HR transformation

THERE’S MORE TO SAAS THAN SIMPLICITY

written for and originally published in Inside HR magazine (Feb 2015)

Despite the simplicity and effectiveness of new SaaS tools, maximum value will only be realised by making fundamental changes to key areas in business, writes Rob Scott

You could be forgiven for thinking the relative simplicity and user-friendliness of modern HR SaaS solutions need less business transformation effort to embed them effectively into a HR and business environment. The oft vendor pitch of having a newly acquired SaaS HR solution “up and running” in a very short timeframe is very appealing to buyers, particularly if they’ve had prior ERP project experiences encompassing flashbacks of complex and error-prone planning, designing, testing and cut-overs etched into their long-term memory.

However, the lure of a swift, pain-free and cost-effective implementation can mask the very real need for a transformed business environment that supports the new SaaS HR solution. The HR SaaS value and business benefits won’t be achieved by simply switching on the software – this is insufficient and must be augmented by making fundamental changes in at least six key areas. The honeycomb below portrays the facets of effective HR SaaS value creation, and as you can see, there is more than “simplicity” at play.

What’s different about HR SaaS?
I am often asked whether HR SaaS solutions are the same as older on-premise solutions, but “just in the cloud”. While functionality is often similar, the principles behind SaaS design, delivery and value creation are fundamentally different and will require a different approach and focus to on-premise projects. As you read the honeycomb elements (see graphic) the obvious “cloud dilemma” is the disparity between the time to implement the SaaS solution (usually four to 12 weeks) and the time required to transform the business. The latter takes much longer and requires careful and advanced planning.

SaaS value

Ownership: On-premise HR solutions are generally owned by the IT function because of the inherent technical complexity and association to hardware; however, HR leaders are becoming the primary SaaS buyer and must therefore take primary accountability for the solution. For many HR lea
ders this will be foreign, but the ownership change is a key driver of value creation.

Skill: HR functions must build system administration (configuration), data management, project management, analytic, social media, mobile and gamification insights in order to appreciate, manage and leverage the capabilities of modern HR SaaS systems. These are not complex skills to learn and should ultimately become standard knowledge areas for all HR staff.

Behaviour: Modern HR SaaS solutions are designed around regular interaction and collaboration with other employees. These are not transactionally dominated systems, but rather tools that remind, inform, connect, advise, analyse, predict, gather, share and enable people’s effectiveness in unique ways. Interventions will be required to activate these new behaviours.

Relations: HR must actively co-ordinate relationships between the CIO, IT function, marketing, finance, the vendor (who owns and houses the software) and external support services. These relations are both strategic and operational in nature and dependent on the new HR skills noted earlier.

Practices: Gone are the days when you apply updates to your HR system annually. SaaS solutions are automatically updated three to four times a year, meaning HR will be accountable to lead a review (with support from IT and others) of new functionality and determine if and how it will be used. SaaS solutions offer “choice”, and HR must think beyond the concepts of standardisation as a best practice.

Leadership: Executives and senior managers dictate organisational maturity. Without the right level of maturity in place, HR is often fighting an uphill battle of acceptance, which will result in SaaS tools being sidelined and unlikely to return business value.

SaaS tools are in many ways a saviour for HR. The simplicity of these new solutions is offering organisations great opportunities to rethink people engagement and value generation using modern technologies. HR must step up and embrace this with understanding and commitment.

HR SaaS: what you need to know

  • SaaS HR software solutions are fundamentally different from earlier on-premise solutions and require new business transformation initiatives to get maximum value.
  • SaaS HR solutions are much simpler to set up and use, however, this simplicity and ease of use should not cloud the important business environment changes required to support these tools.
  • Taking ownership and accountability for the HR systems is no longer technically biased, it has moved to a functional level predominantly, which must be led and co-ordinated by HR.
  • The IT function remains important for technology strategy, integration, standards, security and quality control of all systems, but HR must be accountable.

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.

HR finds itself at a cross-road (Again!)

For the last year or so the buzzword in HR circles is “HR Transformation”, but it got me thinking that this is not a new phenomenon in HR, we have always been telling ourselves that we need to change, adapt-or-die, become more business focused ~ well perhaps not “always”,but at least for the last 15 years of my HR career. So why is it that every now and again HR becomes a key focus in organisations and discussions around adding more HR value become the flavour of the year? More importantly though, do HR departments actually live up to these “periodic expectations” or do they simply spend so much time deciding what needs to happen that the organisation eventually shifts focus and finds other ways to deal with the HR issues.

Wow! what a cynical view, and that coming from an HR professional. Perhaps, but I don’t think I will have to much difficulty proving this either. So why is it that HR seems so reactive and unable to garner the  respect of a finance department ~ HR is a recognised profession and has professional bodies similar to Chartered Accountants, HR has created Shared services centres similar to Finance service centres, HR (often) has a seat at the board, so why then is HR is such disarray? – ah well , enough for now, answers will follow in further posts, and your views will be greatly appreaciated