HR in the Cloud. 5 Mega Trends Driving SaaS Adoption

Transcription

1 HR in the Cloud 5 Mega Trends Driving SaaS Adoption

2 HR in the Cloud 5 Mega Trends Driving SaaS Adoption A New Economic Reality The human resources function is undergoing a critical and fundamental transformation. Global markets, economic uncertainty, evolving technologies, competition for talent, and the growing need for sustainable business practices are creating new challenges for business and the HR leaders who support them. It is clear the old ways of doing business won t work in the new global economy. Fresh thinking is the new order of the day, and HR professionals have a unique opportunity to create new value for the businesses they serve, their stakeholders, and their communities. Within this turbulent business landscape, a key emerging trend is the adoption of cloud-based technologies such as Software-as-a-Service (SaaS) in order to reduce costs, accelerate business transformation, and create new business value. Why SaaS? SaaS 1 is a software delivery model that allows companies to share computing resources rather than building and maintaining their own. The proven scalability, agility, lower costs, and consumer-like user experience offered by SaaS solutions have made them a highly attractive alternative to expensive, inflexible on-premise solutions: According to the Gartner CIO Agenda Report, 46% of CIOs expect to have more than 50% of their infrastructure and applications operating in the cloud by More than 50% of human resource managers polled in a Towers Watson HR service delivery survey are currently using or plan to use SaaS solutions in ABI research estimates that more than 240 million business customers will access cloud-computing services via mobile devices by 2015, driving $5.2 billion in revenue. Given the relative newness of the SaaS delivery model as a viable alternative to on-premise applications, the last several years have witnessed an impressively high adoption rate of SaaS solutions. A possible explanation is that SaaS solutions have proven to be more affordable, value adding, and easier to use than the non-saas alternatives. But that s only part of the story. Below we will explore five business trends driving the rapid adoption of SaaS business solutions and discover why businesses like yours are moving to SaaS. Trend 1: Globalization Global business is a fact of life. Faced with slow growth and a sluggish economy, companies are forced to seek new markets and sources of growth in developing countries, which are growing at a much faster rate than high-income countries. Even companies that operate locally are global, to the extent that consumers around the world are able to find and purchase their products and services. In this evolving global business climate, multinational companies face several challenges beyond the everyday obstacles of setting up global operations: Global Consistency For years, multinational companies have attempted to develop consistent global talent and rewards strategies in order to improve efficiency and alignment while reducing costs and risks. While some companies have succeeded, most have found it doesn t pay to over-standardize on a global scale. Nonetheless, failing to standardize at all, particularly when it comes to global talent management practices, can be both expensive and risky. Moreover, without a 1 For more information about Software-as-a-Service (SaaS) see Workday whitepaper, The Real SaaS Manifesto. 2

3 consistent global talent evaluation process, it is difficult to assess the level of talent around the world, let alone build a culture of global talent mobility. Local Workforce Strategies Global organizations need to be aware of and sensitive to the changing political and economic sensibilities in different countries and adapt their global strategies for local markets. This requires an understanding of what motivates local workers and consumers, and then tailoring business strategies to the needs of each market. In addition to standardizing global practices, companies must comply with local requirements such as works council approval for staffing transactions in countries like Germany and France. The art of global process design is finding the right balance between globalization and localization, a tall order for global business leaders. Workforce Intelligence To make informed business decisions and find the right balance between global and local, executives, managers, and knowledge workers need a global view of the who, what, where, when, why, and how much of business events and their impact on the company. How Globalization Drives SaaS Adoption One of the greatest benefits of SaaS for global businesses is that all locations are always on the same platform and current version, supporting an accurate and real-time view of the global workforce. Consider what this means: Business leaders can access real-time information about the entire workforce in a single solution. All locations are able to follow the same global processes, with exceptions where needed to support local requirements. All regions are always on the same version with no upgrade lag, because SaaS solutions eliminate the need for costly and time-consuming upgrades. Bottom Line Companies need reliable business data to optimize their workforce investment strategies, uncover potential problems and their underlying causes, and take immediate action where appropriate. SaaS solutions provide a unified platform to track, analyze, and take action on that data. Unfortunately, the proliferation of isolated HR systems have created silos of workforce data captured in multiple systems with different data models and update schedules, making it difficult to inventory talent today or predict tomorrow s talent needs. Companies are unable to get a timely and accurate global headcount report, let alone analyze the cost of, or value created by, the workforce. Lacking reliable, timely insight into the global workforce, global businesses are forced to either seize control at the center or else operate as a federation of independent regional units. Both approaches make it difficult and expensive to respond quickly and appropriately to business change. The Workday Advantage Workday offers unparalleled process configurability and workforce visibility. With Workday, you can easily configure global business processes that support local business rules and change them as business strategy changes without worrying about upgrade impact. Workday actionable business analytics are seamlessly available throughout the application at no additional cost, so you can track the costs, capability, quality, and capacity of your global workforce without expensive bolt-on business intelligence systems. 3

