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Introduction to the History of HR Software

by Arthur Zuckerman


People are every company’s most valuable assets, which is why human capital management software came to be the core of business efficiency. In their current form, HR suites administer a number of complex and costly processes, including recruiting, performance monitoring and management, benefits administration, expense tracking, and many more. In their pursuit for the perfect HR management system, businesses commonly choose between one-size-fit-all applications with universal functionality and customizable, in-suite systems that can be configured to meet their industry-specific needs.

The process of discovering a solid system is not exactly challenging, as almost all products offered on the market are able to measure ROI and to boost productivity. This, however, was not always the case: it took decades to perfect digitized employee management, and extract valuable decision-making practices from the data it provided. Hosted in the cloud, and integrated with a number of valuable business management solutions, HR systems are now easily accessible, affordable, and widely used across all industries.

But how exactly did human resources software develop throughout the years? Before you select the ideal product for your company, it might be useful to take a look at the most important dates in the history HR software with us.

The emergence of digitized HR management

The 1970s marked the beginning of digitized human capital management, as this was the period when companies understood that automating cumbersome processes can cut both time and expenses. At the time, however, technology was limited to mainframe computers that allowed only the performance of basic payroll-related tasks, and extracting simple reports that relied predominantly on manual entries. Despite of it, the HR software idea was developing with full steam, and many technology producers were looking for a way to simplify the governance of large and decentralized teams.

The big breakthrough took place nine years later, when SAP launched its R/2 resource management system (later to be replaced with R/3), being the first modern ERP software designed for business use. For the first time, users could combine important corporate data in a single mainframe environment, and track performance in real time. This was only the beginning of a huge wave of modern ERP systems, where HR was rather an ‘extra functionality’ than a standalone service.

SAP R/2 wasn't exactly impressive when compared to current standards, but it was a milestone for HR software.

SAP R/2 wasn’t exactly impressive when compared to current standards, but it was a milestone for HR software.

The first HR system

HR software as such emerged in 1987, when Oracle introduced the first client-server based human capital management system called PeopleSoft. The application was in fact the first HR-centered system to be available on the market, and soon became the trademark of this famous software provider. Nowadays, PeopleSoft is still active and available for purchase by both small companies and enterprises. Together with it, Oracle designed a large number of BPM and financial management apps that excluded the need for some companies to use third-party systems to manage their workflow.

Meanwhile, the trend of designing combined ERP-HR tools continued, and the number of payroll apps that handle HR tasks, recruiting, and learning was only becoming bigger. By the beginning of the 1990s, Oracle launched many of these locally-hosted products, preserving its leadership position in the HR software environment up to date.

Today PeopleSoft is still used, although many companies moved to more modern SaaS solutions.

Today PeopleSoft is still used, although many companies moved to more modern SaaS solutions.

The advantages of cloud-hosted HR management

As popular and beneficial as it was, HR functionality was still unavailable for most businesses, because popular systems were predominantly hosted on local devices, and required expensive hardware and professional installations. The late 1990s, however, put an end to the myth of HR software being designed for big players. Functionality shifted to cloud, which not only secured data better than before, but provided a number of benefits, and made automation accessible for small teams with limited budgets. The client-server technology was already a part of the past, and the list of HR buyers was growing rapidly.

Specialized and best-of-breed systems

With HR design being the hottest trend in software development, providers continued looking for a competitive edge that would distinguish their products from Oracle’s and other companies’ great inventions, and found the answer in producing systems that perform a specific type of tasks. In the early 2000s, it seemed that the one-size-fits-all ERP formula is no longer attractive to buyers, and the strategy shifted towards specialized systems that handled recruiting, training, evaluation, and similar concepts. Best of breed products were apparently more interesting to companies than full ERP suites, and cost significantly less due the fact they were hosted in cloud.

Going mobile

These days almost all HR systems offer support for mobile devices

These days almost all HR systems offer support for mobile devices

From 2014 on, it is quite rare to find an HR system that can’t be operated from a mobile device. The cloud-hosting milestone makes it easy for users to access information wherever they are, but what really makes a difference when purchasing an HR system is whether it offers a special mobile application or not. Most popular providers offer Android and iOS apps to keep even the largest and most decentralized teams on the same page with what is happening in the company. From the manager’s perspective, this means that field performance can be tracked painlessly even when agents are operating on another continent.

The introduction of gamification

Gamification is a relatively new concept adopted by businesses to enhance employees’ experience, and make operations streamlined and fun. Most HR systems nowadays are built with competition in mind, and allow managers to compare performance, and to award frontrunners with badges, bonuses, and extra points.

Current trends and expectations

It took a while for HR software to become as powerful as it is today. Just a decade ago, no one could have imagined that there will be a system that can post job vacancies independently, accept and preselect applications without human intervention, or even enable video hiring to cut the expenses companies have when recruiting talented performers. Following this logic, it is relatively difficult to guess what the development of HR practices will bring us in future.

What we can claim with all certainty is that companies will continue relying on HR operations to obtain real-time feedback, and give these systems an even more central role in business intelligence and social networking. More and more HR processes will be automated and shifted to cloud, and design will surpass basic configuration to let companies tweak their apps and make them more personal. As experts forecast, the demand for HCM tools and gamification systems will be at least ten times bigger in close future, and involve more and more startups and small businesses.

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