Economic concerns are reshaping organizational priorities, with increased scrutiny on HR tech budgets and innovation investments. Meanwhile, many CHROs are grappling with critical workforce gaps and lacking HR tech tools to achieve their goals.
When asked to identify their most pressing workforce and/or HR technology needs, respondents of HR Executive‘s recent What’s Keeping HR Up at Night? survey highlighted people analytics and leadership development as the top priorities. Close behind, AI, performance management and compensation management were nearly tied for third place.
However, addressing these gaps may prove challenging—only 17.7% of respondents indicated their organization expects to have the HR tech budget to invest in new resources in 2025. But does that mean innovation in HR will be stalled for many HR departments this year? That’s unlikely, according to some industry analysts.
Read more: CHRO ownership of the HR tech budget has strategic implications
Cliff Stevenson, director of research at Sapient Insights Group, says that without a budget for HR tech, HR leaders can still take action to empower their positions. “The first step is to collect data proving the need for additional resources,” he advises. “Show this data to those who hold the purse strings and keep it updated for the next budgeting cycle.”
Identify HR tech redundancies
Next, Stevenson recommends that HR leaders analyze their systems to identify areas of overlap. Addressing redundancies can help free up resources and potentially reduce costs. “Take a deep dive into the capabilities of your current systems to ensure you’re taking advantage of all available functionality,” he says.
Sapient Insights 2024–2025 HR Systems Survey Report, 27th Annual Edition reveals that 22% of organizations are unaware of the AI or machine learning capabilities in their current HRMS. Stevenson recommends collaborating closely with solution providers to ensure the HR team fully understands the functionality of their existing systems.
Consider ‘clustering’ HR tech budget goals
As HR systems become increasingly complex in 2025, Stevenson observes a trend among some organizations toward adopting platform “clusters.” These clusters consist of separate HR systems that are closely connected and function as a unified network. By prioritizing new investments around a cluster model, organizations can create a more effective environment and mitigate the challenges of growing system complexity, he says.
AI in HR: Is adoption really low?
The Sapient Insights survey found that only 23% of respondents reported their organizations use artificial intelligence or machine learning for HR-related tasks. By comparison, the What’s Keeping HR Up at Night? survey revealed that 39% of respondents said their HR departments had implemented new AI applications in the past year.
Stevenson observes that HR leaders often cite a lack of clear use cases and proven value as barriers to adoption. Some leaders take a “wait and see” approach, while others remain cautiously optimistic about these emerging AI-enabled technologies.
While the surveys suggest relatively low AI adoption, Stevenson notes that many organizations may not realize their current systems already incorporate AI. As HR teams identify this functionality as AI-based, adoption recognition will likely go up—even if no new tools or projects are implemented. “We expect AI use in HR to grow to 28% this year, and we don’t believe this projection will be impacted by increased scrutiny on HR budgets,” he says.
Learn more: Where HR Orgs Will Be Spending in 2025, a webinar from HR Executive and Sapient Insights Group, sponsored by ServiceNow.
Building a business case for the HR tech budget
Rebecca Wettemann, CEO of the industry analyst firm Valoir, acknowledges that many HR leaders struggle to build a strong business case for securing HR tech budgets, especially when communicating how the benefits of the technology extend beyond the HR department.
To address this challenge, Wettemann suggests that HR leaders reframe their approach to business cases. She says a business case shouldn’t just be a tool to “win budget”—it should serve as a roadmap for implementing HR technology, driving adoption and demonstrating the business value it delivers.
She advises HR leaders to adopt strategies from sales and marketing by framing productivity and efficiency gains in terms of growth and profitability, rather than focusing on headcount reduction. Wettemann observes that many HR leaders struggle to secure budgets because they focus too much on perfecting data about business impact. In contrast, sales and marketing teams often rely on informed estimates of potential benefits to justify their technology investments and confidently move forward.
According to Wettemann, gaining more investment in HR technology requires showing how HR can be a strategic driver of top-line growth and bottom-line savings. Examples include reducing attrition costs and optimizing talent to support organizational growth. She cautions that HR leaders sometimes fall into an HR mindset, losing sight of the broader enterprise impact. “Finally,” Wettemann advises, “HR has to get better at talking about the benefits HR technology can deliver beyond the walls of HR.”
Read related insights from Rebecca Wettemann: Turn caution about AI for HR into confidence
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