The Gartner Report

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Focus on 3 Key Areas Before Implementing a Cloud-Based Human Capital Management Suite


Organizations moving to cloud-based HCM suites without a full understanding of the implications and risks will fail to deploy a fully effective platform. This research discusses best practices in three often overlooked areas to help application leaders plan effectively to overcome these challenges
 

Overview

Key Challenges

  • Many organizations embark on cloud human capital management (HCM) implementations without sufficiently planning their user experience, configuration and integration requirements, which compromises the effectiveness of workflows, business processes and automation.
  • Because updates for HCM cloud applications arrive quarterly or biannually, HR teams struggle with both the frequency and the skill sets necessary to apply these updates effectively.
  • Organizations spend considerably more time evaluating the functional fit of prospective cloud solutions than they do other key criteria, such as service quality and support. This negatively affects the likelihood of a successful project, as cloud solutions require a more profound partnership.

Recommendations

Application leaders responsible for transforming HCM technologies should:
  • Engage business leaders and users in the requirements-gathering phase to define the scope of their functional, integration, user experience and configuration requirements as the first step of an HCM suite selection process.
  • Allocate resources and clearly define roles and responsibilities for managing the schedule of cloud HCM suite updates, and use agile project management principles for successful ongoing change management.
  • Prioritize services-related capabilities alongside HCM functional requirements to identify best-fit vendors, and use a weighting score to determine the relevance of those prioritized capabilities.

Strategic Planning Assumption

By 2025, half of midmarket and large enterprises worldwide will have invested in a cloud-deployed human capital management (HCM) suite for administrative HR and talent management. However, they will still need to source 20% to 30% of their HCM requirements via other solutions.

Introduction

Cloud is now the ubiquitous approach for HCM applications. Cloud solutions accounted for nearly all new implementations of human capital management technology in the past two years (see “2019-2021 Strategic Roadmap for HCM Technology Investments”).
When organizations embark on initiatives to deploy new HCM technologies, they do so with expectations of some fundamental gains in comparison to on-premises alternatives, including:
  • Enhanced user experience for all application roles
  • Easy access to innovations and new features
  • Roadmap to underpin sustainability and future value
  • Quicker implementation and lower cost of maintenance
  • Business process standardization, automation and efficiency gains
  • Cost savings due to a more rationalized software portfolio and less integration complexity
A frequent topic in Gartner client discussions is that of the unexpected challenges that occur during HCM solution implementations. These challenges can result in organizations failing to achieve the expected business benefits from their new HCM technology deployments. Thus, an understanding of the factors that can derail these benefits is critical for success.
In this research, we have assembled best practices in three areas often overlooked by organizations. The aim is to guide application leaders that have been tasked with transforming HCM as they plan their cloud transition, thus maximizing the likelihood of realizing their planned ROI.

Analysis

Define Your HCM Suite Roadmap and Integration Requirements Before Vendor Selection

Organizations generally have a basic understanding of what they need from HCM technologies at a strategic level. For example, they will have an idea of their budget, timeline, critical process or functional needs, and prioritize cloud technology over on-premises. They subsequently commence the RFP process to ascertain system capabilities of prospective vendors’ solutions.
While these basic principles are important, it is crucial to acknowledge that they are only a starting point. Gartner has previously observed the need for organizations to include a more detailed level of scrutiny upon which to base vendor selection. If this is not done effectively, organizations can ultimately regret their move to an HCM suite.
Basing your HCM suite purchase on meeting general or current functional requirements could mean that future or more complex needs are overlooked.
Many organizations do not consider the effect of process changes, new features and integrations downstream. As a result, the HCM suite deployed will fail to keep pace with the modern digital workplace, and organizations will find themselves quickly dissatisfied once again (see “Keep an ‘Eyes Wide Open’ Perspective When Selecting HCM Technology”).
These situations have become more commonplace due to the desire of many chief human resources officers to digitalize and enhance the employee experience. This results in a desire to attract, manage, develop and engage talent through more consumer-grade experiences in a unified HCM suite. This encourages companies to choose an HCM suite that aligns with their own digital roadmaps, as well as being able to address current needs. For example, one organization known to Gartner had implemented a cloud HCM suite by initially deploying just two modules; core HR and payroll. Two years after the implementation, digital talent management (specifically learning, development and skills) became even more critical for the organization’s success and competitive edge. The organization then sought to add to the number of HCM suite modules already deployed in order to achieve its strategic goals and realize further value. At this point, the application leader was disappointed to discover that the HCM suite module failed to adequately deliver the required depth of learning and development functionality and skills analytics. Unfortunately, the HCM suite failed to align to these key roadmap and strategic objectives, which were not prioritized during the vendor selection process. The organization has subsequently pursued investment in a stand-alone talent management suite, at substantial additional cost, complexity of integration and impact on user experience.
 
