No doubt, this year’s HR Technology Conference was one of the largest in the show’s history. A couple of sources indicated that there were almost 500 vendor firms represented in the expo hall alone. I’d believe it. 

I met with approximately 30 vendors for 30-minute 1-on-1 interviews. I also did a solid interview with a Chief People Officer of a huge firm. I spoke with PE and venture capitalists and even some board members. I even got some great intel by walking around the expo floor with some clients of mine that are hip-deep in shopping for new HR technologies. 

Finally, I did two speaking gigs and really enjoyed the perspectives that attendees shared with me after those talks.

Who shops for a platform?

Of those 500 or so exhibitors, I’m pretty sure that 400 of them truly love and adore the HR technology platform their solution rests upon and they want to tell the world about. And each of them believes their platform is different and/or competitively advantageous.

Unfortunately, that rosy self-assessment may not be true. One vendor’s CEO that I met with argued with me for almost 45 minutes that her  product’s platform was competitively differentiated. She spoke like a technologist about her technology. I had to repeatedly stop and ask her to explain just what exactly is the problem she is solving for customers and what experience or experiential aspects of her solution are resonating with these buyers to solve those problems. A platform that doesn’t connect up to a business problem is an interesting technology going nowhere.

The corollaries to that are:

• No-one comes to this show specifically looking to buy a ‘platform’. Nope! They attend because their firm has a business problem (e.g., they can’t find enough qualified workers) that they need solved. 
• No-one can get budgetary approval to attend a show like this to look at ‘platforms’.
• If a prospect has to struggle to figure out what your platform’s raison d’être (i.e., reason for existence) is, your firm needs a new marketing person. Life’s too short for this.

Unimpressive, uninspired gen AI demonstrations

I saw number of vendors peddling “the amazing technology innovations found in their generative AI solutions” or words to that effect. You couldn’t swing a dead cat in that Exhibition Hall without hitting a dozen generative AI-powered solutions. Okay, okay! I get it! You can use your generative AI tool to write a job description. But, guess what? Every HR vendor since July has been telling me that. Shoot, even I can generate a job description using a consumer-grade generative AI tool like ChatGPT. When it came to generative AI solutions, I saw lots of mimicry and incrementalism, but not a lot of oh-wow innovation.

Unfortunately, too much of the generative AI hype is just that – hype! Rinky-dink little applications, if you want to even call them that, were the order of the day with most vendors promising an array of future generative AI capabilities some time in 2024 or beyond.

Gen AI adds to sales costs & difficulties

Vendors with generative or other AI/ML solutions are quite aware that their sales processes have significantly elongated and become riskier. Specifically, they now have to do a two-step sales process.

The first step involves educating prospects about their particular AI solution, its risks, its privacy protections, etc. and then, once they have mollified buyer concerns or laid these concerns to rest, can they get on with selling their solution and how it is superior to that of competing products also vying for that business. A two-step sales process is twice as expensive and only one quarter as effective as selling a more traditional, lower risk and better understood product. The future in these AI-enabled HR solutions sales is absolutely fraught with economic risk to the seller. This is a weird market where it is both caveat emptor (i.e., let the buyer beware) and also caveat venditor – let the seller beware. 

The power of channels

The very best vendors that I interviewed had multiple sales distribution channels. While most firms use a direct sales method to capture new customers, only a scarce few have a robust partner channel network or a white label program to complement the direct sales channel.

Partner sales channels shift a lot of the lead origination, deal shaping, prospect education and other sales efforts and costs to the channel partner. That can save a young software company an exceptional amount of pricey capital, while still adding logos to its customer lists and bringing in much needed recurring revenue. Likewise, white label sales can dramatically increase the sheer number of customers and revenue that a company receives, although many of these customers will not be referenceable to the future prospects of the young vendor.

But it any case, these channels are great to have when capital is tight or expensive. And right now, venture capital is both tight and expensive. Younger vendors with limited venture backing and no alternative sales channels may find the next year or two to be tough sledding without these additional channels.

ESG – missing in action

There were no sessions that I saw on the agenda regarding ESG. That was unfortunate because several vendors (three or four) specifically wanted to discuss ESG with me. ESG is a top three concern of executive teams in many mid-to-large enterprises today (Just like winning the war talent remains a Top Three concern). And given how much data that HR teams can contribute to a company’s annual ESG reporting and other regulatory efforts, the lack of content regarding the ESG topic was unfortunate.

