BPaaS Rising HR Outsourcing in the Cloud

BPaaS Rising HRNWhat is the impact of SaaS on HR Outsourcing?  I have written how BPaaS (Business Process as a Service) might provide a “Silver Lining for HR Outsourcing”.

One of the pioneers of BPaaS is OneSource Virtual, who are well known in the US as one of the largest Workday implementation partners.  They recently opened their Derry European Service Centre in Northern Ireland and plan to create 290 jobs by the end of 2017.  This is great news for Derry and also for prospective and current Workday customers in the UK and Europe.    I am delighted to share a conversation I had with Wesley Bryan, President, COO and Co-Founder of OneSource Virtual, who will be at HR Tech World in London next week. 

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Wesley Bryan, President, COO and Co-Founder of OneSource Virtual

Tell me a little bit about how One Source Virtual came about and what you do?

OneSource Virtual supports the automated delivery of Business Process as a Service (BPaaS) and supports the delivery of solutions exclusively for Workday. We empower organizations of all sizes by providing Workday deployment, consulting, training and in-application payroll services, benefit administration, finance and accounting outsourcing, and application management services.

It is exciting news about your new Customer Centre in Northern Ireland, why did you choose Derry?

Because we knew the next phase of our business was to launch our UK HRMS and Payroll services, we knew it would be strategically beneficial to have a service centre in that area.  After a long selection process, we finally settled on Derry because of its labour market, stellar talent, and the positive relationship its government has on businesses. The talent and workforce in Derry is absolutely unbelievable. We certainly haven’t regretted our decision.

What services will you be providing in the UK this year?

OSV provides UK AMS Consulting, Workday Deployment, UK Payroll and Tax Services, and will be launching an Employee Service Centre that will assist with Workday Helpdesk, Workforce Administration, Benefits Services, Document Management and Administration Services. In the latter part of 2017, we will also be providing AP Processing in the UK.

HR Outsourcing gets a mixed reception due to some tricky relationships in the last 20 years, is BPaaS less risky for organisations?

Absolutely. When BPaaS is used to outsource, we don’t have to go into a company’s system and takeover the maintenance of the software like a traditional BPO.  Through BPaaS, a company is able to outsource services within their system of record. This makes it less risky to the customer because their system is already in- house.  A customer can decide at any time to bring an outsourced service back in-house and we can make that change without altering their structure.

You have done 870+ Workday projects (initial deployments and add-on engagements). What is the no.1 tip you can give on a successful implementation?

Don’t underestimate the complexity in deploying the software. It is imperative to bring in a partner that can help you design and think through how you will utilize and configure the software.

At what point in the HR software buying/implementation cycle would an organisation consider BPaaS?

Typically and ideally during the buying cycle. The BPaaS delivery model is very different from your traditional BPO service model and if you want a true BPaaS offering, you have to be careful to choose a true multi-tenancy SaaS provider who can deliver a range of services that can be standardized across a variety of customers and ultimately be more cost–effective. If that is important to you, it should be discussed during the buying cycle.

Finally, what do you think is the most exciting trend in HR Tech in the coming years?

What excites me the most is the way systems are being built today.  It isn’t uncommon to see various platforms sharing information in real time. For instance you can log in to one platform by using your Facebook credentials. The possibilities with that type of technology are endless because you’re not limited to the information that is only in your database.

This was a guest blog for HRN Blog, "BPaaS Rising – HR Outsourcing in the Cloud"

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Workday Service Partners – Overview of European Market

Workday Service Partners Europe

The Workday Rising Europe 2015 roadshow is kicking off in Dublin this week – a melting pot of existing customers, prospects and Workday partners.  One things for sure there will be plenty of HR Technology craic.

This article looks at the European Workday Service Partner ecosystem, provides some independent analysis of the market and some useful links for those thinking of moving to Workday.

So, why am I writing this article?  I have been involved in over 20 transformation programmes in the last 15 years, and nearly all of them involved HR Technology.  My particular focus is to help organisations develop smarter HR Operating Models aligned to business goals.  New waves of technological innovation has meant for the first time business needs are lagging technological capabilities.  See my article for HR Tech Europe Blog – “HR in a Time of Brilliant Technologies”, however when assessing the impact of new technology on HR, we sometimes get dazzled by the ‘glare’.  Workday has been a real catalyst for transforming HR.  One feature of selecting Workday as your HR technology system is that you have to work with an authorised Workday Service Provide, although there are good reasons for this, we think “how you implement” and “who with” should be a major consideration when selecting HR software.

To start with, we should say, we like Workday and what it has achieved in helping to transform HR. However, it’s role as a HR transformer is not because the functionality of the software blows away earlier generations, but also because it has risen on the wave of technological changes such as mobile, cloud and better integration.

There are three other reasons, we think why Workday is a true HR transformer.

1 – Workday’s main success has been to pitch successfully to the C-Suite.  By raising enthusiasm for great people management, HR has had another go at making the case for workforce transformation after some patchy results in the last 20 years.

2 – Implementing major new software usually requires a business case to the Board, and this has led to HR having to provide assurance that HR has an operating model that is fit for the future.  A new system has often triggered a review of what we do in HR to support the business, the structures, skills and ways of working. 

3 – Every Workday customer gets the same software, and this has forced HR to simplify and streamline processes.  The upshot has been that after making the case to invest in our people management infrastructure, HR has been able to focus more on business priorities whether that is developing talent, sales effectiveness or productivity.

 

In going through the process of choosing the best HR system to suit the requirements of your business, you will have considered some of Workday’s competitors :- SuccessFactors, Cornerstone, Meta4, Fairsail, FinancialForce.com, ADP, Ceridian, Oracle and MS Excel (joking!)

Whichever software you select, a key consideration is choosing the right implementation partner, in terms of cost, quality and risk management and ultimately successful business outcomes.   In our post, How to Earn your HR Cloud Tattoo, I shared some tips to consider when implementing your cloud-based HR system.  This included “Make sure you check out suitable partners before you select the software as this will significantly influence the pricing for your project.”

Once the HR Technology selection decision has been made, the next step is to find an authorised Workday Service Partner.  This is not necessarily a problem, but buyers should line up their preferred partner before signing the Workday contract.  This is important as the success of your Workday implementation will depend on the quality of the service partner, and it is worth thinking about this before you sign the contract.  We have also noticed it is harder to get good independent advice for buyers.  Analysts, well they analyse…Consultants provide advice, but also have big Workday practices – they know the product but have a clear vested interest, and Workday themselves are trying to create a healthy service partner ecosystem.  This involves supporting new entrants into the market and ensuring the quality of deployment is high. 

Anyone who has earnt their “HR Cloud Tattoo”, knows “putting in a HR system” doesn’t “transform HR” or improve the “workforce capability” despite some of the sales pitches I have come across.  Improving workforce capability will only start once the system is stabilised, the new operating model is working and leaders confidently empower managers to manage effectively.  This can take years, not a few months.

A view on the European Workday Service Partner market

For those who have selected Workday, your next step will be to choose one of the official Service Partners.

For customers, this is generally good news.  On the one hand you can be assured that service partners work to a stringent standard, that the software will be deployed using consistent service standards and every consultant is Workday certified.

On the flipside, you have a more limited group of service partners to choose from.  Also, although each partner is reputable, it is more difficult to get independent advice within this context on scope, commercials, programme management issues with Workday. To be blunt, some of the service partners, as you will see below, rely 100% on Workday for their revenues – they are not going to bite the hand that feeds them.

The market for certified Workday consultants is hot!  There is high demand from customers, but a low supply of experienced certified Workday consultants.  As the Workday sales machine does its thing, competition for consultants will increase and so will salaries – potentially pushing up the implementation bill for customers.

Workday is growing fast, but is still not profitable.  The cost per employee per year will not be going down, even if the competition mentioned above come snapping at their heels.  

The market is changing all the time and will evolve in the next few years which is very important for Workday’s long-term success.  As you can see the Workday European Service Provider market has some familiar names, and some more you will not have heard of.  We have characterised the 17 European providers into 5 different sections :- from the Big 4 and Tech Titans, HR Heritage providers, to the general Cloud experts and Workday specialists.  We will continue to see M&A activity in this space.   The Big 4 and Tech Titans (and outsourcers) will make a move for their smaller competitors as the best way to acquire certified Workday consultants and buy a chunk of market share.