4 Trend 2: Economic Uncertainty Over the last several years of economic uncertainty, HR organizations have found themselves under pressure to deliver better, more cost-effective tools to manage, develop, and deploy talent. HR organizations that are able to rise to the challenge of minimizing costs while optimizing talent investments decisions have an opportunity to become strategic business partners within their organization. However, if it were easy, everyone would be doing it, and HR organizations trying to create business value in economically turbulent times face a number of challenges. On-Demand Workforce In response to the economic uncertainty of the last several years, companies have been turning increasingly to contingent labor instead of full-time employees. According to Time Magazine s Future of Work series, the current size of the contingent labour pool is estimated to be about 20% of the total workforce, a number that is expected to double by Unfortunately, most HR systems do a poor job managing contingent workers, to say nothing of providing insight into contingent worker costs, work, or work quality. This puts companies at risk of misclassifying contingent workers, and makes it difficult, if not impossible, to verify whether contingent workers are really less expensive than employees once you factor in things like location, performance, agency fees, and turnover churn. Here again, reliable workforce data is needed to ride out economic fluctuations and make effective staffing decisions. Workforce Productivity Mass layoffs, combined with slow job creation and scarce skills, have resulted in a workforce that is feeling the strain of doing more work than before with less support. To keep up the fast pace and combat the rising threat of workforce burnout, improving workforce productivity has become more important than ever. Productivity can be improved using tools such as a corporate wiki where information can be easily shared, web and video conferencing for remote employees, Internet and mobile access to work and relevant information, and flexible business applications that offer a consumer-like user experience. However, productivity-enhancing tools have limited effectiveness if they are not combined with more efficient processes, clear communication channels, and a workforce that is empowered to access information, make decisions, and take action in their areas of responsibility. Targeted Talent Strategies Because not all skills are equally critical or readily available to an organization at any given time, strategic companies target their talent strategies with surgical precision in order to optimize their use of finite resources. Instead of spending a year or more to roll out a new one-size-fits-all talent management process, strategic companies manage a balanced portfolio of talent management strategies to optimize the return on workforce investments. For example, a company might implement a talent strategy focused on developing high potentials in conjunction with a talent strategy focused on developing and/or retaining critical skills. The high potential and critical skills talent pools will change over time as business needs change, along with the incentives, performance criteria, and development plans targeted at each group. Keeping up with changing talent strategies requires flexible business solutions, as well as reliable workforce insight. 4

5 How Economic Uncertainty Drives SaaS Adoption In times of economic uncertainty, companies are less willing to maintain and integrate expensive on-premise solutions. The SaaS computing model is financially attractive because it provides business flexibility through an on-demand, payas-you-go model that scales with the business. Here are some examples of how SaaS solutions deliver both superior TCO and value to the organization: Shared Costs - SaaS vendors spread the costs for hardware, software, updates, and data center operations across many customers, enabling SaaS customers to leverage top-of-the-line resources, security, and availability without the high individual cost. No Upgrades - SaaS solutions eliminate the need for upgrades, freeing up IT resources to work on other projects. Open Architecture - SaaS applications utilize modern integration standards and architecture, which drives down the cost of building, running, and maintaining integrations. The Workday Advantage Workday solutions offer the agility, visibility, and lower cost of ownership that companies need to optimize their workforce investments. With Workday, you can easily configure business processes and talent strategies to keep pace with changing business strategies and measure the results of your talent investments. Workday dramatically reduces the cost of innovation with easy configurability and frequent product enhancements, allowing organizations to realize the benefits of innovation more quickly. Lower Cost of Data - Cloud computing has driven down the cost of data management and analytics, making sophisticated workforce analyses faster, cheaper, and more broadly available. Bottom Line The flexibility and lower costs of SaaS technology makes SaaS solutions the better choice for dynamic global organizations that must respond nimbly to changing economic conditions. 5

