Posted tagged ‘HR administration’

Playing the Hidden Object Game with HRO News

June 9, 2011

As one of NelsonHall’s research analysts, I follow what is happening in the various HRO markets. The simplest method is reading press releases, to which we add our commentary in our tracking service.  As a reader, you see a portion of this analysis in our HRO Insight Blog and HRO Insight Newsletter.

On my own time, I like to play basic computer and online games. One of my favorite types is hidden object games where you follow clues to solve puzzles. Occasionally, tracking press releases is a bit like a virtual scavenger hunt for the larger objective.

Let’s take a look at an example with Ceridian’s recent announcement of its acquisition of Versult Group, Inc. Versult Group is a workforce management consulting firm acquired to enhance Ceridian’s implementation, training, and support services for its InView Workforce Management (WFM) solution.  It is a straightforward article, easy to cover as is, and then I followed one clue to another and ended up with a richer story. HRO analyst fun!

Back in February 2011, Ceridian announced its partnership with Dayforce to launch InView.  The two partners began working together a year earlier to integrate Dayforce’s WFM software suite into Ceridian’s payroll and HR administration services and ready both teams for launch. Ceridian also made an equity investment in Dayforce, which had already raised $20m, including $10m from Bridgescale Partners in July 2010.

Versult was one of seven Dayforce implementation partners and Versult had already performed implementations with Ceridian. As a bonus to Versult’s experience with WFM system implementation, it brings its own mobile access application, Versobile, to Ceridian.

Ceridian intends to further develop this platform for its clients seeking SaaS-based HR services by integrating beyond the current HR administration and payroll services to create an end-to-end offering including: H&W, tax, pay cards, COBRA, recruiting, EAP, tuition reimbursement, performance management, and training.

The payoff so far is that Ceridian’s investments are seeing rapid initial client acceptance. The platform has already grown to 90 Ceridian customers, rapidly escalating from 20 in February 2011.

This is a good, well-thought-out strategic move for Ceridian. It gets to cost effectively expand its SaaS service portfolio, leverage the strengths of its current offerings, increase scope with its client base, and add an experienced implementation team. It also has an equity stake in WFM, an increasingly important service line given employer concerns with cost control and the capability for rapid and effective workforce scaling.

Let’s leave this chapter of the story with a puzzle. How long will Ceridian be satisfied with a partnership with Dayforce, the WFM software source, when it felt the need to acquire Versult, the implementer?

Now for HRO vendors large and small, how are you solving your piece of the HRO SaaS puzzle?

Linda Merritt, Research Director, HRO, NelsonHall

HR Business Intelligence – How does it tie into HRO?

October 28, 2010

HR organizations are largely on the path to improve the use of technology in managing administration, and service delivery and even workforce and talent management are coming along, according to the CedarCrestone 2010-2011 HR Systems Survey. The highest penetration rate is for administration technologies like core HR recordkeeping, payroll and benefits administration, at 90 percent. These are also top areas for HRO. Service delivery (47 percent), workforce management (45 percent) and talent management (43 percent) are not yet quite at the half-way point.

Business intelligence tools like data warehouse and reporting and presentation applications have reached 37 percent. Workforce optimization is lagging at 17 percent for tools that enhance and enable the use of talent analytics, and dynamic workforce planning that helps prepare for and align a workforce with changing business needs and strategies.

Workforce management addresses the here and now, and how many people, where and at what expense has been a big focus throughout the economic downturn. Sadly, the information was largely used (and needed) to determine where to cut costs and ensure the reductions were achieved. But in  normal times, workforce data is needed to meet and maintain current and near-term staffing levels.

With workforce management tools and data improving, some organizations are not sure where to go next with the tools or how to fully leverage them. With a vague plan, even at 37 percent penetration rate, business intelligence packages can end up being a pretty, expensive, underutilized investment.

As I wrote about in last week’s blog on building an integrated HR ecosystem, it is the connectivity of a comprehensive set of tools and technologies that can unleash the true strategic power of HR in enabling business growth. The ability to use the system to understand, discover and advise is also needed.

As HR uses greater levels of technology for administration and self-service, HR’s workforce needs are generally reduced. In the case of workforce optimization, leading practice indicates that specialized staffing for workforce reporting and workforce planning increases slightly. Large organizations in the study averaged 5.8 people in workforce planning and 4.8 in reporting, while leading users for workforce optimization tools averaged 7.8 and 5.3, respectively.  Oh, and in the leading practice companies HR was viewed as strategic (66 percent), more than in other large organizations (41 percent)!

This is such an important area for HR to truly achieve transformation. It is also important for HRO service providers to be able to move up the value chain and not be relegated to only being useful in building and running the back office administrative systems at lower operating cost – although that will always be a cornerstone of HRO.

Buyers, be sure the vendor you select can not only meet today’s needs but can continue to be your partner as you build out an integrated HR ecosystem. Providers, be ready to demonstrate that you are the partner that can help clients bridge the gap in building and using workforce optimization tools to create business results, including by making them easier to use and understand, and simplifying reporting and providing basic analytical services.

Linda Merritt, Research Director, HRO, 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

Employee Dissatisfaction = Boon to the HRO Industry?

September 3, 2009

While this headline sounds counter-intuitive, let’s look at several news pieces published in just the last week.

An August 26 article by Hudson (a recruitment and talent management services provider) stated, “The global financial crisis has had a severe and divisive impact on the sentiment of the workforce in Australia and New Zealand.” “Employees’ feelings of disaffection are already playing out in the market, more employees are now seeking new roles (jobs) compared to before the downturn, almost half of the workforce is seeking a new role (47 percent) and 56 percent said they would consider roles they previously would not have looked at. If employees are disgruntled or unhappy with their current roles, the moment a better opportunity presents itself they will leave.”

Also on August 26, Jobfox, an Internet-based job site reported, “A recent study concluded that 54 percent of employed Americans plan to look for new opportunities once the economy begins to turn around”.

According to an August 31 USA Today article, “More than eight in 10 employers feel that their workers are just happy to have a job, but just 53 percent of employees feel this way, according to Monster.com.”

17 percent of workers are thinking of changing jobs in the next 12 months, per a survey employment website SnagAJob.com released on August 27.

And in a nationwide telephone survey of 500 hiring managers and 500 workers from various sized businesses – conducted by Robert Half International and CareerBuilder between April 30 and May 31, 2009 – more than half of employees plan to make a career change or go back to school.

Now, think of the impact this employee churn will have. Many are using the term “the jobless recovery” and talk of how the return to job creation will likely lag other evidence of recovery. This could lull in-house HR departments and HRO service providers into thinking the need to gear up for greater volumes will not be needed until later in 2010. While I agree, some churn may well pick up earlier. And churn triggers so many HR transactions – in virtually all aspects of HR including administration, payroll, learning, benefits hiring and staffing – that even if jobs aren’t growing, just replacing current positions will cause HRO activity to pick-up, as in-house HR departments have been cut to the bone.

I believe the economic downturn will be an economic upturn for the HRO industry. What do you think?

Gary Bragar, Lead HRO Analyst, NelsonHall