I would also expect one or two of the US focused providers to enter the European market. For example, one of the largest Workday Service Providers in the US, OneSource Virtual, has recently opened a centre in Derry, Northern Ireland, so will be growing its capability in Europe.

I could plot the Workday partners on a 2 by 2 matrix with ‘completion of vision’ against ‘ability to execute’ and show you how many certified consultants each provider has, but I not sure this will help you find the right partner given your requirements and the maturity of this market.  Instead, I would characterise the market into 5 segments.

The Big 4

Well I am not sure if its Big 4 or 5 these days, it doesn’t look like Ernst & Young are a major player in this space for now anyway…

Accenture – 2nd largest service partner globally according to HfS, in terms of certified consultants.  Can take on the larger, more complex programmes

Deloitte – with 120 Workday customers, it is probably the largest service partner globally

KPMG –  showed ambition by buying Towers Watson’s Workday practice this year

PwC – have over 200 Workday professionals globally

Pros – they have big pockets and seem committed to this market.  They have a breadth of offerings in technology and consulting, and their Account Manager probably plays golf with your CIO and CFO.

Cons – they can turn any project into a massive industry fuelled by an expensive army of fresh-faced analysts.  Relatively expensive, and unless you are Unilever you will not be at the top of the queue for the best consultants.

Question to Service Partner – “Your sales director is *very nice*, but please can I interview the actual team I will be working with?”

The Tech Titans

Like the Big 4, the Tech Titans are well known and survivors. They can work on a mega scale and all keen to develop longer-term outsourcing solutions. (not sure whether Accenture fits in here or Big 4…)

Cap Gemini – European tech giant with HQ in Paris

CSC – A global leader in providing technology enabled business solutions and services

HPE – Hewlett Packard Enterprise, who recently split with HP Inc

IBM – recently bought Meteorix, probably the 3rd biggest SP in terms of Global Workday certified consultants

Pros – they will be on your short-list if they already run some of your tech infrastructure, so you will know how they work to some extent.  If you are thinking of implementing Workday then outsourcing or considering BPaaS then I am sure the tech titan will be interested in negotiating.  (see my article for CIPD on Will the Cloud have a Silver Lining for HR Outsourcing? )

Cons – not usually a great fit for smaller organisations as you will be down their pecking order, but some are trying to build up their practice quickly so worth considering if they are keen. 

Question to Service Partner – “What do you mean you can’t come to a meeting in Berlin because of your Q4 travel freeze!?”

 

HR Heritage

So these guys have been doing your pension and benefits admin since 1953 and know everything about HR and have some very good consultants.

AON – showed their commitment to this market by buying Kloud this year, also big player in HR Outsourcing

Mercer – one of the smaller Workday SPs, with a wealth of knowledge in pensions, investment and workforce

Pros – depth and breadth of HR knowledge.

Cons – Towers Watson had their Workday practice bought by KPMG…wonder whether Mercer can compete with the Big 4 and Tech Titans?

Question to Service Partner – “Can we talk about your Benefits plans? (only joking!)”

 

The Cloud Specialists

These two are regarded as expert at cloud implementations.

Appirio – very experienced with 900+ enterprises moved to the cloud with Salesforce.com, Google and Workday

Kainos – 750 staff with 150 global customers

Pros – both have good reputations and know their cloud deployment techniques

Cons – will have less breadth of offerings as Big 4 and Heritage HR

Question to Service Partner – “How do you stop your team being poached by the Big 4 and Tech Titans?”

 

The Workday Specialists

These service partners live and breathe Workday and have a symbiotic relationship with the mother lode.  Some have local payroll expertise.

Ataraxis – based in Belgium and know European payroll

Cloudator – A cloud-based multi-country payroll system for the Nordics

DayNine Consulting – European clients include Cambridge University Press, TIP Trailer Services and Global Blue

EverBe – Based in Paris.  HR and local payrolls for France, Benelux, Italy and Spain

Realright – specialist with focus on the German market

Pros – might fit your niche perfectly e.g. German/Nordic payroll and probably cheaper than the Big 4.

Cons – they are specialists so less able to provide broader technology and consulting services, also good candidates for takeover by bigger fish.

Question to Service Partner – “So tell me, how many share options do you have then?”  

This was a short overview of the main players which you might find useful, and some tips and to consider before choosing your Workday Service Partner, but if you have decided to use Workday here are some of the considerations when selecting a Workday Service Partner:-

– Consider the fit with your organisation and team – if you have 1,700 employees you will be way down the pecking order for the Big 4 and Tech Titans who might send their intern down to meet you for scoping meetings!

– Are you considering outsourcing, or BPaaS as an option?  Then it’s worth sticking with the same partner through the whole process if you can and evaluating the vendors outsourcing capability up front.

– It’s important to consider and see their proprietary Tools and Methods developed.  The winners in this market will develop the best tools that consultants want to work with and give best results and customer satisfaction.

– Workday will often recommend a particular service partner to work with, this is worth listening to, but their interests (keeping the ecosystem healthy) might be different to yours, so also prepare a shortlist to evaluate.

– It’s crucial that the consultants working on your project have a good understanding of the particular regulations in your geographies.  This could mean for your organisation, the 20 deployments in France and Belgium are more important than the 200 deployments in the US.

– Make sure you meet the actual implementation team.  As well as Workday experience, look for broader HR/consulting experience.  Will they get on with your team?

– Sector experience – Workday is building up its credentials in different sectors in Europe but isn’t there yet….check the Service Partners understand your industry?

– A general point, from our experience the cloud service partner can probably get the system up and running quicker than your organisation can make the required business decision and adapt to the change.  Make sure you have good governance, programme management and excellent change and communications skills in your team.

– Ask to speak to at least 2 or 3 customers in your industry/geography for references.

If you have already earnt your HR Cloud Tattoo, then please share your experience in selecting a Service Partner.  I would also welcome any tips and suggestions from Service Providers themselves, directly or on Twitter @AndySpence.

If you would like this article in a nice PDF format, then let us know and we promise not to charge you $1,295!  And enjoy Dublin if you are at Workday Rising this week!

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How to earn your HR Cloud Tattoo

HR in the Cloud Tattoo - Copyright Glass Bead Consulting

The relentless move of HR to the cloud is ongoing, with over 2000 organisations now using or moving to the Big 3 software providers.

And HR software in the cloud is not just for larger organisations, for example in the UK, Moorepay currently serves over 8,000 SMB businesses in the cloud for payroll, HR and compliance services.

The good news for HR is that the HR technology industry has accumulated a useful body of knowledge for those about to embark on this journey.

From my perspective having worked on over 20 different HR change programmes, HR in the Cloud, is a major catalyst for transforming HR.

Organisations have been forced to standardise their processes and procedures so they can use the software, as there is no customisation with SaaS (Software as a Service).  This brings simplification and focus on more valuable HR services.  Also, making the case to the Board for investment in HR software requires a well thought through business case, and gives confidence that the HR Operating Model is fit for the future.

So if software is forcing HR to rethink how it operates (the tail wags the dog) – who cares if we get positive outcomes?

It is crucial for HR to get this transition right, collectively we have plenty of scars to show after some painful ERP implementations in the last 20 years.

As an industry we need to ensure we pass on our learning and experience to others, and conferences like the HR Tech World Congress, this year in Paris, provide a good forum to do that.

With organisations moving to the cloud we should learn from those who have “been there, done that, got the Cloud Tattoo”.

If you are a HR leader, thinking about moving or in the process of moving to the cloud, then this article is meant for you.

Once you have selected the software, now comes the hard bit – planning a successful cloud technology implementation.

Here are some tips that you might not hear at the vendor pitch.

1 – It’s the people, stupid…

You might be putting in a new system, but to be successful you will need people to work in a different way.  The more thought you can put into the project  team, future HR team, new skills and relationships the better.  Sounds obvious, but it’s easy to lose focus with contracts, Board presentations and enthusiastic account managers to deal with.

