U.S. public sector agencies have accelerated their adoption of advanced human capital management (HCM) software platforms in the face of multiple changes that have impacted the sector in the past few years, according to a new research report published by Information Services Group (ISG), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ HCM Technology Platforms report for the U.S. Public Sector finds that changes in the composition and location of workforces, new employee and constituent expectations and a wave of retirements have forced agencies to modernize human resource management. Two of the steepest challenges today are attracting and retaining talent and promoting diversity, equity, and inclusion, but agencies recognize other challenges will emerge.

“Public sector organizations are turning to centralized HCM platforms so they can take a more holistic approach to staff management,” said Nathan Frey, partner and lead, ISG Public Sector, in the U.S. “What affects one aspect of human resources can influence others, and they want the agility to address future needs.”

State and local governments and educational organizations in the U.S. are seeking improvements in HR operations, management and efficiency, the report says. Their goals span several functional areas, many of which have languished in these organizations due to outdated systems, tools and interfaces.

Typically, public agencies begin by buying and implementing a core HCM platform, which may be decades ahead of the systems it replaces but still have limited built-in capabilities, ISG says. Later, the agencies add modules for specific functions. Many projects involve purchasing software and then outsourcing implementation and maintenance, for which most agencies lack the resources.

To address challenges around talent, organizations are implementing solutions that automate processes and use analytics to make data-driven decisions about recruitment and retention, the report says. In payroll management, new HCM solutions are automating routine tasks and providing better oversight and regulatory compliance, reducing the risk of costly errors and penalties.

“Transparency is critical for taxpayer-funded organizations,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “New HCM platforms provide real-time access to data, which can help agencies increase accountability and public trust.”

The report also explores other HCM trends in the U.S. public sector, including the rising importance of remote workforce management and mobile access to HR data for employees and administrators.

For more insights into the HCM challenges facing the U.S. public sector, including talent shortages and diversity mandates, and ISG’s advice for addressing them, see the ISG Provider Lens™ Focal Points briefing here.

The 2023 ISG Provider Lens™ HCM Technology Platforms report for the U.S. Public Sector evaluates the capabilities of 36 providers across three quadrants: Core HCM Platforms Plus Talent Management, Payroll Management Solutions and Recruiting and Retention Solutions.

The report names CGI, Infor, Oracle, SAP SuccessFactors and Workday as Leaders in all three quadrants. It names ADP, CivicPlus and HR Acuity as Leaders in one quadrant each.

In addition, Circa, Dayforce and NEOGOV are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

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