The market for workforce management is most commonly provided in conjunction with either payroll, HRTech, ERP or industry software. The scope of WFM capabilities have grown far beyond time punch clocks, expense, & scheduling to include a number of workforce job & management features.
The WFM software market continues to grow in the single digits overall with selective double digit growth for select industries as the minimum needs for the middle market have evolved beyond time to include labor/job management. And by 2020, more than a third of the workforce will be non-traditional workforce: fractional, contingent, SuperTemps, contractors, nearshore/offshore or outsourced which presents opportunities for the WFM industry.
The State of Demand for WFM by the Middle Market
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Effectively targeting the middle market requires industry leadership configurations and partnering with established industry sector leaders.
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The opportunity for a platform to consolidate sub-scaled assets to create a scaled organization includes:
- Industry Vertical Markets
- Contingent Workforce Markets
- Global Markets
The scaled platform value is dependent upon the following maturity factors:
- Packaging & Services: what to bundle and how to maximize gross profit (multichannel and BPaaS) by industry, channel and by market
- Technology platform capabilities: data analytics, multichannel, and BPO: buy vs. license vs. build
The investments in the above factors determines whom scales to a market leadership position, and enjoys “platform” consolidation capability and capacity.
The WFM Market Landscape
Beyond market consolidation opportunities, there is a significant opportunity to sell additional WFM products and services as the market beyond core time administration is being fueled by the wave of consumerism and analytics.
The WFM Market Partner Ecosystems
Formal partnership programs are in place for nearly every software company above $50M. These formal programs are commonly supported by an online app exchange as well as joint use cases.
Within the Payroll, HRTech, PSA, ERP and Healthcare software markets, more than 80% of applications have 2 or more signed agreements with either time, or expense, or scheduling software. They are often missing the full capabilities of WFM as companies have partnered with payroll and talent management providers, for time, expense, and scheduling without comprehensive WFM capabilities.
A Brief History of WFM Milestone Events
2018 – Plug and play via APIs, apps, marketplaces, and mobile devices beyond integrations becomes a market requirement.
2017 – WFM goes mobile and wearable: breaking free from the time clock.
2016 – Workforce Analytics becomes mainstream to optimize job and labor optimization.
2015 – Advanced Labor Scheduling for regulated and skilled workforces becomes common.
2015 – The WFM industry embraces Mobile, Social, Analytics, and Apps.
2012 – SaaS HR acquired by Kronos which becomes the small business Kronos Workforce Ready Now platform.
2010 – The rise of Workforce Planning and Workforce Management Initiatives: 71% market adoption with 55% market use for optimization & analytics forward planning versus administration.
2007 – Info acquires Workbrain to fill HCM portfolio gap in workforce management.
2006 – SmartTime acquired by Kronos for workforce management solution.
WFM Market Summary
Value-Proposition: WFM (Workforce Management) goes beyond core administration services such as payroll and includes Time/Job/Work management, Expense, Scheduling, Labor Analytics & Optimization, and integrates with HR, HCM, ERP and industry specific solutions. Workforce management may includes all the activities needed to maintain a productive workforce, such as field service management, human resource management, performance and training management, data collection, budgeting, forecasting, scheduling and analytics.
Market Size: North American WFM >$1B, CAGR single digits.
Valuations: While HRTech valuation multiples remain attractive (for scaled enterprises 2 to 10X revenue multiple and 6 to 12X EBITDA multiple, for service bureaus private company valuations range more greatly with revenue multiples of 0.5X to 2X and EBITDA 2X to 6X. For pure play WFM vendors 1.5X to 10X TTM Revenues.
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