The project team needs to have a good mix of people who understand the new technology, those with a vested interest in a successful implementation, and those who have a good understanding of business needs and nuances.

Do you have the right skills required for the project and if not, how will you fill the gaps?

The skills needed to manage HR are different to the skills needed to transform HR.

You will need storytellers, analysts, designers, trainers, pragmatists and optimists (contact me for this job description!)

Work out how you will facilitate knowledge transfer between the technologists and your operational team.

Ensure that when you set the budget and select the programme team, there are enough resources allocated to communications, change and training expertise – but you work in HR, so you know this right?

Do you have a business sponsor?

This is essential to provide guidance, support and credibility to the changes you are making.  Preferably the business sponsor is someone who stands to benefit from the change, and doesn’t work in HR.

William Tincup and Jeremy Ames, give some advice  “Catalog the ways in which your users will “love” the new software”

Do you have a group of fans who “love” the proposed changes?

These people will be crucial, so nurture their enthusiasm and lavish them with early reviews, and benefits.  Customer user groups should be established up front and this will help you with #2 Decisions, Decisions, Decisions (see below).

One tip from Michael Custers, SVP Strategy & Marketing at NGA Human Resources,

“apply some design thinking around ’employee experience’ – the cloud greatly improves the user experience of HR self-service applications. This is an opportunity to improve the touch points between employee and employer and puts the user/employee at the heart of your HR service delivery ‘engine’.”

You may have selected and costed the software, but have you done the same for your implementation partner?

Make sure you check out suitable partners before you select the software as this will significantly influence the pricing for your project.

With system integrators, insist on meeting the team who are being proposed for the project. Having worked on both sides of the client/vendor fence, I know scheduling pre-contract is tricky.  It is sometimes very difficult to say which of your team will be working for which client before the contract has been signed.     However, your project should not be a glorified training course for expensive ‘green-beans’ !

Have you taken the IT Director out to dinner yet?

The way we deliver HR is being revolutionised, and it’s similar in IT.  With SaaS, we might not have to worry so much about the hardware, but it does throw up a whole load of other technology issues e.g. data security, existing infrastructure, mobile access and support that will require you to have IT on your side.  The relationship between HR and IT is changing, but working together you can be even more effective in instigating change.

2 – Decisions, decisions, decisions….

You have made THE big decision – which software to buy. Now you now need to create the right environment to be a ‘decision-making factory’.

As Peter Drucker said, “making good decisions is a crucial skill at every level”.

Why? At this point the last thing you need is any delay, with deployment consultants on the project – every delayed day burns money.

As you get into delivery, you will have to make a number of decisions along the classic project management triangle of ‘Time vs Scope vs Cost’.

For example what happens if the implementation budget is cut or there are time delays?   Ensure you have a robust governance framework agreed from the onset with a Business Sponsor to help iron out issues, decide who will be on your Governance Board and what their role will be.

In my experience, the big time consumers are not always the big technology decisions, but changing the working practices, rules and processes and the hundreds of smaller decisions, such as ;

– How will recruitment approvals be made in different parts of the business ?

– How will workplan harmonisation work?

– The finer details of the revamped intranet design?

The list goes on…..it’s worth keeping some kind of decision log so you can go back to the original vision and review design principles if needed (see #4 below Is your operating model fit for the future?).

3 – Don’t let the software sales team pitch to YOUR customers

Well of course they will, but you need to be very clear about the expectations that are being set with your internal business customers – this is your job, not theirs.

Worst case scenario? A demo with a short film showing smiling, happy software users – like a scene from the “Truman Show”.  What the software vendors say will of course be true, but they might not (have time to) explain the effort, broken bones and cost to get to that dream state!

Make sure you manage YOUR customers expectations NOT the software account manager.

4 – Is your HR Operating Model fit for the future?

Make sure everyone is clear on why you are making this change, and how it supports your organisation vision. If it doesn’t – then STOP.

HR Operating Models are developing rapidly driven by technology, changing workforce demographics plus the insight that moving to a pre-defined model will not work. See these articles for more context Is Your Operating Model Fit for the Future?.

We need to apply our OD skills to deliver a HR model that works for our organisation, the system should support this.

Ensure the Board approve the vision and a simple set of design principles.

Develop the elevator pitch, to motivate and train up new team members.    Unfortunately, for large global projects, by the time the system is fully operational, the HR Strategy, and HR Operating required to support it might have changed anyway.  The new system will need to support future workforce needs and future HR structures whether you have Business Partners, Shared Services or use outsourced providers.

In this article from Diginomica, Gerard Hussey, VP HR Transformation at pharmaceuticals giant GSK (GlaxoSmithKline), mentions,

All the issues we had post go-live were around the end-to-end service model. So if you only focus on the technology, you’re dead.” 

 

5 – Build out your road map

By now you will have your trusty project plan, but you will also need something that moves beyond the duration of the project. When the project is over, the transformation is only in the early stages, how will you embed the changes into ‘business as usual’?

Jeremy Josephs, Sales Executive at HP for Workday and Outsourcing, gives some advice, “it’s essential to keep the momentum going after the first 90 days post go-live, make sure you have a plan in place to manage ongoing support and to reinforce the transformation goals.”

You will need the planners to be aware of the bigger picture, such as what other projects/programmes are going on that might impact your change?  What are the ongoing activities you need to plan around, for example, operational peaks and troughs, holidays?

The IT team will focus on the technology change, but how will old processes be phased out, as you introduce new HR services?

With cloud technology you can implement more quickly than in the past, sometimes the pace is above your organisations ability to change.  Try and factor this into your planning and expectation management.  Make sure you control the pace of change, not the technology provider.

Understand the known barriers before you start, there are plenty of lessons learned out there so make sure you can reel off the obvious ones and find a friend who has gone through the pain and earned their “Cloud Tattoo”.

 

Finally, clear your diary

You will have a project team and leader in place, but given that you are the HR Director, and know a lot about #1 “the people”, your expertise will be in demand.

You will have thought about how your organisation will make decisions effectively, but this will introduce just a little bit of process, meetings and review time.  Your management of the change will require you to sell the change to your managers, so if you are the evangelistic type of leader, you will be on the road a lot.  So clear the diary in the usual way.

Remember the 4 Ds – Drop, Delay, Delegate & Do

Finally, I hate to break it to you but even on successful implementation things will go wrong, sometimes really wrong.

So build up as much emotional and mental resilience as you can – you will need it!

As some old hands will realise, many of the considerations mentioned are not to do with Cloud models per se.   My point is that we should not forget the collective lessons learned and wisdom of past technology implementations.

For those who have been there, please share your tips and experience!

Tap me on the shoulder at HR Tech World Congress and I will show you my scars if you show me your cloud tattoo 😉

This article was originally published on the HR Tech World blog as a guest post.

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Will the Cloud have a Silver Lining for HR Outsourcing ?

Organisations have had to respond to the seismic shifts in the economy with the increased use of contractors, zero-hours contracts, interim resources, partnership arrangements, consultants and outsourcing to weather the storm. This process has also been mirrored in the HR world as HR directors scrutinise how to source current skills needed to deliver HR services.
 
Outsourcing started out as a necessity of 'doing more for less' and has increasingly become standard practice, with many organisations using outsourcing to drive efficiencies. However, before outlining why outsourcing might rise again, it is worth a quick refresher of its history and some of the lessons learned.
 
The birth of multi-process HR outsourcing came about in the late 1990s as part of the first wave of HR transformation, the goal of which was to spend more HR time helping to deliver organisational strategy and less HR time on administration. The tactics deployed involved tools for managers to do more people management and restructuring HR based on economies of scale. These included HR shared services and tactical outsourcing, and economies of scale with business partnering and specialist HR teams. Some of the enablers of these changes adopted ERP technology, corporate portals as well as the emergence of a multi-process HR outsourcing industry.
 
First wave of HRO – the early adopters
 
We all understood the logic of the first wave of HR outsourcing in 1999 – freeing up HR to focus on strategic aspects of the job. It is worth pointing out that outsourcing wasn't a new concept in HR, with most organisations already outsourcing their payroll as standard practice.
 
