Archive for the ‘SaaS’ category

NorthgateArinso Getting SaaS-y Starting with e-Learning Content

September 28, 2011

NorthgateArinso (NGA) has just announced its euHReka Inclusion Framework to provide transparent access to third party providers, HR professionals, and associated resources.  The euHReka platform includes payroll and talent management SaaS for learning, recruitment, performance management, compensation management, and succession planning.  It serves 80 clients and 800,000 employees, and is available in 100 countries and 32 languages.

Although NGA has been providing learning BPO (LBPO) since its acquisition of Convergys’ HR Management business in March 2010, and since learning is already a part of its euHReka platform, the company is aware of the heightened demand for e-learning content in the market.  Consequently, NGA’s first partnership on the new framework is with SkillSoft to add e-learning content to euHReka.  Subsequent content and applications will include:

  • Compensation data
  • Benefits programs
  • Job boards
  • Professional social networking sites.

NGA is wise to begin with e-learning.  In NelsonHall’s LBPO market analysis, published Q4 2010, traditional instructor-led classroom training (ILT) is expected to be reduced from ~50% of the market in terms of revenue to 40% by 2012 due to the explosion of e-learning.  As a result, content development is also rapidly growing.  NelsonHall’s LBPO report ranks content development second behind learning administration in terms of LBPO revenue and ahead of delivery, technology, and consulting. 

Some examples of e-learning contracts this year include:

  • Accenture with HSBC
  • Genpact with JobSkills in India for a 5-year content development contract (note: approximately 85% of Genpact’s courses are provided via e-learning)
  • Edvantage Group with Yara International for safety e-learning (note: Edvantage Group’s H1 2011 financial results showed a 31% increase in sales and double-digit revenue growth y-o-y with EBITA increasing 168% to 5.9m NOK, compared to 2.2m NOK in H1 2010).

I believe we will continue to see significant increased demand for e-learning content for years to come, which will be further magnified by mobile learning (i.e., m-learning), especially for accessing content for self-paced e-learning when out of the office.  However, e-learning will not replace the uptick expected for virtual instructor-led training (VLT) because of the need to actively participate and focus on the learning task at hand in VLT.  I’ll write more about contracts for VLT and web 2.0 learning portals at a later date.  In the meantime, further analysis on the useage of e-learning by region and other associated information is available from NelsonHall.

Gary Bragar, HR Outsourcing Research Director, NelsonHall

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HRO Themes at the HR Tech Conference: Portals, Platforms and Self-Service

October 7, 2010

If you’ve never attended the HR Tech conference – which was in Chicago last week – I highly recommend finding a way to do so next year (and not just because the venue is changing to Las Vegas.) It’s always a top-notch conference with a superior speaker line-up, and a great forum for meeting with HRO buyers, providers and pundits.

With my eyes and ears focused, of course, on all things HRO, the key themes I witnessed – during both public sessions and private meetings with providers – were portals, platforms and self-service, all geared toward improving the customer experience and getting work done as quickly and easily as possible. By-the-drink-pricing and quick solution implementation were also key focuses. Some examples:

  • Caliber Point’s recently launched multi-tenant HRO service, called Republic. For mid-market organizations with between 2,000 and 15,000 employees, it’s a SaaS solution based on Oracle and includes software hosted and maintained by Caliber Point covering payroll, recruiting, performance management, compensation, employee benefits, time and attendance and reporting. Pricing is per employee per month by country, which covers both software licensing and BPO services, and implemetation can be completed in as quick as six – eight weeks.
  • ADP’s new portal and mobile developments, to be launched by early 2011. I must admit that increased mobile access to HR information, anytime, any place, didn’t wow me until ADP used the example of getting a listing of your in-network benefits and providers on your mobile phone. Think about it…you’re out of town on holiday – without your laptop – and you cut your foot on a piece of glass on the beach or sprain your ankle while skiing. You could pull your insurance card from your wallet or purse and call the 800# to find a local in-network provider. But, with instant access to the information on your mobile phone, why wouldn’t you take the quick route?
  •  Mercer’s integrated rewards and talent management offering, called Human Capital Connect. The technology platform includes performance management, succession planning, compensation and incentives. While a third-party provider can’t replace an in-house manager’s performance management responsibilities, Mercer provides not only the technology but also consulting for implementation, training, change management and execution, and a dedicated client team to ensure success. 
  • IBM’s transformation of its HRO client Kraft’s employee portal, with enhanced self-service, phone-based call center support and live chats with call center specialists. During its session at the HR Tech conference, Kraft stated IBM’s recently established Manila HR Services Center is getting high marks for customer satisfaction and intuitive and user-friendly employee self-service. And we can anticipate this contract, which will further roll out into 2011, will continue to support Kraft’s approximately 140,000 employees, per its acquisition of Cadbury, with the same improved employee experience, including further enhancements to live chats.

