How HCM transformations empower HR to drive business growth

HCM software transformations are redefining the role of HR in today’s business environment.

While HCM transformations have always driven value for businesses through productivity gains, increased automation and an improved employee experience, Strada’s latest research report, Unlocking value with HCM transformation: Insights on AI, value realization and growth reveals that the latest innovations and emerging technologies are also unlocking significant improvements in core HR capabilities.

Advances in data harnessing and the leveraging of AI and machine learning (ML) have made workforce analytics and AI-powered insights essential to strategic decision-making in today’s rapidly evolving ecosystem. This has allowed HR to transcend beyond its traditional administrative duties and position itself as a true strategic partner within the organization.

By considering the benefits offered by these advances, we can gain a clearer understanding of HR’s emerging new role.

The power of people data

Workforce analytics have always played an important role in HR, offering insights into employee demographics, skills, internal mobility, tenure and performance. Traditionally, HR used this data to enhance employee engagement, develop recruiting and retention strategies, and ensure compliance with hiring regulations.

However, recent technological advancements and innovative HCM platforms, become increasingly in-depth and detailed, allowing for more data-driven decision making and providing deeper insights into:

• Workforce planning: pinpointing where talent is needed and where resources are underutilized, enabling HR to anticipate staffing needs, close skills gaps, and create detailed succession plans.
• Employee engagement: providing HR with the ability to measure engagement at the individual level, gauge feedback, and address issues proactively.
• Performance management: helping leaders quickly spot skills gaps, identify high performers, and provide developmental opportunities to maximize workforce potential.
• Recruitment: tracking key metrics like turnover, attrition, retention rates, cost per hire and candidate experience to enhance the hiring process and reduce turnover.  
• Diversity, equity, and inclusion (DEI): facilitating the tracking of demographic information to ensure representation across all levels and departments.
• Budgeting and cost savings: measuring the ROI of investments and allocations to ensure funds are used most effectively.
• Predictive insights: improving HR´s ability to forecast outcomes and develop strategies to address potential issues.

Given the heightened and more frequent leveraging of data and its potential benefits, it’s no surprise that companies across the world are recognizing the growing value of people data. Our Unlocking value with HCM transformation report provides some revealing statistics: 

• Organizations that recently implemented innovative HCM software platforms with advanced workforce analytics capabilities reported a 44% increase in data-driven decision making.
• Post implementation, 32% of these organizations “always” use data for decision making, marking a 60% rise from pre-implementation.

These insights highlight a significant trend: Organizations are increasingly recognizing the power of people data, integrating it into strategic decision-making, and leveraging HR to drive business objectives.

Leveraging AI and ML to transform HCM software to advance HR

Few technological advancements have sparked as much discussion and debate in the business world as AI. Despite some businesses' concerns about data security and reliability, and adoption rates not meeting initial expectations, the overall trend shows a steady rise in AI utilization.

According to Strada’s Unlocking value with HCM transformation, AI adoption among companies that have undergone HCM software transformation has surged from 3% to 18% (a 500% increase). Meanwhile, the number of companies that ‘never’ use AI has dropped from 21% to 8%.

Clearly, AI offers substantial measurable benefits for organizations aiming to streamline operations and enhance strategic capabilities, including: 

• Automation – The incorporation of AI and ML into modern cloud-based ERP systems and processes has revolutionized HR by automating repetitive manual tasks. AI can handle data sorting, error detection, reporting, analysis, and even customer support, allowing HR professionals to focus on what matters most—namely, people, culture and business strategy.
• Integration – Managing operations across multiple systems and vendors can be challenging. AI consolidates these data streams into a single source of truth, improving efficiency, productivity, and the employee experience.
• Insight and analysis – AI processes large amounts of data quickly, identifying errors, mapping trends, spotting patterns, and making predictions to inform strategic decision-making.
• Optimization – AI personalizes administrative tasks, guiding employees through processes like payroll and benefits selection. This helps HR optimize costs and departmental performance.

By significantly reducing HR’s administrative burdens and providing valuable insights, AI is paving the way for a fundamental shift in HR, enabling it to evolve into a true strategic partner that drives decisions, fosters a human-centric culture, and shapes the future of work.

HCM software transformation a new, empowered HR

Advancing technologies have laid the groundwork for a transformative era in HR. HCM software transformations are no longer merely about enhancing HR operations; they are fundamentally redefining HR's role, empowering the department to drive business progress in unprecedented ways.

Innovations like AI and advanced applications of people data and workforce analytics provide HR leaders with deeper insights, enabling them to influence key strategic decisions and spearhead organization change.

This presents an exciting opportunity for HR professionals to reshape their careers and amplify their impact. It also provides businesses with the opportunity to harness HR’s evolving capabilities to gain a clearer understanding of their current state and shape their future direction.