The Puzzling World of HR Technology

After assisting multiple clients with the system selection process I always get a bit surprised when the process seems to bog down the closer we get to the demo.  Historically, we spend a lot of time in Discovery, interviewing staff and collecting requirements.  Then we create a RFI or RFP so we can evaluate the vendors in order to invite the strongest three (3) vendors to demo.

Once the RFP is completed, we usually begin working on the demo script.  Often I do get queries from a client as to why we need the script and just don’t schedule the vendor in to “show us the system.”  After some discussion, everyone usually begins to understand that you would not take a trip without a good map or plan, and that is exactly what the demo script will provide.  It assures that those attending the demo will see the same functionality from each vendor and be able to better compare each vendors system performance.

The demo script for any system should be created in a life cycle flow.  For an PR/HR system, as an example, you would start with recruiting, then to employment, to benefits, compensation, Payroll and on through the termination process.  Then you can look at reporting and system set-up.  I usually suggest that there be an agenda for each section of the demo so various members of staff can come into the demo on features which will impact their area of responsibility.  The one thing I normally stress with a client is that everyone be in the same sections for all demos.

Usually I recommend that items on the demo script also be weighted with a priority.  This allows you to weight the scoring after the demo is done and put more focus on the items which are critical to the running of the company.  It does help in creating a Vendor Comparison Report which will show in one page the major areas of the demo and how well each vendor did to the requirements.  The Vendor Comparison Report and the Decisions Drivers are usually the key elements used to select the vendor of choice.

There is a lot of activity going on during the development of the demo script and coordinating the actual demo. I recommend that companies look at using an outside resource from HRchitect to assist with these tasks.  This resource will allow the full client team to be focused on the demo and not on the administration.  If you have any questions about the demo, be sure to ask your HRchitect representative on how they can help make the demo a smooth process.

It has been a very active couple of weeks in the acquisition market for HR systems.  This has sparked many discussions and conjecture within the HR systems industry on how these acquisitions will effect the future of the HR systems market.  While much has been discussed, it is still too early to fully know the impact to the final look and feel of the product.  What appears is that the major ERP players are moving into Software as a Service (SaaS) and, as predicted, there will continue to be consolidation in the HR systems market.

Every time there is a major merger or acquisition announcement, I continue to get calls and emails from HR professionals asking about how these changes will impact their system.  Even if you are not a client of the acquired vendor, the acquisition can impact your currently used technology.  The acquisition could have a profound change in the direction of the specific genre of software or it could result in an entirely new product being developed which will scientifically change the way HR technology is used.  The one thing that is certain, the changes we have seen will continue to occur.

To better prepare yourself for changes in the market, it is very important you have a full understanding of the technology you are using and what are the plans to interconnect the technology.  If you have not created a HCM technology strategy, now is the time to consider the undertaking.  If you do have a strategy, you may want to revisit your original assumptions during the creation to assure that your plan is still viable.  I realize that undertaking such an exercise in a time of smaller staffs can be difficult, but the payback with a solid strategy can help avoid any costly mistakes.

When updating any strategy it is best to get input from system experts.  This can come from organizations such as IHRIM or from reliable consulting firms such as HRchitect.  The knowledge you can obtain from outside resources can eliminate hours of research for you.  When updating your plans to address changes in the HCM technology future, consider using outside resources.  You will save time and update your plan to include the impacts of the recent software mergers and acquisitions.

Note: On December 14 HRchitect conducted its traditional year-end WebMingle. Matt Lafata (President), Ron Hanscome (VP HCM Systems Strategy Consulting) and John Hinojos (VP Consulting Services) spent a lively hour discussing major HCM technology events that occurred in 2011 versus what we predicted last December, and delivered a fresh set of predictions for 2012. Part 1 reviewed major events of 2011 and how our predictions panned out, and Part 2 covered what we expect will happen in 2012. This post will wrap things up by discussing what HRchitect believes this all means for companies looking to invest in HCM technology solutions over the next 12 months.

