The Puzzling Puzzle of HR and HRO

Have you ever had a thought that was hard to express, been at a loss for words to explain something?

Sometimes I find it is helpful to first express what I can and then build piece by piece over time until I arrive at a complete construct, kind of like building a jigsaw puzzle without the picture on box.

Here are a few of the HR and HRO puzzle pieces I am trying to fit together:  

• The increasing use of HR point solutions in an intended “best of breed” mix

• The changing role of a primary multi-process vendor

• The impact platform BPO will have on the market and HR

• The role of business analytics and HR analytics

• Finding the optimum shared services balance of insourced and outsourced services

• The danger in divergent paths for HR services delivery that “free up HR generalists to do more strategic work”

• How to move up the value chain from improving operating expenses to improving the business

• The impact of cost-driven short-term investment decisions on long-term HR transformation

To be a strategic business partner, HR itself must have two strategies. The first is a strategy for how it  will create business impact, which may include initiatives to increase revenues and maximize the total cost of labor. The second is a strategy that answers how HR should be organized, and what capabilities, tools and technologies it needs to deliver results to the business.

One of the advantages of long-term strategies for HR is that they can be guiding frameworks – even when there are delays and needs for modifications due to business and economic realities – without losing sight of the final picture.

In January I introduced the concept of the HR services portfolio manager and the services delivery architect. It is the role of the services delivery architect to build out the service delivery model ensuring it is all seamlessly integrated, managed and provides the required service quality, cost and performance. The implication is that the service delivery model has been developed with both the HR operational and business impact strategies in mind.  

I was just scanning the 2009-2010 edition of Cedar Crestone HR Systems Survey, and it triggered a puzzle connection for me.  Survey respondents, seventy-four percent of which were from HR, were asked where they were spending at least twenty-five percent of their time and budget. Ranking high on both elements were business process improvements, talent management processes, and employee and manager self services. More time than budget was spent on HR systems strategy and business intelligence/workforce metrics. And even less time and budget were allotted to systems upgrades.

How targeted can you be in improving business and talent management processes if the underlying systems capabilities are not present, fully integrated and unfunded?  If there is a full architected HR systems plan, then a detour driven by the economy can be accommodated and interim plans based on existing capabilities. If there is not a plan, then short- term plans and decisions may be building a puzzle with key pieces missing. Do you have all your key puzzle pieces laid out on your planning table?

Linda Merritt, Research Director, HRO, NelsonHall

BPO Platforms – a Springboard or a Swan Dive?

Last week I attended Infosys BPO’s analyst day and BPO conference in Baltimore, Maryland, overlooking the beautiful Inner Harbor. Platform BPO was one of the big topics, and one of Infosys BPO’s big bets for new avenues of growth. 

Platform BPO is the service delivery model whereby end-to-end processes are offered as managed services on a standardized business platform based on an ERP solution that is hosted, managed and maintained by the BPO provider. Platform as a Service (PaaS) providers bundle operations, integrating management of an end-to-end process with their technology suite and staff. Designed to be configured instead of customized, platform BPO will accelerate mid-market BPO adoption with its lower cost of entry, scalable services, variable pricing and ease and speed of transitions.

Platform BPO service providers will continue to build out their global service delivery footprint with service centers and partnerships, taking advantage of locations with low cost labor and access to skilled talent. These true multi-tenant service platforms will renew the promise of economies of scale the earlier generations of customized client-specialized services did not deliver. It’s an enticing value proposition designed for today’s capital constrained and challenge and change fatigued buyers. If the adoption rate is good, it will be a more economical infrastructure for vendors which can provide a springboard for profitability.

The timing is right. Clients are asking about and for solutions they would have rejected pre-downturn. The advent of new technologies like Service Oriented Architecture (SOA) and the openness of ERP providers like SAP and Oracle to work with service providers are enablers supporting the degree of needed integration.

There will be challenges, especially for the provider community. In return for moving to a configurable platform, the buyer gets to pass some risk and increased expectations over to the service provider. The provider becomes responsible for managing and integrating specified processes, applications and technology, including the investment in development and upgrades, and the selection, management and fit of any third-party applications and delivery partners. Also, accepting accountability for the increased complexity of integrated IT and operations requires a greater level of skilled staff capabilities and coordination across the expanded value chain. 

Hmm…not hearing any HRO platform BPO cannonball splashes yet? It’s a big leap for HR to make and platform BPO is not expected to fit everyone. Yet it is a viable option for many in the mid-market and even some in the large market. PaaS for HR will be especially appealing to those with openness to new solutions, positive experiences with hosted services and point solution SaaS providers, and those pushed by economic realities.

Single service platforms are not new; think payroll or benefits administration as managed services platforms. What is new is the possibility of multi-client and multi-process HRO on a platform that delivers globally for buyers and providers.

There are already some buyer toes in the water. Infosys reports it has several clients up and running on its new Hire-to-Retire HRO business platform which includes talent acquisition, development, retention and management services. At the conference I spoke with an attendee from a borderline mid-market to large-sized company who was thinking about replacing several current separate HRO provider services and wanted to learn more about the new Infosys HRO offering.

Overall, PaaS sounds great and the water is warm, so jump on in! Not ready? Then watch the pool of platform-based services and providers expand, learn about the challenges and successes, and get ready to test the waters.

Linda Merritt, Research Director, HRO, NelsonHall