The evolution of HR Tech: paving the way for AI-centric solutions

I began my career in People Technology in the early 2000s, when HR technology was undergoing significant transformation. This era marked a shift in both functional product expectations and the underlying technology stack that powered these products. The relationship between product functionality and the platform it is built on has always been symbiotic. When technological capabilities expand, so do the functional possibilities and the potential solutions software vendors can offer. Once again, we find HR technology on the precipice of a whole new revolution with AI.

The turn of the millennium was characterized by the rapid expansion of the Internet, which was becoming more accessible and reliable as a foundational infrastructure. This shift also opened a new channel for businesses to connect with people outside of in-person or over-the-phone interactions. The advent of cloud-based technology emerged as a viable and more efficient alternative to managing private networks for running business applications. This allowed smaller companies access to systems that they previously could not afford to implement or manage on their own private host networks.

In this context, HR software primarily served as an add-on to payroll applications, already must-have software that all companies needed to pay people accurately and on time at scale. The HR module was mainly a tool for tracking employment data required for compliance purposes, rather than for payroll processing itself.

Initially, the software was still focused on payroll processing, but having an integrated HR profile within the payroll system became a valuable feature. What started as a differentiator soon became a standard expectation, table stakes, for any payroll system.

The cloud era

As cloud computing took the software industry by storm, existing providers began migrating their offerings to the cloud, driven by competition, and drawn to the stable, recurring revenue of the subscription model.

However, as we transitioned to the cloud, we discovered that the object models of closed-off, payroll-centric HR systems made it challenging to segment the data needed for employee self-service. This led to the emergence of new technologies like Workday, SuccessFactors, and many other cloud HCM platforms. These platforms focused on HR functionality with object models that were thoughtfully designed to accommodate employee and manager self-service.

With this new architecture, HR began to rethink how different departments could use HR data. The ability to segment this data by role allowed HR to provide analytics and raw data to the organization. People technology gradually evolved into the enterprise hub, becoming the source of record for people data used across all business applications.

The AI inflection point

We are now at another inflection point in the evolution of technology: the rise of Artificial Intelligence. AI is everywhere. Everyone is selling it, and everyone is buying it. However, much like the dawn of the cloud era, the market is currently integrating AI into existing products around their current architecture.

Companies are applying new technology to their existing products, aiming to expand the feature set and value they deliver to customers. This helps clients keep their current HR systems useful while the market continues to change.

But if we take a lesson from history, we will soon encounter limitations with our current architecture. New people technology will emerge, architected around the full capabilities of AI. An AI-centric HR product.

In this series of articles, we will explore the evolving mandate of People & Culture within organizations and how this will shape the next generation of AI-centric HR technology. We will discuss the new challenges we will be tasked to solve, what solutions could look like, the risks of AI, and how these factors will impact the future of work.

Farhan Khan ◆