When all is said and done, 2011 was certainly an eventful year for the HCM marketplace. The frenetic pace of merger, acquisition and investment activities has certainly validated the strength of the market, along with strong organic growth experienced by many vendors. Fundamentally, the HRchitect team views the following as the major HCM market implications that every potential customer needs to consider in order to increase the chance of a successful outcome:

• Even though consolidation has reduced the number of vendors, the complexity of decision making remains as high as ever – following all of the moves/adds/changes can be a time consuming, bewildering experience for those who follow HCM providers on an intermittent basis. In many cases, all of the market activity has only traded one kind of complexity (number of providers) for another (product & technology integration, product strategy). Current and potential users of HCM technology will get significant value from guidance provided by those who regularly follow the twists and turns of this market.
• Implementation timeframes have become somewhat extended – there are many factors driving this, including disruptions due to acquisition (changes in vendor product strategy, exodus of implementation resources), extended configuration/design phases as customers struggle to include leading-edge features (e.g., social, mobile, analytics), and greater than expected change management activities. Potential customers should take this complexity into account as they build cost estimates for their implementation plans.
• More than ever, potential customers of HCM technology solutions need a robust framework for selection decision making – with every vendor marketing their “latest & greatest” features, it’s important for customers to understand what is most important to their business and HR function, and to have a methodology for ranking vendor solutions. HRchitect provides a “Decision Drivers” framework that our clients use for this purpose – access a white paper that outlines this methodology here (Note: registration required for download).
• HR is still recovering from the downturn – the impact of 2008 and the uneven recovery since then has definitely affected the HR team in most organizations. Staff cutbacks have forced many HR teams to do more with less, and run a “bare bones” operation that is focused on getting processes done instead of gathering and analyzing information to drive business decisions and outcomes. It will be critical for those implementing HCM technology in 2012 to allocate some headcount to establish and extend the metrics framework to deliver information of value to the organization.
• Strategic linkage is critical – any potential purchaser of HCM technology needs to start with their organization’s business strategy, goals and objectives, and check the HR strategy for alignment. Only then can an HCM technology strategy be developed that supports the overarching HR strategy, which will then support the business. HCM project teams must understand the business at a deep level in order to make this happen.
• Be careful, integration can be a real “gotcha” – with all of the acquisition activity there are fewer HCM vendors that deliver an organically developed integrated application on a single platform. Recent acquisitions will take between 18 and 36 months to be completely integrated into the vendor’s main platform. Make sure that your evaluation process tests the extent of integration that exists between modules, as well as the robustness of integration tools for 3^rd party and enterprise applications. Remember also that project teams typically underestimate by at least 15% the time and cost required to integrate all the products needed to deliver seamless HCM processes – so build some cushion into your project plan.

We hope that you found this series of posts valuable as you move ahead into 2012. We’d love to hear about any questions or comments you may have, so fire away!

If desired, you may access the full audio of the WebMingle here. You can also find some very helpful supporting content (white papers and vendor summaries) here.

This year has gone by so fast and as we approach Thanksgiving, it’s a good opportunity to slow down, just for a short time, and reflect on the many things we have to be thankful for.

HRchitect has enjoyed one of its most successful years ever, and so many great things, and great people have helped contribute to that.

For starters, I have a full house this Thanksgiving as both sets of parents and other family members have come to our home for food, fun and family. We’ll be watching football (why aren’t the Patriots playing?!?!?!) and playing football, all around stuffing our faces with great food. I’m very thankful for all of that and thankful to my great wife that she is always there in listening to me about my work and offering suggestions and a different prospective on issues that can only come from somebody that is not as close to everything as me and the great people I work with.

I’m thankful for this great country that we live in and the opportunities that are presented to each and every one of us to enjoy success that comes from hard work and dedication to our craft.

I’m also thankful for the people I work with. They are a dedicated group of people that share a common goal of being the absolute best at what we do – HR technology consulting. I wish I could have them all over my house for Thanksgiving dinner as well, but they of course have their own wonderful families and friends to be with. HRchitect would not be the company it is today with the employees who are with us today and who have been with us in the past. What is also great about HRchitect is the giving spirit that they possess. As an organization and as individuals, our philanthropic efforts through our time, talent and treasure has made a significant impact in dozens upon dozens of charitable and non-profit organizations.

Of course we wouldn’t be here today if it wasn’t for the more than 800 leading companies across the globe that trust HRchitect to help them with their decisions around HR technology strategies, which HR systems they should invest in and of course helping these great companies implement those solutions. Everywhere I go, everything I do, HRchitect clients are there. I am so thankful for the opportunity to provide services to these companies time and time again. It’s no accident that our clients come to us for repeat business, as evidenced by the more than 1800 projects we have conducted over the past 14 years, and that is a testament to our great reputation and our great people. Thank you to each and every one of them.

And let me not forget the HR vendor community. Nobody knows more about the vendors in the HR technology world and this didn’t happen overnight. It came as the result of hard work on the part of people at HRchitect and people at the vendors. It also came from a level of trust that can only happen by doing what you say and being transparent every step of the way. Thank you to all of the vendors who we count as partners today and those that are in the works. The HR community at large is better off when HRchitect and the HR technology vendor community work together on a continual basis.

