Consulting

Will you renew your HR SaaS contract?

IMG_0415
It’s been 3 years since the HR TECH world witnessed the SuccessFactors and Taleo acquisitions by the largest ERP vendors, SAP and Oracle – these were deals that fundamentally changed the global HR, Talent and Payroll technology landscape, including the role and relationship of the vendor and implementation partners(Si’s) with clients. 

The battle for dominance among the then newly adoptive parents, SAP and Oracle, the ever-popular Workday and a host of other best-of-breed HR SaaS and cloud products centered around the lucrative 3 year annuity contract. Vendors and Si’s stripped out all but the bare necessity costs in order to live up to the reputation that SaaS was an easily justifiable ROI. 

While the vendors have been focussed on maintaining their data centres, building and deploying updates and new functionality  as well as executing competitive selling strategies, the SI’s have re-jigged their implementation approaches and staffing models. Certainly the last few years have been underpinned by tough business transformation for vendors and Si’s. For many service providers in this space, their attention has been split between their internal changes and the ongoing needs of their clients. This may come back to haunt the vendors and SI’s.

Keeping profitable from selling SaaS solutions is very different from that of ERP.  If you needed 2 to 3 long-term ERP project to keep you business profitable then you now need 6 to 9 times more SaaS projects to achieve similar revenues and margins. That’s tough and the real issue is that the effort required to sell a SaaS deal is not commensurate to the implementation time – it still takes significant time. 

2015 is a year of reckoning in many respects with quite a number of annuity deals which were struck in 2012 up for review. What will the client retention rate be for SAP, Oracle, Workday and others, and what is an acceptable benchmark? Salesforce.com is a SaaS stalwart with a retention rate of +90%, so perhaps we should expect similar scores from the HR SaaS players. I have my doubts – some of my intel would suggest some vendors are closer to an 80% CRR  (country specific). 

Ultimately the client will decide to stay with a product/vendor based on their experiences with the SaaS product, vendor and SI’s as well as any broader technology objectives and strategies. While ERP implentations provide lengthy on-site opportunities to develop deep and trusting relationships and easily positioning the next piece of work, the SaaS approach doesn’t. If the vendor and/or  SI have been the proverbial ‘Hockey Stick’ and not actively and regularly engaging with their clients through high quality 24/7 support programs, continuous improvement initiatives, thought leadership exposure and robust future design and strategy workshops, then they are at risk of loosing clients, and deservedly so. 

Time will tell. 

The rise of the SMATE

7719337966_dc8ddb472f_z

Photo Credit – amanda.murphy4 – Flickr

There are times in our recent history where particular events have epitomized the turning-point in global views, perceptions and behaviors ~ like the fall of the Berlin Wall and the end of the “Cold War”, the release of Nelson Mandela and the end of Apartheid, 9-11 and the rise of terrorism, 2008 and the Global Financial Crisis. These events cause “global ripples” and while many people are impacted directly, there are many more people that feel the change in indirect ways. For HR, a turning-point has been Cloud & SaaS solutions, taking center stage in late 2012 – the direct impact is on HR departments from an empowerment perspective, but the real value impact is achieving organisational goals through people.

HR Cloud and SaaS solutions are fundamentally shifting and empowering the HR environment, putting HR in a renewed position to influence organisational objectives and create value through people. But these new solutions are vastly different from the typical ERP products that dominated for decades, and the individuals who became the “life-savers” or “Stars” for those projects were just that because of their experience and insight into managing complex technology tools. They were the technical experts who dominated workshops and discussions to figure out how to set up the HR solution technically.

The latest cloud and SaaS solutions require significantly less technical prowess, and with this we see the client conversation shifting from “how to best configure the software ?” to a more HR flavored discussion of “how do I create value through people ?”. This shift in discussion from technical to people may be easily overlooked, but is more fundamental and deserves greater consideration than perhaps one may think.

HR leaders are starting to take genuine ownership of cloud HR system projects because they are now able to have discussions which are not being dominated by the technology questions (which were all very important by the way) nor left feeling inadequate to contribute in workshops that were driven by the “Technology Stars” using a language and approach which was foreign to them. In HR Cloud and SaaS projects, HR owners will rightly have a different expectation of the project language, approach and outcomes. Cloud and SaaS has lifted the technology complexity for HR and this will spur them on to want to discuss the HR “How” rather than the Technology “How” – the big question is who is best positioned to lead this new discussion with HR….enter the SMATE.

