Last year we were pleasantly surprised at the growth HR Technology firms were experiencing in the Small to Medium Sized Business (SMB) segment.  (Read more here)  Over the last year that growth has continued.  We’re seeing SMB-focused HR Tech solutions across nearly all segments in the HR Tech maket


SMB market size Nov 2013 Post

As we noted last year, the market opportunity for  tech vendors focused on Enterprises with less than 5,000 employees is compelling.  The number of employers and level of employment in the market is staggering.

The sheer number of new vendors and/or products solely focused on this segment has increased significantly.  If the #hrwins briefing process can be used as a barometer, of any sort, for the amount of development going on for the SMB, it’s clearly more than 60% of new development, taking into account new products and products that are being “taken downstream”.

While many of the vendors focusing on the SMB are making a business decision to let legacy players slug it out over customers with more than 5,000 employees.  There are other trends at work here as well.

Consumerization (not to be confused with gamification) is another trend amplifying the adoption of HR Tech in the SMB.  Emerging Employee-Centric HR Solutions (read more about that here) is ripe for use by the SMB where there are little to no budgets, or patience, for complex implementations or lengthy user training plans.

SMB post Nov 2013bTrends like Bring Your Own Device (BYOD) are driving usability expectations across the entire market.  No where is ease of use and portability more of a requirement than in smaller businesses.

The “Mobile First” development trend has led to an emerging “Mobile Only” approach, where enterprise applications are being built for tablets, convertible PCs, and smart phones with no intention to ever move to a “web-based” model.

Now that we’ve seen SMB-focused vendors shipping “consumerized” product for more than one year, we’re noticing another trend, albeit small.  Large Enterprises (10,000 Employees or more) adopting products that were developed for the SMB, trading off complexity and “software-driven compliance” for usability and business performance.  I’m aware of at least 5 implementations that fit this mold.  Is it enough to call it “early adoption”?  Not yet, but time will tell, and the momentum seems to support it.

It’s not hard to imagine the next big Enterprise HR Tech success emerging as a vendor that developed in the SMB and then expanded into the Enterprise market more organically.

One interesting trait that seems to be shared by top Execs at most of the SMB-focused vendors is a relentless commitment to delivering an incredible user experience that leads directly to customer success.   Larger Enterprises could use some of that.

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