Should AI apps cost more?

Some old-school ERP and HRMS vendors are starting to socialize the idea of pricing new generative AI-based applications at a 30% upcharge to the existing module prices. While I’m sure the executives at these companies are hopeful that the market will embrace this (and have probably mentioned this future cash cow/gold mine fantasy story to Wall Street or their private equity overlords), the market may not react so positively. 

For example, some of the new AI capabilities, such as an AI-based job description generation tool, are simply too simple to warrant any kind of premium at all. Premium pricing will only go to the solutions that represent very significant functional, operational, process or service improvements. Again, the gall to think that a job description generator is worth a 30% premium to a recruiting package is laughable on its face.

Furthermore, some AI tools have the ability to  generate application code. If so, why does the vendor charge a premium for something that a program is creating instead of programmers? This again negates the premium fantasy.

But the biggest threat to vendors and their wallet-grabbing attempts may be in the hundreds of thousands of individuals that big integrators, consultancies and others outside of the mainstream software establishment are hiring to create their own AI-powered capabilities for their clients/customers.

Software vendors should take notice that they need to deliver material, vertically-relevant AI or enhanced capabilities if they want to retain (let alone grow) market share. They need to do great new, all-new, primary research as to what could be done for customers (i.e., what is the new art of the possible in the AI-focused software world). Traditional vendors with their unoriginal, traditional mindsets need to quit trying to think of AI in incremental terms. This is time for ‘OH WOW!!!’ moments and not more ‘oh, sure’ moments. Think big, be big folks!!!!

Return of the Black Box/ A new age of opacity

When it came to the auditability of AI or Machine Learning tools, vendors were not willing to disclose how their black boxes worked. The opaqueness of these AI tools left me unimpressed and concerned. If the vendor representatives could not explain how the software was choosing specific candidates that a company should follow up with from a talent acquisition perspective, why should we expect their AI tools in other functional areas to be even less opaque? The HR industry, as a group that wants to use lots of these tools, should demand more transparency from HR technology vendors. The current state of affairs makes me wonder what kind of regulatory and liability exposure customers might face in the near future.

Bargain shoppers

There weren’t any blue flashing lights on the show floor hyping deals on vendor fire sales. But Private Equity (PE) firms were scouting the expo floor and hallways of the show. They were there for two reasons. The first is that they are looking at potential roll-up opportunities (i.e., a chance to acquire two or more HR application software firms cheaply and reap some scale-based savings in back office, sales, development and marketing efforts). They sense many companies are finding the venture capital markets constrained or closed off to them now. What better opportunity to grab a number of young small capital starved companies for pennies on the dollar than now? 

Likewise, PE firms that have been around a while may have some companies in their portfolio that are overvalued. An HR software company with a prior decacorn valuation (i.e., valuation of $10 billion or more) may currently be valued significantly less today. These private equity firms cannot execute any kind of liquidity event without taking a down round valuation or write down. Picking up a couple of inexpensive add-on technologies to smash into previous, but overvalued, investment might provide investors a liquidity lifeline after all. 

Tight venture funding environment makes me suspect that a number of the exhibitors this last week may not be there this time next year.

Come see us at our smaller booth

On a related note, attendees for next year’s HR tech may find not just fewer vendors, but vendors opting for smaller booths as they conserve cash in 2024. There was interesting activity taking place last week whereby exhibitors were being encouraged to pick and choose which booth spaces that they might want to book for next year’s show. I chatted with two or three executives at the show and they indicated that smaller booths may be the more popular ones next year.

Talk fluff to me

This year’s show seemed to have a bit more pragmatic content and less froufrou talks. For my own talks, I gave one keynote on Friday that was a very ‘down in the trenches’ perspective on what real HR transformation efforts require to be successful and how these initiatives look. I was pleasantly surprised at the degree of interest both during and after that talk on that matter. For HR Tech’s show planners next year, they may want to consider even more nitty-gritty sessions. Talks on subjects like “What color is your mood ring” or “Engagement – it’s not just for weddings anymore”  may not motivate companies to spend the budget to send their overworked HR teams to Las Vegas.

Breathless?

Did anything at the show take my breath away? The short answer is no. The sheer volume and impressiveness of the innovations on display at Ceridian’s user conference a couple weeks ago (also in Las Vegas) would be the high point for me.

