How to navigate the digital transformation of HR
The capabilities of HCM systems available today have grown exponentially from those of a few short years ago, and the market is crowded with solution providers. But how can employers navigate the path toward creating a digital workplace without getting lost? Or buying more technology than they can put to practical use? To explore those questions, EBN recently spoke to Denise LaForte and Brian Buck. LaForte leads Mercer’s HR transformation practice in North America, and Buck is a principal in that practice area. Excerpts of that conversation follow.
Employee Benefit News: What is your concept of a “digital workplace”?
Denise LaForte: It’s an environment in which everything is technology enabled, from hire to retire. That’s both in the way that work is done, and employees’ experience with HR. Our most recent global “talent trends” research found that 77% of companies say that they’re on a digital journey right now, but only 8% feel that they’ve landed at their destination.
EBN: Do they have a clear concept of what the destination looks like?
LaForte: I think many of them are unclear at this point. The high-tech companies are the ones that are really on the forefront here.
EBN: Do you sense any anxiety about the prospect of an extreme downsizing of the HR department as this transformation plays out?
LaForte: With next generation of HR transformation, HR will still be critical, of course, but artificial intelligence and robotics will alter the landscape. Should human resources be solely focused on resources that are human, or should they have a broader scope in the future? We’re still figuring that out.
EBN: What are your clients’ immediate concerns with respect to HR technology? Are they asking for a complete overhaul?
LaForte: It’s a wide variety. Somebody might be on an old on-premise HRIS, like a recent client that had built their own and are running on green screens. Others are already in the cloud, and want to do a phase 2. Maybe they didn’t implement the talent management suite, for example. Or they’re just focused on benefits administration. Others want to build a new global HR technology strategy.
EBN: Do clients come to you with a fairly specific idea or the level of investment they’re looking at?
LaForte: Not necessarily, but it can be very data-driven process of finding the answer. We often will do an activity-based costing analysis of what’s being spent today in the HR function so we can understand, for example, how much money they're spending on filling out paper forms and doing data entry, etc. Then there’s also gathering the cost of your current systems, including the cost of the folks in IT, and what you’re currently paying either on a subscription basis or for upgrades.
EBN: And then?
LaForte: For the future state, it’s talking to the vendors and sending out an RFP or an RFI and gathering their estimated costs. Then, finally, we need to think about the future of HR and technology’s role. Do you want to outsource some of it to a service provider? If HR isn’t going to do data entry anymore, how does the role of HR change? Will it be more of a focus on analytics? You need to think about all of those pieces before coming to a price, in order to do a business case and an ROI.
EBN: How do you gauge the value of enhanced analytical capability?
LaForte: Yes, the qualitative piece is critical too, and is fundamental to the ROI analysis, but it isn’t always easy to quantify.
EBN: What’s the role of the IT department as this transition occurs?
Brian Buck: IT’s role is shifting from managing deployments of on-premise systems to managing portfolios of service providers. IT can help in partnering with HR, where sometimes in the past those two functions have not always been aligned.
EBN: How is that transition going?
Buck: When an enterprise function like HR first moves to the cloud, there’s an education process that needs to be undertaken. IT has seen its world change, and seems to be adjusting.
EBN: Speaking of adjusting, I gather that in a transition to a new system there is an evolutionary process of gaining all the hoped-for capabilities? You can’t get it all immediately…
Buck: With competition, the maturity of the cloud-based products from all the major suppliers is increasing. There are gaps within these multi-featured HCM’s, but part of making the move to the cloud is also accepting that supplier will continue to bring new features and functionality that you might reasonably need for the duration of your subscription.
EBN: Are the details spelled out in the subscription agreement?
Buck: The major players might be open to negotiating on certain aspects of their deal. Where I don’t see it is things that have to do with system reliability, hosting, all of that. The vendors are trying to structure those terms uniformly so they can maintain and monitor that for their entire customer base without unique agreements.
EBN: Where are you seeing the most rapid introduction of new functionality within cloud-based HCM systems?
Buck: There’s a lot happening around recruitment capabilities. Another area is wellness, whether that’s health-specific, mental health and overall wellness, and financial wellness. Our customers are inundated with offers for these kinds of tools.
EBN: Can these typically function within the HCM platform?
Buck: A lot of the wellness ones seem to be making their point of entry as an app for smart phone, tablet, that sort of thing. How it could integrate into the enterprise is maybe not as advanced.
EBN: When comparing enterprise level systems, is it possible to make a pure apples-to-apples comparison, given all of the variables involved?
Buck: You do need to consider a lot of criteria. It’s not just features and functionality, but your philosophy around the business case, then some ranking or weighting of the most important elements of selection, including cost.
EBN: Are there any enterprise size thresholds that typically dictate how ambitious one can be with respect to an HCM system investment?
Buck: Technology is an enabler for organizations of any size. Ultimately, you need to have sound business processes to be successful. All of these SaaS HCM products are configurable to the organization. But you do need to look at business processes and determine what is reasonably going to be enabled by the technology to bring people along in a journey to get them where we need them to be, when making the investment decision.
EBN: Do you have clients who have unrealistic expectations of how quickly an HCM technology re-boot can bring about transformative results?
Buck: It can happen, but we try to manage those expectations. Some of the very early adopters were maybe overly optimistic about how quickly the technology itself was going to solve all their challenges. But typically it’s not about the technology itself, but the effectiveness of the change management process, the rate of user adoption, etc. You still have to do the work to get people to use the technology you’re deploying.
EBN: Can you illustrate how a failure to do those things looks?
Buck: Suppose you don’t have complete buy-in at the top, and you’re trying to get front-line managers to use self-service system. How many layers of approval are necessary for a business process to proceed to the next level? If it’s many, if you can’t streamline that process, you’re getting a lot less value from the system.