The Oracle e-suite (HRMS) Solution: A White Paper on the KPMG Consulting Perspective

Transcription

1 How e-hr Technologies are Bringing Significant Cost Reductions and Added Value Process to the Changing Role of Human Resources

2 Contents Introduction 3 Transitioning the Role of Human Resources 3 Avoiding Failure & the Evolving ERP Model 3 Lowering the Cost of Human Resources 5 Overview 5 Oracle s e-suite defines the B2E Approach 5 Adding Value to HR 6 Empowering Managers with Business Intelligence 6 Improve and Leverage the Skills of your Workforce 7 Reward to Compete for Scarce Resources 8 First Steps: Determining Organisational Readiness for an ERP Implementation 9 Overview 9 Defining e-hr Readiness 9 Enabling Quick Wins: the KPMG Consulting Approach 11 Overview 11 Rapid Return on Investment 12 Oracle HRMS Implementation Project Method 14 Partnerships for Success 15 The Oracle KPMG Consulting Partnership 15 The KPMG Consulting Partnership with Our Clients 15 Page 2

3 Introduction Transitioning the Role of Human Resources As organisations undertake constant, rapid change to meet the requirements of a more competitive global environment, and must be agile in their decision-making processes where fast response may sometimes be the only competitive advantage, it has become increasingly apparent that high performance depends upon people. Consequently, the Human Resources function is having to reinvent itself in order to serve the needs and foster the creativity of organisation members coping with change. Human Resource functions must take advantage of the opportunities presented by the e- business model by stepping out of their traditional transactional/ administrative roles and contributing to the Organisation s strategic objectives. This entails a move from Service Provider to Strategic Business Partner as well as acting as consultant in the area of change management. HR is, of course, still expected to manage its traditional transactional activities from an increasingly lower cost base. Oracle is at the forefront of the various service providers in the medium to large scale e-hr solutions market, offering a tightly integrated set of people management solutions that enables HR to transition into this new role while significantly reducing service cost. Avoiding Failure & the Evolving ERP Model While the demand for Enterprise Resource Planning (ERP) Solutions platforms is continuing to grow, there is mounting evidence that many businesses are failing to rise to the challenge of achieving their stated objectives in an ERP implementation, of which the Human Resource approach is an integral part. Indeed, KPMG Consulting can point to anecdotal evidence where Client projects eschew the term ERP for some internally favoured designation as a result of the mounting doubts voiced in the industry press about the achievability of the solution, in an effort to avoid the negative connotations of pursuing an unreachable goal. There is measurable evidence as to why project initiatives fail, as can be summarised in Figure 1 below. Page 3

4 Figure 1 The key reasons why projects fail to succeed almost always come down to lack of planning: Implementation projects therefore must focus on the need to institute proper Project processes with clearly defined objectives and scope while communicating the nature and extent of the changes that will be realised: all of which are natural KPMG Consulting skill sets. Moreover, the landscape of ERP implementations continues to change to account for what the Gartner Group call collaborative-commerce (c- Commerce). If ERP is dead, long live ERP II, the key developments of which are listed by Gartner 1 as follows: A change in the role of ERP from managing and optimising internal enterprise information to one that would include information and collaboration within a community of interest The traditional ERP view of a manufacturing -centric domain has expanded to one that encompasses non-manufacturing industries such as service-, resource- and distribution-intensive enterprises Integration and development of domain-focused functionality that meets the requirements of a given industry segment, as well as the traditional ERP functional areas of manufacturing, distribution and financials The inclusion of collaborative business processes that reach outside the enterprise to encompass an inter-enterprise model of customers, suppliers and other business partners An architecture that traditionally is closed and monolithic becomes an architecture that is Web-enabled and designed for integration The movement from data that is internally consumed to data that is distributed throughout a trading community. Clearly, the Oracle suite of Applications is well-positioned to drive ERP II implementations forward, including an e-hr solution that integrates completely to other Oracle Financial, Manufacturing, Procurement and CRM applications. 1 Source: The Large-Enterprise Services ERP II Market, Gartner Group, January 2000 (Ref M ) Page 4

