(February 05, 2004) - There's another element at work in the ATS market. Decision making control has passed from the hands of the HR team to the IT Department. In the flurry of downsizing and bottom line focus, most organizations have centralized enterprise software decision making to a 'single belly button'.

As a defensive move, it certainly makes some sense. By granting complete authority to the head of IT, the horrible spiral of software installation and customization can be centralized and budgeted. Burnt from overspending on technology during the bubble, the executive team would rather have financial flexibility than competitive advantage.

The head of IT usually wants to turn this into a solid relationship with a single vendor. The process of centralizing tech/software decisions into a narrow few vendors takes time, planning and prioritization. Sometimes, as is the case in the ATS marketplace, the target single source vendor doesn't have a useful product in its line.

While Oracle and SAP come to mind in discussions of Enterprise automation of backbone administrative functions, Peoplesoft clearly holds the largest market share for basic HR systems (and much of the other core data generating/processing in the large firm). While their is interesting encroachment from vendors of CRM/Sales automation, the Enterprise applications market, as it relates to ATS/Recruiting software, is a Peoplesoft game.

And they play it very, very badly.

For a decade now, Peoplesoft has been promising to ship a set of Recruiting tools that work. The vast majority of users who are licensed to use the existing toolset do not even bother to turn their systems on. Peoplesoft's ATS/Recruiting tool is a nightmare of nearly unrelated small applications that dream about the day that they'll be integrated. The shipped product has a learning curve that is to steep for even the best organizational Einsteins.

That leaves IT with a problem in their approach to Recruiting and Applicant Tracking. It simultaneously makes a low priced contract for software services even more attractive. By limiting expenditures and buying a more risky - less adequate solution, IT preserves its financial and programmatic options. The consulting required to fully integrate the automation of a lowball supplier may exceed the cost of acquiring a more mature, fully featured solution. But, it keeps the sole source dream alive.

When you hear that the low priced vendor won again, be sure to understand that it is most likely a vote to wait until Peoplesoft can field a meaningful product.

John Sumser