More than ever before, the marketplace demands that multi-process HRO provides variety—and flexibility.
By Linda Merritt
At NelsonHall, we monitor multi-process HRO (MPHRO) and how it is continuing to reinvent itself to meet changing client needs and the pressures of a constrained economy. It is hard to make a call that the latest version of MPHRO is truly here, as its emergence has been impacted by the same factors that have slowed deal flow, lowered total contract values (TCV), and reduced current client revenues for most HRO service providers. But one aspect is quite clear—the next generation of MPHRO will not be a simple single solution.
Today’s MPHRO midmarket and large market clients have an array of options:
• Have a service provider maintain a current client licensed ERP systems environment, or move to the service provider’s service platform. Or mix and match and do some of both.
• Add on new services with modules from the ERP vendor, or choose directly from the MPHRO service provider or its preferred partners. Or add an additional point service solution provider and manage it outside of the primary MPHRO provider’s scope, or have the vendor provide integration support.
• When moving some or all of the services to the vendor’s platform, select from a licensed on-premises system for maximum control and customization or a client-
licensed and vendor-hosted system to balance customization with some cost advantage.
• SaaS brings new options that can lower up-front capital investments for operational expenses in a trade-off of client-funded customization for vendor-provided configurable options.
• Larger clients might also be able to vary their service selections on both a service-by-service and geographic basis.
Some vendors—including ADP, Ceridian, and NorthgateArinso—are already providing emerging hybrid MPHRO selections. NorthgateArinso is also an IT and systems integrator that offers both client ERP-based HRIS support and its own platforms for HRO services including euHReka, which is based on SAP HCM, and ResourceLink Aurora. Both offerings are available as client-licensed on-premises systems, vendor-hosted, as on-demand SaaS, or as a mixture of each by service or geography. ADP and Ceridian both offer HRO services from basic processing to managed services that include process management, and full comprehensive BPO that adds client contact center services. ADP can provide a client with full proprietary HR BPO services in select countries, HR administrative services from its GlobalView platform worldwide, and add in Streamline for countries in which the client wants only to provide multi-country payroll services.
Other providers offer full BPO services in specialized areas such as payroll or benefits administration, along with a basic HRIS for administration and employee and manager services. For example, Patersons, an international payroll provider, offers a free HR administrative system for employee self service and employee data management. The Patersons payroll solution is available as a client-managed in-house system, a vendor-managed solution, and a fully outsourced service.
Not all vendors are going to offer the full range of options. For example, IBM and Accenture remain primarily focused on the large market and support of client ERP-based environments.
To make all of these choices work, the current major MPHRO providers are showing new implementation discipline, increased systems and service network capabilities, and improved multi-client capabilities. For client ERP systems, vendors can surround the single client applications with multi-client tools and systems such as case management, reporting, and workflow management that enable distribution of voice and non-voice work to onshore, nearshore, and offshore data and client service centers. Two aspects of the integration challenges that come with choice include providing a cohesive look and easy-to-use employee portal—and behind the scenes expertise in managing both interfaces and service-oriented architecture.
Another positive change is that rather than overreach for the largest initial scale, scope, and TCV, service providers and clients are in agreement to start with a contained core set of services to be implemented in a manageable set of geographies. Once the basic HR services are up and running, the client can decide to add in more services and/or geographies through the primary MPHRO vendor, internally, or with a specialty service provider.
Without a full technology plan for HR services delivery, the wide range of choices might end up as a mish mash that once again impacts the growth and stabilization of MPHRO. But when well-planned and appropriately architected, the range of buyer options will enhance building a hybrid MPHRO service delivery mix of capabilities that matches client needs to balance cost and performance.
Linda Merritt is research director for human resources outsourcing at NelsonHall. She can be reached at email@example.com.