6 Trend 3: Technology Innovation Over time, technologies tend to converge. Consider how easy it is to take a picture, look up information, track appointments, navigate, play a game, watch a video, read a book, submit or approve an expense report, send a message, add contact information, play music or even make a call! using a mobile phone. Similarly, computing and Internet technologies have converged over the last decade, making it possible to harness the power of social computing anytime, anywhere and from any device. The benefits of technology innovation to modern business are many, but in this age of easily accessible, networked technology, HR organizations face several daunting challenges as they struggle to keep pace with change. Mobile Workforce At this very moment, there are more people accessing Internet services from their mobile phones than using personal computers. Over the past decade, mobile was one of the fastest-growing major industries on the planet and now accounts for about 2% of the total global GDP. Given the rising expectation of instant access to data and applications on the consumer side, it s not surprising that modern employees and managers also expect the ability to work and access information from any location, on any device, at any time. Web 2.0 Usability Business users are accustomed to a Web 2.0 user experience in their personal lives, so it is not surprising these users expect intuitive applications at work as well. Companies that fail to provide intuitive, easy-to-use business applications pay the price in terms of lower productivity, data reliability, and engagement. Applications that are difficult to use create a variety of problems that build on each other. First, if an application is difficult to use, companies must train people to use it. This means a smaller group of users will have access to the application, which in turn makes it impossible to empower business users with easy access to supporting information. Rapid Rate of Change If we compare the fates of corporate giants Amazon and Kodak, it s clear that innovation is key to succeeding in today s business climate. Companies must be able to quickly formulate and execute on new strategies in order to meet changing business needs. Technology innovation is both a driver of change as well as a tool to help companies anticipate, navigate, and respond to change. Consider how quickly ideas are spread using social media, how easy it is for remote teams to collaborate and share information using modern technology, or how easy it is to find existing products and information online in a matter of seconds. That s how business applications should work! How Technology Innovation Drives SaaS Adoption Unlike ERP applications that were designed to support highly trained back office HR administrators, modern SaaS solutions were designed to support a wide network of untrained users using the modern Web 2.0 usability standards pioneered by successful online retailers. Bottom Line SaaS solutions help modern organizations drive innovation. 6

7 In other words, companies are unable to realize their business objectives because they lack the right people to make it happen. Some companies are hampered by lack of visibility into their current workforce, while others are held back by outdated notions of how to attract, retain, and develop talent. Whatever the cause, the result is mediocre business performance today and a bleak outlook for future growth. Needless to say, competing for skilled talent around The Workday Advantage Workday delivers a modern look and feel that utilizes concepts made popular by consumer websites. Workday s UI empowers business users to easily access information, participate in business processes, and collaborate across the enterprise from any location, on any device. Non-SaaS applications lack the modern technology mobile security, device strategy, UI design, etc. to make mobile deployment easy and cost efficient. Workday applications are optimized for mobile access, intuitive use, and remote collaboration, enabling companies to lower costs while improving productivity. With Workday mobility, flexibility, and usability are out of the box. Trend 4: Competition for Talent According to Manpower s latest global annual survey, 46% of senior human resources executives said that a talent gap was making it harder for their firm to implement its business strategy. 2 Only 27% said their business had the talent it needed. Unfortunately, the talent shortage is likely to get much worse because of the imminent retirement of a generation of seasoned workers with sought-after skills. the world creates several challenges and priorities for HR organizations: Worker Engagement People make your strategy, execute on your strategy, and tell your company s story. 3 That s why companies with engaged employees outperform companies with un- or disengaged employees, and also why worker engagement is a strategic priority for companies that want to attract and keep the best people. Employee disengagement is also a serious business concern due to the high costs associated with it. For example, Gallup estimates that actively disengaged employees cost the German economy between billion and billion per year in lost productivity. Part of this high cost can be attributed to absenteeism, since the absentee rate among disengaged German employees is 28% higher than that of engaged workers, and each day of missed work costs German companies an average of per worker. 4 Given the proven benefits of employee engagement and the high cost of disengagement, HR organizations are expected to find new ways to engage employees and create a high-performing business culture

