03 December 2020

People Analytics Tech 2020 Overview

Stacia Garr
Co-founder & Principal Analyst
Priyanka Mehrotra
Research Lead

TL;DR

  • This is an excerpt of the full study, People Analytics Tech 2020 and a compliment to the PAT tool
  • The people analytics tech market responded effectively to customers’ 2020 needs
  • Currently there are at least 121 PAT vendors on the market; 1-year market growth rate was 35%, 4-year CAGR was 55%, current market estimate is $2 billion
  • Many solutions are not as user-friendly as vendors believe them to be
  • New capabilities include advanced NLP, deep machine learning, and the use of new, unstructured data
  • Special thanks to PAFOW and Insight222 for sponsoring this research and the PAT tool, as they did last year!

When we published our 2019 People Analytics Tech (PAT) study[i] at the very end of last year, we thought we had a strong sense of what was coming in the next year. Like everyone else, we were wrong.

COVID-19 and the social justice movements of 2020 dramatically changed all of our lives. As a result, business leaders wanted to understand what was happening with their people on a much deeper level. People analytics teams and their technology had an unexpected opportunity to shine.

Some teams and technologies seized that opportunity. Those who fared the best had already invested in regular employee listening strategies, democratized data analytics products for the broader organization, and created a flexible and integrated tech stack.

Other teams had to perform heroic acts to get leaders the information they needed. As the crisis of the moment turned into the reality of the year, they began to explore new approaches to deliver people insights at scale.

All of this brings us to now, when many people analytics leaders are looking to 2021, beginning to contemplate new investments, but have less time than ever to think about it.

That’s where our new research on people analytics tech comes in. Our goal is to help people analytics leaders – whether you are in the more prepared group or the heroic acts camp – prepare for next year. Specifically, we focus on 3 questions:

  • How did the people analytics tech vendor market change in 2020?
  • What are the newest capabilities you need to know about?
  • What should you be thinking about when making (or expanding) a people analytics tech investment?

Study overview

This study has the same overall goal as our 2019 study: To make the people analytics technology market more understandable for people analytics practitioners (PAPs) as well as vendors.

Our overall methodology is similar to last year (see Figure 1). We administered a robust vendor survey (June–August) and conducted 60-90-minute vendor briefings (July–November). We made a few additions this year, too:

  • We added a customer poll, so we could better understand people analytics leaders’ perspectives on their vendors’ offerings—this included a customer Net Promoter Score® (NPS)
  • We asked each vendor for an opportunity to see their sandbox environment, so we could get a better sense of their product

Methodology of PAT study

Figure 1: Methodology for 2020 PAT study | Source: RedThread Research, 2020.

We also created a robust evergreen tool, which serves as the repository of vendor-specific information (a lot more information on this below!). This new tool includes an updated RedThread assessment on every vendor, customer NPS and other customer insights (when there were enough responses), screenshots, and case studies. That allows this report just to focus on the overall market.

Key findings

The study is broken into three areas: market changes, vendor capabilities, and considerations for making (or expanding) PAT investments. That said, the overall top five findings are below:

  1. The people analytics tech market responded to customers’ 2020 needs. The events of 2020 required companies to foster connectedness and keep their employees engaged, secure, and safe. The majority of solutions in our study reported employee engagement, experience, and diversity, equity, inclusion, and belonging (DEIB) as their primary areas of focus this year.
  2. Practitioners have more choices of technology than ever. We identified 121 people analytics technologies (PAT) on the market today. The market overall is growing quickly, with a 35% growth rate between 2019 and 2020, and a 55% CAGR for the last four years. We estimate the overall market value at $2 billion.
  3. People analytics practitioners and HR teams are the key users today. This year, 96% of vendors said people analytics practitioners (PAPs) are their primary audience, compared to 77% last year. HR business partners (HRBPs) were the next critical audience, cited as primary by 70% of vendors. Most solutions offer targeted insights and resources to help these two audiences use their solution effectively. However, the majority of vendors anticipate that HRBPs and people managers will be using their solutions more frequently in the next 3 years.
  4. Many solutions are not as easy to use or user-friendly as vendors believe them to be. For customers, ease of use and simplicity is a big differentiator. Given the high number of vendors who claim this is a differentiator – and the number of customers who claim they are still seeking it – we don’t think that most vendors actually differentiate on this capability.
  5. New capabilities include advanced NLP, deep machine learning, and the use of new, unstructured data. Some of the most interesting new capabilities include context-configurable natural language processing (NLP), use of deep machine learning to analyze unstructured data (e.g., voice, images, video), and the collection of that unstructured data.

