Jim Holincheck » HR BPO

Will HR Ever Be Strategic?

Jim Holincheck — Thu, 21 Jun 2007 14:35:06 +0000

Thomas Otter on the Vendorprisey blog throws down the challenge to a variety of bloggers and analysts to discuss the disconnect between survey data that shows most C-level executives believe people issues are strategic, yet do not see HR leaders as playing a crucial role in creating corporate strategy. I will take up the challenge. So, why is the HR organization not playing a crucial role in creating corporate strategy?

It may not be doing the basics well — If HR cannot deliver basic services with high quality at competitive costs, then it does not have credibility with C-level executives. HR should also take the lead in, not be forced into, evaluating alternatives such as HRO. It is important that HR has the data (showing the facts to C-level executives will be a common theme here) that it can share with C-level executives that shows that it is doing the basics well compared to alternatives (or a plan to take advantage of an alternative if this is the best answer).
HR does not really understand the business strategy — If HR does not understand the business strategy, it cannot proactively provide insight on how to leverage human capital to achieve that strategy. This is not a new concern and I think HR leaders are getting better at understanding the business strategy. However, I still see a lot of companies making HR technology investments without thinking through the ties to business strategy.
HR does not provide the information C-level executives need to make strategic decisions about human capital — Even if an HR organization understands the business strategy, it needs to have something to meaningful to contribute to the strategy discussion. Too many HR leaders come to the table without the necessary facts to help make strategic decisions. Many HR leaders provide anecdotes, cite studies, or suggest the best practices of others to answer strategic questions about human capital. These can provide color around strategic decision making, but make a poor substitute for facts based on data that comes directly from the company.

This is the area I believe that HR needs to improve the most. I was at a conference earlier this week held by InfoHRM on Workforce Planning. One of the speakers was an EVP of Workforce Planning at Countrywide Financial. He was a CFO earlier in his career. So, he had a unique perspective of HR and its position as a strategic contributor. As a CFO, he was often put in the position of shooting down the ideas of HR, not because they were not good or necessary, but because they did not have the proper substantiation (i.e., business case). He pointed out, rightly, that investments in human capital are not made in a vacuum. Investments in human capital need to be weighed against alternative investments that the company may make to achieve its strategy. So, that was where HR fell down, in his mind. It did not make the case it needed.

If HR is going to be strategic, it needs to understand the business strategy and support managers and executives in executing that strategy. It needs to provide the necessary facts about the impact of human capital on business strategy and then provide the insight and experience to make the best decisions.

It sounds simple. It is not. HR needs to develop competencies in new disciplines to be successful. It is starting to happen. As more non-HR professionals (an HR professionals get more direct business experience) take leadership roles in HR organizations, we are starting to see new thinking emerge. To me, it is not a question of if, it is when, fact-based, strategic HCM decision-making becomes a mainstream concept. So, I look at much of the survey data as a “call to arms” for HR leaders. If they do not answer the call, they will be pushed aside by those who do.

Insights from Conversations with the Investment Community

Jim Holincheck — Fri, 15 Dec 2006 21:11:32 +0000

I have been having a lot of calls over the last few months with different investment firms. Some are VCs. Some are investment banking firms. All of them are interested in opportunities and different vendors in the HCM world. One of the companies I spoke with today asked me what would happen to the growth of the talent management application market if the economy started to cool (which he believed was starting to happen). I had to think about it for a second and, unfortunately, I think it would have a chilling effect (pun intended). As important as I think talent management is, I think most companies would view it as discretionary spending if belt-tightening is required.

Why is that my natural reaction? I guess I am skeptical about the view of HR by the rest of the business. I am also skeptical about the business case for many talent management initiatives. It is hard to cost-justify. I also think too many projects focus on the automation of talent management processes and not enough on how talent management can impact business performance and outcomes. If the economy does slow down and you have not linked your talent management initiatives to specific needs of the business, expect the budget to go away. It is that simple. Also, vendors that focus purely on automating talent management and not on how to effectively leverage talent management to improve business performance will be at risk.

You know what is a lot easier to cost-justify: BPO. Food for thought.

