My attention was momentarily side-tracked by an interesting blog penned by HR blogger-cum-consultant Andy Spence bearing the dramatic title "Will HR in the Cloud kill HR Outsourcing". Oh yay - I like titles like that...
Andy raises some interesting points and cites some good examples and other analyst data sources, namely:
- HR Buyers are cautious, ‘letting the dust settle’ on SaaS providers as they review their current HR Operating Models and future needs.
- The rise and rise of Workday has actually breathed life into the HRO market – NGA HR, IBM and AON Hewitt are implementing or have HRO contracts using Workday software.
- HRO Buyers want both SaaS and services together, however are not willing to lose portal, chat, contact centre solutions that have been developed over last 10 years. Expect HRO providers to develop solutions in this space.
- There is a 15-20% HRO penetration level for orgs with >10,000 employees and there has been more new buyers in last 8 months than previous 2 or 3 years
Why the successful advent of HR Cloud solutions breathes new life into the multi-process HRO corpse
Having cut my teeth on HRO in the early-mid 2000s, I became increasingly frustrated with the market because you couldn't make the numbers work moving dysfunctional processes to a third party provider which - more often than not - didn't have much of an integrated technology platform to help standardize process and workflow. My good friend and HfS board member, Naomi Bloom, was at pains to point out that multi-process HRO was fundamentally flawed as you can't improve HR processes if the technology underbelly was a steaming pile of rubbish.
So I watched the market tank into insignificance while the likes of Fidelity, Mercer, Convergys, IBM, Accenture and several others made subtle (and some not-so-subtle) exits from the space. I also watched the admirable efforts of SAP and Oracle trying to encourage everyone to do HRO on their on-premise software packages, but struggle to do much more than paint pretty pictures around payroll deals that weren't really much more than... er... payroll.
Sadly, everyone who was counting of multi-process HRO being successful quietly slipped away, either to focus on discreet HR services markets like staffing, benefits admin or payroll, or slinking off into adjacent growth BPO markets like F&A, procurement or LPO.
Let's face facts here, people. When God was dishing out the technology dollars, poor old HR was always loitering at the back of the queue. We've grown up amidst hoards of enterprises suffering from multiple instances of ERP, far too many payrolls, benefits providers, staffing firms, complete black holes of data on their workforces being mismanaged by understaffed and under-skilled HR departments. So many firms have been desperate to make HR less cumbersome - they've tried to outsource it, they've tried looking at terrible software products that are overpriced, hard to integrate and built on rules-based engines that add little-to-no-value. They've made HR the whipping boy for everything dysfunctional and low value about an enterprise.
Then slowly, but surely, HR has gone Cloud crazy.
It's completely changing the way companies can/are/should be approaching HR. The industry is suddenly awash with enterprises rolling out the likes of Workday - and seeking providers which can not only implement the product, but also help with the HR transformation, support and processing that comes along with the purchase. In short, rolling out a true Cloud-based HR solution completely changes the HR dysfunction game. It brings together the app and the process in a way we have never experienced and enables organizations to kill off the obsolete processes that add zero-to-negative value - and helps them re-set and rethink how they manage their workforces.
Suddenly, you don't need armies of HR admin weenies to pester staff to fill out forms and jump through their hoops - as so much of this is now automated and standardized. And when there are providers (we hope) prepared to step up to the plate to host your Cloud-based HR nirvana, you can completely rethink how to refocus how you manage your staff. Suddenly, line of business managers can access better data to understand how to staff their functions better and manage the performance of their staff in a more relevant value-add manner. The value of HR - of acquiring, developing, motivating and managing staff, is now able to permeate the business managers outside of the dreaded HR department because their systems of record are suddenly functional and more relevant.
The Bottom-line: Cloud is helping clean out the detritus of everything that was wrong with HR
Dysfunctional process and dysfunctional technology created a dysfunctional function that attracted low-value individuals to paper over the cracks. The emergence of more affordable Cloud based solutions is finally - after decades of disarray - making it possible for firms to stop staring into the HR abyss and start getting functional again. And the HROs who want to do more end-to-end HR services finally have a backbone upon which to service clients. Yes, the dust needs to settle on the SaaS products and the capabilities of the new breed of HROs, but the HR Cloud revolution seems to be taking root and threatening to completely revamp how today's enterprises can - and should - manage their workforces.