce and NEOGOV are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

A customized version of the report is available from CGI.

The 2023 ISG Provider Lens™ HCM Technology Platforms report for the U.S. Public Sector is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240313968242/en/

Press:

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

Source: Information Services Group, Inc.

FAQ

Why are U.S. public sector agencies adopting advanced HCM software platforms?

U.S. public sector agencies are adopting advanced HCM software platforms due to workforce changes, retirements, and new expectations.

What challenges are public sector organizations facing in terms of HR management?

Public sector organizations are facing challenges in attracting and retaining talent, promoting diversity, equity, and inclusion, and addressing future needs.

What are the goals of state and local governments and educational organizations in the U.S. regarding HR operations?

State and local governments and educational organizations in the U.S. are seeking improvements in HR operations, management, and efficiency.

How do public agencies typically approach the implementation of HCM platforms?

Public agencies typically start by buying and implementing a core HCM platform and later add modules for specific functions.

What solutions are organizations implementing to address talent challenges?

Organizations are implementing solutions that automate processes and use analytics to make data-driven decisions to address talent challenges.