This new discussion with clients and team members will require someone quite unique – an HR SMATE, or an HR Subject Matter & Technology Expert. Many current HR system consultants may be inclined to assume they are a SMATE by virtue of their closeness to HR technology, but the reality is that a true SMATE is a bit like hens teeth – pretty rare at the moment! While many technology educated people have worked in HR systems for years, their point of reference for HR and best practice is mostly framed by the HR technology they know so well – their discussions with an HR professional has been fairly process and system oriented, and most HR professionals will quickly pick up the lack of depth in HR expertise. Likewise many HR people have a mindset about technology that doesn’t go far beyond the UI (user interface) and get lost in discussions on architecture, object management, databases and interfacing. This is frustrating for technology people who understand the critical nature of these discussions to the solution outcome.

HR ERP implementations primarily needed to lead with a technology mind-set ~ the individuals could learn HR/Talent processes to support discussions. It hasn’t however been easy to motivate an HR trained person to learn technology at a level that would enable adequate discussion across coding, configuration and architecture. But cloud and SaaS HR solutions changed that with technical requirements becoming more system set-up (We however still need hardcore techies for integration and custom developments). In a very short period of time HR professionals can learn the ins-and-outs of a cloud tool set-up and confidently introduce these requirements into an HR discussion, The tide has turned and it is easier for an HR professional to become a true SMATE than for a technology oriented person to do so.

We need true SMATE’s to rise up and become the catalyst for new system discussions with HR executives and project owners. To become the driver behind HR/Talent systems delivering value beyond transactional activity. SMATE’s will engage in deep-dive conversations around people behavior and social science thinking in the same way technology people drove technical discussions during ERP projects. Where this happens, we will see greater HR successes.

The organizations and consulting firms that nurture HR SMATE’s will be putting themselves in a strong position to create true HR value and help HR functions become a significant contributor to their organisational goal achievement  – the true HR SMATE is the next HR system “star”

The HR Talent Software Bubble

The Year of Change – 2013

bubbleIf 2013 was anything to go by then we are in for another interesting HR software year in 2014. Last year was very much one of excitement and perceived opportunity around SaaS, cloud, mobile and the resurgence of the talent management offerings (Recruitment, On-boarding, Performance Management, Compensation Management, Workforce planning, Career Planning and  Succession Planning)  – the latter being of significant importance from a revenue perspective for vendors. Prior to 2012 most of the large vendors made most of their money from selling core HR and payroll solutions, but were forced to change selling tactics to support the major and expensive acquisitions or new talent focused developments that occurred during 2012. While SAP, Oracle and Workday were popular news items, many other vendors were investing heavily to move their product to SaaS models and support end users with smart phone and tablet access and tools.

HR Technology is a Mirror 

Vendors spent 2013 pushing licence sales at all cost (heavy discounting, license swap deals and low ball implementation fees) for their cloud Talent products, some touting evidence that organizations would have fairly immediate and positive bottom line impacts, with some vendors going so far as to give % improvement probabilities in ROI and growth in stock values depending on how many modules were bought and implemented.

I wonder how many organizations have reaped the benefits they were sold?  – or were they suckered into believing that a software implementation would improve HR services? While I would love to be proven wrong on this, I suspect the improvements are mostly superfluous and if you scratch beneath the surface you will find feats in process compliance from the new software, but not in long terms business and people sustainability. Too many decision makers still misunderstand the importance of having effective HR services, delivery and environments in place prior to investing in new HR technology – HR technology will simply reflect your good or bad HR environment.

The HR Talent Software Bubble

All the vendors realized that tying a client into a 3-year (or more) annuity license agreement was paramount to their survival – so they all went to battle for the limited resource (clients $) and made offers that were hard to refuse – they drove sales through $$ incentive rather than future value. Cloud solutions fundamentally changed the face and structure of HR system implementations. In particular, the time to implement new HR technology is typically significantly reduced with SaaS products and while this is good for many reasons, it’s also one of the reasons for increased risk around achieving people and business sustainability.

I should probably not paint every sale or organisation with the same brush, but what I can say is that there will be far more companies not achieving the proclaimed benefits in 2014 than there are that do – as time progresses these clients will look for something to blame and there is a good change the software will be in the firing line. 2014-2016 is a period of heightened client relationship risk and poses all sorts of challenges for vendors and implementation partners. For most clients I suspect it will be their own period of disillusionment when they realize the software has not been their saving grace. When this bubble bursts, it will be messy and destructive to HR technology vendors, partners and the HR profession.