Interesting Links

Jim Holincheck — Thu, 16 Nov 2006 00:51:33 +0000

I have not been publishing links as much as I normally do. The truth is that I am behind on reading a lot of what is happening in the blogosphere. However, I have done some catching up on the plane ride home from Boston. So, here are a variety of things of interest (and why).

“What to do with those pesky bloggers” — Vinnie discusses (and links to) the emerging concept of blogger relations as a new a category of influencer.

“Post-elections SOX” — Another interesting post/link from Vinnie about how SOX may change.

“Hewitt’s Financial Results – What Do They Mean?” - Donald Glade at SystematicHR does a nice job pulling together a variety of perspectives on Hewitt’s latest financial results.

“More HR Going Offshore” — A good summary of some of the findings (plus a link to the whole report) from the Offshoring Research Network about the globalization of white collar work.

Gartner HCM Research — June 2006

Jim Holincheck — Thu, 29 Jun 2006 20:42:38 +0000

Below is some of the more recent HCM-related research from Gartner.

How to Lead and Manage the IT-Literate Workforce

Author: Flint, David

People with IT-related skills are now spread across the enterprise, but conventional organizational hierarchies can’t manage these dispersed resources effectively. To ensure that these people receive the advice and development they need, organize them into a set of internal “professions.”

Contact Center Workforce Optimization: A Framework for Success

Author: Davies, Jim

Contact center performance is affected by its employees, technologies and processes. Gartner has developed a framework that encapsulates an emerging software market focused on delivering effective and efficient contact center environments.

Evaluating the Use of One Provider for Global Payroll Outsourcing

Author: Holincheck, James; Tornbohm, Cathy

In small markets, most global organizations outsource payroll to local service providers. However, new models have emerged that enable organizations to outsource payroll to a single vendor. Early adopters must understand the pros and cons of these models to choose the most appropriate provider.

E-Learning Suites Are More Than Just ‘One-Stop Shopping’ Solutions

Author: Arevolo De Azevedo Filho, Waldir; Lundy, James

The rapid evolution of e-learning suites, coupled with the integration of learning management systems, learning content management systems and collaboration functionality, has generated significant interest from enterprises, presenting opportunities and challenges.

Interesting Gartner HCM Research from March to June 2006

Jim Holincheck — Wed, 21 Jun 2006 21:05:36 +0000

It has been some time since I posted links to interesting Gartner HCM research so I thought I would give you an update. Below are research notes that I thought would be interesting. If you look at the list, you will not see my name as an author. I was a contributor to many of the notes, but not an author. Stay tuned. I will post some of my research in the next few weeks.

Begin ‘Future-Proofing’ Your Software Investments: Understand the Most-Critical Uncertainties in the Future of Software

Author: Thompson, Ed; Friedman, Ted

All aspects of software, from technology and markets to usage and licensing models, will change radically during the next 10 years. Every CIO should recognize the most-critical uncertainties related to the future of software. These uncertainties are grouped into four categories of related factors.

Retail Time and Labor Solutions Bridge Gap Between Planning and Execution

Author: Daikoku, Gale

Despite significant investments in supply chain and other tools to help with merchandising decisions, results will fall short of expectations if stores can’t execute initiatives as planned. As retailers decide where to spend their next IT dollar, store execution should be high on the list.

Integrated Financial and Human Capital Management Applications Make Sense, but Not Always

Author: Rayner, Nigel

Many organizations are considering replacing best-of-breed administrative applications with integrated solutions. This offers potential benefits, but the scale of these benefits depends on several factors. This decision framework enables users to assess if these benefits outweigh any challenges.

ExcellerateHRO-Cardinal Health Deal Heralds Healthcare HRO

Author: Brown, Robert H.; Lovelock, John-David; Stone, Lisa

ExcellerateHRO’s and Cardinal Health’s human resources business process outsourcing deal shows how such services are gaining popularity in the healthcare industry. Look to see if ExcellerateHRO posts other wins in 2006.

Evaluating Software-as-a-Service Providers: Questions to Ask Potential SaaS Providers

Author: Lheureux, Benoit J.; Desisto, Robert P.; Maoz, Michael

More software functionality is being delivered in the form of software as a service. We provide key issues that users should discuss with SaaS vendors.

