What is HCM?
Human Capital Management (HCM) is a technology for managing a company’s most important asset – its people. The goal is simple: improve human relationships to grow business. A HCM system helps companies stay connected to employees, streamline processes, and improve productivity.
When people talk about HCM, they are usually referring to a suite of tools that cover all the touchpoints between an employee and employer: Recruiting and onboarding an employee, Being the HR system of record, Tracking time and attendance, Budgeting and forecasting labour needs, paying employees accurately and on time, managing benefits, and facilitating performance and compensation management.
Source: Fortune Business Insights
Here’s why HCM is important
Worldwide enterprise application software revenue totaled more than $190 billion according to market research firm Gartner. Client Relationship Management (CRM) made up a quarter of that revenue, while the spend on HCM is worth around $16b, according to Fortune Business Insights. HCM is forecast to grow to $32b by 2027. The largest market is the US, which accounts for around 55% of total spend, followed by the EU at 25% of the total.
The key global players include SAP SE (SAP GR) , Oracle Corp (ORCL US) , Ultimate Software Group (ULTI US) , Workday Inc Class A (WDAY US), and Ceridian HCM Holding Inc (CDAY US).
What’s happening in Japan?
S&P and Oracle have been established players in Japan for a long time, traditionally focused on multinational enterprises and on-premises ERP solutions. Newer competitors, such as cloud-based operator, Workday, are also expanding operations in Japan. In a 2017 Nikkei interview, Workday had already claimed over 350 Japanese customers, including Nissan, Hitachi, and Sony.
Although Japan is seven to eight years behind what a comparable company is doing in the US in terms of the overall function of the HR department, it seems to be following a similar growth trajectory. The fundamental economic driver is the need for greater labour productivity, due to the shrinking workforce. There has been high awareness among Japan’s policy makers that the country faces a digital cliff in 2025, unless it can embrace Digital Transformation (DX). It is this economic backdrop that underpins workstyle reform policies - a trend that has only accelerated post Covid. Demand for Work-from-Anywhere (WFA) looks set to expand as the business community accommodates telework and builds a hybrid workforce.
Key players in Japan
Kaonavi; Talent management
Link & M; Learning
SuRaLa Net; Learning
TeamSpirit; Workforce management
Change Inc; Learning
Benefit One; HR Core Please let us know if we can help to engage with any small caps in Japan.
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