It was this desire for HR transformation that created ground-breaking global HR outsourcing deals, with Exult-BP and ePeopleserve (Accenture and BT).
 
The rationale for the 'buyer' organisations such as BP and BT was to use outsourcing to help drive transformation, including standardised HR services, reduced HR cost to serve and access to new innovations such as HR portal technology.
 
The thinking behind HRO vendors such as Accenture and Exult (eventually bought by AON Hewitt) was to build up a large global client portfolio and benefit from labour arbitrage by offshoring work to countries such as India. The economic case provided a client with 15–20% savings and the possibility of making a 15–20% margin over a ten-year contract.
 
A longer-term aim was to provide standard HR services using the same technology platform. However, the problem was that each client was taken on in a different state of standardisation, with a different configured HR system, which meant that the service was very much tailored to that organisation and couldn't easily be shared with other organisations – in other words, the antithesis of standardisation.
 
The results of this first wave of HR outsourcing were mixed for both client and vendor. As someone who was involved in one of the very first outsourcing projects, I found it exciting, but it caused many sleepless nights! I witnessed at first hand the trauma of moving the organisation to standardised services, HR service centres for clients and also restructuring HR with new roles such as business partners.
 
As David Ulrich, a professor at the University of Michigan's Ross School of Business, reflected, 'Often the first pancakes or first batch of cookies do not come out well.'
 
Second wave of HRO – some vendor consolidation and indigestion
 
The second big wave of change in HRO contracts came around 2006, including Unilever-Accenture and Johnson & Johnson-Convergys. These didn't quite deliver our dream of a standardised multi-tenant service enabling each client to benefit from new innovations either. Instead, these services offered bespoke solutions, tailored to clients' demands and meeting the particular nuances of their HR operating models. They had some success; according to industry analysts, Everest Group, the multi-process HR outsourcing market is worth about US$3.3 billion globally.
 
Although the HRO industry consolidated, outsourcing contracts lasting a decade were thin on the ground when organisations couldn't see where they might be themselves. Single process outsourcing went from strength to strength, such as benefits administration, recruitment process outsourcing, payroll and learning.
 
From my perspective working on both the client side and the vendor HRO side, there were a number of lessons learned in the first two waves of HR outsourcing.
 
Key questions that need to be thought through before considering outsourcing:
 

– How will outsourcing fit with your HR operating model and HR strategy?

– Does your organisation really have the appetite to standardise HR processes and services?

– Do you have required experience managing third parties?

My view is that cloud will have a significant impact on HR and will help HR to deliver the original goal of freeing up time to focus on strategic imperatives. And outsourcing will play a big part in that for many organisations.
 
Third wave of HRO – will the cloud give HRO its silver lining?
 
There is a lot of excitement around technology as a driver for change, particularly in talent identification and development, and workforce productivity. HR continues to have challenging requirements, from finding future top sales performers to providing tools that monitor the performance of a global project team. There is now a relentless move to migrate HR systems from on-premise to SaaS (software as a service).
 
At the 2013 HRO Today Forum in London, Mike Ettling, Global Head of Cloud and On-Premise at SAP, commented that:
 
'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.'
 
A great benefit of an SaaS solution is avoiding the expensive and time-consuming customisation 'fudges', for example trying to get the system to map your exact paper-based performance management process. SaaS drives process standardisation because 'you get what you are given' in terms of functionality, and then configure it for your organisation. However, you still need to persuade employees to work differently.
 
Cloud will force HR to become more standardised, requiring less centralised HR teams to maintain it and breathing life into the HR outsourcing market.
 
A new offering – business process as a service (BPaaS)
 
The impact of cloud technology also gives HR some attractive outsourcing options, for example, move HR processes onto a standardised SaaS platform and outsource the management of the HR technology platform and HR administration. This combined offering of business process outsourcing and software as a service has been called BPaaS, or business process as a service. BPaaS offers standardised yet highly configurable HR services, allowing organisations to standardise transactional HR processes. The rise and rise of Workday, and others such as SAP's SuccessFactors, has stimulated the HR outsourcing market with NGA HR, IBM and AON Hewitt all with HRO contracts using SaaS.
 
As SaaS forces HR to standardise, there is less HR administration needed, therefore the BPaaS deals so far have been smaller in size. The BPaaS model fits nicely with the new generation of agile HR operating models.
 
So with the potential benefits of a new generation of HR outsourcing, how might this impact future HR operating models?
 
Impact on HR operating models
 
To benefit, HR will need to learn from the past and execute a more standardised approach to the delivery of HR services.
 
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.
 
And with any outsourcing, the same questions need to be asked about how it fits with the HR operating model and HR strategy.
 
As we design a new generation of agile HR operating models, the adoption of cloud and outsourcing will pose some interesting trends to watch, including:
 

– SaaS will automate many HR tasks; manual HR work will be reduced substantially.

– There will be less need for HR service centres as cloud-based systems manage to support the move to self-sufficiency for managers.

– There will be a new type of HR outsourcing which develops more around business consultancy services and specialist HR advice than service centres/manual processing.

– More HR resources will be allocated to solving business problems.

Summary
 
The early innovators of multi-process HRO had the right idea, but perhaps at the wrong time. The conditions for multi-tenanted HR outsourcing are now possible because of cloud technology. HR will have to overcome a resistance and scepticism to outsourcing, after mixed results in the past. Whether we use cloud or on-premise ERP HR systems, the hard work required to standardise HR services across geographies and divisions will still need to be completed, but now the benefits will be worth it
 
This post was orginally published by CIPD,  'Will the cloud have a silver lining for HR outsourcing?' in a report 'Changing HR Operating Models'
 
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Will HR in the Cloud kill HR Outsourcing ?

Will HR in the Cloud destroy HR Outsourcing ? HR Transformer Blog
 
 
 
 
 
 
 
 
 
 
Will ‘HR in the Cloud’ kill the HR Outsourcing industry  ?
 
Or, are the claims of the HR Technology industry in ‘Cloud Cuckoo Land’ ?
 
In Aristrophanes play, ‘The Birds’, written in 414 BC, “Cloud Cuckoo Land” was an unrealistically idealistic state where everything is perfect.
 
In our 2013 HR play, Ms HR Vendor helps the trusting Ms HR Director erect a perfect HR operating model in the clouds.
 
For HR Directors, this has the appeal of ‘killing two birds with one stone’.
 
Firstly outsource chunks of your HR services on a standardised platform.  Secondly, hand over responsibility for your HR systems to the same vendor.  
 
This service has been called BPaaS or ‘HRO in the cloud' and this report from Gartner, is worth reading on the topic –  From ‘BPO to BPaaS: HR Outsourcing calls for the cloud.
 
Will SaaS melt HR processes ? 
At the recent 2013 HRO Today Forum, in London, Mike Ettling, former CEO of largest global HR Outsourcing company, NGA HRcommented that the demand for HRO will decrease over the next few years.  In Mike’s view this is because  :-
 
“In the last 2 years we have seen the phenomenal rise of enterprise ready SaaS solutions in the HR industry.  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.  There will be less scope for customisation.”
 
From this perspective, there will be less HR work in general and less outsourced work.  Not a good signal for the growth of the HRO industry.
 
For those interested, Matt Charney from Recruiting Blogs covered this panel debate well, in Transaction to Transformation: The Next Generation of Outsourcing  
 
HR SaaS – Practical Lessons from HR Buyers
In a separate session, Julie Fernandez from analysts ISG, provided some insights from HR Buyers, typically clients with > 10,000 employees. 
 
 
Amongst the trends and themes I picked up from Julie, were :-
 

– HR Buyers are cautious, ‘letting the dust settle’ on SaaS providers as they review their current HR Operating Models and future needs. 

– The rise and rise of Workday has actually breathed life into the HRO market – NGA HR, IBM and AON Hewitt are implementing or have HRO contracts using Workday software.

– HRO Buyers want both SaaS and services together, however are not willing to lose portal, chat, contact centre solutions that have been developed over last 10 years.  Expect HRO providers to develop solutions in this space. 

– There is a 15-20% HRO penetration level for orgs with >10,000 employees and there has been more new buyers in last 8 months than previous 2 or 3 years

– According to ISG, it seems HRO is not dead yet and in fact SaaS will actually stimulate market.

