HRO in the cloud? What does the new generation of HR systems mean for HR sourcing?

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1 Alsbridge Insights HRO in the cloud? What does the new generation of HR systems mean for HR sourcing?

2 Executive Summary A number of new cloud based multi-process HR systems are competing for the attention of HR Services buyers today: in particular Workday, SuccessFactors and Oracle Fusion. They promise a wide range of benefits such as speed of implementation, improved end user experience, and simpler operation. Workday is gaining most attention in today s market, because for many buyers, it appears to provide the most developed cloud-based HR system. This pack contains a case study review of this system. Cloud based HR systems are still relatively new, and questions remain around their impact on many aspects of the HR service model and HR sourcing including selfservice adoption, legacy systems, current and future HRO transactions In Alsbridge s view, cloud-based HR systems are a major force in the HR technology and process landscape. They are a key consideration in HR strategy and HR sourcing decisions, and are changing the relationship between system vendors, service providers and buyers. Copyright 2013 Alsbridge plc. All rights reserved. 2

3 What does cloud HR promise? Cloud HR promises better deployment, better functionality, and avoidance of the issues associated to traditional Enterprise Resource Planning (ERP) deployment: Rapid deployment configuration not customisation, which means faster time to value and simplicity of ownership Global footprint single instance supports multiple languages, currencies, formats, or regulations. More intuitive functionality better user interface, improving self-service Easily consumable updates infrequent updates per year rolled out across whole customer base rather than major upgrades leaving multiple versions in play No outdating - All clients on one single up to date system version Lower cost of ownership Cloud-based = no hardware or software Configuration-based system; no hard coding; less need for expensive support Lower Capex; higher Opex Embedded analytics no reporting bolt-ons. Copyright 2013 Alsbridge plc. All rights reserved. 3

4 A case study: Workday Workday is an emerging Saas / cloud-based suite of applications that includes a Human Resources Management System (HRMS). Workday is built around focused configuration rather than broader customisation. In practice, it does require a measure of client-side process change to enable configuration to meet business needs. Workday runs a tightly controlled access process around accredited implementation consultants and BPO supplier side users. All tenancies of Workday are owned directly by client organisations, with no current indications of opening up tenancy to BPO Suppliers. Workday appeals both to smaller / mid-size organisations looking for a lean HR platform, and also to larger corporates who are seeking a low total cost of ownership, with no sunk ERP investment and an active process transformation agenda. Copyright 2013 Alsbridge plc. All rights reserved. 4

5 Who is already using Workday Workday has had only a few years to gain market share Adoption appears to have accelerated in the past months Current Workday users include major corporates as well as smaller firms Workday s current clients include: Copyright 2013 Alsbridge plc. All rights reserved. 5

6 Who are the key experienced Workday partners? Workday is not yet commonly offered as a platform BPO service, though more Suppliers are starting to warm up to providing Workday based BPO services either through their own tenancy or using their clients Workday tenancies. Only Workday certified organisations are able to work in Workday configuration and deployment on behalf of clients. At present these include: Copyright 2013 Alsbridge plc. All rights reserved. 6

7 What HR scope does Workday cover? Source: Workday Alsbridge Point of View: Broad functional coverage; growing language footprint Regular updates and additions to functionality Recruitment recently launched Some questions regarding payroll and learning coverage. For example payroll functionality is North America focused at present Copyright 2013 Alsbridge plc. All rights reserved. 7

