Every day, hundreds of small and midsize businesses (SMBs) contact Software Advice looking for applicant tracking systems (ATSs).
Through these interactions, we learn about buyers’ current methods, pain points, desired functionality in a new system and more, which provides valuable insights into emerging trends within the ATS software market.
Below, we highlight our findings from a random sample of these interactions over the past year to help guide SMB buyers in their ATS software search.
- More than half (56 percent) of buyers request a stand-alone ATS, while 43 percent want an integrated HR suite with features such as personnel tracking, onboarding and payroll.
- 64 percent of SMB ATS buyers currently rely on manual methods such as spreadsheets and email to handle their applicant tracking needs.
- 48 percent are looking for increased efficiency, better organization or more automation from new applicant tracking software.
Integrated Suite Buyers on the Rise
Some buyers request a stand-alone, best-of-breed ATS to handle their recruiting needs. Other buyers require functionality beyond applicant tracking, meaning they need to consider an integrated suite that includes additional HR applications such as employee time tracking and payroll.
Which camp did buyers fall into in 2016? The results are almost a coin toss. Fifty-six percent of buyers requested a best-of-breed applicant tracking system, while 43 percent requested an integrated HR suite with applicant tracking functionality.
Only 2 percent of SMB applicant tracking buyers indicated that multiple products would be OK to handle their various needs.
Two trends led to this change:
- The growing availability of affordable HR suites for small businesses to not only handle recruiting qualified candidates into the organization, but to also manage their needs as a current employee.
- A shift in buyer mentality, in alignment with the availability of these suites, as buyers realize the integration and cost-saving benefits that come with having all HR needs met by one system from one vendor.
Drilling down further, of the 45 percent of buyers seeking applications besides applicant tracking, 85 percent request the ability to track employee personnel.
As the name suggests, these suites are designed to handle all of the core HR needs for any small business in one system, making them a choice that will continue to grow in popularity with buyers wanting a consolidated solution.
Manual Methods Users Align With Past Years
When we asked prospective ATS buyers from SMBs what they’re currently using to handle their recruiting needs, 64 percent say they are relying on manual methods such as Excel spreadsheets, emails or pen and paper.
Only a quarter of buyers say they are already using a commercial ATS.
Seven percent are new businesses that have nothing in place yet, and five percent are using other methods such as proprietary databases or CRM software.
Given that SMBs work with smaller technology budgets and a minimal roster of job openings and applicants, it makes sense that many would choose to get by using ad-hoc systems for their recruiting efforts.
These methods come with major drawbacks, however, that become more apparent as a company grows and hiring needs increase, including:
- No automation. Scoring candidates, asking for feedback from managers, sending out rejection emails and a thousand other tiny tasks must all be done manually.
- Double entry. Manually porting and updating candidate information in disparate documents or spreadsheets not only wastes valuable time, but can lead to errors.
- Lack of mobility. Recruiters outside of the office need access to applicant information from their phone at an instant, which isn’t always possible with manual methods.
Small businesses would be wise to invest in a dedicated system before these small hiccups turn into full-blown problems.
Efficiency, Organization and Automation Lead Purchase Reasons
When we asked SMB buyers why they were looking for new recruiting software, nearly half (48 percent) mention the need for increased efficiency, better organization or more automation.
Twenty seven percent say they want a formal recruiting system, while 18 percent say their current solution is missing desired features.
The Bureau of Labor Statistics reported that U.S. businesses had more than 5.8 million job openings in July 2016 (the latest numbers available at time of writing), which is the highest number ever recorded since the stat started being tracked in late 2000.
At the same time that empty seats are rising, so too is the time to fill them. Due to dwindling talent pools, the average job vacancy duration in the U.S. has ballooned from 15.4 work days in July 2009 to 28.7 work days in July 2016—costing SMBs thousands of dollars in lost productivity.
Needing ways to quickly identify, assess and hire workers, many SMBs are turning to recruiting software to automate tedious tasks such as job posting, formalizing applicant workflows, improving the candidate experience and tracking changes in a centralized database.
SMBs Desire Job Posting, Resume Management in New System
The ability to post job openings on job boards, social media or a company careers page is the most requested ATS feature among SMBs, requested by 39 percent of prospective buyers.
Resume management and parsing (38 percent) and the ability to rank or score applicants (33 percent) are also requested by at least a third of buyers.
Best-of-breed buyers should also consider whether their new system can easily integrate with their existing HR information system.
Conclusions and Next Steps
The days of hiring stagnation and having a deep pool of qualified candidates to choose from for every open position are over. SMBs have seats that need to be filled immediately, and if they want to grow and thrive, they need help doing so.
Here are the things that ATS buyers should keep in mind when evaluating solutions, based on our findings:
Decide on depth vs. breadth
ATS buyers in 2016 can go one of two directions:
- The first option is to invest in a dedicated, best-of-breed applicant tracking platform with advanced functionality such as big data recruiting to gain a potential edge in the war for talent. This option should appeal to staffing and recruiting agencies and SMBs in contentious industries.
- The second option is to shun the depth of a dedicated recruiting system for a consolidated HR suite, bundling applicant tracking with other necessities such as payroll and employee time tracking to enjoy cost-saving and integration benefits.
SMBs should evaluate their hiring and HR needs for now and in the future to determine what type of system is right for them.
Do research beyond high-profile offerings
A majority of SMBs are still relying on manual methods for their applicant tracking needs, meaning many are researching applicant tracking software for the very first time.
Not having in-depth knowledge of the market, many adopt popular systems believing if it’s good enough for a bunch of other companies, it should be good enough for them as well.
This works out in a lot of cases, but not all of them. Eighteen percent of buyers say their current solution is missing needed features. Another four percent say their current system is too expensive. Both numbers point to companies adopting solutions that aren’t a great fit.
With more recruiting software options available to SMBs than ever, buyers should do their due diligence to find the perfect system that fits their needs.
With this information in mind, here are a few next steps:
- Check out our FrontRunners for Applicant Tracking. Using Gartner Methodology, we’ve evaluated recruiting systems for value and capability to determine the best products for SMBs.
- Get a shortlist of best-fit products for free. Fill out a short survey about your business and software needs and we’ll send you a shortlist of products to consider with a custom price quote for free.
Here are the demographics for the SMB ATS buyers in our sample:
- Ninety-seven percent of buyers make between $1 million and $50 million in annual revenue.
- Forty-four percent of buyers have 100 employees or fewer, while 30 percent have between 101 and 250 employees.
- Seventy-four percent of buyers expect to have two to five users within their new system.
- Sixteen percent of buyers work in software or technology, making it the most represented industry in our sample.