Open almost any legacy HR system and you are looking at a ledger of the past. You see who joined, who left, who was promoted and what they were paid. The data is there, but it has always been backward-looking, static, and passive.
That’s starting to change. AI isn’t arriving in the people stack as a feature — it’s arriving as a structural force, one that is beginning to rewrite what HR software actually does. The $36 billion market that grew up around storing and retrieving people data is rapidly evolving into a CHRO stack designed around powering workforce productivity and organizational health.
The Market Map: Five Layers of the CHRO Stack
We mapped the global HR technology landscape, incumbents, next-gen challengers, and vertical specialists, across five functional layers. All companies in the map have raised a Series A or beyond, or have been acquired. Logos inside a box represent current or former Norwest or Storm investments.
The five layers are not equally durable. Some are structural foundations unlikely to be disrupted. Others are actively being compressed. Understanding that distinction is the core thesis behind where we’re investing.
Core Layers (Stable). HCM, payroll, benefits, and workforce management sit at the base of every enterprise people stack. SAP, Workday, ADP, UKG, Dayforce, and Oracle dominate here, and the switching costs are punishing. These platforms aren’t going anywhere, though even payroll, long considered the most entrenched layer of all, is seeing modern challengers like Rippling and Gusto win new logos by bundling it into broader workforce platforms. While durable, we don’t believe the core is static.
Talent Stack. Talent acquisition, performance management, L&D, internal mobility, and compensation make up the most crowded and most actively disrupted layer of the stack. AI-native platforms like Gem, Betterworks, and Beamery are pulling what used to be five separate buying decisions into a single intelligent layer. AI is already consolidating the stack, so now the question becomes which company will own the talent graph when consolidation completes.
Analytics and Strategic Planning. People analytics, org design, and workforce planning represent the least mature and highest-potential layer on the map. Visier, Crunchr, and OneModel have existed as reporting tools for years. The next generation of companies, like ChartHop, Orgvue, and Strata, are moving toward telling the CHRO what to do, not just summarize what happened. This is the FP&A moment for HR, and the white space for founders with a data-first approach is significant.
Employee Experience. Engagement, recognition, internal communications, and HR service delivery sit in a layer driven by the consumerization of HR. Companies like Culture Amp, Glint, Simpplr, Atomicwork, and others reflect a decade of spend on measuring and improving how employees feel at work. This layer faces the most acute AI compression risk, with engagement and interface-heavy point solutions being the first to be replaced by agents that surface insight and take action without a human in the loop.
Governance and Risk. HR service management, compliance training, and background checks are the most underestimated layer on this map. HR Acuity, Navex, and Ethena operate in a category that is non-discretionary, deeply recurring, and where AI is beginning to create real leverage. ServiceNow, whose HR platform spans everything from hiring and onboarding to talent management and case resolution, is among the incumbents investing heavily here. For investors, this is a category with sticky ARR and a structural tailwind driven by the proliferation of AI agents across HR workflows, and the subsequent expansion of compliance and accountability surface area.
Where Innovation Is Winning Across the CHRO Tech Stack
1. AI Is Collapsing the Talent Stack
Recruitment, performance management, L&D, and internal mobility used to be separate buying decisions with separate vendors, separate implementations, and separate data models. AI-native platforms are pulling these into one intelligent layer, accelerating consolidation.
The talent graph, which is a real-time map of who is in your organization, what they know, what they can do, and where they want to go, is the most valuable data asset in HR. Whoever owns that graph owns the CHRO relationship. Eightfold, Juicebox, and Ashby are building deep moats in specific parts of that graph. Founders building here need a clear answer to a pointed question: what’s your moat once the incumbents attempt to rebuild this in Workday?
2. People Analytics Is Finally Becoming Actionable
The people analytics category has been promising “data-driven HR” for over a decade. The first wave delivered dashboards that gave better visibility into attrition, headcount, and engagement, useful, but not transformative.
Companies in this category, like Pave, Lattice, and Orgvue, are helping move the industry from descriptive to prescriptive, meaning they don’t just show CHROs what happened, but help them decide what to do next. Think about workforce planning that surfaces attrition risk before a manager notices it, or org design tools that model the downstream effects of a reorg before anyone has sent a calendar invite. For founders who genuinely understand how CHROs think and make decisions, this is one of the most interesting white spaces on the map.
3. The HR Service Management and Compliance Layer Is Underbuilt and Undervalued
HR service management and compliance training rarely make the highlight reel at HR tech conferences, but they should.This is a category defined by non-discretionary spend, high switching costs, and deeply recurring revenue. Mitratech and Checkr are representative of a space where the AI opportunity is large but still early. As AI agents proliferate across HR workflows, the compliance surface grows with them, including who authorized an action, whether a communication was appropriate, and whether a workflow creates regulatory exposure. The infrastructure to answer those questions is being built right now. For investors looking for a category with the durability of the HCM core and the upside of the talent stack, this is it.
Bonus: The Global Workforce Layer Is a Race
This is the fastest-growing sub-segment on our map, and the competitive dynamics are intense. Rippling, Deel, Oyster, Velocity Global, and Papaya are all competing to be the one system that manages people, payroll, and compliance across every country a company operates in. We see distribution and compliance depth by country as the primary differentiators. The winner here is unlikely to be just a payroll company, but rather a global workforce OS.
What CHROs Want From the Next Generation of Vendors
Having spent time with CHROs across our portfolios and beyond, three characteristics stand out about the types of vendors that earn long-term trust:
Domain credibility before product pitch. CHROs are among the most skeptical buyers in the enterprise. They’ve been burned by AI promises before, and they evaluate vendors as much on judgment as on features. Founders with operator backgrounds in HR, or who can demonstrate deep CHRO-level discovery, consistently outperform those who lead with the product.
Integration without the rip-and-replace conversation. Nobody is getting rid of Workday. The vendors that win show ROI within a quarter and connect cleanly to existing infrastructure. The fastest path to land-and-expand is solving a specific, painful problem that the HCM core doesn’t, without forcing a platform conversation for now.
Vertical depth over horizontal breadth. A compliance workflow in a hospital is nothing like one in a distribution warehouse, and neither resembles what a fast-growing tech company needs. The regulatory landscape, workforce structure, and buying behavior diverge sharply by industry. Vertical specialists are winning for a reason, and the most durable moats we’ve seen in HR tech belong to companies that went deep in one vertical before, or instead of, going wide.
The Architecture Is Being Rebuilt
HR software has spent thirty years getting better at storing information about people. The next generation has a harder and more valuable job in actually helping organizations act on it.
The companies that accrue value here will be systems of action, built on proprietary people data that gets richer with every hire, performance cycle, and workforce decision made inside the platform. That data advantage is already showing up in the market, with companies like Mercor scaling quickly precisely because recruiting data, structured and owned at scale, turns out to be extraordinarily valuable. The CHRO stack is heading in the same direction. Whoever owns the people data layer, and can turn it into real-time decisions rather than historical reports, is building something that compounds over time in a way that point solutions simply can’t.
The human element doesn’t disappear in this future. If anything, it becomes more important. The best HR software will use AI to handle what’s routine so that the people side of the work, including judgment calls, culture, development, and the decisions that actually require knowing a person, can get the attention they deserve.
The next generation of HR software won’t just store information about people. It will help organizations act on it, in real time, with the full context of everything they know.
If you’re building in the CHRO stack, we’d love to connect. Reach out to Sean Jacobsohn, David Somers, Kevin Schultz, Nikhil Goel.
