Posted tagged ‘IBM’

Highlights and Trends in the HRO Market for H1 2013: Part 2

August 14, 2013
Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Last week, I zeroed in on specific market activity within the payroll, learning and RPO service lines. This week, I’ll take a closer look at H1 2013 activity within benefits administration and MPHRO as well as provide some insights on what to expect in H2 2013 based on NelsonHall’s recent HRO Confidence Index.

Benefits Administration

Contract signings aside, there has been a plethora of activity within benefits administration in H1 2013, including:

  • New offerings:
    • Mercer launched a private benefits exchange, Mercer Marketplace
    • Buck Consultants launched an automatic enrollment offering in the U.K.
    • Secova launched a Coordination of Benefits (COB) audit offering to coordinate benefits with insurance carriers
  • Acquisitions: Wageworks acquired Crosby Benefit Systems and Benefit Concepts to strengthen its H&W administration offering, including reimbursement account and COBRA administration
  • Partnerships:
    • Fidelity partnered with Extend Health, a Towers Watson company, to provide retiree healthcare services
    • JLT Employee Benefits partnered with Vielife for health and wellbeing services in the U.K.
  • New technologies:
    • Xerox launched an account-based benefits portal, BenefitWallet, to assist with managing multiple health accounts on one platform, including HSAs, HRAs, FSAs, HIAs (health/wellness incentive accounts) and other specialized services
    • Aon Hewitt launched an absence management tool, 360 Absence Solutions, to help clients manage absence-related costs, compliance risks, the administrative burden and lost productivity
  • Educational resources:
    • Mercer and ADP both launched websites to provide information on healthcare reform
    • Ceridian launched an auto-enrollment knowledge center in the U.K.

MPHRO

In recent years, the MPHRO market has been relatively quiet in terms of contract announcements and H1 2013 was no exception. However, my last MPHRO research study, published in February 2013, revealed that the market is very much alive with new wins and contract renewals from all the major vendors, including IBM and Accenture. In fact, IBM recently won a new seven-year, multi-country MPHRO contract, which was bundled with F&A outsourcing services. Other wins include ADP and Marriott Vacations Worldwide for core HR, payroll, time & labor management and talent management covering ~9.2k employees.

Many vendors have been focused on their strategies for expansion, including Aon Hewitt with its acquisition of OmniPoint Workday Services. Although still early, NelsonHall expects ADP to make inroads in LATAM with its MPHRO services since it added RPO capabilities in this region from its acquisition of The RightThing and now expands its payroll footprint from the Payroll S.A. acquisition.

H2 2013

So what does the rest of the year have in store? NelsonHall’s recent HRO Confidence Index survey finds that overall expectations for HRO revenue growth remain at the same level as those reported for the last five quarters; with payroll leading followed by RPO. Top industry sectors for HRO services include healthcare, pharmaceuticals and high-tech. By geography, vendors have reported increased confidence for revenue growth in Central and Eastern Europe and Central and Latin America.

Needless to say, it will be interesting to see how the rest of the year unfolds for HRO.

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HRO and Innovation – Getting Practical

May 31, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Innovation in multi-process HRO (MPHRO) has been a topic of discussion, and some contention, since the early mega-deals that created the modern MPHRO market more than ten years ago.

Even in the early days there was a desire for innovation, but there was also a lack of common definitions and mutual understanding, along with difficulty in articulating innovation in contract language.

There was an even greater barrier – systems spaghetti. Early MPHRO clients had highly-customized ERP infrastructure, aging legacy systems, and third-party applications, much of which may have been non-centralized and non-integrated. Each major customer was in their own bubble of services and systems. It quickly became apparent that it would be hard to add new and different innovations within the constraints of the contracts and the technologies.

Platforms for Innovation

Major MPHRO service providers now have global multi-client service delivery and data centers with sophisticated workflow processes. Early clients have been moved bit-by-bit into the common support infrastructure, even if they remain on their own, licensed ERP systems.

Many HRO clients are ready for increased standardization and multi-client platforms to reduce cost and to improve performance. Innovative cloud-based SaaS and services platforms are opening up new services to the mid-market and parts of the large client market:

  • Clients on a shared service platform benefit from ongoing incremental improvements
  • Clients benefit from access to new products and services without paying a significant portion of the R&D needed for a one-off innovation.

Some tension between continuous improvement and innovation is natural, as the line between an “included enhancement” and what is “new and different to be added as an extra charge” looks very different depending on whether you are a buyer or a supplier.

Collaborative Innovation

Client user groups support both HRO improvement and innovation. Vendors were originally reluctant to let clients communicate with each other (partially because the clients might “gang-up” on the vendor – and sometimes they did!).