One of the HRO vendors told me that the Workday (SaaS) HRO deals are certainly smaller in size, which does tend to support Mike’s view on the impact of SaaS – it does reduce the HR work required.
 
Are the claims of the HR Technology industry in ‘Cloud Cuckoo Land’ ?
It is natural to have some healthy scepticism about the claims of the HR Technology providers on the latest generation of HR systems. (especially if you’ve had as many sleepless nights as me working on Transformation Programmes over the last 20 years!).
 
Haven’t we heard these promises from the HR Technology industry before ?    The claims are remarkably similar to the promise of ERP systems back in the 1990s.
 
That the new generation of software will be rolled out to willing managers enabling them to be more productive, more self-sufficient and  will help them manage their teams more efficiently.
 
Did the technology deliver the promises? Well generally, no.
 
One of the reasons that HR is no more strategic than back in 1995 is that HR Technology has not delivered the promises.  There are lots of other reasons why, and I refer to them in other posts “How to avoid HR Technology bogeys” and “Is your operating model fit for the future?”.
 
Part of the problem is that the software ultimately has to be used by those pesky human beings.  So we need good communications, training and support.
 
Isn’t SaaS or HR in the Cloud, just the ‘next wave’ of HR systems I hear you say?  We expect better functionality and usability in each new release, and HR Directors or managers don’t really care where the servers are located.
 
What is it about SaaS in particular that will drive such process standardisation compared to just another release of software ?  We still need to persuade employees to work differently. 
 
One of the great benefits of going with a SaaS solution is we do not have the expensive and time-consuming customisation fudges.
 
You get what you are given in terms of functionality and then configure for your organisation.  There will be a need to use the system provided for your HR Processes, and so there will still be change management required.  This will reduce the HR Service cycle times and the HR administration support needed – which is all good news as these savings can be spent on more value add activities.
 
Is SaaS a catalyst for more or less HRO ?
In my opinion, The 'size of the pie' will decrease (not as much as tech firms say) but the HRO slice will increase
 
In other words, there will be less work overall due to the benefits of implementing standard process, however, the proportion of work outsourced will stay the same or increase.
 
The drivers for RPO and HR Outsourcing will still be there.  Standard software will make transitions easier with consistent service levels – increasing the appeal of outsourcing.
 
Over the next couple of years we will see lots of activity with reviews of HR Operating Models, implementation of new HR systems, and more HR Outsourcing contracts. (and hopefully roughly in that order!)
 
The Workday marketing machine will get to your Board and you will need to have worked out your plan.
 
So as the 2013 HRO Today Forum ended, the HRO industry could be heard to mutter a collective breath of relief and echo Mark Twain,
 
"The reports of my death have been greatly exaggerated". 
    
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HR Tech Europe 2013 – Big Data, Robots and Cycle Paths

 
Andy Spence discusses Future of HR with a Robot at HR Tech Europe 2013
 
 
 
 
 
 
 
 
 
I have always found Amsterdam an inspiring place to be.   As you walk by the canals you experience the artistic and technological ambition of its residents with its rich history as the hub of a global trading empire.
 
The reason Amsterdam is still a thriving global hub in oil, diamonds, flowers and ideas is not because of its location or wealth but to it's engineering excellence and vision.  
 
Nearly one-third of the Netherlands is below sea level and prone to floods. In the 1950s, a series of dams, sluices, locks, dikes, levees and storm surge barriers were constructed to radically reduce the change of flooding. The American Society of Civil Engineers called it one of the Seven Wonders of the Modern World.
 
Just like the engineers who enabled Amsterdam to survive, and flourish, many delegates at the HR Technology Europe Conference have goals to provide the technology infrastructure required for their organisations to thrive.  They provide the right technology and tools in candidate selection, training, collaboration, productivity or basic workforce management.
 
The conference chatter and tweets was about psychopaths, psychos on cycle-paths (a hazard in Holland!), robots, the jargon of behavioural science, big data and predictions about the future of work.
 
Some facts and figures :-
 
• 1439 delegates attended
• 42 nations were represented
• 1 cute robot attended
• 8,245 tweets using hashtag  #HRTechEurope
82 tweets by myself plus 125 mentions – not bad as I was in listening mode this year – thanks to HRMarketer for the analysis
• 57%  of male vendors wore brown shoes (Thanks to @AndyHeadworth but you should always check your data source!).
 
Whether you were there or not, Download Presentations from HR Tech Europe 2013 and View some fantastic photos from Heather Bussing and others.
 
As I have written before, in Why HR Need to be Technology Champions, this is an exciting time to be working in HR, Technology and Org Development.  There are some important strategic choices to be made about the future of technology in our organisations.
 
Here are some themes for buyers and vendors of HR Technology that emerged for me in conferences sessions, conversations and tweets.
 
Its all about the strategy 
In Professor Costas Markides session, “Make your Strategy process democratic” he demonstrated why the first stage of the development of ideas needs to be democratic.
A question for HR Directors, is how widely did you cast your net for ideas into your HR Strategy ?
As Naomi Bloom outlined in her keynote,"Poirot's Order And Method: Making the business case for HR Technology" the starting point for any business case should be “what is the vision, metrics, value targets that matter?”
 
There is no point buying HR Systems that do not support the HR Strategy that in turn does not support your business strategy and goals.  Naomi in a later session also provided some useful historical context of HR systems and data requirements which have changed completely over the years. Put bluntly, the code and data structures that supported our organisations yesterday will not do so in the future.
 
The end of the HR enterprise software era
John Sumser took the historical perspective further in his session, "Re-engineering The Human Resources Function" in his view we are at the end of the HR enterprise software era, in terms of maturity.  The HR Technology industry has done its job well and provided automated solutions for most HR processes and in John’s view we should not expect much innovation at this phase.
 
However, very quickly we will move to a new exciting phase which will include integration of new data sets from outside HR from aggregate health care data, labour market data and actual work measures.  This really has the potential to transform workforce management, and provide competitive advantage to organisations who adopt early. Imagine the possibilities of predicting peaks and troughs in employee performance by merging HR and performance data with health indicators?  Of course there would be a few privacy concerns to iron out in this brave new world.
 
Talent minus Big Data = Unsubstantiated Rubbish
On the topic of data, there was lots of talk of Big Data, Nick Holley from Henley Business School gave a very interesting presentation on “Talent minus Big Data = Unsubstantiated Rubbish”  and also won the prize for best session title.  Nick gave good examples of using data analysis to solve business problems and told delegates that one of the most successful talent tactics is to identify and manage out the narcissists & psychopaths in your organisation.
 
Josh Bersin, in his session “The Datafication of HR” also demonstrated how HR Analytics could smash some organisational myths such as “people from top universities with good grades are high performers”.  Josh illustrated how HR has been evolving big data solutions for years and presented some great pointers in building this capability into your HR Operating Model.  We need to look at the current capabilities we have in HR and recruit people who are comfortable with data. 
 
One of the iHR Award 2013 finalists, MacroMicro, showcased a tool that sits on top of your HR data providing visualisations of your organisation (just don’t let the CEO get their hands on it until you have done a bit of data cleansing).
 
Visualising and playing with data is fun but this all needs to link back to your strategy, we need to start with the Business Problem we are trying to solve.
 
HR Technology Buyers are at a crossroads
‘61% of HR Professionals are changing their HR Technology in the next 18 months’ – with all the workforce and technology changes out there, there is understandably some hesitation in making long-term buying commitments.   In his presentation to industry analysts the day before the conference, Adel Al Saleh, the newish CEO at NGA HR (used to be Northgate Arinso)  gave his view that ”More HR Technology options has created inertia as organisations take time to review their technology and services landscape”.
 
I can understand why, and demonstrates why this is a good time to ask yourself, “Is your HR Operating Model Fit for the Future?”.
 
Congratulations to Appical who won the iHR Awards 2013 with a successful product and an innovative pitch.  They made the case for turning onboarding new employees into something much more fun with cutting-edge technology and social media.
 
