Recently introduced software-as-a-service rollouts offer companies opportunity to quickly capture savings and efficiencies.
By Helen Neale
Earlier this month, ACS announced that the company was launching a new HR portal, SyncHRO, which enables employee and manager self-service for a wide variety of processes, including payroll, employee data management, benefits, compensation and recruiting. This is just one of many recent announcements within HRO, linking technology to service in a combined software-as-a-service (SaaS) BPO model.
This comes as no surprise following research Nelson Hall recently undertook looking at buyer perceptions of SaaS. Research conducted on behalf of the NOA (National Outsourcing Association) found that seven percent of organizations think SaaS will assist in improving business costs, and nearly 100 percent believe that SaaS plus BPO services will reduce business costs. In HR, a key enabler of this business cost reduction is the implementation of self-service for processes ranging from payroll to learning to benefits to wealth management. So why is SaaS-y HRO proving to be so popular with buyers?
Greater Cost Savings. Technology updates can prove costly, and organizations do not want heavy upfront investments in today’s climate. Combining a service with this technology investment can provide organizations with greater cost savings in those processes being managed, particularly as providers may be able to offer standardized process solutions.
Faster Implementation Times. Platform-based BPO solutions take less time to implement, and payback is faster than the more transformational HRO deals that were popular in the earlier part of the decade.
Greater Provider Choice and Better Contractual Terms. Competition within the provider space can make for better contract terms. For example, organizations looking for transformational HRO contracts have little choice now due to the de-emphasis by some suppliers on their transformational multi-process offering. However, platform-based BPO gives a much wider choice for buyers, including access to some offshore providers such as Wipro, Caliber Point, TCS, and Infosys, alongside traditional payroll providers such as ADP, Logica, and NorthgateArinso, depending on the processes being considered for outsourcing. This wider choice enables buyers to negotiate harder and choose the supplier with a much better cultural and capability fit to their requirements.
Easier Sell to C-Grade Executives. A significant roadblock in the HRO market at the moment is a tendency for executive outsourcing decisions to become “frozen” as there is so much volatility within the marketplace. SaaS combined with BPO seems to be easier to win approval for—most likely due to the easier implementation and lower costs in terms of management time, than a more transformational approach to HRO.
But buyers still need to beware; it’s increasingly important for organizations within the current climate not to approach HRO with the “your mess for less” mentality that presided over IT outsourcing 20 to 30 years ago.
Senior executives from both buyers and providers must make sure that should they choose to go down the SaaS-HRO route, they don’t neglect to ensure that services being delivered are not just done more cost effectively but are tied into the business objectives of HR as well.
This is where the capabilities of your provider in helping you determine what information and data you should be gathering for display within your manager self-service portal is all the more important. Hence the current interest in HRO analytics, with soon-to-be-published NelsonHall research suggesting that the interest among outsourcing clients in having their providers gather tactical and operational HR data and display that to them in an easy-to-digest format is on the rise.
Buyers need to work in partnership with both advisors and providers to answer the following questions during such HRO implementations:
- What are the business objectives of my organizations?
- How can HR contribute to these objectives?
- How can I measure the success of those HR objectives?
- What metrics do we need to track to enable this measurement?
- What process do we need to put in place to enable the tracking of those processes and the gathering of the relevant metrics?
If your provider helps you understand your objectives and enables easy measurement of those objectives, your organization will not only reap cost reduction rewards but will be able to show HR’s contribution to overall business strategy—a significant step on the way of getting that all elusive HR seat at the board table.
Helen Neale is HRO research program manager for NelsonHall. She can be reached at firstname.lastname@example.org.