The second in this series of articles explores how Cloud-based solutions can help HR teams make a real contribution to company balance sheets. Why is HR under pressure and still not delivering?Today’s HR leaders are expected to do the impossible. CEOs want them to address key strategic objectives, such as retaining and engaging the best talent or creating a strong leadership pipeline to provide business continuity at all times. But HR leaders are also under pressure to improve their companies’ financial performance by delivering efficient, cost-effective services and - most importantly ensuring that all HR processes comply with national regulations.
Most HR teams struggle to meet these twin challenges. They just do not have the right people, processes or HR technology in place.
HR processes present a further challenge. Often developed piecemeal by different parts of the same company, they can vary hugely in quality and are also a wasteful duplication of effort.
The technology available to HR teams often makes matters worse. A study by Deloitte Consulting2 _ found that 53 per cent of companies surveyed were using systems that were at least seven years old, a proportion rising to 63 per cent for larger enterprises. Many of these systems had been developed in-house and were out-of-date and expensive to maintain, as well as difficult to integrate with each other.Rethinking HRIn a bid to overcome these problems, many companies have attempted to transform their HR functions over the last 20 years. But continuing dissatisfaction with HR suggests that many transformation programmes have failed to live up to expectations. A 2010 study by IBM’s Institute for Business Value, reported that fewer than 5 per cent of executives thought their organisation’s management of people did not need to improve. Poor HR support was widely viewed as a key part of the problem.
Sustainable HR transformation, as Ulrich himself has argued 3, needs to focus on adding value to the business. Simply restructuring or changing the underlying HR technology is not enough. HR transformation has to cover people, who need to start acting as business partners, processes that need to be streamlined and standardised, and technology - which increasingly means Cloud-based HR solutions. Cloud changes the rules of the game for CHRO’s tooDefined as any IT solution delivered over a network when the customer demands it, cloud computing is a game changer. It has been named as one of 12 potentially economically disruptive technologies in a report by the McKinsey Global Institute 4, which highlights the Cloud’s potential to ‘improve the economics of IT for companies and governments, as well as provide great flexibility and responsiveness’.
Cloud-based solutions have also become key drivers of HR transformation programmes, allowing HR to react immediately to changing business needs and provide services where and when they are required. As Charles Hamilton Ferguson, a senior business leader at ADP, said in a recent article: ‘Cloud solution providers are enabling businesses of all sizes to truly deliver on the promises of innovation, scalability, ease of use, lower cost and, most importantly, choice.’
Businesses that have achieved these goals have not only adopted Cloud technology. They have also rethought and redesigned their entire HR function.Cutting edge HR technology impacts the bottom lineUsing the latest HR technologies can have a major impact on a company’s bottom line. A recent study by CedarCrestone 5 found that companies with higher than average adoption of talent management, business intelligence and social media technologies generate 16 per cent higher revenue per employee and 35 per cent higher profit per employee than companies making less use of these technologies.
But the total cost of ownership (TCO) of these HR technologies is massive. It includes not only the capital expenditure involved in buying and installing new systems,,,, can access the cloud solution provider’s resources and avoid any capital expenditure.
Cloud solutions can be especially attractive to small and medium sized enterprises without the resources to buy the latest IT systems and upgrade them regularly.The answer is in the CloudsBut businesses of all sizes can benefit from working with external Cloud providers. In the recruiting arena,, companies can dramatically reduce costs by adopting a recruitment process outsourcing (RPO) approach. According to research by6 RPO reduces recruitment costs by 33 per cent on average. Companies befitting from using this approach include a global investment firm that saved $7.2 million by using an RPO solution 7. Can you achieve the impossible?But the real power of Cloud-based HR solutions rests in the opportunities they provide to redesign HR services and so accelerate HR transformation. Streamlined,,, generate value now - not a year or two in the future.
Cloud solutions can also support revenue growth and operational excellence by providing readily accessible workforce intelligence. Above all, they reduce HR costs while freeing up talented HR professionals to focus on activities that have a real impact on their companies’ bottom line.
Are you, ready to achieve the seemingly impossible? For more information please contact us. Quantifying Great HCM,, 2013
Managing Talent through Technology: HCM Buying Trends in 2013
David Ulrich,, 2009
Disruptive technologies: Advances that will transform life,, 2013
CedarCrestone’s 2014 Annual Review of Global Organizations: Learning from he Best Global Organizations
Targeting RPO,, 2012
ADP RPO case study