Lastly, I am thankful for all the exciting things that we have planned for 2012 and beyond. While I know everything I have written above is about what has already taking place but I would be remiss to not look forward and be thankful for the groundwork that has already been set. Our dedication to making the HR community better with everything we do has never been stronger. I am thankful for the leadership position that HRchitect has worked so hard to achieve which allows us to make an impact on the lives of so many people both directly and indirectly.

And if you have read this far, I am thankful that you did so.

I hope you and your loved ones have a wonderful Thanksgiving!

Giving thanks,
Matt Lafata, HRchitect

Here at HRchitect, we celebrated the opening of our new corporate office location this week with a ribbon cutting and open house.

The growth we have experienced over the previous few years, and especially over the past 18 months, dictated the need for expanded office space.  So, we moved right down the street to our new location, still within the Frisco Square development that we all enjoy working in.  The new office offers increased working space for our employees as well as increased conferencing space for meeting with clients, prospects and partners.

We look forward to hosting many more events in our new space!  Our doors are always open, so if you are in the Frisco area, come by and say hello.  Our new address is 6175 Main Street in Frisco.

My first post on this subject encouraged HCM technologists to “think big” when building a justification for new or upgraded enabling technologies:

Saving time or reducing paper for a relatively small number of HR staff will not garner much interest from the C-Suite. Instead, think about how your enabling HCM technology will affect broader segments of the workforce, and thus truly impact the bottom line of the organization.

While this statement is absolutely true, it was not my intent to minimize the importance of including process-based efficiency and effectiveness gains. In my view it is necessary for a project justification/rationale to contain a mix of strategic and “tactical” savings in order to give senior leadership the most complete view of ROI possible. The critical factor here is to again focus estimates of even tactical savings on broad segments of the workforce in order to leverage the larger numbers impacted by the change. Take the following example involving the performance appraisal process at an organization projected to begin 2012 with 5,000 employees:

This model “goes granular” by focusing on estimating the hours saved by both employees and managers as a result of implementing a new enabling technology for the appraisal process. Average population begins at 5,000 employees, with a projected annual growth rate of 3%. The next key variables are how long it currently takes the employee and manager to complete the average performance appraisal – the rigor of gathering these numbers can range from a simple estimation, to questioning a subset of the manager and employee population and averaging the responses, to doing a full time study on a sample population. Whatever the method, average hours per review are multiplied by the total population to calculate the total hours spent doing performance appraisals by each workforce segment. Remember that an employee is in essence reviewed “twice” – their self-assessment and the manager’s review – so according to the parameters entered above, managers and employees together spend 25,750 hours doing performance appraisals (5,150 *[3+2]). Since the new technology will be enabled during 2012 to review 2012 performance in early 2013, hours saved are calculated in that year.

The next parameters are the estimated time saved by using he new technology expressed as a percentage. As the example shows, organizations often see a greater savings on the manager side due to supporting tools that are used more by managers than employees, such as ready access to past appraisals, “writing assistant” tools that provide suggested wording based on rating scales and associated behavioral anchors, and the ability to easily choose remedial learning events tied to specific performance gaps from an integrated course catalog. The percentages are used to calculate the estimated hours saved, which are then multiplied by the respective hourly rates to arrive at a dollar equivalent savings.” The total savings for the five year period is estimated to be in excess of $1.1M for this one component of performance management.

Certainly all the usual caveats discussed in Part I apply here as well – all of the variables can be modified to better reflect your specific situation, the need to work with Finance to determine the definitions for direct versus indirect cost savings, etc. In the end, even if the dollar value of the hours saved is not considered in the rationale, the saved hours themselves have significant value, as they can be re-allocated to more value-added tasks. Certainly you could add to this simple model by reflecting the time spent by HR administrators and generalists and estimating savings there, as well as incorporating the time spent by multi-raters if that methodology is in use by your organization. The same general model could be tweaked and applied to any number of HCM processes – here are just a few:

• Training enrollment (employees, managers and learning administrators)
• Recruiting (hiring managers, recruiters)
• Onboarding forms completion & provisioning (new hire, HR admin, payroll admin)
• Compensation Planning (managers, Compensation, senior leaders)
• On-line pay stubs / W-2s (employees and payroll admins)
• Time entry automation (employees, managers, payroll admins, operations admins)
• Labor scheduling / shift bidding / shift swapping (employees, managers)
• Benefits enrollment (employees, HR admins)

Hopefully this example of a more granular, process-based approach to estimating your HCM technology project ROI will help you to build in the right mix of strategic and tactical savings, and thus better your chances of quick approval. As always, I welcome any additional thoughts and insights you might have – the more, the merrier!