As I sit here in my office at 6 pm on a Friday, I realize that I am the perfect representative of a our #3 HR Tech Trend for 2014 – Too much to do, and too few precious hours & resources! Seriously, I came back from our team holiday party happy hour to finish some of today’s many to-do’s now that the phone’s incessant ring has ceased. Never mind that the work week is over – or that I just had a couple drinks to chase away the week with our awesome team – the work still has to be done.

And presently, that’s polishing and proofreading this post!

There’s a call for postings from all prognosticators and predictors out here in the Blog-o-sphere from the vendor Silkroad to predict what’s in store for HR Tech in 2014 and the deadline has arrived today. Technically, I’m sliding this entry in after work hours – but the rules only said by 12/13/13 and I’m interpreting that to be 11:59pm Pacific!! (Yes, I’m intentionally ignoring how this mirrors my life, Dr. Phil!)

And truly this isn’t just a Guinness-fueled, “challenge accepted” posting, because our team cares so much about HR Tech it’s hard to let an opportunity to opine pass by. The trouble is, 2014 is just around the corner – and revolutionary stuff certainly takes more than a year to arrive! After all, those jet-packs and flying cars I’ve been waiting on since my comic book educated childhood are still yet to come through, so we’ll have to restrain all truly inspiring dreams to just our immediate future. And that limits things a bit.

As I thought this week on what I’d write, there were several ideas that came to mind. While I’ll get to our #1 Trend in a couple paragraphs, I want to assure you that I’ve shied away from the most predictable, but legitimate answer: #2 HR Tech Trend: ACA Fear-mongering and Pandering. I’m going to guess that over 85% of the responses to this challenge will focus on the huge regulatory and operational change that we’ve all been banging our heads into for the last couple years. As you know, we write a lot about Healthcare Reform on this site, but just to be unpredictable and edgy, we’re going to leave that as our runner-up HR Tech Trend.

And so, with no further ado:

The #1 2014 HR Tech Trend: Vendor Consolidation through Merger & Acquisition

If there’s one bold prediction I can make and be sure it will ring true by 12/31/14, it’s this: the vendor landscape will continue to morph & change. There are two factors driving this:

1)      Interest rates are continuing at historic lows – Borrowing costs are still near all-time lows. Access to cheap money is there if I want to acquire and if I’m running a business, where else can I put my investments where they will return more than a couple percentage points? The economic conditions are almost guaranteeing this will continue or even accelerate.

2)      Vendor Management frustrates employers and destroys value – while there is always lip service to “Best of Breed” with most decision makers we meet, over the course of a discovery process they almost always fantasize about how easy it would be to manage one vendor instead of many. They look wistfully at the all-in-one, Swiss-army type ERP or HRIS vendors who offer a full-suite product like Workday, ADP, Paychex, Ultimate Software or Infor. If you’ve ever been charged with corralling all those vendors into a “Transparency Summit” like we have, you already see the wisdom on display here. So vendors that enter in narrow focus often tend to move into an acquisition mode to expand their offerings across the many functions of HR, payroll and benefits. Ultimate Software is a great example: 10 years ago, their motto was “HR / Payroll: It’s all we do.” Well, that’s not so true anymore and hasn’t been for quite a while. Success breeds spread.

So while I can’t predict which vendor will be bought – we are carefully looking at our suspect vendor lists and all the private, single focus vendors as high-risks, as well as those public companies who’s market capitalization has long disappointed institutional shareholders.

I was talking yesterday morning with the head of sales for a very well-known Benefits Administration vendor, who was trying as best as he could without liability to ensure me that they had taken steps to improve their debt situation and reduce potential for being acquired. He told of the private company’s owners who were committed to staying in the game and not looking for an exit strategy. He was earnest.

The problem is, he and I both know that nothing is a certainty in the business world. Plans change. And even though he’s a senior executive and I do trust him, he may not know everything going on. Or there could be a hostile takeover bid. You never know. And neither do we.

So what’s an employer to do?

We spend a lot of time working with employers during the contract negotiation phase of our Vendor Selection projects to ensure they are protected if there’s a “Change of Control” with their new vendor or their newly purchased solution. Too often, this risk management goes unaddressed to an employer’s chagrin.

After all, the sales reps promise stability and point to multi-year roadmaps and strategic plans. Often, well-intentioned vendor CFOs will get on the phone with our employer clients to assure them they have no plans to sell and will show selected financial statements as proof.

The problem that we’ve seen over the past five years – and one that will certainly continue into 2014 is that Merger and Acquisition is a way of life in the HR Tech marketplace.

Just ask customers of Employease. Or Workscape. Or one of my old favorites, ProBusiness. Anyone remember TED? Cyborg? Ah, this list could be four pages long!

The future is clear for 2014: Vendor Consolidation is coming. Be Forewarned!

This post is part of SilkRoad’s first annual #HRTechTrends Blog Carnival. A recap of all participants will be posted on SilkRoad Ink on December 20, 2013. – See more at: blog.silkroad.com. Please click on the comment link above to send us your thoughts and predictions. What did we miss? See things differently? Let me know at mkaiser@lockton.com or @HRTechKaiser