RedThread Research has launched its latest report, titled “AI and People Analytics Technology: Insights from the Starting Line.” This comprehensive study delves into the increasing use of artificial intelligence (AI) in HR technology, focusing on the evolving roles of Generative AI (Gen AI) and Machine Learning (ML) in people analytics technology. The report provides key insights into the opportunities and challenges organizations face when implementing AI in HR practices, based on eight months of research.
Key Insights from the Report
1. Broad AI Adoption with Customer Skepticism
- Vendor Usage: 90% of vendors report using AI (ML and Gen AI) in their products.
- Customer Recognition: Only 40% of customers recognize AI in their solutions, revealing a significant gap in communication and implementation between vendors and clients.
2. Alignment in Use Cases, Misalignment in Perceptions
- Common Use Cases: Vendors and customers agree on top AI use cases, such as Natural Language Processing (NLP) and attrition analysis.
- Perception Gap: However, customers report fewer instances of seeing these use cases effectively implemented in practice.
3. Traditional Machine Learning vs. Generative AI
- Machine Learning Focus: Vendors tend to apply ML for managing workforce challenges like retention prediction.
- Generative AI Applications: Gen AI is more commonly used for data accessibility, interpretation, and optimization tasks.
4. Innovation Driven by Small Vendors
- Agility of Small Vendors: Companies with under $1M in revenue are leading in AI experimentation due to their flexibility and quicker adaptation to emerging technologies.
5. Ethics and Risk Management Concerns
- Ethical Shortcomings: There is a notable gap in how vendors are addressing ethical concerns related to AI usage.
- Risk Management Deficiencies: Only 50% of vendors ensure SOC 2 certification for security and risk management, which is crucial for protecting customer data.
Expert Insights
- Stacia Garr, Co-Founder and Principal Analyst at RedThread Research:
“Generative AI is transforming HR technology, but we’re still in the early stages. There is significant potential, but clarity is lacking on how AI addresses key HR challenges.” - Priyanka Mehrotra, Co-Author and Analyst at RedThread Research:
“Our findings indicate a gap between what vendors can do and what customers expect. Vendors must increase transparency and focus on practical AI applications to create real business impact.”
RedThread Research’s report highlights the rapid adoption of AI technologies in people analytics, while pointing out critical gaps in understanding and implementation between vendors and customers. To truly harness AI’s potential, greater transparency, risk management, and effective application of AI are essential.
