Cloud-based HR management systems not living up to expectations

31 August 2016 Consultancy.uk

New cloud-based human resource management systems have been expected to be the silver bullet that transforms HR into a department of game-changing competitive advantage. The reality, however, is somewhat more muted. A new report finds that, while the technology has considerable potential, wider strategic transformation within HR departments is required to leverage its full potential.

Cloud based solutions for a range of business needs have been marketed successfully over the past years, promising reductions in costs, ease, as well as a range of business benefits. Given the promise, a range of corporates have in recent years embraced cloud-based HR solutions, as part of a wider drive to bolster the use of technology within the human resources field.

In a new report from KPMG the professional services firm explores the cloud-based HR system landscape. The report, titled ‘Cloud HR: the future belongs to the bold’, involved 850+ executive respondents, 44% of whom work in organisations with >5,000 FTEs, based in 52 countries.

Benefits of new HRMS systems

According to the report, the optimism that many companies had – going into investing in the cloud – are not finding fruition, with just 24% finding that the technology reconfigures the HR function, thereby driving greater business value. Investment into cloud-based HR systems is continuing, with 42% of respondents saying that they will invest in the technology.

The respondents highlight that the top benefit of cloud-based HR systems, compared to on-premise-based systems, are lower operating costs, cited by 35% compared to 23%, and improved upgradability, cited by 22% versus 10%. Other areas in which cloud-based systems are said to win out are predictable on-going costs, at 10% of respondents compared to 3% for on-site solutions.

On-premise solutions win out in a number of functional areas, including better functionality, at 72% versus 69% for cloud-based solutions, and in improving value-added from HR to the business, at 67% compared to 63% for cloud-based solutions. On-premise solutions were also cited as easier to manage on an ongoing basis, by 43% of respondents compared to 32%.

Benefits of existing HRMS

The survey also asks respondents to compare the actual benefits of cloud-based and on-premise-based HRMS. The results suggest respondents primarily gained tactical benefits, such as increased use of manager and employee self-service cited at 57% for cloud-based HRMS systems and 36% of on-premise HRMS system. Cloud-based systems also improved the availability of management information, at 53% versus 40%, and improved processes and process management including workflow, at 53% versus 32%. On-premise solutions, the research finds, are less expensive to maintain – as cited by 25% compared to 10% for cloud-based solutions.

The research highlights, however, that cloud-based systems, as well as on-premise systems, are not creating value in areas of critical importance to businesses. Particularly an ability to reconfigure the HR function to drive greater value in the business scores lowly at 24% and 17% of respondents respectively, followed by improved availability of workforce analytics, including predictive analytics which comes in at 20% and 17% of respondents respectively.

According to the consultancy firm, the lack of core business benefits derived from the technology, and thereby, disappointment or dissatisfaction, is in part, due to the technology not being leveraged within a wider transformation of the HR function within businesses. According to the firm, business wide data integration is required, as well as the skills to transform and integrate that data into the decision making process.

“Without understanding the business outcomes you are trying to achieve, cloud technology projects can turn into an expensive exercise delivering very little value,” says Patrick Fenton, a Partner at KPMG in the UK. “You need to a paint a clear picture of what the future should look like and then address the diverse elements that need to be in place to generate the effective change you are seeking.”

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How a change toolkit can help consultants deliver transformation

23 April 2019 Consultancy.uk

Changefirst is a company that provides a cloud-based transformational change toolkit to consultants and companies. David Miller, Founder of Changefirst, sat with Consultancy.uk to discuss how the toolkit known as ‘Roadmap Pro’ adds value to consultants. 

When David Miller called time on his 15-year career with American Express to found Changefirst in 1995, change management was a different animal altogether. According to Miller, even as recently as five years ago, the business of change was much more manageable. The pace of change was slower and project timescales were longer.

Since then, however, the accelerating pace of change and the widespread impact of digital transformation has completely transformed the role of change management professionals. Those working in change management now face more projects, with diversified end-goals, new ways of working (e.g. agile), and are left with shorter timescales to deliver them. The drastic alteration in the sector prompted the IT and services company based in West Sussex to develop a new SaaS-based toolkit for implementing change more effectively.