5 Lowering the Cost of Human Resources Overview Oracle understands both the HR function and the full potential of Self Service, consequently, the Oracle Human Resources Management System (HRMS) allows employees, line managers and executives to participate directly in managing HR business. Employees perform such tasks as updating personal information, applying for training courses, updating their profiles and completing self assessment forms, on-line benefits enrolment expense claims and procurement activities, and so forth. Line managers engage in HR Administration activities such as hiring, promoting and reviewing their employees. Executives seek instant answers on head count, employee costs and deployment. With Oracle e-suite, all areas of the organisation become self sufficient in HR Administration and information access. Embedded within the Oracle solution is their state-of-the-art workflow engine, which guides single or multiple users through the full cycle of a business process. The self service and workflow functions of Oracle HRMS facilitate two key aspects of strategic HR management. The first is information access at all levels of the organisation for employees, managers, HR professionals and executives. The second ensures that every essential step of a business process, including approvals, is followed with limited involvement from the HR professional community. Moreover, these processes can quickly adapt to changing organisation structures and entail minimal administration in comparison to legacy processes, where one change will impact all related systems without the necessity to re-key or duplicate data. Implementing Oracle HRMS enables HR staff to provide more autonomy to its customers: employees, line managers and executives while it retains control over information and ensures that the organisation complies with all policies. This reduces the time spent on administrative tasks, increasing time that can be spent on strategic activities and reducing administrative costs. Oracle s e-suite defines the B2E Approach There are very real gains to be made in the development of an e-hr systems implementation. Oracle themselves have reported significant benefits in their advertised achievement of $1 billion savings in moving to their own B2E model globally, of which some of the US HR metrics include: HR:Staff ratio up from 1:125 to 1:247 HR Admin:Staff ratio up from 1:1000 to 1:2000 (soon to be 3000) Savings of $1.6 million pa per 10,000 employees Within the UK Banking sector, research has shown that the scope of savings across the Industry can be significant when the average performance indicators are compared to the top 10%: Page 5

6 Banking Sector Sector Industry average Sector Industry Top 10% Gap between Average and Top 10% Potential Opportunity Per Employee Metric Revenue per FTE 393, , %? Costs per FTE 357,461 90,788 (75%)? Profit per FTE 34,640 61,715 78%? Absence rate 3.2% 2% (38%)? Absence cost per FTE (38%)? Termination rate 14.1% 7.6% (46%)? Source: Saratoga 1999/2000 Figure 2 Lastly, research from the Hunter Group in the US has highlighted the typical cost reductions achievable in moving to Self Service, which has a dramatic impact on costs per individual HR transaction administration, as below: Process Manual Cost Self Service Cost % Saved Personal Data Address Change $20.82 $ % Emergency Contact Change $15.53 $ % Request Record $9.91 $ % Benefit Data Benefit Enquiry $10.91 $ % Dependant Update $15.53 $ % Open Enrolment $77.58 $ % Beneficiary Update $15.38 $ % Manager Promotions $39.61 $ % Merit Increases $35.65 $ % Salary Adjustments $35.65 $ % Department Transfers $26.70 $ % Status Changes $26.70 $ % Other Communications Policy Manual $ % assuming no printed material 100% Source: The Hunter Group Figure 3 Adding Value to HR Empowering Managers with Business Intelligence While cost reduction is ever more important, the key difference between managed human resources and strategic human resources is the ability to transform data into decision making information. Oracle HRMS maximises decision making capabilities by ensuring that the right business information reaches the right people at the right time. Oracle HRMS is complimented by end-user information access facilities and report generators that provide immediate and comprehensive views of the workforce for timely and accurate decision making. This information is accessible through a sophisticated executive interface. Oracle HRMS gives Page 6

7 users the ability to address typical HR questions - and it equips executives with the decision-making information they need to answer questions that historically could not be addressed. Moreover, Oracle s Business Intelligence System is an integrated reporting, decision support and corrective action system targeted to managers, business analysts and executives. The value of the Business Intelligence System lies in its ability to summarise data for key roles in an organisation and present the information intuitively and simply. It allows executives and managers to set personal and corporate objectives for key business conditions, such as head count, employee costs, deployment, recruiting campaigns, lost opportunities and more. These business conditions can be continuously evaluated behind the scenes and conclusions can be delivered through electronic mail, browser notifications and data devices such as pagers and data telephones. Arming your managers and executives with information and answers to tough questions makes them better decision makers and affects your bottom line in a way not possible before. Improve and Leverage the Skills of your Workforce Oracle HRMS enables an organisation to define its goals in terms of the competencies of its workforce. A competency is an enduring, underlying characteristic that defines a pattern of behaviour or thinking which enables a person to deliver superior performance in a job role or situation. Using competencies as the basis for HR management increases the probability that the competencies people were hired for are the are ones that they are developed and managed for in their job (and career), and that these capabilities are the foundation for taking on future leadership roles. Consequently, capturing and measuring the competencies of its employees and matching them to the enterprises goals are key factors in an organisation s success particularly if key people data is seen not as residing in a separate HR system, but is a dynamic set of data that can integrate across all relevant business systems and be easily retrievable by people who need and act on the information. Complete Competency Management The management of human resources through competencies is a fundamental aspect of Oracle s HRMS solution. Oracle HRMS enables the proper positioning of employees within the organization, to achieve a close fit between an employee s competencies and the job requirements. It begins with defining the organisation s goals and the core competencies required to meet them. Once this has been done, HR can deliver value by hiring employees with the right skills, performing automated assessments and appraisals, identifying development needs and providing training through Self Service so that employees skills remain aligned with organisational goals. After identifying the goals set for an organisation and the competencies associated with them, it is possible to create reward packages that will reward employees for the skills and competencies that they possess. Competency based pay allows employers to reward people for their Page 7

