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ATS Market Basics IX

(February 17, 2004) - So far, we've established a number of key dynamics in the Enterprise Sector of the ATS Market:

  1. It's tiny and fractured. 20 (or more) companies compete for $200M to $500M in annual business. Consolidation is likely if this year is not better than last.
  2. The hidden dynamic is IT's desire to standardize on a single platform (Peoplesoft). Unfortunately, the Peoplesoft recruiting tool is worse than unusable (and unused by most -90%- licensed customers). Currently, IT is the driving factor in most procurement decisions.
  3. There will always be a lowball pricing entrant keeping price points damagingly low.
  4. The real product isn't software at all (even though the purchasing process is framed as a technical requirements development process).
  5. Most projects fail (driving 50% of the potential market to develop internal solutions).
  6. Project failure is caused by the requirements development process which focuses on software functionality rather than organizational outcomes.
  7. Recruiting is an information process that varies broadly around an idealized system. Effective installations must meet idealized objectives (for Regulatory purposes).
  8. Successful installations involve detailed, individualized training and requirements review with each user of the system.
  9. Customer satisfaction measured by talking to a subset of users is a meaningless measurement.
  10. A more effective measure of the worth of an ATS is its contribution to specific strategic corporate goals.

As long as the players continue to act as if ATS delivery was a simple software transaction, the market will remain chaotic and poised for consolidation. All of the players will continue to derive negative margins.

Ultimately, we're talking about a far more complex and interesting business. Recruiting is the formal gateway to organizational membership. Ensuring that the business process delivers the right quality with the right orientation and necessary rights of passage involves transformation, reengineering as well as data entry and search capacity.

Surprisingly, the actual Recruiting goals of the company regarding quality of hire, access to labor markets, internal development are rarely a part of the contract. By focusing on functionality and software reliability, vendors do their customers the disservice of pretending that its a simple transactional process.

Recruiting is the lifeblood of a company's continued ability to compete and adapt. Soon, we'll see a courageous vendor or two who understand that the consistent failure of the ATS market has been to view itself as data rather than an improving quality process with measurable outcomes.

That approach can be profitable for everyone who touches it.

John Sumser

Previous Articles on the ATS Market Basics Series:
     ATS Market Basics
     ATS Market Basics II
     ATS Market Basics III
     ATS Market Basics IV
     ATS Market Basics V
     ATS Market Basics VI
     ATS Market Basics VII
     ATS Market Basics VIII
     ATS Market Basics IX
     ATS Market Basics X
     ATS Market Basics XI
     ATS Market Basics XII
     ATS Market Basics XIII


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