How not to do a briefing

Too many vendors tried to pitch meetings with their platform or AI-based solutions as their lead-off spiel. These efforts came off as a technology looking for a business problem to solve except that I had to guess what the intended business problem was. 

Marketers should be able to talk about the pain points, business problems, etc. of prospects first and then weave together a cogent narrative about:

• What the root causes of this problem are.
• How these issues adversely affect the prospect (e.g., trigger lots of overtime, create frustration, drive up attrition, etc.).
• How these issues create financial consequences (or opportunities) for the prospect.
• Why this kind of technology is needed and needed now.
• What sort of outsized value-creating opportunity is possible via the new technology.

And only then…

• What the new technology is.

When vendors start with the last point, they leave me (and prospects) wondering why are you telling me this? Context matters folks! And, so does understanding the experiential aspects of the prospect’s current and future work world. 

Noisy channel

As mentioned above, there were approximately 500 vendors in the exhibition hall for the show (and many others lurking in the hallways, but not exhibiting).  One question I asked of many firms was how can they hope to get their marketing messages heard above the din of all of these other firms? Some vendors had no answers, some merely want to throw more money at old methods, and some asked if I had some interesting ideas.

One vendor and I discussed at length how they’ve used breakfast meetings and seminars in a number of different cities. They have learned that many HR people cannot get budget or permission to fly to attend a conference like this show. That is unfortunate, but kudos to vendors who instead go to the prospects. Like the old adage, if the mountain won’t come to Mohammed, then  Mohammed must go to the mountain. Frankly, I think holding marketing events in second-tier cities, as opposed to top-tier locations like New York or Chicago, is a smart use of marketing monies. Why? Second-tier cities are severely underserved by such events and can often produce significantly greater numbers of people at events than those occurring in much bigger (and often costlier) markets.

This space is crying out for vendors with more provocative, focused marketing messages and campaigns. Saying you (also) have an HRMS is like saying the sun came up in the East this morning. It’s factually true but it doesn’t motivate anyone to do anything. Marketing that doesn’t trigger action is misspent energy and capital. 

Two hot spots

Two big functional areas stood out at the show: HR Analytics and AI. These two areas got so much discussion that core functions, such as Payroll and HRMS, were shoved to the back seat.

I’ve already written plenty about AI in this piece. Let me add some commentary re: HR Analytics. Of course, segment leader Visier was there and when we met, we discussed ESG the entire 45 minutes. Kudos to Visier for seeing the how this tech can dramatically help firms not only produce ESG regulatory reports, but how this data will help firms better manage and improve their supplier relationships, community interactions and more. 

All Analytics vendors may be getting a lift as AI tools will be pulling in an extraordinary amount of new, people-based data that could inform a number of people-based decisions. The results of these efforts will trigger new reporting and analytic outputs and insights. Readers should absolutely expect that a serious push into HR AI technology will require new reviews of analytics and processes. 

AI & the show from a customer’s perspective

As mentioned previously, some of my clients were at the show. They had previously attended Ceridian’s user conference in recent days and have been reviewing RFP responses, too. These buyers are a savvy lot and one item regarding AI has solidified their thinking in one key area – they will buy and implement a large suite of HRMS and related software if at all possible. 

That represents a big change for this firm, which has previously bought a number of HR sub-suites (e.g., payroll, HRMS, recruiting, etc.). Why did this happen? These buyers realized that AI capabilities will be the core of future HR applications and that these applications need data, lots of data, to work well. Getting all manner of HR data in one system, one database/cloud, etc means fewer data integration activities and cleansing work would be needed to power up and maintain AI tools. They are absolutely correct in this observation. 

My take

In the analyst world, it’s exceedingly rare to have such an abundance of vendor executives, product displays/demos, colleagues, etc. at a show, especially one where you aren’t the guest of a vendor. It’s like browsing a football field long buffet line and your plate can only hold a tiny fraction of the offerings. No two people could attend this show and have the same experience and it would take a small army of people to cover even a fraction of the vendors and content. While some readers who also attended the show will assuredly have a different set of recap observations, I hope these remarks help stimulate a number of conversations re: HR technology in your firm. 

And that is the essence of this show: to help software buyers realize what is the state of the art in HR technology today. This show wouldn’t still be going strong a couple of decades later if it wasn’t delivering that experience. 

Let me know if you’re going next year….