Living Up to the Promise Will cloud-based technology transform the next generation of HRO? By Andy Spence
The HR technology sales machine has been hard at work creating demand for solutions which include words like big data, mobile, social media, and cloud. There is a lot of excitement around technology as a driver for change, particularly in talent acquisition, development, and workforce productivity. HR faces tough challenges—from finding future top performers to providing tools that monitor the performance of a global project team. According to recent research from Bersin by Deloitte, 61 per cent of organisations will be changing their HR technology in the next 18 months. According to NGA HR, by 2015, 85 per cent of all software will be cloud or Software-as-a-Service (SaaS)-based. With these developments, HR directors need to be informed of the opportunities the SaaS technology offers as well as its potential to transform HR. At the recent 2013 HRO Today Forum Europe in London, Mike Ettling, former CEO of NGA HR, commented: “The game-changing impact of SaaS is the fact that SaaS is melting business processes. In the past, we designed our system around the process; now we have to design our process around the system.” Will this new wave of technology live up to the hype and transform HR? In my experience, some healthy scepticism is natural, especially if you’ve had as many sleepless nights—like myself—working on HR transformation programmes over the last 20 years! I am reminded of the sales promises of the ERP systems back in the 1990s: consolidation of data, integration between HR and finance, and increased usability. In my view, the great hope of ERP technology did not deliver. Part of the problem is that the software ultimately has to be used by us pesky humans. Good design, robust governance, communications, training, and support are always needed irrespective of the next technological breakthrough. The Impact of Cloud Solutions on HR HR is currently in a pivotal position at the intersection of technology and people. In the corporate world, HR has been a pioneer in adopting many emerging technologies such as cloud applications like
Workday, Oracle Fusion, and SuccessFactors. A great benefit of a SaaS solution is avoiding the expensive and time-consuming customisation “fudges” we have all experienced. SaaS drives process standardisation because “you get what you are given” in terms of functionality, and then configure it for your organisation. As cloud implementations require little customisation, they are much quicker to launch. Sometimes, too quick for the organisation to digest the change impact. The technology can reduce the total HR transactional effort since less HR administration support will be required. These savings can be reallocated to strategic goals such as developing talent with learning solutions. I have seen the relationship between IT and HR gradually change with this wave of technology. With cloud solutions, there is less need for managing each piece of the technology infrastructure in-house. HR should have more weight in HR SaaS decisions, and be a stronger voice in how technology is used in the workplace. Impact of the Cloud on HR Outsourcing The impact of cloud technology also gives HR some interesting options with outsourcing. An attractive option for some organisations is to outsource chunks of HR processes on a standardised platform. At the same time, companies can outsource the management of the HR technology platform, therefore avoiding the cost and hassle of keeping up to date with the latest trends and regulations. The rise and rise of Workday has breathed life back into the HRO market with NGA HR, IBM, and Aon Hewitt having HRO contracts using Workday software. These deals so far are smaller in size because there is less HR administrative work to do. But my hunch is there may be more of them since this model will fit nicely with a new generation of agile HR operating models. HR is at an important interchange in its journey and in a strong position to lead change. These technology trends can be the catalyst for HR to completely transform itself and the wider organisation.
Andy Spence is HR transformation director with Glass Bead Consulting and writes the HR Transformer blog.
Key Takeaways •
HR will need to streamline processes around the software, not the other way round.
HRO TODAY GLOBAL
| WINTER 2014
• HR can support the rest of the organisation to deliver the benefits of new technology, using its experience of implementing HR software and supporting the people elements of change.
Cloud will provide more options for outsourcing to fit in with more agile HR operating models.
HR will need less resource for administration, but can reallocate this towards more strategic goals.