8 Workforce Development In response to the scarcity of ready talent around the world, companies are starting to tap into underutilized talent pools, including women and older workers. To bridge skills gaps, they are also turning to creative and cost-effective solutions, such as mentoring programs and on-demand learning. And to retain and motivate workers, companies are beginning to offer lateral career paths, as well as new job flexibility and incentives. Future business leaders will also need a new set of skills the ability to lead global, diverse, and virtual teams will play a key role. Companies are considering a variety of strategies to improve leadership readiness, including identifying high potentials, overseas assignments, and formal succession and mentoring programs. In addition, they are looking for business solutions that can support their workforce development strategies. At the same time, HR leaders are realizing their current patchwork solution landscape is incapable of delivering the information they need, and their rigid legacy systems provide neither the usability nor the flexibility needed to keep up with business change. Bottom Line It should be as easy to find an employee with specific skills or identify critical skills gaps as finding a book or a pair of shoes online. Unfortunately, it s not a simple process, and it s a key reason strategic HR organizations and business leaders are demanding new and better solutions. Talent Summary Liu, Betty Potential: High Potential Emergers Director, Payroll Operations Achievable Level: 2-3 Levels # Retention Risk: Low Risk Organization: Human Resources Loss Impact: Critical Manager: Logan McNeil Position: Director, Payroll Operations Last Performance Rating: Performance Over Time: 3 - Meets Expectations 3 - Meets Expectations Location: San Francisco Time In Position: 12 year(s), 1 month(s), 3 day(s) Length of Service: 12 year(s), 1 month(s), 3 day(s) Citizenship: United States of America Succession Plans: Chief Human Resources Officer - Logan McNeil Job History Competencies 01/01/2000 Director, Payroll Operations Current Previous Internal Projects Building Talent Expert Client Acquisition Skills Talent Mobility To retain and engage top talent, companies must get Work Experience External Job History Education Core Values Organization Expert Sales Business Planning Skills Proficient Leadership Results Orientation Proficient Time Management better at assessing the talent they have today and optimizing how current talent is deployed. Better insight Certifications Languages Chinese, Latin Awards Proficient Mobility Career Interests into workforce talent can help companies make better Training use of talent, foster a higher level of engagement, and navigate economic fluctuations more smoothly. The Workday Advantage One of the top drivers of employee engagement is the availability of growth opportunities within the organization. It follows that a top challenge for HR organizations is to create a dynamic culture of talent mobility. How the Competition for Talent Drives SaaS Adoption With Workday, you can easily search for specific skills across the organization, add workers to talent pools, and use these throughout the system to target specific workforce strategies to different workforce segments. Workers can maintain their own talent profiles, indicating skills, proficiencies, and career goals. Hiring managers can review the workforce to match skills to jobs to promote internal talent mobility, and workers looking for the next step can compare their skills to roles in the company for a good fit. Gone are the days of cookie-cutter talent management; today it s all about managing a balanced portfolio of targeted talent-management strategies. HR needs to deliver solutions that make it easier for managers to assess, manage, and engage talent, as well as reliable workforce data to drive global talent investment decisions. 8

