HR Gen AI Adoption of 15% Significantly Lagging

The Hackett Group, Inc. (NASDAQ: HCKT), released its first Digital World Class Matrix™ focused on the human capital management (HCM) software market – a growing segment of the human resources (HR) technology landscape – driven by technology innovation and increasing HR demands.

Optimizing HR processes and predictively analyzing workforce trends are critical to the successful operation of businesses of all sizes. While the “great resignation” is over, employee engagement remains a high strategic priority for the C-suite. A core pillar of HR excellence is effective deployment of HCM technology.

The HCM Digital World Class Matrix™ provides a comprehensive guide for understanding the critical aspects of the HCM market, the evolving landscape, challenges, opportunities, and key considerations for both solution providers and buyers. Drawing on extensive interviews and 29 different criteria, the report evaluated 11 global providers and divided them into five categories:

• Digital World Class^® offers an expanded mix of solution capabilities with high customer satisfaction ratings in value realized.
• Innovators deliver superior value realization to clients but with limited scope and service features.
• Enterprise leaders focus on building strong, broad, function-level capability but have the opportunity to improve against key performance metrics.
• Challengers deliver greater value realization and capability breadth, but capabilities and value realization are not yet fully established.
• Emerging has limited market share but displays a vision for growth and is still developing and defining their strengths and capabilities.

Both established and emerging HCM solution providers continue to distinguish themselves through a wide variety of capabilities and offerings. Reward-to-exit processes form the core of HR operations for critical functions such as data management, compliance and benefits administration. Time-to-pay (TTP) processes are continuing to be delivered in a highly fragmented delivery environment, and organizations are challenged to find a single vendor delivering native TTP solutions to all of their countries. Talent management processes are frequently the most fragmented of tech stacks for organizations overrun with point solutions for niche processes.

The report highlights the diversity and fragmentation of the HCM technology market. As organizations grapple with the multitude of HR technologies – ranging from end-to-end to point solutions – they continue to multiply. Striking the right balance of HCM technologies in a tech stack remains a challenge for HR professionals seeking advanced functionality without the potential complications of managing numerous vendors.

HCM vendors continue to innovate their products by incorporating artificial intelligence (AI) solutions within the flow of work. These include job description generation, analytic report recommendations, and chatbot assistants for basic HR tasks, among others. Organizations are cautiously implementing AI into their HR technology toolkit but seek greater confidence in those solutions before deploying.

Research indicates that it is still early days for generative AI (Gen AI) implementation in business services functions, and most organizations are taking a measured approach. Just 24% are in the initial stages of Gen AI exploration, while 15% are still investigating how to apply it. Only 15% are in the process of piloting Gen AI technology, and merely 2% have a Gen AI project in production. The Hackett Group’s analysis projects a 51% increase in HR staff productivity and 44% reduction in HR process costs by fully embracing Gen AI.

To remain competitive, The Hackett Group believes HR leaders must be proactive in considering solutions beyond their current vendor roadmaps or risk significant productivity and cost disadvantages, which requires an understanding of what vendors plan to provide, by when and at what cost.

“As the HR function elevates as a strategic priority, organizations are demanding more expansive and advanced technologies to support their strategic HR initiatives,” said Harry Osle, CHRO of The Hackett Group. “Buyers face a variety of choices in HCM selection, and the HCM Digital World Class Matrix™ underscores the importance of choosing technology that aligns with key HR initiatives and delivers ROI specific to each organization’s needs. The matrix provides tangible examples of measurable impact in areas such as workload reduction, process improvement and strategic enablement.”

By leveraging this comprehensive analysis, HR professionals can make informed decisions to optimize their operations and drive strategic value, ensuring they harness the full potential of advanced HCM technologies.

HCM Digital World Class Matrices are part of The Hackett Group’s full 66-page report. The HCM Digital World Class Matrices should be read in the context of the entire report. A 23-page summary is also available on a complimentary basis, with registration: https://go.poweredbyhackett.com/hcmsm2406nr. Inquiries regarding purchase of the full research report can be made by visiting our Market Intelligence Service webpage at https://go.poweredbyhackett.com/hcmfl2406nr.

The Hackett Group does not endorse any participant, vendor, product or service depicted in its research. This research should not be considered as advice that a company considering HCM select only those participants based on their ranking or position on the Digital World Class Matrix™. You should not rely upon any material or information within this research as a basis for making any business, legal, financial or any other decisions. Any such reliance shall be solely at the buyer’s risk. The Hackett Group’s research publications consist of the opinions of its research organization and should not be interpreted as factual statements. To the fullest extent permitted by law, The Hackett Group disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. The information contained in this research is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness. The Hackett Group assumes no responsibility or liability for damages of any kind arising from any information, data, content, materials, or references within its research, including but not limited to direct, indirect, incidental, consequential, special, and punitive damages.

About The Hackett Group

The Hackett Group, Inc. (NASDAQ: HCKT) is an IP-based, Gen AI strategic consulting and executive advisory firm that enables Digital World Class^® performance. Using AI XPLR^™ – our AI assessment platform – our experienced professionals guide organizations to harness the power of Gen AI to digitally transform their operations and achieve quantifiable, breakthrough results, allowing us to be key architects of their Gen AI journey.

Our expertise is grounded in unparalleled best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100 – and are delivered leveraging our Digital Transformation Platform, Hackett Connect^™ and Quantum Leap^®.

For more information on The Hackett Group, visit: https://www.thehackettgroup.com/; email info@thehackettgroup.com; or call (770) 225-3600.

The Hackett Group, quadrant logo, Quantum Leap and Digital World Class are the registered marks of The Hackett Group.

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This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” seeks,” “estimates,” or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include without limitation, the ability of The Hackett Group to effectively market its digital transformation, artificial intelligence, and other consulting services, competition from other consulting and technology companies that may have or develop in the future, similar offerings, the commercial viability of The Hackett Group and its services as well as other risk detailed in The Hackett Group’s reports filed with the United States Securities and Exchange Commission. The Hackett Group does not undertake any duty to update this release or any forward-looking statements contained herein.

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