8 knowledge. Oracle HRMS has a consistent approach to defining and administering all of the components of reward management including flexible benefits and web compensation - and integrating those components into a complete package. Being able to find the people with the right skill sets, who fit in with an enterprise goals, can give an important advantage over the competition. Organisations can act quicker, knowing that they have the right people deployed in the areas that need them the most. Reward to Compete for Scarce Resources Today s highly skilled knowledge workers look to their employers for more than a salary. Incentives and cafeteria options, whether they be stock options to luncheon vouchers at work are becoming common place in compensation discussions. Employers need to match such expectations in order to recruit and retain the scare resources available. Skilled people are hard to find, therefore to attract and retain them you need to offer creative personalised reward packages. Additionally, HR departments must ensure compliance with legislation tax reporting, data protection, union collective agreements and many other laws and mandates. HR must also integrate job structures and compensation profiles resulting from mergers, acquisitions and reorganisations. HR is based on policies that may differ across business units and around the world. The Oracle solution provides a flexible rules based system, integration of data and adaptable policies structures making it easy to establish diverse organisational compensation policies and to modify them as changes occur. With Oracle HRMS, policies are established and amended through a unique, flexible rules based engine. For example, the rules based payroll gives you the ability to reward employees for achievements in education and other accomplishments, and provides rapid implementation of bargaining agreements and global tax structures. Oracle Advanced Benefits is a rules based management system that supports the full spectrum of benefits in a total compensation environment. It s seamless integration with Oracle Payroll and HRMS provides for rules-based benefits calculations and processing. For example, Advanced Benefits evaluates multiple-life events within a period, systematically applies your rules, processes the appropriate life event and then modifies the pay calculation, accordingly. This allows a Benefits Team to feel confident that plan rules are applied consistently. Page 8

9 First Steps: Determining Organisational Readiness for an ERP Implementation Overview We can establish the following: The ERP model continues to change as Organisations seek ever greater synergies and efficiencies between once disparate information systems, both within and outwith the Organisation. Oracle has a fully enabled e-suite of applications to meet these demanding objectives, and the HRMS module in particular has a proven track record in enabling the Human Resource function to move to a Strategic Business Partner role. This is a major challenge to most organisations, and a significant proportion of ERP implementations fail because of unclear objectives, projects being managed without a structured approach and poor communication on the significant nature of change that is an integral part of these cultural paradigm shifts. The prize is worth the effort, however, given the power an e-hr strategy has to enable HR to reposition itself as we move into the 21 st Century to say nothing of the significant cost reductions in administrivia effort that accompany such programmes. KPMG Consulting works closely with clients to ensure that any implementation will be successful, and that ownership of the solution is transferred to and understood by the client as soon as possible. While we ensure that project management methods are implemented against a road map that will guide the organisation through successive stages of a project at any point in the value chain: from determining the HR Strategic direction, aligning HR objectives against business goals, re-engineering of processes through to an e-suite implementation - first steps are fundamental in enabling a client to envision what is possible, as well as the effort required in achieving that vision. Defining e-hr Readiness This is not simply a standard consulting solution of determining the Gap- Fit through a comparison of the current As Is situation against a possible To Be future state. Any successful ERP implementation demands a carefully structured review of the organisation s readiness to undertake such a process if we are to enable quick wins for the client in any subsequent implementation. KPMG Consulting have developed a modular process to allow an organisation to understand clearly the issues that need to be addressed before any detailed HR requirements are defined. This modular approach is designed to add value whether a company is welladvanced in it s understanding of and preparations for implementing an e- Business model or just starting to review e-business solutions as a future strategic direction. Page 9