Companies like IBM and Xerox were leaders in developing client advisory boards. These interactive groups provide feedback on the services, give input into common needs, and even offer guidance on parts of the vendor’s development roadmap. They are not just “the voice of the customer”; they are also a built-in base of beta testers. Willingness to put some skin into the game is also a great way to test market viability and further strengthen relationships.

Infrastructure of Innovation

Buyers can develop their processes for HRO innovation in the following ways:

  • Assess vendors for innovation capabilities as part of the selection process
  • Develop the language and mutual expectations for measurable innovation upfront and include in the terms of contract. Include who pays, and when, determine if there will be vendor incentives, and clarify the client’s role
  • Use the governance process to jointly monitor, manage, and measure improvements and innovations over the course of the relationship.

The good news is that we are beginning to build the HRO infrastructure for future innovation; common language, standardized multi-client platforms, and client user groups.

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RPO Generation 2.0 is Ready to Go

March 28, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Recruitment Process Outsourcing (RPO) is one of the younger HRO service lines and it is both growing and maturing quickly. The March issue of HRO Today recognizes the emergence of RPO 2.0.  NelsonHall’s RPO specialist, Gary Bragar, would certainly agree. Gary’s October 2012 Targeting Recruitment Process Outsourcing market analysis highlighted many of the same developments in this rapidly growing HRO segment.

What is New in RPO 2.0?

The rapid growth and incorporation of social media for recruiting is a big part RPO 2.0, one that keeps pushing RPO to the leading edge of innovation in the HRO space.

RPO services are rapidly moving up the value chain, and changing client expectations is the key. While reducing the cost of service provision is always on the table, it is no longer the number one issue. Flexibility and scalability will always remain important as well, given how quickly hiring needs can change.

Today’s RPO 2.0 clients are looking for more value:

  • Improved quality of hires
  • The latest tools and technologies for social and mobile
  • Expertise in accessing talent pools and passive hires
  • Greater focus on candidate experience
  • Analytics and insights, in addition to metrics and reports
  • Improved retention
  • Access to advanced services including employment branding, talent management, talent engagement, and integration with workforce planning.

Clients Simply No Longer Want To Do It

In the last few years, many buyers reduced internal recruiting staff in line with the reduced volume of hires, and they do not want to rebuild and reinvest in the rapidly evolving technologies and advanced skill sets it takes to succeed in today’s competitive, social, mobile, and global recruitment process market.

Buyer Choice is Broad

For every large staffing company that does RPO including Adecco, Kelly, Manpower, and Randstad, there are smaller vendors that specialize in RPO such as Ochre House and Pinstripe.   Most leading RPO vendors of all sizes can offer services in most of the regions of the world as they have partnered and made acquisitions to make their footprints global.

Not long ago, major multi-process HRO (MPHRO) providers either did not provide end-to-end RPO or saw it taken out of contracts. Now, more MPHRO providers have full RPO services strong enough to be offered as standalone services including ADP, Aon Hewitt, Infosys, and IBM.

With RPO 2.0 You Can Have It All

While having it all may still be a bit aspirational for most of us, we are finding evidence that successful client / provider RPO partnerships can improve process efficiencies (e.g., reduce time to hire 20% to 50%), reduce the total cost of hire (often 20% to 30% or more), along with increasing hiring manager and candidate satisfaction.

Imagine what we can achieve with RPO 2.0!

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SaaS versus BPO

March 14, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

The HR Outsourcing Association (HROA) just completed a series of webinars on SaaS and HR BPO. There was a wide range of HROA industry experts bringing their real world experience on each panel including Accenture, ADP, Aon Hewitt, Futurestep, IBM, ISG, NorthgateArinso, Oracle/Taleo, and more.

SaaS or BPO is Not the Question

The conversation was largely about the difference between SaaS and the ERP systems included in most current BPO deals. It was not about using only SaaS or only BPO. SaaS can and does fit into BPO. I expect to see lots of growth in SaaS and BPO combinations in the next few years as SaaS platforms scale and grow in handling complexity.

SaaS is a Success Story of Innovation

The rise of SaaS was also fueled by the recessionary pressure to lower HR costs. Pre-downturn, HR leaders strongly preferred the customization power of ERPs to conform to a client’s policies and processes. Now the acceptance of the speed and economic advantage of configuration and standardized processes makes SaaS a viable option for an increasing array of HR services and even HR management system infrastructure (HRMS).

BPO service providers are also prime sources of many SaaS applications:

  • SAP and Oracle offer cloud HRMS used as the core for most HRO platforms such as: Genpact Hosted HRMS Platform, Infosys TalentEdge, CGI Oracle HCM, Caliber Point Republic, TCS HR platform
  • Proprietary systems include: ADP Vantage HCM and Workforce Now, NorthgateArinso ResourceLink Aurora, Preceda, and MoorepayHR, Ceridian DayForce and HRevolution
  • Talent management applications including RPO services have been so popular that Oracle snapped up Taleo, IBM acquired Kenexa, and SAP bought SuccessFactors.

