Companies have spent years buying software to run payroll, benefits, hiring and scheduling in one place, known in the industry as Human Capital Management, or HCM. A new benchmark report from 3Sixty Insights found that only 13 percent of businesses actually get full use out of these systems. Just 12 percent of users describe themselves as confident with the tools they already paid for.
That gap is expensive. The global market for this kind of software reached 58.7 billion dollars in 2024 and is expected to climb to 81.1 billion dollars by 2029. Businesses are pouring money into these platforms every year, yet most of them are running the software at a fraction of what it can do.
Keisha Forbes, a director at Insperity, calls the underlying problem a fragmentation tax. Companies buy a single system, but old spreadsheets, side tools and manual workarounds never fully go away, so data ends up scattered across five or six places instead of one. Eighty six percent of users in the report said they still deal with ongoing issues in HR, payroll or benefits, despite paying for a platform built to solve exactly that.
Some HR teams juggle as many as 26 separate systems at once, according to industry research on HR technology sprawl. That kind of clutter does not just frustrate the HR department. It slows down onboarding, confuses employees trying to check their benefits, and quietly increases the odds of a compliance mistake that costs real money later.
None of this is unique to HR software, and that is the part worth paying attention to. A widely cited MIT report on generative AI found that despite 30 to 40 billion dollars in company spending, 95 percent of AI projects have produced no measurable financial return so far. The pattern is nearly identical: a company buys a promising tool, rolls it out, and then never invests in the training or support needed to make employees actually good at using it.
Software vendors selling AI features inside these same HR platforms are counting on companies repeating this mistake, because unused features still generate renewal revenue. The businesses that will actually see returns are the ones treating adoption as a real budget line, not an afterthought. That means training time, a person responsible for cleanup, and a plan to retire the old spreadsheets once the new system goes live.
The uncomfortable truth in this report applies well beyond HR. Whether the purchase is payroll software or a new AI assistant, owning the tool was never the hard part. Getting a workforce to actually use it well is, and most companies are still failing at that step.