A successful HCM transformation initiative to support your corporate strategy A business case for transformation & modernization Prepared by: Chip Nordstrom, Grant Thornton, LLP Mick Johannes, Oracle Chip Nordstrom @chip_nordstrom Mick Johannes @evlg3ns Session ID: 105830
Why do we hope you are here? Transformation/Modernization results in A DISRUPTIVE CHANGE TO YOUR TECHNOLOGY, PEOPLE AND PROCESSES TO SUPPORT A BUSINESS NEED. we hope you are here because you recognized a need to change your HR system, BUT, has anyone here consistently been handed the check simply by asking for it
What are your transformation considerations? Questions: Why Invest? Where to Invest? Why Invest Now? How to Invest? Which Platform? How much? How soon? Who s impacted? Define Strategic Value Realize Strategic Value Line-of-Sight Outcomes: Enable customer success & continuous innovation Decision support Promote retention & advocacy Cost Avoidance Enable Cross Pillar efficiencies / Visibility Collaborate with customers to define a consumable roadmap, build their Compelling Case for Change and realize the business value they expect 3
When transformation approvals fail The Planning Trap Reactive & Tactical Planning Failure to account for the impact of change The Executive Alignment Trap Limited ability to tie HR Transformation Initiatives and Investments to Executive Imperatives The Execution Trap Technologydriven, not Outcome-based 4
Understanding Executive Priorities CEO/CFO Grow into new dynamic market Establish a culture of innovation Identify, engage, and empower talent Reinvent Operations: change in stride while being disciplined about costs Mitigate and Manage Risk Business Transformation Technology Innovation CHRO Managing Talent Leadership development Managing demographics Delivering on recruiting & staffing Managing change & cultural transformation Enhance employee commitment Transforming HR into a strategic partner CIO Be more agile and faster Make IT ONE with the biz Break the 80/20 spending trap Harness Big Data Find the right people Leverage social media Understand the Consumerization of IT Explore Cloud Computing Improve Collaboration Oracle 5
Real Business Case Example
Articulating Maturity Destinations Foundational Foundational Intermediate Advanced Transformational Manual/Offline Some Automation Mostly Automated Fully Automated Batch / Untimely Limited Integrations Int-Process Integration Real-Time Disconnected Limited Enforceability Reactive Enforceability Full Process Integration Reactive Limited Flexibility Some Reliance on IT Standardized Tactical Slow Reaction Times Near Time Information Collaborative Limited or No Visibility Heavy IT Reliance Reaction Inefficient Adaptable/Flexible Rigid Data Heavy Increasing Visibility Wide Visibility Unpredictable Information Poor Defined Governance Strategic Misaligned Limited Governance Org Alignment Proactive 7
HR Under the Covers 1. Talent Management - Create lifecycle programs and track talent/skills - Avoid high cost of replacement from turnover - Establish transfer processes before they leave 2. Positioning HR within the Business - Finding and attracting talent is a value add - Developing people increases retention, reduces expense and makes a company more responsive - Plan for critical turnover=company sustainable - Invest in technology that can support needs 3. Change Management - Successful implementation happens when a buy-in for change comes from all business areas - Usability drives adoption - Drive social adoption through business leaders 4. HR Strategy - Find a technology that executes business needs - Utilize and interpret data for upper management - Technology to measure benefits Source: HR Tech Fest --Trends, Issues & Challenges, 2016 5. Employee Engagement - Involve technology with an intuitive user experience - Use employee feedback and engage with offsite teams through technology - User friendly technology 8