An example of this is that Software-as-a-Service (SaaS)-based services in the HR technology space have been steadily increasing in recent years, as companies explore ways in which to reduce costs and access new innovation in the space. SaaS can reduce the cost of ownership, an HR department’s dependence on IT support, improve employee experience, and increase the speed at which value is yielded by change.

How a change toolkit can help consultants deliver transformation

Speaking to Consultancy.uk, Miller explained, “The pressure from digital transformation and the race to reinvent business processes means that the sheer pace and volume of change projects can be overwhelming and chaotic. Organisations needed a whole new way to respond to the challenge – one that is quick and easy to use and supported collaborative working; one that is online and can rapidly scale across the organisation itself. We saw these trends emerging and they were the inspiration for developing the Roadmap Pro tool as a SaaS-based approach to implementing change projects.”

Consulting sector

The SaaS toolkit provided by Changefirst, named Roadmap Pro, has the potential to yield value for consulting industry incumbents, as they are so often drafted in by clients to oversee complex change programs. However, firms might still be skeptical of the need for an external tool to do something that in essence is already part of their core business, and something they theoretically know inside out.

When asked how Changefirst believes it can make inroads into the consulting sector, Miller noted that not all consulting firms have the same level of change management capabilities. Indeed, the toolkit is designed to be tailored to firms, depending on their level of know-how.

“Our solution can help and how consultants choose to use it is likely to differ based on the change management maturity of their firm," Miller explained. "The more capable firms can utilise Roadmap Pro to increase productivity, improve client delivery, consistency and to rapidly on-board new hires and contractors. Less capable firms also might want all these benefits too, but it's highly likely they also want the ability to rapidly increase their client-facing change management capabilities.”

The toolkit is an ‘Out-of-the-Box’ solution, supported by Changefirst’s service offering, which enables clients to deliver higher time-to-value returns compared to other approaches. It is mostly configurable, and the ability to customise it is increasing during 2019, with Changefirst working with new clients to make changes that ensure the software meshes with their clients' implementation methods, while giving them the advantages of the installed content. The system takes the best practice content the firm has built up since it first launched, and makes it available in a state-of-the art, SaaS-based software solution.

“We’ve spent 25 years building our ‘best practice’ model," Miller added. "We have a huge database, that we are able to query, and that tells us a lot about what is happening during change projects. We continuously synthesise that with the lessons we have learned from working with over 300 organisations around the world. This has enabled us to build a methodology which was described by Forrester Research as one of the three most used change management methodologies in the world.”

“We’ve spent 25 years building our ‘best practice’ model... We continuously synthesise that with the lessons we have learned from working with over 300 organisations around the world.”
– David Miller, Changefirst

Roadmap Pro uses this wealth of experience for three key building blocks, which integrate these capabilities: effective online learning; change management diagnostics and analytics; and pre-populated change management planning. It also creates high levels of client engagement, enabling consultants to easily collaborate with clients.

Feedback

There have been some fears in the consulting sector that the leveraging of technology could risk the cannibalisation of hourly work. However, Miller regards this more as an opportunity than a problem.

He argued, “If you look at all the reporting from the analyst community, it’s becoming clear that clients want more digital support and what is called 'Reusable Assets'. In other words, they want IP that consultants have used left behind so they can continue to use it. Consultants now have a big opportunity to create continuous revenue streams and client ‘stickiness’ by using digital tools on assignments and then letting clients continue to use their tools. These firms will also sell more hours and generate more opportunities by on-selling and supporting clients' use of the tool.”

Indeed, the benefits seem to have already been judged to outweigh the perceived risks. Roadmap Pro was only launched in early 2018, but Changefirst’s partners are already using it to deliver a variety of major projects. These include usage in a major real estate change for a European media company; in the outsourcing global IT services for a Brazilian manufacturing company; for implementing a new global HR business model for a European chemical company; and for implementing industry changing technologies for both infrastructure and for new ways of working in a major transportation organisation.

According to Miller, clients have already presented the toolkit with “tremendous” feedback. The interface and the marriage of content and software have drawn particular praise, but Miller concluded that the bigger picture here is that Roadmap Pro can help the firms looking to challenge the Big Four. Indeed, with many firms looking to leverage technology to increase their competitiveness and digital presence, technology like Roadmap Pro is undoubtedly playing a role in seeing such companies win more of the bids against larger organisations around the world.