8 Workday in practice: Alsbridge point of view Designed for the Way You Work Real Cloud one version Cost savings The Promise the most intuitive enterprise application ever designed Every customer is on the same version of Workday a subscriptionpricing model, you pay as you go low cost of ownership Alsbridge Point of View Available as standard on mobile devices no charge for Apps Methodology very much focuses on deployment of the tool. Organisations still have to take full accountability for business readiness, end to end process design, change management and BAU governance to get the best out of the tool Enables increasing user adoption of transactions via self service which can offer commercial and data accuracy benefits Very modern user interface Every customer really is on the same version There are 2 updates per year for all Timing of releases published up to a year in advance New functionality deployed switched off switch it on if you want it No risk of running multiple versions or unsupported products but careful tenant management is needed Does not remove client obligations around system testing Greenfield cost savings could run up to 40% (potentially) Sunk investment in ERP needs to be factored into business case Cost savings driven by lack of hardware requirements Configuration vs customisation means less reliance on systems consultants No external expense for upgrades all clients on one version workflow is built-in no bolt-on required Powerful and flexible reporting is built in no bolt-ons required faster deployment shorter time to value Copyright 2013 Alsbridge plc. All rights reserved. 8

9 Workday in practice: Alsbridge point of view The Promise Alsbridge Point of View Integration Global Simple and effective Agile user, not IT, driven changes accomplish strategic objectives and optimize your talent around the world Configuration versus customisation means that Workday does come out of the box One methodology for deployment Workday s way is the only way Import of data from bespoke ERP could add complexity Following deployment ongoing configuration can be managed by end-users, but this still requires a skilled super-user. Potential to free HR from dependency on IT No bolt-ons are essential to deliver basics such as reporting or workflow, but there is no document management capability Additional tooling needed for end to end workflow coverage, vs just the Workday element of process, Ease of access to and flexibility of reporting does enable this, but possibly no more so that ERP plus bolt-on Security Rock-solid security Servers are held in the UK and US to cater for data protection concerns Complexity could be introduced where there is a need to get around specific requirements in industries such as FS where holding data in the public cloud is restricted Mobile Workday puts mobile first Available as standard on mobile devices no charge for Apps. ERP is a long way from this at present May present challenge rather than advantage for organisations with restrictive policy around mobile access to sensitive data Copyright 2013 Alsbridge plc. All rights reserved. 9

10 What does Cloud HR mean for sourcing decisions? Today s market offers buyers a range of credible cloud-based HR systems which can meet needs ranging from transformative multi-process deployment, to single process module deployment, and shades in between. Though there appears to be some degree of confusion in the market between true cloud offerings and hosted system hybrids. Fundamentally changes legacy ERP software ownership model, lightening the burden of implementation investment and simplifying ongoing commercial management of HR systems. Builds on lessons learned from legacy ERP deployment and can provide a catalyst to drive simplification and standard process compliance, to maximise cost savings. Rigorous organisational and operational readiness assessment and change management are no longer nice to have business cases for cloud HR are often heavily reliant on increased self-service adoption. Impact on HRO is yet to be fully understood - how cloud HR evolves into platform BPO offerings will be key to un-tapping potential for large scale change in the HRO market. Recent release of Recruitment functionality could be disruptive in the recruitment tool marketplace in-flight buying decisions may be delayed whilst potential is assessed. Copyright 2013 Alsbridge plc. All rights reserved. 10

11 How Alsbridge can help Alsbridge has advised dozens of organisations on HR Sourcing Strategy including: Shared Services Outsourcing HR Systems Renegotiation Commercial models Alsbridge has a bank of experienced experts in HR cloud systems and HR sourcing, as well as HR benchmarking data, tools and templates. Alsbridge can support your thinking via half-day working sessions to explore the main issues and opportunities. Alternatively Alsbridge can provide a more in depth support to your HRO, shared services or improvement programmes. For more information, please contact jill.stabler@alsbridge.eu Copyright 2013 Alsbridge plc. All rights reserved. 11

12 About Alsbridge Insights Alsbridge Insights are a new series of papers, focusing on burning and emerging client sourcing questions. Alsbridge Insights Insight Available: #1301 Innovation in Outsourcing #1302 Transition Assurance #1303 Finance BPO market #1304 Transactional Pricing #1305 HRO in the Cloud #1306 Tail Spend Management #1307 Robotic Automation #1401 Business Outcomes #1402 Analytics Please contact mark.jones@alsbridge.eu for more information. Copyright 2013 Alsbridge plc. All rights reserved. 12