Software as a Service: Negotiate Key Terms to Avoid Unexpected Costs

Author: Bona, Alexa

Gartner is seeing more software deals purchased “as a service.” In these deals, the contractual terms are different from traditional on-premise perpetual licenses. Buyers must understand the hidden costs and different types of protections needed to negotiate sustainable deals with predictable costs.

SAP Pricing in Evolution: Five Key Items to Negotiate With SAP

Author: Bona, Alexa; Disbrow, Jane B.

Many organizations find SAP’s licensing and pricing complex. Because SAP is a strategic vendor with a high initial and ongoing investment, this lack of clarity and predictability brings significant risk. Focus on five areas to avoid unexpected costs and improve flexibility.

Technorati Tags: HR, HCM, HRMS, HR BPO, SaaS, Software-as-a-Service, Workforce Management

Finally – My Research Agenda for the 1H06

Jim Holincheck — Tue, 21 Mar 2006 15:17:17 +0000

Ok. It is almost the end of March. It is a little late to post my first half 2006 research agenda. But, it is better late than never. Here it is:

- MarketScope for Retail Time and Labor Applications, 2H05 – Complete
- Magic Quadrant for Midmarket HRMS, 2006 – Complete
- Continued Consolidation Headlined the Human Capital Management Software Market in 2005 – Complete
- Tough Competition Force Consolidation in the Expense Management Software Market – Peer Review
- Understanding Emerging Offerings for Global Payroll Outsourcing (Presentation for Gartner Outsourcing Summit) – Complete
- Single Sourcing Global Payroll Outsourcing – Peer Review
- Five Key Considerations for Global HR Implementation – Peer Review
- Cool Vendors in Human Capital Management Software, 2006 – Complete
- Market Landscape for Contingent Workforce Management Solutions – In Process
- HR BPO and the Importance of the Underlying Technology – Not Started
- Case Study on Next Generation Workforce Analytics – Not Started
- MarketScope for E-Recruitment Software – Not Started

I have been spending some time over the last week or so trying to determine if I should do a Magic Quadrant or a MarketScope for the update on E-Recruitment Software. For those not familiar with these notes, Gartner uses MarketScope in markets that are early in life and where there is a lot of dynamism. In addition, we use the MarketScope for markets that are very mature where there is little change. The reason for this is that a MarketScope is an absolute rating of vendors. Each vendor is evaluated independently of the others. Because it is an absolute rating, it is easier to change as the market changes (or keep the same if the market does not change frequently). A Magic Quadrant is a relative rating. That means every time it is published, all vendors must be evaluated relative to each other. In an established, growing market, this relative evaluation is important to customers to understand vendor differentiation.

On the one hand, the e-recruitment market is dynamic. There is significant M&A activity going on and a MarketScope can keep up more readily. On the hand, it is an established, growing market and customers would be well-served to have a more differentiated analysis. Why am I spelling this out? I want to get your input. Please e-mail me or comment to this posting with your thoughts.

Technorati Tags: HR BPO, HRMS, E-Recruitment, Payroll, Workforce Analytics, Contingent Workforce Management, T&E Management

Gartner HCM Research from February and March 2006

Jim Holincheck — Tue, 21 Mar 2006 14:49:37 +0000

Cool Vendors in Human Capital Management Software, 2006
Author: Holincheck, James

Summary: These “cool vendors” represent emerging trends in HCM technology. They take familiar HR and workforce problems (such as timekeeping, analytics, recruitment, employee engagement surveys and benefits) and use new technology to achieve improved results.

Best Practices for Uncovering Differentiators in Midmarket Financial and HR Evaluations
Author: Herrmann, Michael E.; Recknagel, Kirsten L.

Summary: When midmarket organizations are evaluating financial and HR solutions, they should employ three techniques to highlight the differentiators necessary to make well-informed decisions.

Continued Consolidation Headlined the Human Capital Management Software Market in 2005
Author: Holincheck, James

Summary: The HCM software market continued to consolidate in 2005. In 2006, if you make new HCM solution decisions, consider the effect of ongoing market consolidation. Before making any HCM software purchases, evaluate vendors’ underlying talent management application suite strategies.

