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Don’t Go Changing…The Dangers of Category Creation

The HCM technology market is competitive and crowded. Providers are trying to gain market share and expand into new territory. Especially, when customers are increasing their investments and 1 in 5 companies (on average) are looking to replace their existing solutions (Aptitude’s 2016 Hire, Engage and Retain study). Given this state of the market, one trend I have noticed is that many providers are trying to get the buyer’s attention by creating new categories. They are coming up with clever names to describe very mature areas of technology investment or in some cases, inventing something new. Sometimes it makes sense but most of the time, it doesn’t. Does anyone really want to invest in an ”employee awesomeness experience excellence platform”?

You get my point.

Below are a few considerations for any solution provider that is thinking about embarking to the land of Category Creation.

  1. Budget: Does this new category align with HR Technology, workforce management or recruitment budgets? If not, buyers are going to have to build a business case for something they don’t have any idea of what the demonstrated ROI is going to be. That’s no fun and sounds like a recipe for failure.
  2. Confusion: The HCM technology market is already filled with confusion. Most companies are still trying to understand the difference between talent acquisition and talent management. Will a  new category exacerbate this confusion or bring clarity? Too often, new categories leave customers unsure of where this technology fits into the broader HCM landscape.
  3. Product vs. Marketing: There are product providers and then there are marketing providers. Which one are you? If you truly believe in your product and the value it provides, then by all means, create a category. But in many cases, providers are putting a marketing spin on a performance management system, LMS or ATS.

If you are set on category creation, then there are a few success stories that might be worth watching. Recruitment marketing is one example. A few years ago, companies had no idea what a recruitment marketing platform would look like. Today, it is a very well-recognized category thanks to providers such as SmashFly that have not only built a strong product but educated customers on the value. HireVue (video interviewing) and Globoforce (social recognition) are a few examples of other providers that have created awareness for new categories that now align with budgets and provide tremendous value.

Companies have a lot to think about when selecting the right technology. They want simple solutions that will help them do their jobs better and improve business results. Fancy names and new categories will not always help them achieve these goals.