9 Trend 5: Sustainability According to the McKinsey research paper Data Centers: How to Cut Carbon Emissions and Cost, 5 the world s 44 million servers consumed.5% of all electricity in 2008, with data center emissions approaching those of small countries and projected to quadruple by The same report estimates that 25% of the average IT budget is spent on computing resources, including facilities, storage devices, servers, and staffing, and that the average corporate data center is only about 5% efficient. Much of the energy waste in data or shared computing centers results from inefficient cooling or outdated servers. However, a significant amount of energy waste results from a failure to understand the cost of data in terms of human, physical, and energy resources. While IT organizations struggle to meet their organization s growing data needs, corporate sustainability has risen up the ranks on the executive agenda for several reasons. Sustainability is also a differentiator when it comes to attracting and retaining talent. As a result, corporations are under increasing pressure from all sides financial, regulatory, customer, and brand to engage in sustainable business practices. The next few years will witness a sea change with respect to sustainability. Although too many business leaders spend too little time thinking about future generations despite the fact that many of them have future generations of their own entrusted to their care consumers are starting to think about it more. Employer Branding Sustainability matters to employees, in particular younger generations 6, meaning companies will find it increasingly difficult to recruit and retain top talent without a serious sustainability agenda. Winning the war for top talent is especially important in creative industries, which is where we can expect to see the most innovative sustainability policies communicated as part of the overall employer brand. As the best people increasingly choose to work for Increased Demand for Data Modern corporations rely on data, which is why corporate data centers house thousands of servers to provide that data. However, building and operating these centers consume increasing portions of corporate IT budgets, leaving less available capacity for high-priority technology projects. As the demand for data and computing resources continues to increase, the rising cost and environmental impact of providing that data threatens to have a significant impact on corporate profitability. Stakeholder Attention Corporate stakeholders such as regulators, stockholders, and consumers are taking a greater interest in how companies manage their carbon footprints. companies that promote sustainable business practices, sustainability will continue to grow in every industry. Increasingly, companies that want to thrive in a world where corporate stakeholders are watching will need to offer a compelling sustainability strategy. How Sustainable Business Drives SaaS Adoption SaaS is a software delivery model that allows companies to share computing resources rather than building and maintaining their own. With SaaS, computing resources are shared and optimized across a large number of customers, driving economies of scale in terms of lower costs and energy consumption and higher computing efficiency. In other words, SaaS is naturally more sustainable, because it depends on efficient energy use and enables companies to decommission inefficient data centers

10 The results speak for themselves: The Carbon Disclosure Project recently released a study that was conducted using 11 global firms as case studies, including two Workday customers: Aviva and Applied Materials. The study found that by 2020, Large U.S. companies that use cloud computing can achieve annual energy savings of $12.3 billion and annual carbon reductions equivalent to 200 million barrels of oil enough to power 5.7 million cars for one year. Bottom Line With the significant financial and environmental benefits offered by SaaS solutions, it s no surprise forwardthinking companies are turning to the cloud. The Workday Advantage With Workday SaaS solutions, you can reduce your data storage costs and your carbon footprint at the same time, creating a win for the environment, your corporate stakeholders and the bottom line. Workday takes green even further by purchasing carbon credits to offset the energy used by its facilities and data centers, with the goal of providing 100% carbon neutral SaaS solutions. For more information on this and other sustainability initiatives at Workday, see the Workday sustainability report. Is SaaS Inevitable? Some of the most significant business trends of our time are influencing companies to adopt SaaS solutions. Global markets, economic uncertainty, evolving technologies, competition for talent, and the growing need for sustainable business practices have all created a growing demand for more usable, affordable and flexible business solutions. For HR organizations, this means designing effective workforce strategies that help companies meet their business objectives, including the ability to: Assess and optimize deployment of available talent; Empower business users with accurate workforce information; Align talent strategy with current and future business needs; and Demonstrate the business impact of workforce investment. HR organizations that have access to dynamic, real-time, contextual workforce information within a flexible global solution have a clear advantage over HR organizations that struggle with disparate, inflexible systems. Modern business happens in the cloud, and increasingly companies are questioning the high costs, hardware requirements, and overall value proposition of onpremise solutions. Enterprises are looking to modern SaaS solutions as more companies embrace SaaS and realize the value of continuous innovation, a consumer-like user experience, flexible solutions that adapt as business needs change, and embedded business insight. That s why more and more companies like yours are choosing SaaS over on-premise solutions. About Workday Workday is the leader in enterprise-class, Software-as-a- Service (SaaS) solutions for managing global businesses, combining a lower cost of ownership with an innovative approach to business applications. Founded by PeopleSoft veterans Dave Duffield and Aneel Bhusri, Workday delivers unified Human Capital Management, Payroll, and Financial Management solutions designed for today s organizations and the way people work. Delivered in the cloud leveraging a modern technology platform, Workday offers a fresh alternative to legacy ERP. More than 280 customers, spanning medium-sized organizations to Fortune 50 businesses, have selected Workday. Visit us at Workday, Inc Stoneridge Mall Road Pleasanton, CA United States WORKDAY ( ) Fax: Workday, Inc. All rights reserved. Workday and the Workday logo are registered trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders. HRCLOUD