10 We present here an e-hr version of the first module which looks at the development of a Net Readiness scorecard developed in conjunction with Cisco systems - which assesses how ready a Company is to do business via the web. In this e-hr focused version of the Net Readiness tool, the same methodology is deployed, which seeks to determine where a company evaluates their position/progress on a number of factors across the four main drivers of e-business success, including: Leadership o Determination of the Corporate Strategy and Vision o How HR objectives are aligned to the Corporate Goals o The size and nature of the HR role in the Organisation Governance o Definitions of future-state roles & responsibilities across the business exist o HR involvement in defining the people element and other business touch points in an ERP strategy o Whether appropriate metrics have been defined and are in place Organisational Competence o There is an appropriate skills base/plans to acquire/train skills to underpin the strategic e direction o There is a defined HR-specific skills base for the posttransition function o HR responsiveness to internal and external customers o Ability to execute the e-hr approach Technology o Scalability of IT infrastructure o Existence of technical and operational skills Where the full modular Net Readiness tool utilises a range of approaches to develop the NR Scorecard from interviews with senior executives to a detailed analysis of a company s functional and IT systems this abbreviated e-hr tool allows respondents to quickly place their organisation on a scale of 1 to 10 against a number of key statements for each of the four Drivers. Simplistically, the total scores for each are then plotted, which in turn identifies areas that should be addressed by the organisation before any detailed implementation work begins. Where the ideal model would be high scoring in all key drivers, a typical model might look like Figure 4 below: Page 10

11 Figure 4 This abbreviated tool can serve as a useful aid to organisations as a first cut in determining the scale of the initial actions that need to be undertaken in advance of an ERP systems implementation. Once the decision has been made to move down the ERP route, we recommend use of the full modular tool to clearly define the starting point for any implementation. The modules are: Net Readiness TM : defines an organisation s readiness to move to a full web-based e-business model ReadySetGo TM : helps an organisation to determine a robust e- strategy E-Hub TM : focuses on e-business programme management E-Volve TM : designed for those already well-advanced on the e- business route, but now looking to expand their horizons and increase competitiveness. Enabling Quick Wins: the KPMG Consulting Approach Overview A key objective of KPMG Consulting in using the various toolsets to ensure a successful review of a client s value chain from defining strategy to implementing an e-hr system is that we deliver added value and that this is delivered quickly. The agile business today needs to be confident that strategic change can be enacted not only successfully, but quickly, with a rapid transfer of new knowledge from consultant to client. Our toolsets are uniquely configured to ensure that this rapid knowledge transfer is built into all project phases. Page 11

12 Rapid Return on Investment KPMG Consulting utilises a number of tried and tested methodologies and approaches to guarantee success in implementing the Oracle suite of applications, chief among these is our Rapid Return on Investment toolkit. Figure 5 RROI templates lead an Implementation Team through basic HR Business Processes which enable data element identification and mapping to an HRMS build; Configuration Guides set out in a concise, step by step guide, the necessary build tasks to creating the Oracle HRMS database for the unique client requirements, Training Guides facilitate easy to use End User Training, Acceptance Testing scripts ensure that the build proceeds smoothly, underwritten by specific Task Plans. Our RROI Methodology and Toolkits leverage pre-configured documentation procedures and techniques along with the firm s HRMS experience in Oracle HRMS implementation and business process improvement. To our clients, RROI is extremely cost-effective because time and money are focused on value-added functions, not exploration and assessment. The service combines an innovative methodology, toolkit, implementation approach, and targeted user roles. All materials are updated regularly and have currently been written up to the HRMS Release 11.i version. KPMG Consulting s strong emphasis on end-to-end solutions, client-centric teaming and return on investment further enhance RROI. As its foundation, our Rapid Return on Investment service encompasses: A methodology which emphasises iterative, hands-on simulation of real business activities, including on-site training using client data. The methodology focuses on efficiently showing client staff how to run the business with the new system. A toolkit providing pre-defined, optimised business practices embedded in Business Process, Training and Test Guides. Page 12

13 The RROI Methodology has several discrete stages, in summary: This runs in parallel with the overall project management methodology (below). Equally important is the team of experienced HRMS consultants who deliver the RROI service at a client site. RROI project teams have the solid functional and technical experience required to customise pre-designed business processes and pre-configured applications to meet specific client needs. This ensures that time to Go Live is minimized through a FastTrack application implementation method that has been successfully deployed worldwide: Conventional ERP Implementations: Duration: 9 to 24 months No early learning for client KPMG Consulting s RROI-based ERP Implementations: Duration: 4 to 6 months Focus is on early Client learning & handover Figure 6 Figure 7 The KPMG Consulting Oracle solution is infinitely customisable and scaleable to Clients precise needs, and our template methodology lends itself to whichever approach is deemed most suitable for a given situation. Typical Approaches may look as follows: Full HR Strategy and BPR definitions phase to ensure value added HR processes are integrated into the System build, allowing Best of Breed HR practices to be modelled. Basic Boilerplate classic/vanilla build (HRMS only) Standard HRMS and Payroll build Page 13

