It might be hard to believe, but at one point in time, watching a favorite classic movie once a year was a real treat. Growing up in a little Ohio town in Midwest USA, not only did we walk to school uphill both ways in a snowstorm, but we also had a distinct lack of streaming videos. In the dark days of broadcast TV, one of my favorite annual events was watching Judy Garland in “The Wizard of Oz.” And yes, I understand that today there is a great deal of meaning placed on that movie for what it did and did not do well in handling sensitive political and social issues of the time—nonetheless, it also made a big impression on me.
Having actually read all of L. Frank Baum’s OZ series, it wasn’t just the music and the colors that captivated me, but how the movie took a very complicated “modern fairytale” and boiled it down to the heart of all the books:
- The journey
- The relationships
- The fears
- The goal
Over the years, I’ve found that I could leverage this template to simplify complex ideas—including our own HR Technology story. I must admit that I was scared when I first began researching HR Technology. The industry was definitely in the midst of its own transformative journey, and I was positive it was more complex than it looked from the outside. What I quickly came to realize was that everyone around me was just as scared.
Change isn’t a new concept, but it can be terrifying to make a change from the known to the unknown. This is exactly what we are asking of HR and IT leaders today. They are facing difficult career-making or -breaking decisions while hardware, software, and delivery mediums remain moving targets. Daily shifts in regulations, the definition of a workforce, and business practices only add to the level of uncertainty. The industry is transforming, but how do you explain that transformation?
As we wrap up the collection phase of the Sierra-Cedar 2015–2016 HR Systems Survey, 18th Annual Edition, I’d like to share with you a few insights on how this industry transformation looks through the eyes of data in the hopes of resolving some of the fear and highlighting the possibilities before us.
This HR technology transformation isn’t paved with a “yellow brick road”; in fact, our research finds that organizations are discovering multiple ways to execute their transformation strategies:
- Depending on the HR technology, an average of 13 to 15% of our Survey respondents last year were maintaining both on-premise and Cloud solutions.
- One third of organizations with multiple HRMS suites plan to consolidate and upgrade an on-premise solution.
- Thirty-one percent of organizations with over 10,000 employees planned to implement a SaaS HRMs this year.
The biggest challenge for most HR and IT professionals is the realization that this transformation journey isn’t just a once and done project. Much like ending up at the Emerald City only to find out that you need to go on to slay the Wicked Witch, Cloud technologies are built for constant updates and reassessments: 31% of organizations planned to change their Talent Management suites this year from one solution to another, and 62% of those organizations are consolidating their TM solutions with their core HRMS. In this environment, it’s okay to build in a plan for change if today’s solutions aren’t what you’ll need tomorrow.
Beyond the actual applications, the overall vendor relationships will be changing as well. Last year’s data showed that the average on-premise technology was in place for 7 to 10 years, depending on organizational size, with the average upgrade implemented four years prior. Organizations originally purchased feature-rich technologies that required little involvement from their vendors beyond implementation and security updates. Ongoing resources and financing were focused on customizations and integration efforts.
In Cloud-based vendor relationships, Survey respondents expected significantly more from their vendor relationships: 63% of Survey respondents expected better user experiences, 55% percent expected easier update processes, and 43% expected better services and support than their previous technology environments. We’ve added more questions this year on services and what drives customer satisfaction—and we expect the details to be enlightening.
What does HR fear the most when it comes to HR technology? Payroll! After last year’s release of the Sierra-Cedar 2014–2015 HR Systems Survey White Paper, the greatest area of questions I received were by far concerns over payroll solutions. Should we outsource our solution or bring it in house? If we want to consolidate our global payroll, what are our options? If we change our HRMS, should we also look at replacing our payroll solution?
Responses showed that 97% of organizations were using a payroll application, and on average organizations stated that they were managing five different instances or solutions to maintain their current payroll operations, with some even ranging over 100. As organizations plan their HR transformation strategies, the question of what to do with payroll applications is the least defined. This October, we’ll be able to provide some insight into what organizations are planning to do with their payroll applications and how effective their current applications are at managing global needs.
It isn’t groundbreaking news to hear that HR applications are moving to the Cloud. Last year’s Survey responses found that over 30% of organizations already had a Cloud-based HRMS or Workforce Management application in place, and over 40% had a Cloud-based Talent Management application. We expect to see all three of these application areas increase to over 50% adoption levels this year. Our research and others have confirmed these findings:
- Cloud solutions require less time and fewer resources to maintain and implement, on average
- New Cloud solutions achieve higher user experience scores
- Organizations with Cloud HR technologies have higher average user adoption levels
Unfortunately, in all of the noise about making a switch to the physical Cloud, we’ve lost the most important reasons for making this journey. The transformation isn’t about a physical location of the application, but a fundamental shift in the concept of work. New Cloud applications must to be able to achieve these goals:
- Broaden the definition of workforce and candidates
- Expand the ideas of job, position, and role
- Capture both actions and outcomes of work activities
- Analyze data and predict possible futures
- Build relationships and communication across all of these factors
- Provide all of this in a real-time environment
The ultimate goal isn’t about lowering costs, reducing IT staff, or gaining a single vendor to work with—although many organizations see these as benefits. When we asked organizations why they were making changes last year, their expectations were loftier outcomes:
- Better user experiences, increasing adoption
- More strategic data for business decisions
- Creating a culture of continuous improvement
- Standardizing our approach to key processes
Change is here to stay and every story will have its ups and downs. Hopefully, the addition of a little practical data will help to ease some fears and provide more options for planning your own transformation efforts.
We are wrapping up Survey data collection this month, and if you’ve already completed this year’s Survey, Thank You! If you find this data valuable and would like to participate, this is the final opportunity to participate in the Sierra-Cedar 2015–2016 HR Systems Survey.
To access previous “Survey Says” articles containing unpublished nuggets, please visit our website; to download our full Annual HR Systems Survey White Paper from last year, you can register to access it here.