Exploit Benefits and Apply Benchmarks Benefit Benchmark Talent/Perf Goals Succession On Boarding Employee time managing and administering performance, goals and succession show improvement opportunities between 20-30% CEB Talent Management Study Reduction in time to productivity for new hires or internal transfers demonstrate improvements of 10 20% Aberdeen Benchmark Report Core Increased productivity and efficiency with increased automation and self-service 30 45% Payroll Services Compensation Average improvements via automating and integrating payroll processes, including leveraging self-service 40-60% Hackett Group Payroll Benchmark Study in conjunction with APQC Reduction in risks associated with errors in manual calculations, including over or under payments 40-80% CedarCrestone and Gartner estimates Report/Analytics Efficiencies gained thru centralized data, analytics and accuracy show a range of 25 50% Benefit Admin Simplified processes, integrations and improved reporting illustrate opportunities of 20-30% Hackett Group 2012 Book of Numbers Determine your Benefit areas and how you will create opportunities to cut costs or gain revenues by becoming more efficient and mature. The kitchen sink approach will come across as unrealistic and reaching for the stars approval killer! 9
Human Resources Core FOUNDATIONAL INTERMEDIATE ADVANCED TRANSFORMATIONAL PRIORITY: High Current Target Current Situation Company Running PeopleSoft 9.1 with multiple integrations built into PeopleSoft from other systems Challenges Data stored in multiple systems, creates redundancies, impacts accuracy Spend a lot of time cleaning up data Most approvals are via email, difficult to track Lack of manager self service creates heavy administrative burden on HR, impacts timing of data and accuracy Employee change forms are paper based Promotions must be entered manually All systems are not in local languages, impacts user experience Difficult to get headcount reports All holiday forms and equipment requests are paper driven 10
Human Resources Talent/Performance Goals & Succession FOUNDATIONAL INTERMEDIATE ADVANCED TRANSFORMATIONAL PRIORITY: High Current Target Current Situation Strategically trying to drive a talent driven culture, - career pathing, individual dev plans, succession plans Drive succession planning down to managers, identify impact and probability of loss Goal is to be transformational in 5 years. Challenges The business needs a lot of help in employee development, improve employee feedback Must be better at developing talent internally to reduce need to recruit externally More visibility into talent across the organization. Currently manually writing out succession plans (9 box doesn t feed over to succession plans) Haven t brought historical data into cornerstone due to costs Learning Mgt: More competency based training, also onboarding, supervisor and new manager training 11
Human Resources Compensation FOUNDATIONAL INTERMEDIATE ADVANCED TRANSFORMATIONAL PRIORITY: High Current Target Current Situation Need to build more consistency in process and structure. Putting together band structure with consistent job titles, and ability to enter market pay data Vision: Consistent job titles, incentives consistent by level, administrative ease Challenges Lack of visibility to incentive plans and bonuses internationally Cannot store employee allowances outside of U.S., compensation is not accurate Desire to track incentive plans by position and provide visibility to managers, employees and finance on target vs current results Difficult to analyze effectiveness of plans Reporting and analytics is a huge frustration, not having all pay and bonuses in one place Difficult to have real time oversight and dashboards for sales performance and compensation Administratively burdensome and has an impact on executives outside of HR. 12
Human Resources Payroll FOUNDATIONAL INTERMEDIATE ADVANCED TRANSFORMATIONAL PRIORITY: High Current- Global Current- U.S Target- U.S Current Situation 100% Direct Deposit Director has done a great job of creating standardized and Streamlined processes Global aggressive goals to go live this year Challenges No manager workflow in place in PeopleSoft ADP for garnishments, tax filing, no ipay statements Responsible for additional reporting, for w-2's Not paperless for w-2's Some countries require information that we don't want in PeopleSoft Vacation not printed on paychecks- not stored Salaried use spreadsheets to upload Don t have a nice report library. Have a lot of queries, but constantly need to add additional fields. 13
Human Resources Benefits Administration FOUNDATIONAL INTERMEDIATE ADVANCED TRANSFORMATIONAL PRIORITY: Medium Current Target Current Situation Challenges Rolled out self service last year Do open enrollment, new hire and life changing events in PeopleSoft ACA is outsourced to Hodges Mace Rolled out Kiosks in break rooms of production facilities Fidelity for 401k elections Outsourced ACA reporting. (25-30k per year) Potential compliance issues if don t keep up with employee eligibility changes Family Status Changes in PeopleSoft difficult to use. Created customizations Not up to date on maintenance patches and fixes Must rely on I.T. for a lot of different projects Can t cross validate HSA plans with benefit plans. Don t have one standard time off absence policy 14