Selection and Implementation Commonalities

The buyer experience has common elements whether selecting SaaS or BPO.

  • The upfront client planning process is the same: identify goals and objectives aligned with business and HR strategies; gather cost, process, and performance data to build a business case; consider enterprise risk; etc.
  • Vendor selection: do not just select the service; ensure there is a proven record of vendor performance and solid evidence of collaborative client relationships.

SaaS is not Self-Installing

While the total time and effort may be less, all the traditional elements remain. Webinar panelists warned that even if the decision has been made to use SaaS, do not underestimate the time and effort to make a vendor selection, manage change, gain buy-in, and project management implementation.

Even though one of the advantages of SaaS solutions is faster and “easier” implementations, it will still take buyers time and effort to standardize processes and data and to determine the configurations. Make sure that as a buyer, you know and plan for the skill and effort needed. Like BPO, experience says to consider a phased in rollout starting with one service / process and bring the learning forward to the rest of the implementation.

Next time, we will explore to SaaS or not to SaaS.

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Can HRO be Social, Smart, Quick, and Effective?

February 1, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Smarter Workforce and Smarter Commerce are the two major themes of this year’s conference for customers and business partners at IBM Connect 2013.

IBM is Messaging, Managing, and Delivering

First, I want to complement IBM on the clarity and alignment of its strategy with action. I have not seen this level of aligned organization and action across such a large and complex corporation before.

Building out under the Smarter Planet umbrella, IBM is bundling its many products and services, coordinating internal research and development, making targeted acquisitions, working across product and organization lines, and communicating clearly in its go-to-market campaigns. Given the great number of successful Smarter Workforce client case studies being presented, the proof points are already building to show business value can be delivered.

Smarter Workforce Supports Smarter Commerce

Smarter Workforce and Smarter Commerce are each separate service lines that can be coordinated to achieve greater business impact. Each is a combination of the IBM Platform for Social Business (social networking, social analytics, and social content) bundled with other new and existing products and services. Under the hood is a myriad of product lines making it work operationally, all tied together by messaging:

  • Smarter Workforce: Activate the workforce to improve productivity and unleash innovation
  • Smarter Commerce: Delight customers to increase loyalty, advocacy, and revenue.

Balance Individual Focus with Collective Value

Jonathon Ferrar, IBM vice president of Smarter Workforce, talked about the need to be social, smart, quick, and effective. Other words that were used a lot included community and relationships. Connecting communities of practice and building relationships, not for social intimacy, but for learning, leveraging, and leading to delighted customers and achieve business success.

Embedded throughout the social aspects of the services is a focus on the individual user that takes into account ease of use, mobile device access, points of need, and other behavioral aspects that are built in to increase collective business value creation.

Kenexa is Key to Smarter Workforce

The Kenexa acquisition closed in December 2012 and it is already being integrated into current offerings and it will be a key to plans for enhanced Smarter Workforce services as early as the second half of 2013:

  • Kenexa’s software platforms for recruiting and learning will be used for RPO and learning BPO services as well as integrated with the social business platform
  • Kenexa’s behavioral science expertise will be used to inform leadership, organizational, and talent management services and add to the analytics component.

IBM’s HRO services will be impacted by the changes. New options will be available to existing and new clients as talent management, learning, and RPO are brought together.

A lot of complexity remains to be managed, but it would be great to see IBM set a new high bar for making its services, client workforces, and HRO social, smart, quick, and effective!

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HRO Today Forum Europe 2012 Demonstrates the Value of HRO

November 20, 2012

Gary Bragar, HRO Research Director, NelsonHall

I attended HRO Today Forum Europe in Dublin, Ireland from November 13th to 15th to present my “State of the Learning BPO Marketplace” analysis and to introduce subsequent speakers of the learning track.This conference was different than those I’ve attended in the past as several of the sessions were interactive small group discussions. The small groups allowed us to learn from each other, and created energy and enthusiasm!

Interactive sessions I attended included:

  • The opening recruitment session where we identified top challenges and solutions
  • A leadership development program workshop to identify top challenges and solutions.

There were ~260 registered attendees (the same as in Amsterdam two years ago), of which 87% were in attendance throughout the three days including ~50 HR practitioners. Here are some of the highlights from the forum:

Opening remarks: Elliott Clark, CEO of SharedXpertise, opened the conference by sharing some enlightening data from a recent survey, primarily Europe centric:

  • Twice the percentage of providers think HRO is thriving compared to buyers
  • 77% of vendors think M&A is good for HRO compared to 55% of buyers.

