The advent of consumer technologies is disruptive, creating new business expectations for HR to be real-time and mobile: Managers expect access to utilize daily “moments of productivity” while in line for a latte, while executives want to access real-time workforce data on their tablet. The forces driving this digital transformation via a simplified and improved work experience are pervasive and will be persistent for decades to come. These new expectations are creating an urgent paradigm shift for HR, but a digital HR transformation is achievable if leveraging a proven path and technology solution.
Calibrating Terminology and Purpose
Let’s first establish a common framework on the concept of “HR Digital Transformation.” An HR Digital Transformation uses social, mobile, cognitive, and cloud technologies as an integrated platform to enable a frictionless user experience that facilitates collaboration amongst an organizations’ employees, managers, executives, and candidates.
HR digital transformation = enabling business with consumer grade technologies
Use this paper as a playbook to initiate executive conversations on the macro trends reshaping human capital management and to tailor a business case to transform enterprise functions.
Aligning on the HR Digital Transformation Opportunity
The traditional role of HR as a patriarchal administrator enforcing policies as the single-threaded access point to back office systems and disjointed processes undermines the strategic value and potential of the function. As an organization’s employee advocate function, HR is uniquely positioned to be a catalyst for enterprise digitization. There is an urgent need for the offices of the CHRO and the CIO to unite and lead the charge to deliver a higher standard of Human Capital Management solutions.
Organizations need human capital management technology to…
Create people capacity
Today’s workforce is complex: The rise of the gig-economy allows organizations to engage contractors and traditional employees to identify the best possible mix of workers to satisfy different business needs. Organizations are trending to more project-focused matrixed, interconnected, and flexible teams assembled to solve specific challenges, then be redeployed within the organization or back into the workforce. This new workforce dynamic creates new challenges and opportunities in human capital management.
Innovate culture + career experience
Corporate culture must evolve: There are four generations in the workforce (Baby Boomers, Generation X, Millennials, and Centennials), creating a need for increased HR focus on inclusion and shared beliefs to tie these diverse workers together. Millennials made up 33% of the workforce in 2017 (will be 70% in 2027), but organizations have already experienced their disruptive expectations of rapid career growth, sense of purpose, collaboration, flexibility, empowerment, and innovation.
Unify transactions + reporting real-time
The Internet-of-Things (IOT) is here: In our IOT inter-connected world where Apple, Google, and Amazon have redesigned life as we know it. Corporate systems now have the same expectations to be web-enabled + real-time + integrated + easy. For years organizations have seen technology enable real-time manufacturing supply chain and inventory management, and now that same transformation opportunity exists for real-time talent supply chain and human capital management through the advent of cloud based, unified HR transactional and reporting software.
The current wave of digitization, and therefore democratization, of human capital information is rapidly moving the HR value proposition from human capital administrator to curator: Analyzing and show-casing secure, real-time content to enable strategic business decisions is the future of the HR function that triggers a domino effect of transformation within the business and ultimately to shareholders.
Visualizing the organizational impact of HR digital enablement
To put a final point on the HR Digital Transformation opportunity, invert the enablement concepts to test the argument:
Can Shareholders receive maximum value from a business that cannot make proactive informed decisions on cost or growth initiatives – especially for organizations where their largest capital expense is their workforce; from an HR Function that does not have tools nor time to proactively analyze and manage human capital; against a Workforce who cannot easily access data systems that facilitate core enterprise management functions? Probably not.
Building a Measurable Case for Change
Building the business case requires inextricably linked HR and technology executive sponsorship starting with the CHRO and CIO, but extending throughout the organization. To be successful, an HR Digital Transformation cannot be “just another system conversion”: It requires a holistic approach to baseline current state costs, risks, and user experiences, against an agreed target state vision for transformative change across the organization.
Business cases can be tricky because there is “no line item” to account for things that aren’t being done currently, that would be possible after the investment; on the surface, doing nothing is always cheaper than doing something.
Defining the HR Experience Target Future State Vision
Before whipping out ledger paper and a calculator to start cost analysis, first align the organization on the target future state that must be costed and assessed for risk. It is critical to engage line-of-business leaders and their HR business partners on an assessment to calibrate current state pain points and to validate how much opportunity there is to make their work-lives simpler. When thinking about this “Experience Analysis,” consider it from multiple perspectives:
- The business stakeholders who initiate and approve demand (Employees, Manager, HR Business Partners, HR Admins);
- Functional CoEs who facilitate process areas (Recruiters, Compensation Team, Benefits Team, Payroll Team, Leave Admins);
- Technical CoEs who maintain enterprise data and systems (CISO, Infrastructure Team, HRIS Team, Systems Analysts).
This Experience Analysis step is tricky, especially for the functional areas that report to the CHRO and CIO. It is hard to be vulnerable because egos are involved, and people generally avoid conflict. To increase the odds of having a productive and engaging interaction by HR customer types, attempt to facilitate a common vision for transformative change and their ability to influence the direction of simplifying work-life:
- Establish a library of baseline business personas to facilitate end-user insight into the HR Experience. For example, consider personas by generation, management level, work country, line of business, field work vs. desk, etc.
- Interview each Functional and Technical COE team to identify pain points and recommendations of quick-hit and transformational HR function opportunities; this is the group most likely to impact long term success or sabotage of a transformation effort.
- Survey business stakeholders to objectively evaluate current state and to help define future state goals for the HR Experience.
There is no need to engage a consultancy to facilitate target future state business process mapping, chewing up several months and hundreds of thousands of dollars doing process redesign. A more effective use of time to set and calibrate a target future state vision is to network with installed customers who have successfully achieved an HR Digital Transformation on the cloud technology, and this is a CRITICAL step if a cloud technology selection is still in-process.
