AI Becoming Essential to HCM, ISG Says
Two-thirds of enterprises will need AI-enabled HCM software by 2027 as employee expectations change, data’s potential expands, new research finds
The ISG Buyers Guides™ for HCM, produced by
“Businesses expect HCM technology to improve workforce agility, decision-making and alignment with enterprise goals, all of which AI can help to achieve,” said
AI is the basis of new employee workflows and engagement, embedded analytics and personalized self-service, the research finds. These advances are transforming how organizations make strategic HR decisions. For example, predictive analytics allows leaders to anticipate and address talent shortages before they affect operations. Instead of relying solely on historical workforce data, companies can use AI to identify critical roles, assess internal readiness for them and decide whether to fill the roles through training or external hiring.
Enterprises upgrading their HCM software face a choice between consolidating disparate systems in all-in-one suites or integrating best-of-breed solutions, ISG says. While the former offers seamless integration across all HR functions, the latter may provide better capabilities for specific HR processes like payroll or workforce management, ISG notes.
A unified approach to HCM simplifies HR operations and employee data and eliminates silos and streamlines processes across an organization. Talent suites, meanwhile, support the entire talent lifecycle—including recruiting, learning, performance and talent planning—and providers are now adding AI-driven features such as skills matching and personalized learning.
When assessing or selecting software, companies often consider scalability and the level of embedded AI-driven automation. Organizations must carefully evaluate their unique needs and their HR and workforce objectives to choose the right applications and HCM platform, ISG says. One of the most significant shifts in the market is the growing demand for configurable platforms that allow for customization and integration of third-party applications and services.
Companies that invest in AI-enabled HCM will gain the ability to guide actions and unify decision-making for engaging and retaining employees, maximizing the value of talent and aligning workforce strategies with business goals, ISG says. To maintain that edge, they need to not only utilize the right software but continuously evolve their HCM strategies.
For its 2025 ISG Buyers Guides™ for HCM, ISG evaluated software providers across four categories—HCM Platforms, HCM Suites, Human Resources Management Systems (HRMS) and Talent Suites—and produced a separate Buyers Guide for each. A total of 19 providers were assessed: ADP, BambooHR,
The 2025 ISG Buyers Guides™ for HCM named the following Overall Leaders:
HCM Suites: In this evaluation, the most comprehensive as it covers both HCM platform and HRMS capabilities, Oracle was named a Leader in all seven categories, and ADP a Leader in six. UKG came in third with Leader designations in three categories. Dayforce, HiBob, SAP and Workday were rated Exemplary.
HCM Platforms: Oracle topped the list, being designated a Leader in all seven evaluation categories, and ADP followed closely, with Leader designations in six categories. UKG was Exemplary and designated a Leader in four categories. Dayforce, HiBob, SAP and Workday were rated Exemplary. Two providers rated as Innovative were Darwinbox and Rippling.
HRMS: Oracle was named a Leader in all seven HRMS evaluation categories. ADP again came in a close second, ranking as a Leader in six categories. UKG was named a Leader in four categories. Dayforce, HiBob, SAP and Workday were rated Exemplary.
Talent Suites: Oracle and ADP were designated as Leaders in seven and six evaluation categories, respectively, and there was a three-way tie for third place among SAP, UKG and Workday, which were designated Leaders in two evaluation categories each. Cornerstone, Dayforce, HiBob, SAP and Workday were rated Exemplary.
“Software providers will be adding AI, both GenAI and Agentic AI, within applications to simplify and deliver a more consumer-grade user experience over the next few years,” said
The ISG Buyers Guides™ for HCM are the distillation of more than a year of market and product research efforts. The research is not sponsored nor influenced by software providers and is conducted solely to help enterprises optimize their business and IT investments to reach maximum set of outcomes.
Visit this webpage to learn more about the ISG Buyers Guides™ for HCM and read or listen to executive summaries of each of the four reports. The complete reports, including provider rankings across seven product and customer experience dimensions and detailed research findings on each provider, are available by contacting
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About ISG
ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
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