The industry behemoth, Oracle, intends to continue to invest heavily in HR Solutions according to Mark Hurd at Oracle.  Mark also brought along his robot, Oscar, who is seen in deep conversation with myself about the future of HR.  After a couple of cocktails, Oscar confided that he planned to deliver a session next year on “The new field of Robotic Resources – RR”.
 
Finally, looking into my Google HR Glass (John Sumser predicted 10% of delegates will be wearing these at the Conference in 2014)  there will be lots of HR Tech contracts signed in 2014.  
 
I am looking forward to the HR Technology Europe Conference in 2014 and seeing how this group of  Workforce Visionaries will be building the technology infrastrucure for our future organisations to thrive.  And through my Google HR Glasses, I will also be watching out for less organisational psychopaths, psychos on the cycle paths and robots doing more HR and the odd keynote speech.

 

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Top HR Transformation Articles from November 2012

In November we found out who will be the leaders of the United States and China for the next few years.  In the world of HR Transformation, we start with two articles which slay two old HR dragons, Performance Reviews and Employee Engagement.  We highlight the most important HR outsourcing contracts of the last couple of years, and finish with a book recommendation on Negotiation.  A skill we all need to be very good at in HR!

 

 

Before we put on the armour and go HR dragon slaying, we have been looking at the best way to share our favourite HR Transformation articles with you, so its worth checking out our new HR Transformation Magazine format below.   All our recent articles are featured here in addition to the HR Transformer Blog.  Bookmark this for your daily scoops on HR Strategy, Recruitment, HR Shared Services, Change Management, Business Transformation, Leadership, Learning, HR Outsourcing, HR Technology and other randomness.
 

 
 
We are now getting towards the end of the year, so it is a good time to look at what we should Stop, Start and Continue in 2013 both personally and professionally.  At the top of our STOP list are the dreaded annual Performance Reviews……
 
Why Performance Reviews Don't Improve Performance

You know we like to peek at what our Academic siblings are up to, and Ray Williams has written a good article in Psychology Today, Why Performance Reviews Don't Improve Performance. (incidently Ray has also written a novel called Dragon Tamer)
 
When we hear the phrase "would you mind if I give you some feedback?" what that actually means to most of us is "would you mind if I gave you some negative feedback?" wrapped up in the guise of constructive criticism, whether you want it or not. According to Williams,
 
“constructive feedback, which is usually critical, rarely helps anyone, and certainly rarely improves employee performance on the job.”
 
The prevailing theory is that criticism, which invariably is part of the performance review, will improve the employee's performance, and in addition the employee will positively welcome it. Nothing can be further from the truth.
 
The reality is that the traditional performance appraisal as practiced in the majority of organisations today is often incongruent with our values-based, vision-driven and collaborative work environments,yet Performance reviews have become institutionalised.
 
Samuel Culbert, a professor at the UCLA Anderson School of Management "this corporate sham is one of the most insidious, most damaging and yet most ubiquitous of corporate activities."
 
If you can look your Executive in the eye and tell them that the annual performance review is worth the effort, then fine.  However, if you have ever wondered whether they really do increase the performance levels in your organisation – then read this article for a different perspective.
 
Our view is, If your appraisal doesn’t improve performance then do something else with the time and energy this will free up.

 
The second HR dragon to be slayed this month is the Employee Engagement Survey. This article was written by Jacque Vilet at TLNT.  Most people recognise that engaged and motivated employees are more productive, however are we getting the murky lines between correlation and causation mixed up?
 
A typical quote from the those selling the merits of Engagement Surveys is :
 
“high engagement firms have a shareholder return that is 19% higher”
 
But isn't this a bit like saying :-
“more intelligent firms have a shareholder return that is 19% higher”
OR
“healthier firms have a shareholder return that is 19% higher”
 
All possibly true, but the question for me is, is the shareholder return higher because of higher engagement or is higher engagement just correlated with higher shareholder returns?
 
Of course successful organisations have higher engagement levels, profit margin and productivity.  They are possibly healthier and more intelligent too.  In these organisations, The Executive is getting something right on strategy and management.
 
I do vaguely remember torturous statistics modules at University – and it was drummed into our heads by exasperated Psychology Professors that  Correlation does not imply Causation
 
Making the assumption that higher employee engagement improves shareholder value is a bit like saying that
 
"Sleeping with one's shoes on is strongly correlated with waking up with a headache.
Therefore, sleeping with one's shoes on causes headache."

As Vilet explains “Every HR department wants to believe that high employee engagement causes company performance. But that is not true. Many in HR mistake correlation with causality and therefore don’t understand what drives what.”

We just do not know enough about the specific causes of high employee engagement.

Again if the activity conducting Engagement Surveys and associated reporting is only neutral on productivity, then it is not worth doing. You could be doing something better instead – like analysing specific performance issues.
 
So, why are engagement surveys so fashionable ?  This is another topic for another day, but a quick answer is (1) they are much easier than doing a proper root cause analysis  (2) they are pushed by a powerful sales effort.  Enough said for now.
 
To some, HR Outsourcing is another dragon that should be slayed, but we think there is still some puff in this dragon for the time being….

Our latest HR Transformer Blog article has a look at the The Most important HR outsourcing contracts from last 2 years.   Although there have not been too many blockbuster deals, there has been plenty of HR Outsourcing activity in smaller deals and single process outsourcing.  Find out which company has created an "HR Ice-Cream Sundae" by mixing up its HR vendors.

The Future of HR & Competencies

The new HR Competencies, have been issued from SHRM and highlighted by Cathy Missildine. You might remember from last year, Professor Ulrich's  What's next for HR? The six competencies HR needs for today's challenges which are:-

Capability Builder, Change Champion, HR Innovator/Integrator, Technology Proponent, Credible Activist and Strategic Positioner. 

We would both be interested to know which set do you prefer and why ?

 
Some other great articles from November

A Revolutionary Approach to Strategic Change  In this hour long Harvard Business Review webinar, John Kotter, foremost expert on leadership and transformation discusses a new approach to accelerate the achievement of their strategic initiatives in a rapidly changing environment.

BigData in HR: Why it's Here and What it Means

Given the global recession and talent imbalances in the world, companies are focusing on replacing their legacy HR systems to help apply analytics reasoning to HR and talent.  Josh Bersin provides his analysis, and for the visual thinkers provides a useful diagrammatic history in The inevitable Shift to HR and Analytics.

9 Ways HR & Recruiting Technology Will Evolve in Next 4 Years

"Most of the 10 million Millennials entering the job market during the next three years will expect a far better candidate experience than today’s." An interesting article on TLNT, from Heather Huhman.

The Amazonification of Recruiting

Bob Corlett creates a new word AND provides insight into current recruitment trends.

"The Amazonification of recruiting is accelerating. Sites like Yelp and Glassdoor are pulling back the curtain on candidate experience. LinkedIn has found a way to rapidly accelerate the endorsement process, and apparently will start to weigh your endorsements in their search results.  It’s a brave new world of accountability coming. Are your recruiting practices ready for it? "

Negotiate your L&D budget successfully  Why do people buy ? Apparently, there are 'good' reasons vs the 'real' reasons.  If you like what Simon has to say, we recommend his new book,  Negotiation Mastery: Tools for the 21st Century Negotiator. This might make a good Christmas gift for that special HR Business Partner in your life.

And finally, What Colours mean in different Cultures, with thanks to Tom @TomWHaak for this link.

We hope you have enjoyed our latest HR Transformation articles, a big thank you to those who contribute with fresh ideas and suggestions to share with the HR community. Do keep in touch with any of your future articles and suggestions @AndySpence on Twitter.

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Most Important HR Outsourcing Contracts of the last 2 Years

Last year, we asked if HR Outsourcing could be on the verge of an upturn with our article, “Will HR Outsourcing ride the Third Wave?

According to estimates by industry analysts, Everest Group, the multi-process HR Outsourcing market is worth about US$3.3 billion globally.  We expect respectable single digit growth over 2011 and 2012.