The People Analytics Tech Market Solution Matrix

In this research, we attempt to provide a foundational understanding of the market and where the different vendors fit within it. To do this, like last year, we mapped all of the vendors in the study on our People Analytics Tech Market Solution Matrix (see Figure 9). We also call it our 2×2 matrix. But please remember, unlike some other analysts’ 2x2s, up and to the right is NOT better. The different boxes all have their own strengths.

To understand the market, we compare two aspects of vendors’ capabilities: usage frequency and data sources. This approach allows us to clarify if, on the X-axis, the analysis is primarily used for strategic organizational decisions (frequent analysis) or informing individuals about themselves / their teams (continuous analysis). It also helps us see, on the Y-axis, the number of data sources integrated, which can give us a sense of the integration complexity. You can see here for more details on the different axes and how we categorize vendors.

When we compare last year’s and this year’s studies, we notice a few things:

  • Compressing toward the X-axis. More vendors than before are both creating and integrating data––meaning we have more vendors in the center of the matrix
  • Moving to the right on the X-axis. More vendors are making data continuously available and increasingly accessible to more user types (e.g., business leaders / C-suite, people managers, and employees)––meaning more vendors moved to the right side of our matrix this year
  • Fragmenting of vendor categories. Last year, we were able to reasonably and clearly group vendor categories (e.g., employee engagement / experience or workforce planning platforms) by their location on the matrix; this year, given some of the shifts mentioned above, we find them somewhat more fragmented––meaning there’s more differentiation between the vendors within a given category

Figure 2: People Analytics Tech Market Solution Matrix | Source: RedThread Research, 2020.

Check out the full study and tool

The full study has lots more information than what we’ve detailed here, including customer quotes, overall customer NPS scores, and checklists for both vendors and people analytics practitioners to get started.

As you may know, we recently launched our paid membership, and the full study is available only to study participants and paid members. You can also access the study on the websites of PAFOW and Insight222, as they were generous enough to sponsor this research.

In addition, we encourage you to check out the brand new, fully redesigned People Analytics Tech tool, which is available both to members and non-members (the tool will also be available on the websites of PAFOW and Insight222). You can filter on a wide range of factors, such as analysis type, capabilities, customer NPS©, customer size served, primary talent area of focus, top 3 industries served, and primary users (see Figure 3).

 

Figure 3: PAT Tool, Example of Filtering Capabilities | Source: RedThread Research, 2020.

Once you click on a vendor, you will be taken to an overview tab, which provides our RedThread assessment, vendor details, and customer feedback (see Figure X). Members can also access additional insights, screenshots, and case studies.

Figure 4: PAT Tool, Example of Overview Page | Source: RedThread Research, 2020.

This tool is designed to be evergreen, so it will be updated continuously as we conduct briefings throughout the year.

A Thank You

This study is a labor of love, in that it reflects a significant time investment from everyone who participated in its development. We want to thank all of the vendors and customers who gave their time, energy, and expertise to make this such a robust study and tool.

If you have any questions about this research or about becoming a RedThread member, please contact us at hello@redthreadresearch.com.

[i] People Analytics Tech: The Vendors, RedThread Research / Stacia Garr and Priyanka Mehrotra, 2019. https://redthreadresearch.com/pat-thevendors/ and People Analytics Tech: The Market, RedThread Research / Stacia Garr and Priyanka Mehrotra, 2019. https://redthreadresearch.com/pat-themarket/

 

Written by

Stacia Garr Redthread Research
Stacia Garr
Co-Founder & Principal Analyst

Stacia is a Co-founder and Principal Analyst for RedThread Research and focuses on employee engagement/experience, leadership, DE&I, people analytics, and HR technology. A frequent speaker and writer, her work has been featured in Fortune, Forbes, The New York Times, and The Wall Street Journal as well as in numerous HR trade publications. She has been listed as a Top 100 influencer in HR Technology and in D&I. Stacia has an MBA from the University of California, Berkeley, and a master’s degree from the London School of Economics.

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