Human Resources Reporting & Analytics FOUNDATIONAL INTERMEDIATE ADVANCED TRANSFORMATIONAL PRIORITY: High (for business) Current Target Current Situation Valuable team members spend significant amount of time creating reports Business leaders are asking for better data from HR. Challenges Queries are difficult to run Data is not always accurate because of inconsistencies, manual entry, multiple sources of truth Report writing tools are not intuitive and are limited Difficult to provide leaders with access to real time data Difficult to measure and track metrics, makes it challenging for leaders to own their own business Access to real time data on employees can help leaders with work force planning and understanding how HR can help Most reporting is done on a monthly basis ( i.e. headcount) Cross functional reporting between PeopleSoft and Cornerstone is a challenge 15
Human Resources Process Summary Areas of improvement to process and capabilities Capability Area Priority Foundational Intermediate Advanced Transformational Core HR Talent/Performance, Goals and Succession Compensation Payroll Benefits Administration Reporting and Analytics High High High High Medium High Current Target 16
Words have meaning When trying to get your project approved, the words KNOW and NO go hand in hand. If you can t support the former, the latter is a given!
Reality Check Speaking the CFO s Language
Consolidation of HCM Applications Key Challenges HR has a number of disparate systems, with different vendors. The environment does not allow for common contract benefits, and at a system level, creates needs for integration points and interfaces, and multiple upgrade work streams with additive costs. Improvement Opportunity Consolidating into a unified platform will allow us to eliminate interfaces, upgrade cycles, and manage contracts through a single vendor. Hard dollar, cost eliminations Includes PeopleSoft costs,cdw, Linux and backups. Does not include third party, in-country HR systems, plus interface management costs. Also need to consider additional hardware costs to upgrade to PS 9.2 19
Opportunity to Reduce Future Upgrade Costs Key Challenges An upgrade to PS 9.2 is required. Additional upgrades necessary if you decide to move to a modern platform within the next 5 years. Improvement Opportunity Moving to a modern HCM system avoid the additional cost of having to upgrade at least 1x over a 5 year period and potentially 2x s if a decision is made in the future to move to a modern HCM solution. Hard dollar, cost eliminations
Reduction in HR/HRIS Support Costs Key Challenges Current disparate systems require significant HRIS resources to customize and maintain current systems. Improvement Opportunity Companies that move to a modern integrated system can expect to see a 30-50% reduction in their IT support costs Improved productivity by enabling HRIS to address projects faster to support transformation Subjective cost reductions using benchmarks and weighting
Improved HR Productivity Key Challenges Data stored in multiple systems, creates redundancies, impacts accuracy Spend a lot of time cleaning up data Lack of manager self service creates heavy administrative burden on HR, impacts timing of data and accuracy Employee change forms are paper, Promotions must be entered manually Improvement Opportunity By reducing the number of systems and integrations, providing manager self service and ease of reporting you can realize approximately a 20% improvement in productivity. (Hackett Group Book of Numbers) Subjective cost reductions using benchmarks and weighting
INVESTMENT: TCO Analysis 23
Summary of Potential Benefits 24
Benefit Phasing 25
5-Year ROI Analysis 26
Summary Explore all departments and areas of the business for impact Go as deep as needed to create a compelling business case It is a challenge to sell on Qualitative alone Be realistic about labor impact tough to eliminate.5 FTEs Gaining Executive support and buy in about the process along the way go Agile Assume reasonable waste in your gains projection Commit to a plan for how you will measure success
Q&A
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