18 December 2019

People Analytics Tech Market 2019: What You Need to Know

Stacia Garr
Co-Founder & Principal Analyst

Priyanka Mehrotra
Research Lead

TL;DR

  • The current state of the people analytics (PA) technology market
  • Key findings from our research
  • RedThread Research’s 2×2 PA technology market framework
  • Outcomes of PA technology’s impact on people data
  • A special thanks to both PAFOW and Insight222 for sponsoring this research!

We all know that the people analytics tech market is hot and growing fast. That rapid growth has created a lot of confusion in the market for buyers, who have puzzled over which vendors they should use and for what purpose.

We've been studying this space for about a year so we could help everyone understand it much more deeply. From this in-depth research, we've created 2 reports that share our most important findings. The first report, People Analytics Technology: The Market, focuses on the state of the broader market. The second report, People Analytics Technology: The Vendors, goes into detail on the vendors and their differentiators, as well as offering recommendations for both buyers and vendors.

This first report, People Analytics Technology: The Market, answers these questions:

  • How big is the market and how quickly is it growing?
  • How should we think about classifying the market?
  • What types of data do vendors analyze and for whom?

At a high-level, our analysis uncovered a number of insights, such as:

  1. The people analytics tech market is comprised of ~90 vendors with ~$1.7 billion in annual revenue
  2. There has been rapid revenue growth in the market between 2016-2018 (220% CAGR), and slower, but still significant customer growth (23% CAGR), which we attribute to an increasingly successful search for product / market fit
  3. Buyers come from all sizes and knowledge industries, revealing a large addressable market for vendors
  4. Primary users are HR and people analytics practitioners with independent use cases / needs
  5. Top implementation and adoption barriers include privacy, data integration, and lack of robust data cultures
  6. The outcome metrics most impacted by people analytics solutions include: efficiency, collaboration, and innovation (business outcomes); engagement and retention (talent outcomes); and, better workforce insights, higher data quality, and improved reporting (HR outcomes)
  7. We can differentiate vendors based on data source and frequency of use

While the first 6 findings are likely of general interest to all, the last point is probably most important for people analytics practitioners trying to understand the market. Specifically, we developed a 2×2 matrix that compares usage frequency and data sources (see Figure 1) as this analysis can help us understand how and by whom different solutions are used. In the report, we explain the 2×2 and the four quadrants in more detail. (Spoiler alert: Being up and to the right is not necessarily better.)

Figure 1 People Analytics Tech Market What You Need To Know

Figure 1: People Analytics Technology Market Classification Matrix | Source: RedThread Research, 2019.

The report also covers another topic near and dear to our hearts: data ethics. We learned that only about 1/3 of vendors in our study believe they have a role in designing systems that protect employees as well as educate HR and other leaders. Further, we found real opportunity for vendors to provide employees with more control over their data at work.

In fact, only 50% of vendors report they allow employees to access their own data / insights and the same percentage allows employees to correct the data collected on them (see Figure 2). This point is especially important, as a recent study shows that when organizations deliver value back to employees, they're more open to data being collected on them. The topic of data ethics represents a significant opportunity for vendors to lead by bringing a thoughtful perspective to what customers should and shouldn't do with people data.

Figure 2 People Analytics Tech The Market What You Need To Know

Figure 2: Availability of Features to Give Employees More Control Over Their Data at Work | Source: RedThread Research, 2019.

We hope that these insights will whet your appetite for more.

As we mentioned above, this report is just the first one in a 2-part series. The second report, People Analytics Technology: The Vendors, is specifically designed to help practitioners understand the players in the market. It goes into much more detail on the vendors themselves, what differentiates them, and where they are on our 2×2 model.

With this research, we know we're just scratching the surface of this conversation on people analytics tech. We invite you to comment below or reach out to us at [email protected].

Written by

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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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