This step in the evaluation process to learn from installed customers and product experts also provides a glimpse at the organizational attitude to move to a true multi-tenant Software-as-a-Service Cloud solution, which is the only way to confidently and efficiently achieve a consumer grade technology experience of enterprise applications. If there are organizational leaders or business stakeholders beating the drum and chanting “our organization is so complex and unique,” then it’s important to flush-out a potential Catch-22 argument by evaluating if that complexity is inherited from the disparate complex technology landscape that currently provides enterprise functions.
Quantifying the Improvement Opportunity
No business case would be complete without Key Performance Indicators (KPIs) to set objective baseline and target results for enterprise systems and functional services. Collecting the enterprise system KPIs from the cloud technology vendors is a straight-forward exercise that does not practically allow for negotiation, since multi-tenant SaaS System Availability spans multiple clients who by default share the same KPI targets. The cloud technology vendors all tout similar best-in-class KPI targets related to System Response Time and System Availability; however, carefully inspect the definitions of System Availability, especially the definition of “Scheduled Down Time” as some cloud vendors suggest that it’s acceptable to introduce additional hours of Scheduled Down-Time with only 48 hours of notice. This KPI calibration is another CRITICAL step if a cloud technology selection is still in-process.
Next focus on the KPIs for functional services provided to the business and assess how an HR Digital Transformation would impact the level of service provided to the business. These functional KPIs are typically a set of measures for accuracy, turn-around-times, and customer satisfaction by enterprise function (Help Desk, Payroll, Benefits, Recruiting, Reporting). In the world of legacy enterprise operations, common KPI failures originate from data collisions between current, future, and retro-dated transactions that require manual reconciliation across disparate systems. Improving KPI results by eliminating known failure points simultaneously increases HR customer satisfaction and reduces cost-to-serve.
Lining up the Facts and Data
When thinking about the cost assessment, bring in the CFO to carefully consider the investment and accounting opportunities created by a move to cloud technology. It’s obvious to start with the hard-dollar costs, but soft-dollar opportunity costs should also be included, as they are expected from most investments: To effectively build out the opportunity costs, leverage the learnings from the Experience Analysis. When assessing costs, calculate Return on Invested Capital vs. only focusing on [(Current State + Deployment Costs) < Future State Costs]. Business cases can be tricky because there is “no line item” to account for things that aren’t being done currently, that would be possible after the investment; on the surface, doing nothing is always cheaper than doing something.
- Current state costs, KPIs, and accounting for ERP platforms and adjacent technologies (reporting, document management, portal)
- Annual license and vendor support contracts
- Hardware required to run applications and depreciation schedule
- Database and security administrators to support the on-premise solutions and technology business analysts by platform
- Data file interfaces and data warehouses required to integrate platforms and normalize data
Probe for the full cost of ownership to update and operate multiple redundant systems; for example, how many hours are spent reconciling HR data inconsistency errors with both external vendor systems and internal systems.
- Deployment cost of future state technical solution, ancillary system impacts, and business change management
- Cloud based platform subscription costs and platform provided training costs/credits
- Hardware required to run applications – Carefully unpack solution buzz words like “co-existence” which translates to on-premise servers being required
- Hard dollar spend of a system integrator consultancy to lead the cloud system deployment
- Soft dollar spend of internal resources required to support deployment inclusive of testing, change, and program management
- Hard dollar costs from down-stream vendors who are impacted by the target state solution (decommission or change costs)
All cloud based HCM solutions are not the same. Ideally before creating the business case, first select the technology solution that best handles organizational business requirements vs. incorrectly assuming that the effort to deploy and enable change management will be identical across technology solutions.
- Future state ongoing run rate for the target vision inclusive of costs, savings, KPIs, and accounting treatments
- Revisit the “current state cost analysis” to create a corresponding future state cost profile for the same categories
- Assess HR efficiency headcount savings from increased self-service transactions and reporting; including capacity created from no longer chasing users for illogical or missing data, since data inputs are reconciled real-time against configured business rules
- Assess Enterprise efficiency savings and risk reduction from unifying systems, functional teams, and technical analysts
- Assess accounting impact of cloud technology licenses treated as OpEx vs. CapEx, and significant reduction in hardware required
- Assess value to the organization from improved control environment and internet-based access to modern business systems
Beyond comparing the current state vs. future state ledger, it’s critical that the organization buys into the bigger picture of what an HR Digital Transformation enables: Revisit the graphic “Visualizing the organizational impact of HR digital enablement” as a guide to weave together the organization’s unique narrative and value opportunity to be included in the business case proposal.
Realizing the Vision
Through the process of building this business case with a unified C-Suite and business stakeholders, the effort to socialize, refine, and build support for the change is more than half way done; hopefully, approval to embark on an HR Digital Transformation and introduce consumer grade technologies to business operations will soon be “only a vote and a budget cycle away.” Transformation is, by definition, a significant body of work that will fundamentally redefine the status quo, but there are hundreds of organizations who have already made the journey and are generous to share their success tips and “If I had it to do all over again” learnings. Eventually, every organization will need to make the shift to modern, consumer grade technologies, the only real questions to answer are:
- “What will an HR Digital Transformation look like for my organization?” Hopefully this white-paper helps highlight a path to define the target future state and to build a business case for change.
- “Who will I partner with to realize the vision?” There are two decisions here = Technology Platform + Deployment Partner.
While there are several cloud-enabled enterprise technologies on the market, they are not all designed equally. The next decision to select a deployment partner who will both listen and direct, is just as important as the decision of which technology can best realize the target end state vision.
This blog was written by Invisors, they are an exhibitor on the HRTech247 Consulting & Advisory Partner floor of the Partners Hall. You can visit their virtual space here.