Consider functionality, usability, and process best practices when choosing the ideal solution for your talent management needs.
In my September column, I introduced a decision framework for evaluating talent management approaches in light of their impact across the key drivers of value within HRO: cost, quality, and risk management. In this column, the focus is on the dimensions of quality and risk: how on-premise or software-as-a-service (SaaS) offerings from talent suite, stand-alone niche, or ERP vendors can impact operational excellence and risk mitigation in talent process outsourcing.
Excellence in operations requires process efficiency and effectiveness across both the back office (processing) and front office (end-users of client customers) operations. From a technology perspective, this requires the right business functionality, delivering the right user experience, and enabling full leverage of process best practices.
Functionality. Niche and talent suite vendors have historically delivered deep, even bleeding-edge functionality in their heritage product areas. SaaS vendors are able to quickly deliver new functionality through frequent updates to their managed platforms. ERP solution functionality is demonstrating richer, more advanced capabilities that customers can leverage upon their upgrade from older releases. (One exception is SAP’s Enhancement Pack strategy, which more closely mirrors the low-impact releases of SaaS vendors.) When evaluating functionality, organizations need to ensure their business needs are well understood, letting these drive choices in software, not the other way around. Indeed, a recent Gartner study reported most organizations using niche software talk about strategic capabilities but in reality use it for transactional automation. Sadly, it’s like having a Ferrari and driving it like a moped. Much of the high-end capabilities remain untapped as users drive their software at or below the posted speed limits.
A discussion on functionality must also include integration, for without it many features are not enabled. For example, without integration, compensation planning would not benefit from knowledge of an employee’s performance ratings, flight risk, competency levels, or participation in succession plans. Succession planning would be based on personal networks rather than a comprehensive view of the employee. Degrees of integration can vary by solution. Performance management and compensation are not truly integrated, for example, if the only data element shared between them is a performance review score. Managing talent processes holistically rather than in silos can significantly improve the quality of operations for an organization.
What are the implications for HRO? Single-process talent applications in an outsourcing platform can deliver significant client benefits due to their richness of functionality, if that functionality is enabled. Achieving and maintaining the data and process integration that is required to enable these higher business impacts can be complex, affecting service quality and increasing costs and risks. A unified talent platform, optimally on the same platform as the HRMS, can mitigate those risks.
Usability. A critical factor in the buying decision is usability. Niche vendors are noted for early adoption of the latest technologies, driving engaging and collaborative experiences. A build-up of vendor solutions can result from the silo buying practices within talent management. This can lead to a collection of different products and user experiences (login, user interface, navigation, task presentation). The resulting “UE glut” can lead to high user dissatisfaction and low user adoption. Imagine driving a 50-lap race in which you change cars every lap: sometimes a manual transmission, other times automatic. Even if each car is top in its class, the driver’s performance and satisfaction will suffer.
HRO providers may shield end users from these UE differences by crafting their own user interfaces and processes to front these varied applications (and, in fact, differentiating themselves with their unique yet unified user experience). The potential downside is the increased overhead as the provider works to keep pace with the many release schedules of multiple vendor offerings. The user experience in ERP applications is becoming more innovative in recent years, adding further to their value proposition of a consistent user experience and seamless process integration across all talent modules and into the back-end HR and enterprise systems.
Process Best Practice. Processes should be connected to bring richness and value across the enterprise to what otherwise would be merely transaction automation. Processes also need to be standardized to deliver on the required scale effects of outsourcing. Leveraging a standardized deployment and best practices across all talent initiatives helps to effectively support both local and global processes while simplifying ongoing quality improvements. Getting to these goals is challenging in the highly complex environments of multiple technologies.
Risk Management Considerations
Beyond cost and quality considerations, the degree of risk incurred by an organization over the term of an outsourcing contract should be fully evaluated across all technology options. Consider the areas of transformation, operations, and strategic risk.
Transformation Risk. Will the software be operational quickly? Will it support expansion into new countries or into other areas of talent management as requirements change? Are there process integration touch points, and how much data flow between applications? Mitigation of transformational risk requires that vendor selection is based on several factors, including broad solution scope, extensive standard interfaces, and strong configuration capabilities. Initially, the technology vendor should cover 80 to 90 percent of the functional and geographical requirements to avoid future add-on applications and/or customizations, as well as to expedite initial implementation. The vendor should deliver standard process connection points supporting single-sign-on, real-time calculations versus batch updates and automated workflows. It should also ensure extensive configuration capabilities to reduce the need for custom code.
Operations Risk. Reducing operations risk from fluctuations in accuracy, consistency, and timeliness is an ongoing concern. Data redundancy and synchronization errors in siloed environments are causes of such risk, increasing with each new technology added. Inconsistent or poorly designed self-service may lead to data errors and increased utilization of call center staff. The availability of knowledgeable resources is also a factor. The degree to which an HRO provider can leverage labor in low-cost locations depends on the availability of offshore specialists.
Strategic Risk. Technology is a critical component to achieving success in talent outsourcing initiatives. It is imperative to consider the viability of the vendor(s) selected. In the area of talent management, consider the following: Mwore than 50 “financial events” have occurred since 2005, with more than 30 of those being acquisitions. Leaders/survivors are emerging, but consideration must still be given to whether a particular vendor will be operating in 12, 24, or 36 months. If not, customers must understand the potential impacts to maintenance and innovation, as well as the impact of a forced migration to another platform. We have seen that ERP vendors are not immune to acquisition, but the size and impact of their global customer bases are such that changes resulting from acquisition are much longer in coming.
Another strategic risk is that of value realization. Very strong correlations have been made between the use of an integrated talent management platform (integrated talent processes on the same platform as HRIS) over best-of-breed solutions. Citing increased revenue and operating income growth as well as lower total cost of ownership, industry studies reveal that an integrated platform is a necessary condition for achieving strategic results beyond simple process automation.
Analyst reports confirm that organizations are beginning to balance their desire for deep functionality with the inherent advantages of integration. HRO providers have likewise begun to evaluate and move to the more sustainable options of an integrated platform. Ultimately, the technology landscape supporting talent initiatives can be highly complex or relatively streamlined. Achieve “pole position” in the race for best talent outcomes by selecting the best vehicle for your organization.HRO