All aboard the eHR train

by 22 Jun 2010

eHR solutions can assist in reducing HR administrative and transactional workloads while improving cost and operational efficiencies. HR Leader looks at some of the latest trends in eHR and what they mean for HR professionals

he economic downturn forced many companies to deliver on cost savings, and at the same time, deliver on performance without putting a strain on budgets. A recent survey found that while more than 70 per cent of companies in Australia use a HRIS, budget is the main roadblock for improving HR systems in the post GFC climate.

The survey, which was conducted by HR technology consultancy/provider Navigo, also found that in 32 per cent of cases, increasing efficiency is the main motivation for improving HR systems and technology, while strategic motivations were also a common factor. “HR executives believe that strategic initiatives suffer through the time-intensive demands of transactional HR – the drive for efficiency is really a drive to free time and resources for strategy,” said Navigo’s Australian HR Tech Report 2010. “Technology-based systems are likely the most popular because of the operational efficiency they deliver.”

While there is some room for improvement in the automation of HR’s basic service delivery processes, most organisations are striving to become more of a strategic partner with line managers and executives, according to James Holincheck, Gartner Research’s managing vice president.

“To that end, the focus has started to shift to activities and technologies that support line managers in managing talent,” he says. “One of the biggest challenges is that HR has many functional silos. Managers want a seamless end-to-end process experience; process thinking must become pervasive if HR is to be an effective partner with the business.”

Holincheck, who recently authored a Gartner report into the top up-and-coming human capital management processes, says the current focus for most companies is to ensure that they are delivering services as efficiently as possible. “However, HR organisations should take a broader view, and not only focus on HR costs, but also on how to affect fully loaded labor costs and workforce productivity,” he says.

Benefits and cost savings

HR is increasingly turning towards outsourced eHR offerings to reduce costs, according to Vern Hue, an associate market analyst in software and services (ANZ) for IDC Research. “Compliance and automation intensive procedures, such as payroll and storing of applicant information, are seen as the most logical process to be outsourced, allowing the organisation’s HR practitioners to dedicate their attention and expertise towards the more pertinent task of talent management and employee outreach,” he explains.

John Macy, vice president, Asia Pacific, of HRMS consultancy Jeitosa Group International, says that eHR can assist HR in becoming more efficient. “It is a matter of process review and understanding HCM product capability. There are still a lot of companies that are carrying out processes that could benefit from self-service,” he asserts.

eHR can help reduce costs, and Macy’s experience is that companies are staying with inefficient and costly technology delivery models. “That is, there is a reluctance to take a look at infrastructure hosting and the same applies to application delivery. The new SaaS (Software as a Service) model should at least be evaluated to see if there can be a reduction in TCO (Total Cost of Ownership),” he says.

Future eHR trends

There will be an increase in Web 2.0 in the HR space as companies find different ways of encouraging collaboration within an organisation, according to Hue, who adds that Web 2.0 can assist with learning and the fostering of camaraderie among teams in an organisation.

“Web 2.0 will embrace HR functions, such as employee training, performance management and also towards more outreaching functions, such as recruiting and candidate screening,” he says.

Hue believes that SaaS will also play a major role in human capital management, as this deployment method will be a more cost-effective technology to adopt.

Macy predicts an increase in the use of remote platforms to build composite applications to enhance product functionality. “ has their AppExchange to expand the functionality of Customer Relations Management (CRM) systems by publishing integration points and encouraging developers to build marketable component products,” he explains.

“HR will benefit from the same concept and new component developers will emerge to build specialty applications.”

SaaS companies have the most to gain through improved integration techniques, Macy adds, as clients want “one neck to choke” and they prefer one source to supply all their computing needs. “That doesn’t mean one HR application supplier because we know that is not possible,” he says.

“Companies have been trying for years to build one product that suits all clients and it just won’t happen. HR applications must be assembled from components from multiple vendors but in a seamless integrated user interface.”

The top trends in e-Hr

HRIS use in Australia is diverse. The majority of organisations with 500 or more employees use a HRIS either combined with payroll or on its own. The Australian market has a rich diversity of systems despite the consolidation of vendors that has occurred within the last decade.

Technology-based solutions are more satisfactory. While HR technology adoption is still disparate across Australian organisations, those with technology-enabled HR systems were 91 per cent more satisfied than those without.

HR targets efficiency in drive toward strategy. For 32 per cent of Australian enterprise-level organisations, increasing efficiency is the primary motivation for improving HR systems and technology. Increasing workforce intelligence and improving people management were the second and third most popular motivations.

Reducing costs is not a motivator despite the GFC. Despite clearly identified increases in efficiency that HR systems improvement can deliver, HR does not directly equate this to cost savings. The problem lies with the difficulty of clearly stating the potential return on investment (ROI) of a new HR system. The solution lies with vendors, who need to more accurately enumerate the potential for cost savings and time-to-ROI on their technology.

Organisations are ill-prepared for an ageing workforce. Thirty-six per cent of organisations have no succession planning systems or technology. Talent management, especially succession planning, will become more important as organisations look for ways to retain talent in the face of an ageing population, pending retirements, and the resulting lower availability of skilled workers.

True business intelligence is elusive. With the majority of organisations having adopted an HRIS, the problem is knowing what data to extract and how to present information in a way that provides value and insight for executive-level decision making. The key issues are not with system choice, but with data accuracy and data ownership.

No one-size-fits-all. Each industry has different types and levels of adoption: not just niche HRIS use, but greater or lesser levels of overall system adoption, and different leanings towards HRIS-based or standalone systems.

Source: Australian HR Tech Report 2010.