Light at the end of the Tunnel

There is hope though (there always is), as well as time to fix this. It will come in the form of improved skills, understanding and appreciation in HR & business sustainability from the Vendors and Implementation partners. This must include greater advisory capability in helping to create the right HR environment for the technology to be fully leveraged. The one advantage of true cloud and SaaS solutions is the lower dependency on technology understanding to implement the solutions. The more we can replace the technical implementer with a combo HR professional/tech appreciator who understands what makes HR successful, the more we can mitigate the future blame risk that is bubbling under. HR Vendors and partners need to think long-term and be prepared to invest in HR environmental support, not just technical support, they need to drop the profit motive as the sole approach to measuring  success and be bold enough to include societal value into their success equation. I suspect we will see a host of new partnerships and acquisitions between traditional IT consultancies and specialist HR consultants (ones with deep HR and business understanding).

As a final note on this topic, I had two experiences in 2013 where the vendor led the pitch/ implementation of their cloud HR Talent tool with a Change (Project) Manager (Social Sciences type) rather than a traditional cost/time project manager- These vendors realized the importance of changing the HR environment and the people in order to fully leverage their new HR technology journeys – its paying dividends for those clients and these vendors will reap the long term benefits too.

It’s time for HR service providers to take accountability for what they sell

charlatanCross post from HRmaturity.com  (please visit this site for some great blogs and thought leadership on HR Maturity)
Today I spent some time wandering around an HR conference and Vendor expo in Sydney. I like doing this partly to ensure I’m up to speed with what’s on offer, but also to look for any fundamental changes taking place in the HR industry. On my agenda today was to ask all the Vendors & Service providers I met one pertinent question -“Did they have any accountability for their product/solution success after the sale?”

As I expected, most of the answers contained elements of ongoing support contracts, help with the design/implementation/creation of the solution and similar rhetoric. I couldn’t find any vendor that would categorically take any accountability for the outcomes expected from their offerings.  The key argument was that they were not in a position to take accountability as ownership passed from them to the buying client and decisions made by the client could not be influenced by the vendor.

Here is the problem with these arguments – it’s a convenient “cop out” and smacks of simply wanting to take the money and run! It was a similar argument that many consumer product manufacturers used in the 90’s when they said they could not be held responsible for how a consumer used their wares, and if it killed the consumer in the process, well that was simply not their problem (to be harsh and blunt) – but times have changed and many countries now have strong consumer protection laws in place where the producer of a consumer product is accountable and responsible for ensuring the product brings no harm to the buyer and does what it purports to do. Of course there is an equivalent onus on the buyer to use the product as it was intended and according to instructions.

This notion of responsibility and accountability between the producer and buyer of consumer products didn’t happen quickly. There was a maturing and education process that took place over years to get producers to understand that they could still make profits, but they had to do it responsibly and take accountability for negative impacts experienced by the buyer.

If I look at so many HR departments, they are littered with tools, solutions, ideas, schemes, strategies and other paraphernalia that was procured over years, all with great expectations of achieving fantastic outcomes, but they didn’t.  And so, the failed solution got thrown out onto the proverbial HR solution junk heap, and the search for something better and greater continues. Now don’t get me wrong, I’m not trying to push all the blame onto HR solution providers and vendors, but I reckon there are many that would go out of business if there was a legal obligation to ensure their HR wares achieved the outcomes they claimed.

I would like to see HR vendors and service providers playing a far stronger and leading role in assessing if a buyer is positioned to use their tool, solution or idea before committing to selling it to them. The onus should rest with the seller, (who after all is supposed to be the guru in terms of their solutions) to help educate the buyer around the necessities for their solution to be successful, and have the professionalism and guts to withhold a solution if these critical elements are not in place. In short, HR vendors need to skill up in making a professional diagnosis, and assessing any risk and negative impact that their solution will have on an organisation, its employees or associates. There needs to be severe penalties for those that “sell and run”.

Making HR a successful and value adding part of an organisation requires the commitment of all stakeholders and it’s time for the charlatan HR vendors to change their ways or move out of the industry.

Iphone 5 vs Samsung Galaxy S III – The same “love” is found in HR systems

The lead up to the launch of the iPhone 5 as well as the actual announcement leaves nobody with any doubt that marketing (if used correctly)  is a powerful mechanism to convince and manipulate people into taking a position and influencing future behaviours (in this case buying patterns).

It has an unfortunate side-effect… one that brings out a darker side of the human psyche and has the potential to be destructive to the person being influenced by the marketing spin, but also to other people who don’t hold the same view. Its called Technology-Fundamentalism.

