The Hackett Group, Inc, released their first Digital World Class Matrix™ focusing on MPHRO vendors – a market undergoing unprecedented transformation.

As chief HR officers (CHROs) increasingly grapple with challenges like insufficient budgets, data management inconsistencies and the shortage of experienced talent, more and more are looking to MPHRO for support. Three factors are driving value from MPHRO vendors: increased innovation and adoption of digital HR solutions; ease of integrating third-party solutions into human capital management platforms; and a cultural shift toward artificial intelligence (AI) and intelligent automation.

“It’s clear that HR buyers highly value their MPHRO service providers as partners who bring expertise, innovation and strategic guidance,” said John Sheridan, associate principal at The Hackett Group. “The fact that 87% of buyers see their MPHRO providers as sources of both digital and thought leadership underscores the significant role these partnerships play in driving HR excellence.”

Leveraging in-depth interviews with both buyers and providers, the Digital World Class Matrix™ is a comprehensive guide for understanding the dynamics of the MPHRO market and evaluates overall value based on 29 different criteria to provide an in-depth analysis of the MPHRO market, its progression, and its impact on client HR functions with actionable insights for both MPHRO providers and client organizations.

Stakeholder interviews also revealed MPHRO services are fragmented and largely underutilized, with many only contracting for single discrete tactical services without leveraging the full transformational capability of their service providers, underscoring the need for an experienced partner to guide enterprises through their transition.

The most underused services are HR transaction processing, contact center support and interview scheduling for talent acquisition. AI and generative AI (Gen AI) are also solutions. Despite significant ongoing investment by service providers, AI and Gen AI services are still yet to reach their full potential in driving efficiency and enhancing user experiences within the MPHRO framework.

As HR buyers increasingly adopt additional services, they not only benefit from reduced costs through economies of scale and consistency via process improvements, but they also gain access to greater insight, improved business resilience, increased workforce strategy support, and better employee experience.

In total, 12 global providers were evaluated and divided into five categories:

• Digital World Class^® offers an expanded mix of solution capabilities with high customer satisfaction ratings in value realized.
• Innovators deliver superior value realization to clients but with limited scope and service features.
• Enterprise leaders focus on building strong, broad function-level capability but have the opportunity to improve against key performance metrics.
• Challengers deliver greater value realization and capability breadth, but capabilities and value realization are not yet fully established.
• Emerging has limited market share but displays a vision for growth and is still developing and defining their strengths and capabilities.

In addition to assessing MPHRO performance, the report reveals the key priorities for HR buyers and offers strategies to empower providers in effectively marketing their services and supporting buyers. Showcasing new services, particularly those leveraging AI and demonstrating strategic value or HR services and illustrating how they drive value while reducing cost, will help providers stand out in a crowded marketplace.

The Hackett Group is committed to providing expert guidance to CHROs and will release a new report evaluating HR systems later this year.

MPHRO Digital World Class Matrices are part of The Hackett Group’s full 67-page research report. The MPHRO Digital World Class Matrices should be read in the context of the entire report. A 21-page summary report is also available on a complimentary basis, with registration: https://go.poweredbyhackett.com/mphrosum2405nr. Inquiries regarding purchase of the full research report can be made by visiting our Market Intelligence Service webpage at https://www.thehackettgroup.com/market-intelligence.

The Hackett Group does not endorse any participant, vendor, product or service depicted in its research. This research should not be considered as advice that a company considering MPHRO select only those participants based on their ranking or position on the Digital World Class Matrix™. You should not rely upon any material or information within this research as a basis for making any business, legal, financial or any other decisions. Any such reliance shall be solely at the buyer’s risk. The Hackett Group’s research publications consist of the opinions of its research organization and should not be interpreted as factual statements. To the fullest extent permitted by law, The Hackett Group disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. The information contained in this research is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness. The Hackett Group assumes no responsibility or liability for damages of any kind arising from any information, data, content, materials, or references within its research, including but not limited to direct, indirect, incidental, consequential, special, and punitive damages.

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