Opening keynote: David Andrews, CEO of AOI and founder of Xchanging, presented “Reshaping the HR Business and Lessons Learned from Across Europe.” David began by talking about the history of HR BPO and how BP was the first company to sign a major HRO contract with Exult in 1998 to obtain 40% cost savings to remain competitive. David’s concluding remarks were that the outsourcing space in the U.K. needs to be bigger since ~$18bn is spent by the U.K. government on back-office processes and only ~$700m is outsourced.

Panel discussion: “State of the Market Debate” was hosted by David Andrews and participants included Accenture, IBM, Logica, NorthgateArinso, and Xchanging. Margaret Spink, Managing Director of HR Services at Xchanging, stated SaaS will be the most important phenomenon in the industry and the mid-market will be the biggest growth area. I agreed with Margaret’s mid-market comment, but spent the next day wondering about SaaS until the Xchanging hosted breakfast when Margaret stated that HRO is not just about technology – I couldn’t agree more! Technology is an enabler and I believe more focus should be on implementation, process, utilization, effectiveness, and achievement of desired outcomes.

General session: The conference concluded with a payroll presentation led by Julie Fernandez of ISG followed by a panel that included SD Worx, Ceridian, and CloudPay. The focus of Julie’s presentation and panel were on multi-country payroll beginning with the benefits that include:

  • Reduced number of payroll providers for better procurement pricing and contract terms
  • Consolidated interfaces to HR
  • Improved visibility and reporting of employee headcount and cost
  • Reduced compliance and financial risk
  • Harmonized payroll processes and improved governance.

Challenges of multi-country payroll include securing buy-in of all the countries and funding. Part of the challenge is the implication that all countries must fit one model using one provider. All three panelists use partners in countries where they are not able to provide service themselves.

Q&As from the multi-country payroll session included:

  • Q: How do you get internal finance to have confidence in the provider to prevent an extra layer of checking on vendor performance?
  • A: CloudPay stated that multi-country payroll reports into the client CFO and that one way to satisfy finance is for the vendor to do more self-audits and disclosure.

An interesting discussion also took place on “cloud” with the panel in agreement that the true meaning is you can do anything from anywhere for anything, but that the industry is not there yet due to the concern of knowing where data resides. The industry will, however, grow into acceptance.

In sum, it was a worthwhile conference for anyone interested in learning, networking, and meeting potential clients. I look forward to HRO Today Forum Europe 2013 in London, November 12th to 14th, expected to be the biggest event yet.

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HRO Yesterday and Today

October 29, 2012

Linda Merritt, HRO Research Analyst, NelsonHall

NelsonHall was pleased to contribute to the HRO Today article Out of the Ashes for the 10th anniversary issue. 

Looking back ten years shows a picture of HR saddled with expensive and paper-heavy manual processes, even after the introduction of the big HR ERPs from PeopleSoft, SAP, and Lawson, providing impetus for an emerging HRO industry.

A New HRO Emerges…

The new HRO industry was full of great ideas and big plans and ready to grow well beyond payroll and benefits administration services. Unfortunately, intentions were a bit ahead of capabilities including the buyers, providers, and technology. Luckily for the industry, most clients and service providers fought through the issues, the losses, the changes in scope, and even changes in providers, to stay with HRO.

One of the biggest changes we have seen is the maturation of the HRO experience and enabling technologies. As the HRO experience has been developed, subject matter expertise has grown, global service delivery networks have been built, processes have become structured and standardized, and technology has advanced with more configuration and less customization.

…Goes Global…

HRO is now global in every sense of the word. Clients are based in every region of the world as are sales and service delivery. The highest revenues are still generated from the established markets like North America and Western Europe; the growth markets in Asia Pacific and Latin America are developing beyond service delivery (supply) for multinationals into internal markets for growing regional businesses (demand). For example, IBM is headquartered in the U.S. and Tata Consulting Services (TCS) is headquartered in India, both have major multi-county multi-process HRO clients in Latin America as well as a growing set of in-region service delivery centers.

… and Gets High Tech

Technology advancement is the great enabler of HRO services. The BPO industry as we know it would not be viable without global low-cost communications and the internet that allows work to be done anywhere at any time. Software advances bring not only better tools to clients, but improved workflow processing to HRO service providers, allowing work distribution to where it can be done most efficiently and effectively. Now an employee in the U.S. may call a service center on or nearshore with a complex issue that creates a tier 2 referral to a center of excellence in a third country using data and analysis derived from the data center in a fourth country.

Web-based services, mobile device access, and social media are all transforming the user experience and bringing more value at affordable prices to HRO. The creation of Software-as-a-Service (SaaS) services, HRO platform services that add BPO to SaaS, and the Cloud are bringing more options and affordability to all clients, especially to the mid-market.  

The HRO industry has grown in maturity, capability, and has an even greater future ahead. 

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