I recently checked in with executives from Halogen Software. Halogen is a Canadian HR software firm that made its chops initially as a 360-degree evaluation software firm. What distinguished Halogen from competitors is its customer intimacy focus. They pride themselves in managing every single touch point between their firm and customers.
What I learned is that Halogen's sales mix these days includes many more competitive switch outs than green field installs. That's interesting as it shows:
- Larger HR suites, like those that Halogen and other firms have developed, are putting pressure on the standalone or best of breed HR products in the market. Customers will prefer larger, pre-integrated solutions as they possess one user interface, one learning curve to overcome, etc.
- Many HR organizations already possess some form of first or second generation HR, Human Capital, Talent Management or other related solution set. These older products, many with client server roots, are ripe for displacement.
The question for vendors and customers is "How will newer generation products deliver a value proposition that makes a competitive switch out viable?"
Newer generation products won't win new buyers if all they promise are the same productivity savings first generation solutions already delivered (e.g., the usual efficiency and effectiveness savings). No, the newer generation products have to deliver (not just promise) a world class workforce for their customers. That's easy to say and harder to do. Firms like Halogen will need to work closely with individual customers to learn which workers (and prospective new hires) are capable of becoming high performing and high value adding employees. Customer intimate firms (as opposed to those that strictly focus on technical innovations) may have an advantage in delivering this type of value.
Halogen indicated they are pursuing this value trajectory. They also indicated that they are expanding their vertical focus. They see these as tandem strategies to deliver better value to their customers. In time, every software vendor must address vertical, geographic and other dimensions of value to their prospects.
(This posting is a result of an executive briefing I did at the recent HR Technology show in Las Vegas. Full disclosure: Halogen was a client of my firm this last year.)