During the lead up to the announcement of the iPhone 5, I would periodically read articles on the likely features and changes to the phone on “balanced-view” websites. What struck me more though, were the comments section at the end of the article, where readers can provide their owns views and comments. To say that it often turned into a ‘war of words’ is an understatement, the iPhone fan-boy club would be absolutely ruthless generally towards anything Android and visa versa – I have no doubt that many of these on-line discussions could turn into nasty brawls if all the contributors where physically sitting in the same location. Why is this, and is this healthy ? – has effective smartphone marketing turned people against each other to the extent that they cannot acknowledge the positives of another product without feeling that they are going against their Smartphone doctrine.

It got me thinking about the world of HR software, which I take a particular interest in. There is a lot of similarity in the dialogue between smartphone owners and HR software users/vendors/consultants. And it is very prevalent in the SAP, Oracle, Workday, Taleo, SuccessFactors space – most people working with these solutions tend to align themselves with a company or a product and fight “Tooth & Nail” to convince you that their chosen product is better than the others.

I have no doubt that in each of the mentioned products there is functionality,  components and  tools that are better than the other products, but they are also likely to have their weaknesses which are either obvious or are not discussed so that they create the impression of “Perfection”.

And people in this space go to extremes (fundamentalism) – I was once hosting an HRIS session at which all the main ERP / SaaS players were in attendance. I spent some time chatting to the country MD of Workday, which obviously offended the SuccessFactor guy, who thought it correct to lay a formal complaint to my employer. Admittedly, these sort of behaviours are extreme, but it shows you how people can be absolutely in love with their technology, that they will go to great extremes to if required.

On a practical level, I have seen functional consultants making fundamental mistakes in trying to convince clients that they can MAKE their product do what the client needs (and often the client agrees because they don’t know better), when clearly there are other solutions and options that are better. You can do just about anything with most HR technologies if you want to, but that doesn’t make it right.

So being passionate about you product (or your phone) is good, it drives one to greater depths of understanding that can be very powerful, but there are limits, that if you pass, you become obsessed and start thinking everyone who is using another HR tool (or uses another phone) is making a huge mistake. That’s the sad part!

To all the SAP, Oracle, Workday and other product fundamentalist – take a step back and explore the other solutions and offerings – you’ll firstly be amazed at the similarities, but also realise that there is other ways to do things as effectively as your product does. Your ability to help your clients will be significantly improved and you can broaden your understanding of HR technology significantly. Who knows, you may even find it easier to switch from your Samsung or iPhone…..

Is your HR System geared for Work 3.0

I’m not normally one to jump on the acronym band-wagon, but ‘Work 3.0’ is definitely emerging as a real issue for many organisations ~ especially from an HR strategy and systems perspective. One of the messages from Work 3.0 is the notion that the workforce will be made up of lots of people providing specific skills to resolve specific outcomes, based on an on-demand working model.

The growth in crowd sourcing on-line businesses that essentially allow prospective employees to bid for a piece of work,  is a good indicator of this trend, although I would hasten to say that the growth of these businesses are not an indicator that organisations are shedding full time employees to be replaced by on-demand services. I think there will be a far more gradual shift to a on-demand workforce through natural attrition and opportunity. Practically the type of work suited to crowd sourcing is fairly limited and is currently best suited to outputs that are clear-cut and easily definable, and where the risk is low. As we see technology improving in terms of speed, collaboration capability and the ability to create a sense ‘closeness’ and ‘trust’, we will see the opportunity for jobs outside of the low risk category growing.

Let me cut to the main point of this blog – your HR system and its capability to manage an on-demand, and physically dislocated  workforce. There are a number of challenges that immediately spring to mind:

Hiring: Hiring someone to do a piece of on-demand work is simple – A line manager can go on-line, place a work requirement, wait for responses, select the resource you like and away you go. Of course this is reminiscent of ‘cowboy’ recruitment we have seen in the past and has a wide range of risks. So how will HR departments manage the hiring of these types of resources ?

If your organisation doesn’t have a sound practice to hire and manage contractors currently- this is a signal that you are going to have problems in Work 3.0 environments too. HR systems need to assist in managing the  process, provide tools to validate employee/organisation fit, manage post work assessment (performance management) to name a few. In my view I haven’t seen any HR or Talent tools stepping up into this space. We should also not assume that current system  functionality in Hiring, Assessment and Performance management can simply be extended to this new category of employee – it has very different requirements.

