HR service providers have reporting and analytics capabilities including software, consulting and outsourcing. But getting beyond providing support for basic reporting capabilities has been a slow and rocky road. To move further down the path, we need a roadmap for HR analytics.
NelsonHall’s 2009 report, “HRO Analytics: Utilizing Analytics to Improve Outsourcing Experiences”, found that 85 percent of vendors have an advanced analytics offering, but only 22 percent of clients have implemented such services. Gaining agreement that workforce data is important is easy, but finding funding to build or buy the capability is considerably harder. One of the reasons for the slow adoption rate in HR analytics is how hard it can be to demonstrate ROI.
I see signs of current buyer interest that can be leveraged, although the signs may not look like a direct request for HR analytics:
• Behind the drive for multi-country payroll during a recession was not a bizarre interest in payroll systems, but rather a senior leadership demand for better workforce and financial data in order to understand what is happening in every operating geography.
• Growth in leave of absence, absence management and dependent audits all support tighter workforce management in lean times.
• Can anything sound more non-urgent than consolidating time reporting systems? But how about when they are linked to razor-thin staffing levels and controlling the use of overtime while still meeting sales and customer service objectives?
• With an expected modest rise in recruiting, improved workforce planning and forecasting is vital to ensuring the most critical areas are targeted.
Each of these opportunities require timely and accurate data from across the enterprise, and each impacts the total cost of labor – in other words, an ROI signpost and a roadway to direct bottom line impact.
Sometimes HR wants to start at the end – the fun and strategic stuff. But to get credible workforce data that drives decisions and impacts business results, the data infrastructure must be in place first. Perhaps boring to some, but data definitions, data warehousing, establishing a system of record, reporting applications, data security, etc., are all important, as is having a framework for what data needs to be pulled into the system: employee, workforce, individual and business performance and financial data.
If you’re a buyer, do you have a roadmap to get there from here? Are current HR systems adequate, or can you get there with add-ons at the edge or in the cloud? If you go for separate point solutions for each issue, will you be able to pull in all the data from the various vendors? Where will you connect to the enterprise business performance and financial systems? How many interfaces are manageable, and who will manage them? Which analytical capabilities should you build in-house, and should some be outsourced?
A word to vendors – R analytic sales opportunities may be disguised, but they are there. The time is right for you to drive your shiny offerings down prospect road.
And advice to buyers – call your friendly HR portfolio manager to ensure you build an integrated set of systems and capabilities at the lowest operational cost level while raising the bar on HR’s ability to increase business results.
Linda Merritt, Research Director, HRO, NelsonHall
HRO Insights 
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