14 Custom Build, incorporating any or all other systems elements such as web-based Employee & Manager Self Service or Training Administration Single or multi site/country implementations Integration to other Oracle applications in the suite or interfaces to non- Oracle legacy systems. Oracle HRMS Implementation Project Method To the earlier point above where Implementation Projects fail because of a lack of structured approach to the project stages and outputs, KPMG Consulting employ our own Project Method that takes the form of a phased approach to delivering Oracle HRMS solutions. This methodology is well proven, practical, focused and effective. It allows us to build a working solution in partnership with clients through to implementation and roll-out across their businesses. With periodic reviews built in at critical points in each phase, project teams are better able to assess the match between the underlying vision/business objectives and the work being produced. All phases are closely linked with our tools, methods, standards and techniques for project, change and quality management. Figure 8 below provides a summary of the approach and details the stages involved in implementation. The methodology defines a number of tasks from initial project mobilisation activities, through development and validation of the process model, Conference Room Pilots, User Acceptance Testing and Live instance builds. Figure 8 The RROI implementation methodology fits into the overall Project methodology outlined above, ensuring control of the systems build as well as the overall project task list at every stage. Page 14

15 Partnerships for Success The Oracle KPMG Consulting Partnership KPMG Consulting is a Global Alliance Partner with Oracle Corporation, working closely with Oracle to leverage the synergies between Oracle s application and technical expertise and KPMG Consulting s global knowledge of the Human Resource value chain: from defining HR strategy, through identification of key Business Processes to implementation of global e-hr strategies and systems implementations. Between both firms, we have the extensive specialist knowledge required to ensure not only that we can deliver added value to a client s e and non- e processes, but also ensure successful implementation of strategies that allow Human Resources to transition to full Strategic Business Partners. KPMG Consulting is the Number One independent implementer of Oracle applications across the globe, and we: Founded the first global Oracle Applications Competency Centre and was the first Global Consulting Alliance Partner Have pushed the technology envelope with Oracle Applications through a number of groundbreaking assignments, including: o Largest single site (Instance) implemented of Oracle Applications (1000+ concurrent users) o Largest global single site (Instance) of Oracle Applications (800+ concurrent users) o First firm to implement Oracle Release 10.4 globally o One of the first to have multiple Release 11.i implementations running The first Partner to develop a FastTrack Methodology to ensure rapid implementation of the Oracle HRMS database in our Rapid Return on Investment toolkits, which we make available to our clients. At any given time, we have more than 1200 Oracle HR Consultants engaged on Implementation Projects around the world 200 in the UK & Ireland - ranging from country-specific HR-only projects to global projects integrating HRMS with the full suite of Oracle applications as well as other non-oracle legacy systems. The KPMG Consulting Partnership with Our Clients Our unmatched combination of skills is the foundation for delivering e-hr solutions to our clients, and it is no accident that so many Clients come back to us to help them in new initiatives time and again. Our combined approach and capabilities offer significant benefits to our clients. Strategic Alliances KPMG Consulting actively maintains a strong partnership with Oracle Corporation which is delivering the tools and products to implement ERP and e-hr strategies, including integrated self service capabilities Page 15

16 o Other partners include self service product vendors that add on solutions to augment back-office systems and custom development tools vendors that provide capabilities for unique solutions. o We work closely with our partners to fully leverage their product capabilities on behalf of our clients. We also provide partners with our industry perspective on how to create the next generation of enterprise solutions to meet market needs Global Reach KPMG Consulting is a global advisory firm whose aim is to turn knowledge into value for the benefit of its clients, its people and its communities. KPMG Consulting is a global leader in providing professional services, operating in over 825 cities in 157 countries. Focus on the Business Case KPMG Consulting s impact analysis methodology describes the effect of process improvements using both qualitative and quantitative measures. The measures are linked to the overall business objectives for a given project and can be used to understand both the cost and the benefit side of the cost/benefit equation. Technology Expertise Our consultants have experience with all facets of leading-edge technologies, including those that support data access and communications. We also provide staff who are experienced in a wide range of web-centric applications, workflow automation, decision support, telephony integration and data warehousing tools Page 16