Classification of the employee: One of the basic HR functions is to know how many people work in your organisation – in many organisations this only means people paid through the payroll system. In my view this is a misrepresentation of the total workforce and its associated cost. The reason provided by HR is often indicated as a lack of system capability to track contractors who are paid through invoicing to finance. Work 3.0 will further exacerbation this issue, and HR organisations need to quickly get on top of this so that the workforce count if properly represented.

Data sharing: Crowd sourced employees will want to share information with organisations and want their employer to feed them information back – this data could be stored in commercial social networking tools such as Linked-in, Facebook, the crowd sourcing platform or their own personal database. The ability to share information between a corporate HR system and external and individual social / cloud tools is a new concept for HR vendors, but will become a prominent need in the next few years.

Payment: How you pay a crowd-sourced employee or on-demand employee can be challenging, particularly if they are in another country where you don’t have a physical presence. Its not so much the movement of money that’s the issue, but rather compliance to local tax regimes.The recording of time against a task will also be an important area for development and integration.

Hyper specialization: Crowd sourcing or on-demand working will give rise to the concept of hyper-specialization. Activities will be broken into a multitude of tasks in order to take advantage of an on-demand workforce. For a line manager, this brings in new dynamics to manage a team of people collaborating on a common output – Line managers will need new tools to help co-ordinate work across tasks and teams of physical and dislocated employees. Some HR systems do a decent job in supporting project environments, but its not the norm, and in future they need to provide better end-user management tools outside of the ‘Project Manager’ type tool mindset – tools that will facilitate teamwork, team management, performance management, completion tracking and communication.

Strategic Workforce planning and Talent Management: The on-demand workforce will provide new opportunities to manage the ‘supply’ side of long term talent management needs, which could ease the fears around the ‘war on Talent’ – however most workforce management tools are geared towards the traditional employment model. Workforce planning tools are emerging as an important components of an effective HR environment, particularly in the area of predictive modelling techniques. The crowd sourced employee adds an unknown layer into this equation that will need to be understood in order for WFM tools to be put to best use.

We are heading for an exciting time in execution of work in our workplaces, but we do need HR systems to start providing tools to better manage this future environment. What are your views.

HR Dashboards: All chalk and dust..

956386I have a good mate and ex-colleague at Deloitte, Lyle Cooper. We regularly have  debates (typically over email given the time difference between Australia and South Africa) over topical HR issues. Last week he asked me for my views on HR Dashboards, and how prevelant they are:

The question was : would you say that Dashboards and scorecards are prevalent  or do most HR depts. get by with standard reports or specifically collated reports (not from an automated tool).”

I though I would share my answer with you and see what others are thinking:

My Answer:

Personally I  haven’t seen a major take up of front end strategic visual tools by HR ( there are lots of individual HR staff that have developed  tools and systems for themselves that are visual displays / dashboards ) and most HR departments are still generating their strategic reports and manipulating them prior to distribution to executives and managers.

Part of the problem that Dashboard tools are not effective when used (or  if used at all) is because the business requirements eg. measure total workforce numbers & cost, is not accurately supported by HR departments and their systems. There is also still a lot of mistrust of HR data. Another reason is the lack of system capability knowledge generally in HR environments. Where I have see positive movement is when ‘new age’ HR senior resources are appointed ( execs that don’t come from an HR background ) – they have see decision making tools like Dashboards and Scorecards work in finance , procurement, marketing etc. and know the value that such tools can offer if they work correctly. The other thing that is pushing change is when HR departments have placed analytics people in their structures or CoE’s – they tend to increase accuracy of data and use the outputs to help support decision making. 

So while Dashboards are not the norm, these days I’m seeing more standard reports being generated that look a lot nicer – use of graphics etc. are definitely being used ( sometimes to hide the real answers though), but not seeing a lot using interactive graphics eg. Business objects type tools.

I should say again that I see a difference  between the use of dashboards at an executive vs operational level. The former is the area that is not doing well in my view ( ties into the maturity level of HR ).

So, should HR be going down the Dashboard route? In my opinion ….Yes , but the back end HR/People data must be trusted first, it must contain the data to support business decision making (not HR decision making…. there is a difference) and the dashboards should show direct lines of influence or effect on a business strategies (eg. What is the contribution from HR strategies on the annual 20% growth target). Dashboards for operational management is probably less useful, and the line managers need for this data is likely to be supported in MSS tools and tools like instant Analytics  (Workday approach).

So let me know your thoughts and experiences on the use of Dashboards in your HR world…….All ‘Chalk & Dust’ or ‘working well.