Yes folks, today and into the future, we’ll see rapid developments in portals, platforms and self-service. But these technological developments won’t remove the “human” element from HRO. Rather, they’ll increasingly support the way humans need, want and expect to accomplish their tasks and jobs, at an increasingly attractive price point.

Gary Bragar, Lead HRO Analyst, NelsonHall

HRO SaaS Uptake – What, How Much and Where?

August 19, 2010

As a follow-on to my July 7 blog titled, “SaaS More Than Just Catching On,” let’s today look at what types of HRO SaaS clients are buying, the size of awarded contracts and the industries in which HRO SaaS has had the greatest penetration to date.

The What

By rank order of the most commonly purchased software applications/modules:

• Payroll

• HR administration

• Benefits administration, including benefits planning, health and safety, claims submission, absence management and occupational health

• Employee and manager self-service

• Talent management, including recruiting and learning

• Workforce planning

• Compensation/salary administration

• Employee development for career pathing

• Travel  

The reasons behind the rankings, especially at the top of the list, are pretty self-evident. Payroll leads as it is the most visible and frequently used (and arguably, the most important) service. And HR administration really ties into employee and manager self-service, as one of the primary drivers of SaaS implementation is self-service for cost reduction and employee satisfaction.

The Size

As I noted in my July 7 blog, the mid-market is proving to be the ripest for HRO SaaS. Using Netherlands-based HRO provider Raet as an example – and a good one at that, as it in the past six weeks inked seven new SaaS contracts and one renewal – client company size is ranging from 250 to 12,000 employees. This uptake in the mid-market makes perfect sense, particularly on the lower end, as companies in this space need access to HR technology to enhance their operational efficiency but frequently lack the budget to invest their own capital in purchasing it. In terms of contract sizes, we’re seeing a length range from four to seven years, with an average of five years.

The Industries

In looking across all HRO SaaS contracts awarded thus far in 2010, education is the top industry, followed equally by local government and retail. I don’t necessarily believe there’s any secret sauce as to why these are the top three ranking industries, as organizations in virtually all – including healthcare, media, manufacturing and financial services – may be challenged with a preponderance of multiple divisions and locations, and often have several disparate systems for HR and payroll that do not communicate with each other, causing extra administrative work and duplication of effort, etc. Thus, the driver for most existing and upcoming HRO SaaS contracts is the ability to have one singular system for HR and payroll in order to achieve standardization, data accuracy, cost savings, self-service, timely processing and data, and employee satisfaction.

Due to all the inherent advantages, I believe we will continue to see a growing number of HRO SaaS contracts in the mid-market, across all industries. In addition, but to a lesser extent, I believe we will continue to see combined SaaS and outsourcing contracts such as the one announced on August 10 between MidlandHR and Swan Housing Group. Under this contract, Swan Housing will internally host MidlandHR’s iTrent software – which provides a single platform for HR, payroll, talent management and workforce planning. Swan Housing will simply provide the payroll data via iTrent, and MidlandHR will do everything else, from the structuring of pay and deduction calculations, through to payslip printing and distribution. The advantage of these hybrid-type contracts? Economies of SaaS scale coupled with outsourcing of processes for which internal resources and/or knowledge may be lacking.

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Top HR Issues by Geography: The Same, But Different

July 23, 2010

In blogs earlier this month I addressed: 1) increasing use of SaaS; and 2) cost reduction as a top HRO driver based on data from NelsonHall’s recently published HRO buyer report, “HR Issues and Outsourcing Intentions.” Now let’s talk about the top HR management issues by geography.

On a 1 – 5 scale, with 5 being most important:

Asia Importance
Low consistency of HR processes across the organization 4.8
Difficulties in obtaining consistent single view of the employee 4.4
Need accurate and consolidated workforce information and reports 4.3
   
Continental Europe Importance
Difficulties in obtaining consistent single view of the employee 4.4
Corporate requirement for reductions in costs of HR administration 4.3
Need accurate and consolidated workforce information and reports 4.1
   
U.K Importance
Corporate requirement for reductions in costs of HR administration 4.2
Need accurate and consolidated workforce information and reports 4.1
Need to improve identification of high performers and succession management 4.0
   
