Sign Up for Our Newsletter
The IRF’s Incentive & Events Industry Software Report: 2020
- Solutions are delivered almost exclusively via Software as a Service, and most pricing is on the SaaS per-user subscription model, resulting in lower systems fees and the ability to invest more in rewards.
- Clients prioritize ease of use and often demand extensive customization capabilities which in a SaaS-dominated environment, providers must make their tools more flexible and configurable.
- Program owners want solutions that fully integrate with other HR tools as well as CRM and intranet platforms using API and single sign-on capabilities.
- Sophisticated data capture, analysis and insights are in high demand. Technology-first providers may evolve into analytics-first firms, especially as AI and predictive analytics are more widely used to offer deeper, more actionable and individualized insights.
- Responsive web design that enables mobile user interfaces, including dashboard access, points redemption, and reports have become a standard capability.
Over the past two decades, incentive programs have undergone major transformations. Not long ago, most corporate incentive programs were managed manually, even in large firms. And back then, the emphasis was on reward fulfilment – giving and getting. In recent years, a more sophisticated, subtle and complex approach to rewards has emerged: one focused on the earning of the reward and how firms can use incentives creatively and more transparently to influence employee behaviors.
It is clear that technology has played and continues to play a critical role in the transformation of the industry. For example, in the IRF’s 2019 Top Performers Study, a benchmarking survey of 399 firms across the manufacturing, financial services and technology sectors, almost 90% of respondents either agreed or strongly agreed that they effectively leverage technology within their incentive, recognition and reward programs.
The incentives, recognition and engagement technology landscape consists of an innovative and dynamic milieu of traditional, new and, in many cases, highly-creative solutions providers. Competitors in the space are as likely to be incentive services and consulting firms with proprietary or white-labelled solutions as native software providers who have added strategic consulting and professional services to their offerings. Points-based recognition and reward fulfilment platforms mix with survey and engagement-driven systems. Others emphasize goals-management, learning and performance.
Sales, and especially channel incentives technologies, tend to stand apart. As one interviewee told us: “Employee incentives technology is very different from sales incentives, and especially channel incentives technology, which is a completely different thing. In channel incentives, the technology is different, it’s far more complex, a lot of it is in the way companies need to capture data and the point scoring logic against that data.”
A small, but growing number of providers bring several of the elements above together in one “umbrella” solution, including some that envision an end-to-end platform that includes all people-related technologies. Traditional approaches to incentives and rewards compete with technologies built on motivation theory, behavioral sciences, and a range of consulting and change management methodologies.
The events, travel and meeting technology arena is also innovative but far less crowded. Many potential customers exist for these tools, but a subtle network-effect may favor first movers. Moreover, aggressive acquisitions and a fast adoption cycle for the technology has led to consolidation. In terms of the scope of events and meetings technology addressed in this paper (the many dozens of “in-event” technology providers are not discussed), market share is concentrated in just a few providers. These factors likely act as barriers to new entrants.
Whether for incentives or events, the overwhelming majority of technology (spreadsheets not included) today is licensed or purchased, not built in-house. This is especially true of events technology, newer engagement platforms, and umbrella solutions. Incentive firms – at least those not focused on channel incentives – tend to license, purchase or partner for some or all of the technology they offer to their clients. Likewise, the great majority of engagements for software are for those offered in the cloud – Software as a Service (SaaS).
Though some firms require installed applications, even large, data-sensitive organizations have moved to the cloud or plan to do so shortly. SaaS is now a 30-year old offering and cloud data, computing and other services have been available since 2006. Both have moved into the late-majority/laggard adoption stage of the technology lifecycle (see Figure 1 below).
To a slightly lesser degree, Application Programming Interface (API) integration and single sign-on interoperability is now standard across solutions, though not always desired or needed by clients. Though integration capabilities vary, most providers publish APIs and have experience integrating their solutions for data transfer with major Enterprise Resource Planning (ERPs, i.e., SAP, Oracle), Human Resource Information System (HRIS) and other HR platforms, including ADP and Workday. Many also integrate with intranet-type tools including Slack, Sharepoint, MS 365, and even homegrown intranets.
Based on current and anticipated customer demand, most providers cite the expansion of data capture, analysis and insights capabilities as their main focus in the coming months and years. Incentive and Events Technology (IET) solutions, particularly peer recognition tools, capture and produce high volumes of data. Whether providers approach the market with consulting and services first, or lead with technology, most grasp the potential of data, even where their customers may not, or where their customers prove too busy to use the reports already on offer. Indeed, analytics-as-a-service promises to generate new revenue streams for industry providers, especially as Artificial Intelligence (AI), machine learning, predictive analytics and natural language processing capabilities enter the IET mainstream.
IET providers tend to differentiate in their emphasis on different aspects of worker motivation and performance (or in bringing several together). As would be expected perhaps, service-first firms differentiate very little on the technology and more on consulting capabilities and specialized expertise around worker motivation and engagement. With notable exceptions, few differentiate on price. The SaaS subscription approach dominates.
As the IET arena grows and, in some aspects, matures, customer expectations have evolved in parallel. First and foremost, customers want tools that are reliable, easy to use, streamlined, and embedded in the workflow (i.e., integrated with the tools they use daily). At the same time, they demand customization, interoperability and feature complexity, which in a SaaS-dominated world, means providers must make their tools more flexible and configurable – even customizable to a degree – while also leveraging common code to avoid excessive costs and complexity.
In the first decade or so of IET solutions, users have seen considerable benefits. Though employee engagement levels remain low in general across the US and global workforces, incentive, recognition and engagement solutions appear to contribute tangibly to better engagement scores and lower turnover. Some claim to predict attrition, others drive more and better employee referrals, all improving the bottom line. Intangibly, they may contribute to stronger workforce cultures of collaboration, appreciation and trust. Without question, one of the most exciting trends in IET technology are tools now available that are based on theories of motivation and behavior. The combination of established and empirically-tested motivational theory with powerful technology is one that will undoubtedly help transform traditional 20th century organizations into more progressively-managed, collaborative and innovative 21st century firms.
Though sales rely somewhat on economic conditions, IET solutions providers see a bright future for their tools based on the pace of new client acquisition and broader adoption trends in the industry. Most view improved data, analysis and insights – including machine learning and predictive analytics ¬– as their development focus over the next several months to three years. Many also intend to improve integration and interoperability with other HR, ERP or travel-related technologies.
Overall, whether consulting service-first or technology-first, providers in the incentives and events/meetings industry can expect a highly-disruptive, fast-changing environment in the years to come. This includes higher stakes in the technology itself (i.e., faster, costlier upgrades to keep pace); downward pricing pressure, and a nascent consolidation trend that – along with higher costs and price constraints/sensitivity – appears certain to threaten small players, especially those who struggle to differentiate.
Thank you to our Research Advocacy Partner