Findings From the Gartner 2006 Global Research Meeting: Prepare for the Business Application Decision Olympics
Authors: Rayner, Nigel; Genovese, Yvonne; Holincheck, James; Eschnger, Chad; Phelan, Pat

Summary: For multinational companies, recent vendor consolidation in the business application market appears to have simplified selection decisions between megavendors SAP and Oracle. The opposite is true, however; many users will face hard decisions through 2012.

Updated Magic Quadrant and New MarketScope Published the Week of January 23, 2006

Jim Holincheck — Mon, 30 Jan 2006 13:52:35 +0000

Well, after 5 long months of effort, two large research projects have come to fruition. We published the following research last week.

Magic Quadrant for U.S. Midmarket Human Resource Management Systems, 2006
Author: Holincheck, James; Recknagel, Kirsten L,

Summary:
Leaders have emerged in the HRMS market for midsize companies. Automatic Data Processing and Ceridian have strong positions. Employease, through its relationship with ADP, is well-positioned. Ultimate Software and Kronos are strong alternatives for organizations that want to keep payroll in-house.

MarketScope for Retail Time and Labor Applications, 2H05
Author: Daikoku, Gale; Holincheck, James

Summary:
This research focuses on vendor capabilities within the context of retail workforce management. Industry interest is expected to grow as Web-based solutions mature and leading retailers use technology-optimized workforces to improve store productivity and deliver a differentiated value proposition. (This research is only available to Gartner clients who subscribe to the Retail Industry Advisory Service).

Technorati Tags: HRMS, Retail Workforce Management, Time and Attendance

Interesting Viewpoints on the Future of HR

Jim Holincheck — Tue, 24 Jan 2006 15:48:16 +0000

I was reading a post from SystematicHR Blog called “HR 2006 Part 2 – Direction” (the other posts in the series are worthy of a look as well) that talked about the future direction of the HR profession. It cites a very interesting publication from Mercer and Harvard Business School Publishing called “Tempered by Fire: Where HR Is. Where It Needs to Go.“. Mercer and HBSP conducted seven dinner roundtables with 65 senior HR executives to understand their issues and challenges and view on the future. It was interesting to see their main areas of focus:

- Cost reduction
- Show contribution of HR to business results
- Outsourcing (the debate is over — it is happening whether one likes it or not)
- Change Management
- The War for Talent (it is back, but looks different)
- Discontent with metrics (I would argue this should really be part of showing the contribution of HR to the business – See “Exploit the Next Generation of Workforce Analytics to Manage Human Capital”
- Going Global
- Strategic Partnering (everyone is tired of discussing this one — including me)

It is interesting insight and as I finalize my research agenda for the year (which will be soon and I will update the previous post on areas I was considering) this will be a strong input. The good news is that I was already planning to write on many of these challenges. I was surprised that the HR executives did not discuss how they plan to leverage technology to help meet these challenges. I guess that I have more work to do to help educate this audience.

Technorati Tags: Outsourcing, Analytics, Global, Talent, BPO

Gartner HCM Research for the Week Ending 1/6/06

Jim Holincheck — Tue, 10 Jan 2006 16:32:19 +0000

Market Focus: BPO Competitive Landscape, Worldwide, 2005
Author: Tornbohm, Cathy; Brown, Robert H.; Goldman, Matthew
Summary:
Global business process outsourcing providers include specialists and generalists; top providers vary by geography and process. Insight into the top worldwide providers by revenue helps BPO providers plan competitive, market-entry, acquisition and partnering strategies.

Ready Your HR and Payroll Applications for Australia’s WorkChoices Legislation
Author: Ganly, Denise
Summary:
Sweeping industrial relations reforms are expected in Australia. Businesses need to assess how human resource and payroll applications will have to be changed to address the new legislative requirements.

Market Share: ERP Software, Asia/Pacific, 2004 (Executive Summary)
Author: Kumar, Pranav; Eschinger, Chad; Dharmasthira, Yanna
Summary:
The Asia/Pacific ERP software market grew 19.6 percent to reach $418.9 million. SAP continued to be the market leader. China replaced Australia as the largest market.

Technorati Tags: HR, HCM, BPO, Australia, Asia/Pacific, HR BPO