U.S. Importance
Corporate requirement for reductions in costs of HR administration 4.2
Need to improve identification of high performers and succession management 4.2
Need for improved talent management capability 4.1

While the relative rankings vary a bit from geo to geo, and although there are a couple of outlier line items, the cited HR management issues can pretty much all be addressed by outsourcing core HR technology. Not surprisingly, this was identified as the number one HR service to be outsourced in our HRO buyer study, and its validity is bearing itself out as evidenced by recently-signed HRO contacts that are either for technology or technology plus HRO services. Let’s look at a couple of examples:

•  In just the last two weeks, Netherlands-based Raet has been awarded five SaaS contracts for its HR portal, RaetOnline, to leverage one system for HR and payroll, standardize to achieve improved efficiency, data accuracy and cost savings from elimination of systems and/or what may have been manual processes, and gain self-service capabilities 

•  Infosys is implementing a platform-based HRIS and global payroll platform for a leading Australian insurer, using PeopleSoft 9.0 to enable the client to have one standard integrated platform, eliminate disparate technologies, drive up process consistency, increase data accuracy and reduce costs

Tangentially, I found it interesting that cost reduction didn’t even make it into the top three HR management issues in Asia, while the U.S. and U.K. cited it as the primary issue, and continental Europe ranked it second. This made me think about my prior background in quality, long before I started working in HRO, and the work of Dr. Deming and Dr. Juran who trained Asian workers and managers on the importance of quality for three decades following World War II. Their tenet was that if you first focus on process and quality (of data), reductions in cost will follow. Cost reduction is of course important in Asia, but there’s clearly a different mindset in how to achieve it. Rather than my views on the principles of management, let’s engage. Where do you think cost reduction should fall in the “fix HR issues” equation?

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

SaaS-based HRO is More than Catching On

July 7, 2010

The current economic environment is increasingly leading buy-side organizations to up-step their usage of SaaS-based, vendor-hosted applications to underpin outsourced HR services, with the adoption of new HR technology becoming an important enabler of improved HR process cost-effectiveness. NelsonHall’s recently published HRO buyer report, “HR Issues and Outsourcing Intentions,” found that 72 percent of the HR executives who participated in the study cited increased likelihood of using SaaS applications for new outsourced services. And HRO service providers responding to NelsonHall’s 1Q10 HRO Confidence survey cited that 44 percent of client prospects are seriously considering platform-based HRO. Gasp! Can you recall the last time buyers’ anticipated uptake of – well, name it – outpaced the providers’ predictions?

To properly frame HR departments’ increased utilization or consideration of SaaS, it’s important to remember HR is typically the process area in which there is greatest organizational acceptance of use of vendor technology, driven by the traditional low priority given to HR in terms of HR investment. But this historically minimal investment is exactly the point – and much of the upside – to leveraging SaaS-based HR applications. Buyers don’t need to make a capital investment in, but have access to, the most up-to-date technology without worrying about upgrades. Add to the benefits mix the elimination of multiple – and oftentimes outdated – HR and payroll systems many medium and large companies around the world still have in force, with the resulting reduced redundancy and further savings costs.

The services provided using hosted HR applications are these days largely singular in nature. For example, the HRO services enabled by supplier-hosted SAP human capital management (HCM) services are typically restricted to payroll services and employee care. There is also an increase in the use of supplier-hosted applications that support single services including learning, recruitment process outsourcing (RPO), and HR administration. For example, earlier this year MidlandHR was awarded an HR and payroll software contract by Kent County Council utilizing its iTrent software to provide several modules including learning and recruitment. And NorthgateArinso was awarded a six year contract for payroll and employee administration software by Garlands Call Centres. NorthgateArinso’s ResourceLink Aurora system will be used to support administartion of employees’ personal details and employment records, process hires and leavers, and run the payroll process for 1,500 employees.

Based on contracts I’ve seen and research I’ve conducted, I believe we will continue to see an increasingly high number of platform- and SaaS-based contracts, particularly in the mid-market. There will also be more platform- and SaaS-based HRO contracts in the large market, but they will be supported by more comprehensive BPO in terms of outsourcing of people (e.g., recruiters in BPO) in addition to technology to perform service delivery, as buyers look to maximize quality in delivery of services and further reduce headcount and costs. 

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Surprise, Surprise (not): Cost Reduction Reigns as Top HRO Driver in 2010

July 1, 2010

Although reduced service delivery costs are not always the key reason companies outsource to third parties, it comes as no surprise (and really, why should it?), that the overriding issue which continues to concern HR departments in 2010 is the ongoing need for HR service cost reduction.

