This article is the second in a series of excerpts from Digital HR: A Guide to Technology-Enabled Human Resources (SHRM, 2018) Deborah D. Waddill, Ed. D.
Part 1: Mobile Learning
Part 2: Information Systems
Part 3: Social Networking
The HR systems field is experiencing a cataclysmic change. How do these technology trends impact HR practice? Essentially, they primarily affect the areas of performance management, people analytics, learning, talent acquisition, team management, health and wellness, and automated HR. Let's examine a few of these. We have already discussed how learning environments are replacing traditional learning programs and how cloud, social, and mobile technologies impact learning. What has changed regarding the other functions? Here are some of the bigger changes:
- Performance management—which was a soft skill and qualitative process—is now data-driven, assessed through pulse surveys that are distributed directly to mobile devices using integrated directories, enhanced by gamification features, and conducted continuously, enabled by cloud computing.
- People analytics (or workforce analytics) use modeling software to obtain predictive analytics for job progression and career next step established through networks recognized through an analysis of email patterns.
- Talent acquisition that is propelled by mobile and cloud-based software can handle end-to-end recruitment and record all of the qualified candidates in an applicant tracking system.
- Automated HR has been rocked by the incorporation of AI in the fiber of the program, such that AI advertisement is a natural feature of the cloud-based HR system on topics including guidance on career, learning, and leadership decisions at the individual level.
All of these functions can be supported by an HR system.
Not every organization can afford to eliminate existing legacy systems and replace them with an HR system. Luckily, there are options. Three basic choices are involved in the physical design of the HR system: you can build your own organization-specific HR system, find a commercial off-the-shelf (COTS) system, or outsource the function, letting another organization handle it. All three choices impact costs to varying degrees. In the three approaches, four different elements should influence the final decision on acquisition strategy: the business need, in-house skills, project management skills, and timeframe.
- Build: When the business need is unique and the in-house skills exist both at the functional and technical level, then building the system in-house is an attractive option. There should be a skilled in-house project manager. The development timeframe can be flexible if using in-house or external developers. The advantages include customization and control over all aspects of the development. The software is guaranteed to meet the business requirements, and there will be increased flexibility and innovative solutions for accommodating business processes.
- Commercial Off-the-Shelf: A COTS system is appropriate when the business need is considered standard. COTS is a prepackaged commercial product that has been tested and is stable. It can be purchased and configured to meet the business needs. There will, no doubt, need to be modifications made to accommodate internal business processes.
- Outsource: Outsourcing the function allows you to leverage another organization's system and processes. Outsourcing has its advantages. Often HR departments outsource payroll. In that case, the vendor may have both the system and the processes.
The impact of cloud computing can be seen dramatically when talking about HR system selection. Traditionally, this decision was made based on the answers to basic technology and cost questions. Those have now been replaced by a focus on function. While these questions are still important, due diligence has shifted to an analysis of what major HR functions the organization needs performed by a system. However, cost does still impact selection. Compiling requirements and budget leads to analysis of vendors who offer systems satisfying both. The basic steps of HR system selection remain the same, but they are not as detailed:
- Know what you want the system to do (system requirements).
- Know your audience and their needs.
- Research what peers are saying about best-in-class vendors.
- Develop a Request for Proposal (RFP) to vet potential vendors and invite the top three or four RFP respondents to demonstrate their capabilities.
- Do your homework by getting the vendor's references and following up on them, and then make a selection.
- Close the deal, but be prepared to negotiate.
Organizations adopting a new HR system find that business processes are impacted and will need to be revised. Additionally, the technology system architecture will most certainly change. Here is the good news: Investment in an HR system may change the business processes, but it also offers advantages. Scalable implementation of cloud-based HR systems can offer savings—pay for what is used and no more. Additionally, could HR technologies are leading edge, typically incorporating mobile, social, big data analytics, and IoT. This offers obvious benefits to larger organizations but also enables small and medium-size organizations to have a technological online presence that is sophisticated and leading edge.
Cloud computing offers scalable, agile, and distributable capabilities that enable smaller organizations to reach optimum performance immediately by lifting and shifting selected functions to the cloud. Further, as the organization grows, other functions can be added. Since you pay for what you use and don't pay for functions you don't use, the savings accumulate. This is the benefit of being asset light, or not investing in the equipment.
The HR system can be approached in a modular fashion allowing for economies of scale. Identify the HR software features that are required at present and add other features later as needs change. This is the recipe for success and truly unique to the new cloud-enabled HR technologies. Couple that with a digital mindset and the result is an agile HR department.
Deborah D. Waddill, Ed.D., is an HR leadership and technology expert with extensive consulting and business experience with government, academic, nonprofit, and for-profit clients.
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