Chris Berry, managing director of Computers in Personnel, says one of the main changes he has noted is "a realisation that internet technologies can make a real difference to the way people work with HR data". This, he says, is in areas ranging from self-service administration to internet recruitment. "Self-service is not a new thing, but two or three years ago it was seen as something only for large sophisticated businesses with IT back-up. Now it’s seen as normal and sensible for any business."

Berry adds: "Internet recruitment is asked for a lot, and web technology is increasing awareness of the potential for hosted or managed systems, where customers can benefit from the expertise of outside experts without requiring HR-specialised IT people."

Hazel Johnston, product planning manager of Midland HR, agrees there is a major trend towards devolving administration down to managers and employees themselves. "Self-service has been talked about for 10 years but is now really coming to fruition," she says. "This requires true web architecture, not merely ’web-enabled’ versions of old software."

A small but important spin-off from self-service is noted by Tony Flanagan, marketing manager at ASR. "People were demanding full real-time integration between HR and payroll systems. With self-service, employees can update bank and payroll details themselves, so we need to insert a ’validation' process, while still keeping the systems integrated."

Mobile devices such as palmtops or PDAs (personal digital assistants) are freeing up the way HR can operate. With this comes greater sophistication in HR’s approach to IT. Steve Foster, HR business strategy manager at Northgate HR, says: "Three or four years ago it made sense to keep it simple. Now it is much easier to do something more sophisticated and adapted. Organisations are not monolithic and the technology shouldn’t be either. The way you implement technology is a form of competitive advantage."

Pressures on the supply industry are increasing, says Foster. "Customers are looking for better value from technology: they are investing a lot of money and are looking to suppliers to come up with unique solutions, and to be more than a one-trick pony - they want end-to-end solutions. Inevitably there will be further consolidation."

Perhaps controversially, he suggests this will not only be between software houses, but also in vertical solutions: "It won’t be enough to be only a software or benefits provider. Customers want a single place to discuss all their needs."

Jenny Campbell, marketing manager at Snowdrop Systems, agrees that the way HR system investments are being made is becoming more strategic. Selection processes are lengthier - sometimes up to two years - and there is more pressure on the software to deliver results. Nor is HR a separate consideration. "The entire business looks to gain the most value from employee information," says Campbell. "The desire to integrate HR, payroll and employee information is resulting in market decline for best-of-breed HR and payroll solutions where data isn’t shared."

Johnston at Midland HR says software and technology have almost caught up with HR professionals’ aims to link their priorities to the organisation’s business objectives. "Web-based software is helping the whole area of talent management, for example - attracting, retaining and training staff 7#150; and making it part of the total system."

Midland HR has many public-sector clients, where the business drivers behind HR software implementation are clearer - the use of shared services, for example, driven by the Gershon review on increasing efficiency, which is also leading to business process outsourcing, mostly for payroll but also including some HR. The drive for e-filing of payroll returns has also been a big influence, and Johnston notes that this, along with the ever-increasing complexity of payroll, has caused an upsurge in the number of small bureau operations that promise to remove the burden.

Approaches to outsourcing are becoming more sophisticated too. Nicola Smith, marketing manager at KCS, says: "The key question is not in-house or outsourcing, but ’right-sourcing’. You can have an in-house system, staying completely in control of the data and functionality, but outsourcing particular elements."

More sophisticated workflow engines are able to trigger "events" both on in-house systems and with external suppliers, often without human intervention. Smith says this is helping HR managers who are looking for more than a repository of information. "They want systems to be both reactive and proactive, helping them to identify what information they’ve got and how they can use it. HR software is becoming much more intelligent - it isn’t just about data storage."

This affects line managers too, says Smith. "Managers are beginning to see that a lot of things are not only HR'’s job. That means they see investment in HR systems not as a cost but as an asset; a tool they can use themselves."

Increased capabilities and the drive to devolve administration are trends also noted by Flanagan. "A lot of people, who 12 or 18 months ago installed basic self-service capability simply to save time and administration costs, are now upgrading to more comprehensive e-HR modules that allow line managers to be more active in managing their teams." He says that as HR has gained credence, people have increased their understanding of the value of employees and the strategic importance of career paths, training provision and succession planning.