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  • Thinking about cloud? Things to think about from a human capital perspective

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  • Thinking about cloud? Things to think about from a human capital perspective 1

    The Deloitte ‘Resetting Horizons Human Capital Trends 2013’ report highlights talent and performance management as two of the key trends impacting HR and organisations. The report calls for a more integrated approach to the managing of HR, as well as an understanding the value HR can add to the organisation. HR leaders are extolled to think like economists when managing the allocation of talent (a scarce commodity in the current global environment). This means that HR should not only focus within the organisation in terms of managing human capital, but also turn their attention outwards. Being able to understand the impact of the broader economy and diverse factors such as workforce demographics, infrastructure development, technology trends will be critical in terms of adding real value to organisations.

    The open talent economy is another key trend highlighted in the report, the composition of the workforce in any large organisation has shifted over the decades from a predominantly full time workforce to one that comprises a mixture of full time, part time, freelancers and increasingly people with no formal ties to the organisation. The growing drive to provide HR business partners with the tools they require to support such a shifting workforce is being met with an explosion in the availability and capability of cloud based HR solutions. These waves of change have placed HR in the in the unique (for them) position of being able to meet the needs and expectations of the business as these needs become apparent. This is a dramatic shift from the reality HR has faced in the past where they were desperately trying to keep up with the organisation’s expectations using outdated or ill-fitting solutions. This is explored in some detail in Paul Khanna’s article – Human Capital in the Cloud, A review of the SAP and SuccessFactors strategy.

    These factors are driving a strong trend across the globe for HR to adopt cloud based HR technologies. The vendors make strong and very attractive claims regarding their solutions that they are; quick to implement, reduce overall costs and drive best practice. However there are some considerations that HR should take into account before leaping onto the cloud band wagon.

    Cloud is quick and easy This is a common claim made by all cloud solution vendors. While this claim has some truth to it, it is based on a number of key assumptions. A quick implementation is only a reality if the client has completed all the preparatory work such as; defining their HR and business processes, gathering and cleansing their data. But the primary assumption is that the customer is able and willing to accept a solution that while highly configurable, is not customisable. Customers no longer have the option of customising the solution. In many cases this last point requires a very mature organisation, one that is able to accept a screen, a set of functionality process or an approach to employee management without being able to bend the solution to meet every whim of the organisation.

    The rapidity of the implementation highlighted by vendors often only looks at the technical implementation it does not take into account the associated transformation journey facing the organisation. Regardless of the technology and the speed at which it can be brought into use at an organisation there will always remain a need to plan and identify the impact this new tool will have on the organisation. This impact must be planned for and managed to ensure a smooth transition and easy adoption of the new technology and the new ways it brings.

    The Deloitte ‘Resetting Horizons: Human Capital Trends 2013’ report highlights talent and performance management as two of the key trends impacting on HR and organisations.

  • True and sustainable business change involves careful planning, communication and alignment, which takes time.

    True and sustainable business change involves careful planning, communication and alignment, which takes time. Rushing or ignoring this reality in order to stick to the time frames promised by the vendors is a recipe for failure. If one key lesson was learned from the ERP wave of the last few decades it is this: ‘bring the business along on the journey and make sure you meet their needs and expectations’. Most of the cloud HR solutions are designed with the end user and manager in mind, they will be the primary users of the solution, make sure their needs and expectations are clearly understood, and that they are aligned with the final solution. If they do not like or understand the tool, they will be reticent to use it.

    No need for IT resources, HR can do it themselves The cloud vendors have expended significant levels of effort in making their tools and solutions easy to use and simple to configure. In most cases the technical implementation is driven by data collection spread sheets and incremental functional user walkthroughs.

    An additional value of being in the cloud is that there is no need to purchase additional servers or other technical infrastructure. There is no need to ensure and cost for additional infrastructure and network support (other than the provisioning of additional bandwidth if required). While this is a significant advantage to a cloud solution, it does not take into account the fact that there is often significant existing IT infrastructure in place. The need to continue supporting and maintaining these investments will not evaporate once the cloud solution has been implemented.

    These legacy systems remain, and in many cases these need to be integrated to, either to gather HR information (e.g. time and attendance solutions) or to supply HR data (e.g. to Financial reporting).

    In the modern enterprise it is folly to assume that HR can operate an HRMS without the support and advisory of the IT function. Just because it is possible to implement a system with no help from IT does not mean it is a good idea. The IT strategy should be clear on the requirements for all new solutions being introduced. This does mean that HR may not be able to implement systems of their own choosing – it is critical that they understand the thinking behind these rules. There may be a valid strategic reason for restricting the use of cloud technologies in the organisation. HR cannot strike out on their own; the impact of the cloud solution on the overall IT landscape must be understood and planned for.

    Built in best practice It has been a mainstay claim of HRMS vendors for decades that their systems are pre-delivered with industry best practice. Best practice while useful as a guide or a starting point for a process, should never be taken as being a universal ‘best’ way of executing a process in an organisation. Best fit is of greater value to an organisation than best practice, this state is achieved once the best practice recommendations have been tailored to meet the specific needs and expectations of the organisation. Most of the Cloud HR solutions have highly configurable process engines that allow for a great deal of flexibility in terms of configuring processes to support the organisations’ process requirements. With this flexibility comes a responsibility to ensure that not only is the opportunity to review and redefine processes seized, but that these redefined processes support the transformational objectives of the organisation rather than reinforcing the status quo. Each step in a process must be consistent with the objectives and strategic intent of the organisation.

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    The cloud vendors have expended significant levels of effort in making their tools and solutions easy to use and simple to configure.

  • Every system (HR, Finance, and Procurement) is built from a set of fundamental principles. These principles define how the system is designed to be used. This is no less true for cloud HR solutions. Each solution has grown from a specific set of design principles that define how the system will interact with users and how the users are expected to interact with the solution. If the system is built from an employee centric perspective (as many, if not all the cloud solutions are) then, most if not all the functionality will be focused on what can be done by or to an individual in a specific process. A system that is built from a HR or back office perspective will be less concerned with actions on the individual and will focus more on the administration of groups or classes of employees.

    Organisations must consider their needs and expectations of a system very carefully and ensure that the solution they choose is able to operate in a way that matches not only their strategic direction but also culture and ways of working internally. If a stereotypical grey bank adopts a solution that is built around the concept of a connected social employee, there is bound to be a great deal of space between what the solution offers and how the bank wishes to manage it’s employees. Even where the gap is understood and the appropriate solution is selected it is imperative that the transformation of the HR service in the organisation is carefully planned and executed to ensure that the technology supports and enables this change rather than defining it.

    Always up to date Cloud solutions by their nature ensure that all users are on the latest release of the software. The application is updated by the vendor with no effort on the part of the user. In mo