Historically, the UK SME market has been the preserve of smaller tech companies. With the emergence of SaaS technology, the large software providers are now able to get in on the action – like never before. But what’s the future of People Tech systems for SMEs?
Here’s our take:
Cost is key
The UK SME market employes 14.4 million people, and has a total turnover of £1,600 billion. Opportunity’s always been there, but now it’s far more evident, thanks to reduced costs.
Multi-tenanted environments are keeping prices down, as are quick, repeatable implementations. The results? SAP, Oracle and Workday will soon be within the reach of small and medium enterprises.
The time is now
This market is packed with new providers, start-ups and exciting new software companies – 100s in the UK alone. But let’s remember: HR has a broad remit. It calls for regular updates, and frequent regulatory upgrades.
The large software houses are well equipped for such challenges, with their wide variety of offerings, and their experience of operating at scale. They also have heavyweight coding capabilities, enabling them to tackle significant advancements in a matter of months. These giants have the financial backing to acquire other innovators along the way, too.
It’s in this space that we predict the next revolution in People Tech will unfold.
There are plenty of impressive players
The SME market will be the battleground. And the following software providers will be stepping up to wage war against each other:
These are by far the largest players, with the greatest penetration in this market. Think ADP, Ceridian, Midland Software, and CloudPay.
Mid-market talent software providers
These guys have been picking up clients at the larger end of the SME market for some time, offering full service systems. Think PeopleFluent, Lumesse, and Cornerstone.
New kids on the block
Young, ambitious providers are emerging, specifically targeting this market with simple, repeatable, low cost solutions. Think BreathHR, PeopleHR, and OctopusHR.
That list is by no means exhaustive. There are endless players in the market, with more joining the mix all the time. And it’s not yet clear how quickly the competition will heat up, or how fast consolidation will occur.
But one thing’s for sure – within the next two to three years, many of the organisations currently delivering services in this space will no longer exist. Change will be the only constant, and customers will quickly become accustomed to choosing from a wide range of options.
The result? SMEs will secure great prices, but there’ll be risks to watch out for too...
We must keep an eye out
The pace of change is thrilling, but there’ll be implications a-plenty:
Accelerated market consolidation
Any market so full of providers always has to go through a consolidation phase. The introduction of large, financially rich software houses to the SME market will fuel this even further.
Creative, competitive tactics will show themselves, and existing providers will fight to defend their client bases. Some will be acquired, while others will cease to operate. Many will be driven out of business as prices become lower and lower in a saturated market.
Offerings tailored to specific verticals will likely begin to emerge. Savvy providers will begin aligning themselves with industries’ governing and education bodies.
We might see the emergence of a provider with a clear focus on, say, construction or haulage. Watch this space.
Movement of employee data
As smaller providers are gobbled up by giants, employee data will be purchased too. It’ll be vitally important to know who’s taking over your current provider. Be sure to vet them as strictly and comprehensively as you did your original provider.
As providers fight to protect their share of the market, we’ll see many beginning to broaden their offerings. They’re likely to branch out into related areas, such as health and safety, or finance.
There’ll be countless success stories and casualties in the next few years. Who will survive? And who will fall by the wayside? Some will see this increased dynamism as good for customers, others will deem it a minefield. What’s for sure? It’s good for investors.
People Tech is undoubtedly on the move, and it’s important to move with it. With foresight and flexibility, you’ll be prepared.
At LACE Partners, it’s our business to help businesses stay ahead. To find out more, please email firstname.lastname@example.org