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 Insights 
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