Most vendors, including large ERP vendors such as SAP and Oracle, are eying big opportunities in the market for human capital management (HCM) applications, according to a new IDC study.
The HCM market was worth $1 billion in 2005 in Western Europe, growing a healthy 8% compared to 2004. The $630 million payroll applications market grew at a moderate 4.1% during 2005. The combined market is led by SAP, Oracle, Northgate Information Systems , Sage Group, and DATEV.
Among the top 20 HCM vendors in Europe, specialists such as Bluegarden, Meta4, Carmen Systems (now Jeppesen), and HR Access had the highest relative growth, while the ERP giants SAP and Oracle continue to have the largest market presence. SAP alone holds a third of the total HCM market in Western Europe.
The niche vendors excel in "strategic HR" applications to manage workforce planning and deployment, HR performance, recruiting, and incentives and bonuses.
The more traditional applications for payroll processing and personnel administration continue to make up the bulk (73%) of the European HCM and payroll applications market.
However, in terms of R&D investment focus, the market now evolves around strategic HR. SAP and Oracle are investing aggressively in areas such as HR performance management, HR analytics, and erecruiting, with the aim of dominating these new segments.
The two ERP vendors already dominate the traditional payroll and core HR segments, but the battle is much more open in the strategic HR segment. In the workforce management areas, challengers include ATOSS Software, Carmen Systems/Jeppesen, and GFI Informatique.
In e-recruiting, StepStone, Northgate Information Systems, and MrTed are challenging SAP for the leadership position. Cegid, ExecuTrack Software, and Northgate are aiming to dominate the HR performance management market.
IDC's study, Western Europe HCM and Payroll Applications 2005 Vendor Shares (Doc #LC03N, September 2006), discusses the competitive landscape of this fast-moving software market.