The positive benefits and business case for HR Outsourcing is still there for organisations who currently have a need for:

  • – Standardised HR services
  • – Reduced HR Cost to Serve to its employees
  • – Access to new innovative workplace tools and technology

There have not been many mega-deals, but plenty of smaller contracts in the multi-process HRO Market.   However, single process outsourcing including Recruitment Process Outsourcing (RPO) is the fastest growing segment in HRO, as HRO Insights highlight in their article "RPO, A Bright Future on the Path to Business Impact"

HR Outsourcing Contracts 2011 2012 Glass Bead Consulting

In summary, we have had:

  • – Two large European deals
  • – Two in South America
  • – Two contract renewals

We have also seen some longer contracts including a 15 year contract, showing some confidence in the HRO market.  IBM appears to be leading the way with 3 new contracts with Unilever in South America, Air Canada and Algar.  IBM has also make a very good acquisition of Kenexa which should enhance their RPO and HRO offerings.

Two of these contracts were renewals with the incumbents here.  We advise organisations with current HRO contracts and 2 or 3 years from renewal to see this as an opportunity to review all options. The market and conditions are very different to those when they originally signed the contract.

Renewal is always good for business, particularly with such long contracts.  In our article the “HR Outsourcing – The challenge of picking winners” we mentioned that you need to look at the market longer-term. Who is more likely to be in the HRO business in 13 years time IBM, HP, Ceridian, Infosys, ADP ? Take your pick…

Hewlett Packard stride back into the market with a large European deal.  To our knowledge, there has been no new large multi process HR Outsourcing contracts for Northgate Arinso, Ceridian, Accenture, Xerox/ACS, or the emerging Indian providers such as HCL, Wipro or  Infosys.  With contracts running up to 15 years and an industry in the throes of consolidation, it is important to check the vendors’ long-term appetite for HRO.

We plan to publish more HRO Vendor Profiles and HRO Market analysis over the coming months.  Get in touch with us if you have any particular questions  and make sure you don’t miss out by signing up for our articles direct to your inbox.

Here, we dip into our “Glass Bead HR Outsourcing Database” to give the HR Transformer Blog view of the six most important HR Outsourcing contracts of the last 2 years

 

1 – Hewlett Packard step back into the HRO market with a 15 year contract with UniCredit

UniCredit is an Italian based global service company.  With strong roots in 22 European countries and an overall international network present in approximately 50 markets, 9,500 branches and 158,000 employees.

The 15 year contract was signed in May 2012, with about  98,000  employees mainly in Italy & Austria.  The scope of the contract includes payroll, time and attendance, workforce administration, learning and development administration, mobility, and ex-pat services.  The service will be delivered using a Joint Venture (JV), dedicated company called ES Shared Service Center SpA.

This is a large European contract and gets HP right back into the HRO market after no major deals for the last 4 years.  It is significant because of the sheer scale of nearly 100k employees.   HP beat IBM, the incumbent, demonstrating that organisations are willing to test the market rather than ‘stick with the devil you know’.

2 – BAE Systems changed their HR flight path with Logica, but, then changed their mind and stayed with Xchanging

BAE Systems is a global company engaged in the development, delivery and support of advanced defence, security and aerospace systems for air, land and sea.    BAE are pioneers in the HRO market with an early contract with Xchanging at the beginning of this century.  The Logica contract was signed in February 2012, and would have been based in the UK over 6 years and involved the design of a new system on Oracle’s Peoplesoft HCM and E-Business Suite Payroll.  However, BAE, changed their HR flight path again, and have now confirmed that the deal will no longer go ahead.

“Following the acquisition of Logica by CGI Group Inc. on 20 August, BAE Systems has exercised its contractual right to terminate the contract for HR outsourcing services," the company said in a statement.

 "We are now reviewing our HR business process outsourcing activity and have agreed a 12 month extension to the current HR Services contract with Xchanging HR Services (XHRS)," it added.

This is another large European contract with 83,600 employees, so it will be interesting to see BAE's approach in the next 12 months.
 

3 – Unilever produce a “HR Ice-Cream Sundae”, giving IBM the contract to provide HRO services in South America

Unilever has more than 171,000 employees globally, and incidentally is the biggest producer of ice-cream on the planet.  This 5 year deal was signed in April 2011, and includes 27,000 employees in Latin America.

Back, in 2006, Unilever outsourced HR services to Accenture in 100 countries, however this did not include South America.   The word by the 'HR ice-cream van' was that Accenture found this HRO contract with Unilever almost too big to digest, and left the organisation with some indigestion, too much ice-cream is not good for you….

What this contract does show is the maturity of HR Outsourcing pioneers such as Unilever who are willing to use multiple service providers globally.  This mitigates the risk of having one global provider, enables some internal competition and keeps the HRO vendors on their toes.  For others, this also helps to open up a more competitive HRO market.  For large organisations like Unilever, and many Public Sector buyers, splitting up the scope was their only viable option as their ambitions are greater than the vendors’ ability to execute globally. 

4 – Aon Hewitt are re-United with BMO Financials

This is a contract renewal for 8 years, signed in June 2012.  A pat on the back for Aon Hewitt, who continue with BMO Financials, with 46,000 employees in North America.  The scope includes payroll, workforce administration, health and welfare administration, recruitment services, and compensation administration amongst others.

5 – Air Canada board with IBM for an 8 year contract

IBM signed an 8 year contract with Air Canada in September 2011, dislodging Aon Hewitt.  Air Canada, based in Montreal, have about 26,000 employees in North America.  

The scope includes HR contact centre, employee data management, employee travel support, payroll, benefits administration, leave management, recruiting services (with select support from manpower), and software application support for the HR systems used to provide the services.

Why is IBM continuing its MPHRO winning streak?

According to Kevin Howlett, Air Canada’s senior Vice President of employee relations, “IBM’s core strengths as a market leader in innovation played an important role in our decision-making process.” It also helped that the client felt IBM also had the strongest service offerings, a commitment to transformation, and the proven ability to ensure delivery performance and lower cost.”

6 – IBM sign 13 year deal with Algar Group in Brazil

Another contract for IBM signed in March 2012, with the Algar group. Brazilian holding company Algar is comprised of four business units: IT and telecoms, agribusiness, tourism, and services.  This is a 13-year multi-tower award from Algar Group in Brazil that covers HR, F&A, and procurement supply chain management.     The contract covers seven of Algar’s business segments and 13,000 employees.

The scope for HRO includes call centre, personnel management, benefits administration, payroll, training, and performance management.

 

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Top HR Transformation Articles from October 2012

The HR Transformer Blog is back – we have been trawling the web to pull out the best HR Transformation related articles from October 2012.
 
There have been two big HR Technology Conferences either side of the Atlantic this month, filled with talk of ‘big mobile gamification in the data cloud’, or something similar.  After being initially dazzled for a moment, I rubbed my eyes and remembered, “It’s all about the People” and found some great articles on managing change.  I’ve taken a brief look at HR’s past and it’s future, finishing with some useful tips from HR Metrics to running your HR Shared Service centre like a Gordon Ramsay restaurant (but obviously without the expletives!).
 
Big mobile gamification in the data cloud  – and other disruptions at the HR Technology Conferences
The HR Technology Conferences in Chicago and Amsterdam made a big splash online. The jargon can get a bit confusing, so XpertHR have provided a very helpful guide for those who only dabble in HR Technology. The industry is buoyant after record conference turnouts, the successful Workday IPO and a flurry of takeovers including; SuccessFactors, Taleo and Kenexa. According to the press releases, new services in SaaS, mobile and big data will transform the way we manage people in organisations. The fact is many large scale HR Technology programmes do not always deliver intended goals. At a Technology Conference, funded by the technology companies – this is unlikely to be a theme with the speakers and bloggers.
 
Which begs the question, where are the unbiased, independent voices to support HR buyers of technology and services?
 
It is well known, that some analysts work for both the buyers and the vendors. According to an article by analyst, Mark Smith, Industry Exposé: Technology Vendors Skew Analysts and Influencers
“The dirty secret is that some of the largest technology vendors have forced industry analyst firms to contractually agree to the right to review, edit and approve any written research that references their name or products before it is published.”
 
With nearly two out of every three IT projects failing, I think there should be more focus on good governance, solid requirements and the people elements involved in change. See our article on How to avoid HR Technology Bogeys, inspired by the Ryder Cup.
 
