Onward and Upward for HRO in 2013

Linda Merritt, HRO Research Analyst, NelsonHall

Each year, the NelsonHall HRO team is asked by HRO Today to make predictions for the year ahead. Here is a summary of our featured article, Onward and Upward to kick off our 2013 blog series.

HRO is reaching maturity

There is a growing level of acceptance with less perceived risk in making the HRO decision; value is balancing the focus on cost, and pent-up technology needs will be opening the door to new service provider opportunities.

• Value and cost are reaching parity for many buyers that want agile new HR capabilities that produce results, including the ability to measure and manage HR issues across the enterprise as well as improve the employee experience
• The need for core HRMS upgrades and new technology should reach the point of increased budgeted spend; be ready to discuss whether upgraded and bolt-on additions versus a new core HRMS is the better path for increasing business impact and the total cost of ownership.

Breakthrough HR technology for 2013: cloud-based SaaS

Major technology costs will open the door wider for SaaS. As SaaS offerings move “up-stack,” the ecosystem for SaaS support will continue to develop in 2013 via consulting, implementations, integrations, BPO, etc.

• SaaS HRMS adoption will continue to move fastest for mid-market organizations
• Expect little large market HR ERP near-term erosion from SaaS HRMS; but cloud-based SaaS HR platforms are disruptive technologies that will quickly move up the value chain and be able to serve larger and more complex organizations
• Total cost analysis, not just system costs, will be important in the adoption of SaaS HRMS in larger organizations; over time, the ERP per user pricing advantage will disappear, especially if evidence continues to mount of better performance and lower overall costs.

Emerging HR technologies: social media and HR analytics

There is increased interest in how to deploy the newer tools strategically. Look for adoption to slowly build as clients need a certain level of maturity in systems, services, and vision to create real value with the newer HR technologies.

The word for 2013: convergence

It may be a bit early to pick a HRO word of the year, but I think convergence will be a good candidate to cover changing client needs and new and emerging technologies.

Where, when, and how do we bring together the old and the new to create new synergistic capabilities? What can we do with a fully-integrated HRMS with HR analytics? How can we change the delivery of services with strategically deployed social media? Can we bring new magic to the employee experience with mobility and social tools?

As choices increase and grow more complex, confusion and inaction may result. With clear purpose, planning, and great advice and counsel the opportunity is before us all to create a real breakthrough year for HR and HRO in 2013.

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HRO and a Culture of Analytics: Part 2

Service level agreements (SLAs) are probably the most thought about key metric connected to outsourcing. Operational metrics that measure process performance are important. The practice of measurement can also be innovative and strategic.

Let’s stay with IBM as an example and move to the HRO services group, which serves almost 2m users in 99 countries with 29 languages.  I spoke to several IBM’ers including Kerry Violette and Janet Hunter.  Both are a part of IBM’s HRO efforts to enhance the employee experience, increase customer satisfaction, and use intelligence and innovation to enhance differentiated value aligned with IBM corporate goals and initiatives, including the Smarter Planet agenda.

One of IBM’s new programs underway to enhance the employee experience is the “Next Generation of Measures,” and several new HRO contact center metrics are being trialed.  When complete, the new metrics will be rolled out to all clients.  Better measures rely on better data. Cleaning up data and adding more fields takes a certain amount of client effort and IBM is working first with those clients who are ready to step up to a new level of contact center activity analysis.  In addition to the data tracking efforts, client employee users will be surveyed about the contact channels used and will assess the level of effort expended to reach resolution.

IBM HRO, led by Mary Sue Rogers, was an early leader in creating a client advisory group, which encourages feedback, input into prioritizing improvement investments, input about the creation of new service offers, and cross-client sharing and learning.  As clients will tell you, and the IBM HRO team knows, it is not uncommon to “see green, but feel blue” when using traditional SLAs.  And yet, understandably, contractual service metrics focus on the services and processes that are under the vendor’s control.  Another 2011 initiative, Beyond Sat 360, is designed to go beyond contractual obligations and cover processes end-to-end, including client and even third party components.  The program will also aid IBM’s assessment of current drivers of customer delight and retention.

Beyond Sat 360 is an outgrowth of both corporate initiatives and the client user group.  It will take a deep dive view of processes to identify opportunities to reduce nonproductive time and effort for both parties and identify the biggest bang for the buck improvements.  Current HRO clients may opt into the beta test and help develop the program and its deliverables.  Data collection and analysis, reports, and dashboards will be a big part of the program including client participation in diagnostic interviews and surveys.  IBM is partnering with Clear Picture/Organizational Metrics to support the research.

The assessment opportunity is free to participating beta clients. If successful, who knows, this could become a new service offering, as have other programs that started with the client advisory group.

How is your HRO vendor using measurement in innovative and strategic ways to improve their services, provide you more value, and deepen the client relationship?

Linda Merritt, Research Analyst, HRO, NelsonHall