Regardless if your native tongue is English, German, or even Pig Latin, the language that all HR organizations want to speak is data integration.
While language obviously facilitates communication, it can create misconceptions as well. And not just across cultures.
I work for a German company, and in the German mindset word and meaning are absolute. So, “tomorrow afternoon at two” means precisely that. Precisely. We can contrast that with other countries and cultural backgrounds, where the same words tend to take on a slightly different meaning. Where “tomorrow afternoon at two” may indicate a genuine intent to honor that timeframe, but it might not happen.
In our industry, so dominated by jargon and marketing speak, there is a risk of pollution of meaning and of being separated by a common language, caused by a lack of a clear taxonomy. The move towards further standardization in the HRO industry as led by the HRO Association is a great initiative in this respect and will drive this industry forward toward greater clarity.
Many decision-makers in BPO come across this interpretation problem as well when they confront the choice of underpinning the delivery of the service they receive with best-of-breed, software on-demand, or integrated ERP-type technology. What exactly is meant by “integration?” What constitutes cost, risk, and quality? In some cases, the decision-makers resort to leaving the decision completely up to the BPO provider.
In the past, the debate could often be summarized as “CIO vs. line of business,” with the CEO and CFO sitting on the fence. CIOs do not want to complicate their technology environment, and lines of business seek out quick solutions to impending problems. This focuses on the means and not on the ends, which distorts incentives and decision-making while ignoring a more fundamental approach.
Let’s start from the end-objective. Customers usually want to access BPO providers’ superior scale, process engineering skills, and labor arbitrage to improve on three value dimensions:
- Lower cost of the entire organizational structure (i.e., including cost of the retained organization and others beyond the technology spend);
- Better process quality; and
- Improved risk management.
Fig. 1 illustrates these dimensions, and some of their key components throughout the BPO lifecycle. Any technology choice must be able to help succeed on these dimensions, both in the short and long term and across all functional silos. Focusing on technology per se—not process service delivery and the required related technology—may be a recipe for trouble.
It is important to realize that we’re not talking about just software here; this is about the complete HR process solution—well implemented, stable over time, and a good fit into the end-to-end business process integration. I want to highlight this last point because integration is often interpreted as a technology-only topic. Yet, it can be a facilitator for seamless end-to-end business processes. What value integration can bring, how it can help drive down costs, and how it can mitigate risk depends on the interpretation of its meaning. Let’s just say that there are at least two interpretations of what integration means, and one of them is in German.
Integration is an often-discussed topic, in particular with the emerging popularity of best-of breed talent management applications. Integrated talent management was the buzzword of the last HR Technology show, yet there were almost as many interpretations as there were specific (best-of-breed or on-demand) talent management vendors. For some, it meant passing on course results from the learning environment to their new competencies module. For others, it meant passing on information from the recently acquired recruitment functionality to their own succession planning.
None talked about integration between the broad talent management functionality on one hand and the basic HR administrative master data on the other. Yet, this is a key lever for integration benefits as it paves the way for truly, end-to-end HR business
process integration as we will see. So let me just state here what I think we’re talking about: For your employees, integration means a single user interface with one logon and relevant data for all relevant processes. It means real-time data, with no waiting for interfaces to run and no waiting for batch programs to update critical information overnight or over a weekend. When viewing integration from this broader overall HR process perspective, we can see notable advantages over more siloed approaches:
- Ongoing compliance with the Sarbanes-Oxley Act dictates that enterprises consider centralizing processes for simplified control. Enterprises must also consider the provision of control procedures that affect jobs (for example, job descriptions, procedures, and controls that must become part of performance metrics, and so on).
- Master data integration affects authorizations to view sensitive data, to create or change data such as salaries, bonus levels, or performance reviews, and to execute sensitive reports; it also affects how workflow is executed. Time capture and evaluation must be considered, as this flows into payroll runs—an area where there could be Sarbanes-Oxley–related violations as well.
- HR process integration affects and ensures compliance for processes such as the new-hire transaction, where the manager should be prompted to add the appropriate authorizations; and the termination event, which should automatically remove the person from a position, prompt the manager to recall assigned assets, and ensure that the person does not receive any unwarranted paychecks.
- HR process integration offers opportunities to increase HR value through leveraging employees’ competency data to fill critical temporary positions in your production plant or to optimize shift planning by working with recruitment data.
So, best-of-breed solutions may have an appeal for one functionality component, but the real, heavy-lifting economic challenge is to scale and optimize end-to-end functional or even end-to-end enterprise processes, which also implicitly requires all parts to communicate seamlessly. Alternatively stated, integration is as valuable as—and often more valuable than—perceived functionality advantages and helps to achieve your HRO goals with respect to cost, quality, and risk.