“Nice interface, it even looks a bit like Facebook! Great, I can view on my phone. But how will this really help my organisation achieve its goals?”
 
Charlie Judy reminds us that “it ain’t a HR Strategy without technology” in a good post with some useful tips. HR Strategy should determine your HR Tech requirements, not the other way round, so don’t let the Tail wag the Dog.
 
A development I think will make a big impact is Salesforce’s entry into the market, with Work.com. If this sounds strange, read this excellent article by Appirio The Future of Work : Employees as Customers showing the parallels between HR and Marketing. I will be watching this develop with interest over the coming months.
 
For the visual thinkers, this caught my eye, HR technology on Pinterest from Deb Maher, spotted on #HRTech hashtag on Twitter.
 
Talking of Twitter, we have recently updated our lists of HR Transformers on Twitter for you to use, so let us know if we have missed anyone, and connect with me @AndySpence
 
People first
One of my mantras is that for technology investment to be worthwhile, we need to focus more on the people who will use it, these two articles on Change Management were clear and insightful.  Ten Reasons People Resist Change from a true teacher, Rosabeth Moss Kanter, and a golden oldie with some useful lessons, from Harvard Business Review – The Hard Side of Change Management.
 
HR Operating Models – Ulrich Model 2012
The evolution of HR operating models over the past two decades has been slow in some areas.  In the article, HR's Future Looks Strategic—or Does It?  University of Southern California professor Edward Lawler has tracked the amount of time HR managers spent on working as a strategic partner since 1995. He recently released the results of his latest research, from 2010, and found nothing has changed.

"When we ask them: 'What is their role in developing business strategy for their companies?' we're getting the same answers as we've always gotten," Lawler says.

Why is HR no less strategic than in 1995?

My view is the move to a simpler Ulrich model has generally aligned HR better to organisational goals, focused more on the customer, enabling economies of scale and economies of skill.  However the transition to this model has not always been successful and the interpretation of HR roles such as the Business Partner have not been wholly successful. 

Which leads me to an interesting article Has the Ulrich model narrowed HR career paths?   
 
My observation is that we have some great HR Specialists in Reward, Pensions, OD, Learning – however we are slowly losing those who have the big picture of the HR Strategy.  This is retained with those with more of a generalist background – currently in leadership positions, but I have concerns about succession when they retire. 
 
Another question for HR Operating models related to demographics,   in 2020, one third of workers will be over 50, so how will this impact HR?  We ask the question of the Impact of the Ageing Workforce on HR.
 
Ulrich’s original work on HR Operating Models was influenced by what was going on in other functions such as Finance and IT.  I was interested to read that there are similarities between HR and IT in the challenges the leaders face. (e.g. struggles for the CIO to become a true partner to their business  –  sound familiar?).  Time for the CIO to jump on the wave of change from Outsourcing Magazine.
 
Some other useful articles for HR Transformers
HR Shared Services: What works well for a restaurant could help HR Shared Services function. Simon Brown, writing in SSON, suggests Restaurant-style Service (Tier-0 and Tier-1) “Tier 0 – to ensure your menu is well laid out, easy to search, navigate and read.” Great article, but be careful with following Gordon Ramsay’s style too closely!
 
HR Metrics of Note: Revenue Per Employee VS. Profit Per Employee  A good example of using HR Metrics that matter, in this case to the investor community, who use Revenue per Employee to analyse retail giant Amazon. Who else could this come from but the HR Capitalist?
 
Powerpoint use and abuse – Few pieces of office software have simultaneously been so used and abused even causing ‘death by PowerPoint’. Find out about Cognitive Dissonance, Noise & Overload from Donald Clark.
 
The Top Social Tools For 21st-Century HR Humans, communication, work etc, makes HR the ideal spot from which to harness changes in work habits for the benefit of the company – good read from FastCompany.
 
And finally, Live language translation. Now this is a disruptive technology! Remember Babel Fish from Hitch hickers Guide the Galaxy.  I did a Masters in Cognitive Science in the mid-90s and some of these technologies are starting to emerge – very exciting developments indeed! Hat-tip to Graeme Codrington for this link on Twitter.
 
We hope you enjoy our latest HR Transformation articles, a big thank you to those who contribute with fresh ideas and suggestions to share with the HR community. Do keep in touch with any of your future articles and suggestions @AndySpence on Twitter.

 
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Will HR Outsourcing ride the Third Wave?

There’s a common belief that the third in a series of ocean waves is the biggest. If it’s true for waves of change in HRO too, this latest wave of transformation in the industry will have a considerable impact. According to Anthony Hesketh in HRO Today transformation is back on the Outsourcing agenda, if indeed it ever went away.
 
We all understood the logic of the first wave of HR Outsourcing in 1999 – freeing up HR to focus on strategic aspects of the job, introducing standardization, self-service technology and Global Service Centers. It was this desire for HR Transformation that created ground-breaking Global HR Outsourcing deals with Exult-BP and ePeopleserve.
 
Back then HR consultants from the Big Four, heading for the exit, process-map and SLA template in hand, myself included, could be heard muttering under their breaths ‘every last large organization will want an HR portal and centralized HR service’, (while they hungrily signed-up to their dot.com share-options). Of course they didn’t.Innovation is a tricky business. Potentially great ideas get ignored because markets are too small, or the change doesn’t fit other people’s business models or match existing values. Sounds familiar?
 
The second big wave of change in HRO contracts came around 2006, including Unilever-Accenture, Johnson & Johnson – Convergys. These didn’t quite deliver our dream of pre-configured, hosted and e-Enabled services either. Instead, the services they offered were bespoke, tailored to clients’ demands and the particular nuances of their HR Operating Models. Still they had some success, given the industry grew to be worth billions of dollars.
 
In response to the economic meltdown of the last few years, organizations began thinking again, developing new business strategies, and new operating models. The HRO industry consolidated. Outsourcing contracts lasting a decade were thin on the ground when organizations couldn’t see where they might be themselves. Out of this has come the third and potentially most significant wave of transformation for HRO.
 
The focus for HR has shifted to employee productivity and engagement, deploying the right skills at the right time, mergers and acquisitions, and developing staff. HR needs to transform itself and the way it operates in order to deliver, enabled by organizational structures and processes better aligned to the businesses it serves. A greater share of the HR responsibility needs to be carried by line managers too.
 
The question for HRO vendors and HR Executives is what role will HRO play in the move to new HR operating models?
 
One way will be through more standardized HR services. HR needs to demonstrate value for money. Can a business justify providing employees with a personalized HR service when competitors get good results for less money using self-service processes. If HRO vendors can provide standardized services with user-friendly tools then there will be a sea-change in HR Operating Models.
 
HRO providers can also offer web-based tools to enable improvements in collaboration, productivity and managing the workforce. Delivering these tools, allowing buyers to avoid large upfront costs and access to the best solutions is an attractive proposition. Those HRO vendors who provide tools and services that help address organizations’ key talent management issues will thrive. Watch out for innovative market entrants building rapid market share with a credible HRO/SaaS model.
 
Transforming HR is about changing how people work and behave, not merely changing systems and processes.  Having worked on both sides of the HRO vendor/buyer fence, I have seen opportunities where skills gaps in managing change, managing vendors and transformation programmes could have been bridged. HRO vendors have been reluctant to share (or sell) their change management skills and can play a significant role in the move to new HR operating models by sharing their experience, knowledge and skills with organizations.
 
HRO will enable a leaner corporate function, by reducing central transactional HR work, pushing out more ‘people management’ to managers enabled with much better skills and tools. The onus is on HRO providers to be innovative and enable more self-service, for example by utilizing mobile devices for time-recording, checking schedules, benefits, vacancies.
 
HR Transformation is not back. It never went away. For HR executives to benefit from cost savings and to achieve their strategies, they will need to accept increasing standardization. Industry consolidation, technological innovation, economic pressures will all help to make this happen, and we could see HRO take off. All change is disruptive, outsourcing in the HR industry included. The early innovators of HRO had the right ideas at the wrong time. Now the conditions are right for it too.
 
This article was originally published in the Spring 2011 edition of HRO Today, by Andrew Spence.
 
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