NelsonHall’s just published research report, “HR Issues and Outsourcing Intentions,” found that 78 percent of the 120 buy-side HR executives interviewed – with a nice cross-section of participants from the banking, consumer products, healthcare, high-tech, insurance, media, pharmaceuticals, retail, telecommunications and utilities industries – ranked the corporate requirement for reductions in HR administration costs as their number one issue. Other issues and challenges 2010 HR departments are facing include providing support for organizational restructuring and retraining, of course while reducing HR costs, and standardizing HR processes and providing improved HR information in an environment in which there is little management support for internal investment in HR technology.

This need for cost reduction with minimum investment is having a major impact on the manner in which organizations are approaching HRO. A full 60 percent of our buyer interviewees stated cost decreases (“maintenance of our current services and systems, with only minor changes/additions”) was their main HRO need and expectation over the next 12 to 18 months.

Overall, organizations are seeking average cost reductions of approximately eight percent from their HR services during 2010. However, they will be seeking significantly higher cost reductions from their outsourced HR services. Consequently, they will negotiate with their providers for further cost reductions within existing HRO contracts, and engage in additional HRO deals that focus on both process standardization and cost reduction.

As a result, we’ve seen an increasing number of announcements of new standardized service offerings, particularly in the small and medium enterprise (SME) market. For example, earlier this week Sweden-based Aditro, an outsourcing provider of payroll and HR services to Nordic countries, announced a packaged payroll service for SMEs that includes a standardized payroll service with pre-defined service levels, enabling clients to receive the benefits of outsourcing, but at a lower price.

In an upcoming blog we’ll speak in detail about uptake of SaaS-based vendor hosted applications, another topic we covered in detail in our “HR Issues and Outsourcing Intentions” research report. But, given the extensive nature of the report, (it’s more than 176 pages!), there are many other areas we can also try to cover in future blogs. Interested in hearing more about the key issues HR departments are facing relative to HR service delivery, and initiatives planned in response to these issues? Level of satisfaction with current HR service delivery? Expectations from HRO, including benefits sought and attitudes toward use of hosted HR platforms and offshore service delivery? Let us know!

Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall

Weathering the Weather in HRO

February 9, 2010

I am weary of Winter and ready to get on with Spring! A record setting Winter snow storm just blasted the East Coast of the U.S. this past weekend, and more snow is heading this way by mid-week. London has also seen the heaviest snows in twenty years. Some areas are prepared for lots of snow and can handle it with aplomb and as an economic boom. But in cities like London, Philadelphia and Washington, D.C., big snow is disruptive, dangerous and a budget buster.

At least we are seeing signs of the coming Spring in HRO, with a generally upbeat tone to most of the earnings calls, even as most vendors continue to report revenue declines and offer guidance of relatively flat revenues for 2010.

Winter is not yet over

For example, last week ADP announced that its Employer Services fiscal Q2 2010 revenues were down two percent compared to 2009. ADP saw client payrolls down five percent leading to a drop of seven percent in payroll and tax filing revenues, reflecting continued workforce reductions at the end of 2009.

ADP’s Employer Services revenue growth will be constrained until payroll volumes increase, which are expected to start improving in the first half of 2010.

An expected thaw is on the way

HRO vendors reporting results that are less bad compared quarter over quarter and the universally reported increased pipeline activity are indicators of a thaw.

For example, for ADP, the view beyond payroll revenues, which includes HRO services, remains more optimistic based on three percent increases in each of the last two quarters. And ADP’s small business sales have increased, largely due to the successful introduction of Workforce Now, a new payroll, benefits and HR services SaaS platform for the less than 100 employee market. Workforce Now has already added 2,000 clients since its introduction in October 2009.

According to ADP, larger employers are starting to reengage in new services discussions, but remain slow to make contract commitments. Even with the uptick in the small market and the beyond payroll services, the overall decline in revenues driven by smaller payroll pays and lower client fund balances keeps the forecast for FY 2010 ES as flat to down one percent.

With some signs of the coming Spring

ADP is confident enough that the economic recovery is starting that it plans to begin modest hiring to have more sales and service personnel onboard and trained to take advantage of increased opportunities.

The truth is, Winter is still not over. We need to see an increased rate of contract signings Then we need to see positive revenue gains not clouded by currency exchange rates. And a few larger HRO deal announcements would help warm us up nicely.  

For awhile yet we will continue to see mixed signs of recovery and there is likely another Winter storm or two to weather. Still, I can almost hear the birds of Spring chirping…can you?

Linda Merritt, Research Director, HRO, NelsonHall