Billions of dollars are spent on HR tech each year, representing a big chunk of many businesses’ bottom lines. But who decides how these funds are allocated? According to Stacey Harris and Cliff Stevenson, analysts at Sapient Insights Group, there is a “battle brewing” between IT and HR over who controls the HR technology budget.
According to the group’s 27th Annual HR Systems Report, budgetary control can greatly influence the strategic role of HR within an organization. The study found that HR leaders are nearly 40% more likely to be viewed as strategic if they are responsible for the HR tech budget. “This depends on prioritization of people data,” says Stevenson, indicating that data-driven decision-making is a strong indicator of strategic vision.
It’s no surprise to any business leader that new HR tech solutions don’t come cheap. According to Sapient, overall HR tech spending plans remain steady year over year, with 41% of organizations planning to increase their HR tech budgets in the next 12 months. Among companies increasing their investments, budgets are expected to rise by 7-9%.
Allocating these funds effectively requires human resource expertise. “While the amount you spend is important, how you spend it matters more,” write the report authors. “Creating a solid budget is essential for making necessary investments in HR technology.”
With HR at the helm of the tech budget, investments more naturally align with strategic people goals. According to Sapient research, the top spending areas for 2025 are likely to include improvements to global payroll, HRMS replacement, learning and benefits.
Controlling the budget allows HR to focus on collecting and analyzing workforce data, which is essential for making informed decisions, according to Sapient.
Read more: What are the top findings from Sapient’s HR Systems Survey?
As Stevenson points out, management decisions about who should control the budget—HR or IT—are significant, as this control affects how resources are allocated and who has the final say in technology decisions. Stacey Harris, chief research officer and managing partner, adds that HR professionals who manage the budget are often better positioned to advocate for technologies that directly support their strategic initiatives, such as data-driven decision-making and outcome-oriented implementations.
Harris also notes that even when HR controls the tech budget, “we don’t work in a silo,” emphasizing the value of collaboration with IT. Such partnerships foster the technical expertise needed to implement and maintain HR systems, ensuring that chosen technologies integrate seamlessly into the organization’s infrastructure.
One area of concern is the HR Service Delivery (HRSD) category, which the Sapient team says has evolved significantly in recent years. No longer a simple self-service add-on, today HRSD includes a range of essential service functions, such as HR portals, employee and manager self-service tools, content and document management, employee help desks and case management. In the Sapient research, this category also includes survey, feedback and engagement platforms.
While in the past these platforms may have been perceived as administrative, they play a crucial strategic role in 2025, according to the Sapient team. That’s because they significantly influence how employees and managers interact with HR, shaping their perceptions of HR’s role within the organization.
HRSD applications manage an organization’s most sensitive employee information and are frequently accessed during significant life events. Recognizing the importance of these applications is not only strategic but essential for maintaining a human-centered focus in the workplace, according to Sapient.
Learn more: In this HR Executive webinar, Harris and Stevenson discuss more key findings from Sapient’s 2024-2025 HR Systems Survey. Get the replay here.
HR tech in action
CodeSignal, a skills development platform, has launched an AI-powered interview solution to streamline hiring for sales roles. Expanding beyond tech and engineering, the tool uses AI to assess core sales skills like value selling, discovery, active listening, persuasion, pitching and coachability.
Career readiness platform YouScience launched an enhanced Brightpath for Workforce solution. This data-driven tool connects local talent with in-demand careers, helping employers build a future-ready workforce that supports local community economies and addresses workforce gaps.
Workday and Compa have partnered to integrate Compa’s real-time market intelligence into Workday, replacing annual compensation surveys. This integration gives joint customers access to up-to-date compensation data directly in Workday, enabling more informed and competitive job offers. Compa was recognized as an HR Executive Top HR Product of the Year in 2022.
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