New Value Propositions in HCM Software

A couple of announcements in the last few days caused me to raise my eyebrow and take a second look.  Last week, GeoLearning announced Geo On-Demand a free e-learning solution (there will be charges for additional online courses).  Today, I saw a press release from Kronos announcing pay-per-hire pricing.  Granted pay-per-hire pricing is not new in the Recruitment Process Outsourcing (RPO) world, but it is unusual for e-recruitment software.  These announcements follow on the heels of the SmartRecruiter announcement (free e-recruitment software) several months ago.  Eventually, I think we will see a free talent management suite (we already have a free HRMS, OrangeHRM, an open source solution).

Now, there is no such thing as totally free.  Vendors need to make money too.  Geo On-Demand, SmartRecruiter, and OrangeHRM offer optional, value-added products, content, and/or services either direct from the vendor or through partners to generate revenues.  The key word though is "optional".  This does make one ask the question, where does the value reside in the "whole product" (in the Geoffrey Moore sense of the term)?  It may not reside in the application.  It might reside in content or services.  It might also be better tied to the business results (as in the Kronos pricing example). 

Of course, "free" solutions will not be for everyone.  It is not even clear yet if the "free" model will work long-term.  However, competing against "free" increases pricing pressure.   Customers buying solutions today (yes, they are still out there buying) are looking for every leverage point.  Vendors, now more than ever, really need to have a compelling, differentiated value proposition.

Would you want a "free" solution?  Is "free" a compelling value proposition for HCM applications?  Is a business-result-based value proposition superior?  What do you think? 

Comments

[Brian]

Important to note, pay-per-x is not the same as free and is oftentimes far more expensive than a fixed subscription. I recall some internal Icarian conversations about trying to get a percentage of the hiring process dollars traded (vs a flat ASP subscription) and the dollars to be made there were far larger (to client and vendor) than fixed subscription fees.

[Bill Kutik]

A historical note, Jim. Ten years ago when Taleo started business as Recruitsoft, it also offered pay-per-hire pricing. That quickly became, "Well, how many hires do you make in a year? That makes x per month. Since all of them will go through our system, why don't we make that your monthly fee?" Be interesting to see if the Kronos experiment turns out any differently.

[Chris]

Has Kronos announced their pricing for their pay-per-hire pricing? I wouldn't be surprised that Kronos institutes a variable pricing strategy where the price for pay-per-hire ends up being fairly close to pricing for their subscriptions service.