Despite cost cutting measures in health care, expenditures on human capital technology have been on the rise, largely driven by a need for more efficiency.

A majority of human resource professionals (88%) said they plan to spend the same amount or more on technology and systems this year compared to last, according to new research from Towers Watson. According to the 2015 HR Service Delivery and Technology Survey, organizations are replacing their core HR management systems more frequently than ever before — every three to five years versus a historical five to seven years.

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“Modernizing core HR technology is emerging as the primary HR service delivery priority,” says Mike DiClaudio, global leader of Towers Watson’s HR service delivery practice. “While in the past, companies have mostly invested in secondary technology for talent, compensation and performance management, there has been a dramatic shift to investing in core HR systems.”

Benefits professionals expressed a gap between the level of satisfaction with HR technology and the extent to which organizations still use paper to perform certain HR tasks.

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As an example, close to three quarters of respondents said they were satisfied with their current technology used for performance management, and more than one-fourth still use paper. “Likewise, 79% of those organizations that use technology for global grading/job leveling and core compensation activities say the technology is effective, yet 42% and 47%, respectively, continue to use paper,” Towers Watson says.

“It is somewhat surprising that so many organizations are still using so much paper,” DiClaudio adds. “Given the robust technology solutions now available to HR departments, we expect the reliance on software and systems to increase while the use of paper will steadily decline over the next several years.”

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Benefits managers do say, however, money being shelled out will be used on investments directed toward the implementation of some new functionality, including HR portals, talent management solutions, mobile access services and software-as-a-service systems.

“Many organizations are now looking at cloud-based platforms to replace traditional HR platforms,” DiClaudio says. “The changing environment will lead companies to take a closer look at their overall HR technology needs.”

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