Recommendations:
In order to identify best-fit vendors and be ready for HCM implementations, it is critical to:
Engage stakeholders and subject-matter experts from each functional area to lead discovery sessions. They must create a design that includes both current and desired future states, as well as variances in local processes and ways of working (see “HR Transformation Projects Must Address Nontechnology Issues”).
Typical outputs of discovery sessions should include:
  • A blueprint of integration requirements.
  • A small number (less than five) of high-priority opportunities to standardize processes.
  • A nominal list, (in priority order) of recommended changes that will deliver efficiencies.
Recommendations:
  • Educate stakeholders (especially those participating in discovery sessions) about the out-of-the-box nature of HCM suite.
  • Explain that HCM suites need to be tailored to your organization via product configuration. This presents limitations, and not everything in the product can be configured to fit. This may result in the possibility of existing business processes needing to change to fit the HCM suite. Be transparent about this with key stakeholders to manage expectations.
  • Manage and successfully overcome configuration constraints by sharing the results of your discovery sessions with your HCM suite vendor and implementation partner to align system configuration and build.
  • Ensure that your HCM suite vendor and IP clearly reference discovery session requirements in the implementation statement of work.
  • Enlist the support of procurement, legal and IT specialists before commencing the vendor selection process to ensure corporate due diligence and governance. Getting these specialists involved early on will help you manage the lesser-known risks that accompany procurement of cloud-based software.

Allocate Resources and Clearly Define Roles and Responsibilities

Cloud applications are continually evolving to meet the changing demands of the digital workplace by delivering updates according to a regular schedule, typically quarterly or biannually. This means that system updates, fixes, changes and new features are released regularly during the course of a year. A planned release schedule improves service delivery for cloud applications by aiming to reduce unexpected system outages and disruption to normal service. This is touted as a major advantage of the cloud value proposition. However, without appropriate management and resources, cloud technology can potentially fall short of exploiting the full value of this benefit.
Application leaders are uncertain about (or often overlook) the level of resources and skills needed to manage cloud system releases and adoption of new features.
Common questions raised by Gartner clients include:
  • How does the relationship with central IT change when we move to the cloud?
  • What HR team structure should I put in place — if any — to manage cloud HCM?
  • What skills does my team need in order to manage new features and innovations (such as AI)?
  • What insights do we need for configuration to enhance the user experience and automate or change business process workflows?
This is exemplified by an organization that had implemented a new cloud HCM suite but was struggling to assign resources to ongoing change management. In short, it failed to prioritize the roll-out and adoption of new features such as conversational digital assistants. The IT team did not have necessary functional HR and business process insights to manage HCM cloud change across the business. The HR leader was unable to ascertain the skills necessary to manage AI. Moreover, HR business partners and subject-matter experts across the business couldn’t commit to the additional workload that accompanied change management and deployment of new features. Consequently, the organization soon became encumbered with an outdated HCM suite that failed to keep pace with innovations and new features. System users became confused and frustrated by unannounced and automatic system updates that impacted their use and familiarity of the HCM suite.
 
Recommendations:
  • Ask the HCM vendor and implementation partners to define the skills and resources necessary for managing the cloud HCM suite once live. Many vendors (for example Workday) have resources, peer-to-peer forums and business strategies that enable clients to increase the value of an HCM cloud suite following deployment.
  • Develop a partnership with your IT team, project management office, and where necessary other functional areas to agree on roles and responsibilities for HCM suite management.
  • Ask central IT how cloud application management is provisioned and managed for other functional business areas in your organization such as finance and marketing, and explore if the same model will work for an HCM suite.
It will be highly unlikely that just one resource will have the full set of skills or bandwidth necessary to manage cloud HCM alone. Developing a partnership charter with your IT department and project management office (if you have one) is essential to ensuring sufficiently skilled resources are assigned to managing the HCM suite successfully.
Increasingly Gartner is observing managed services offered by IT service providers are being used by HCM suite clients to augment internal team capabilities with external capabilities to manage HCM suite applications.
A partnership charter must include a responsibility matrix that assigns tasks across multiple resources and multidisciplinary teams.
A sample matrix is illustrated in Table 1

Table 1: Sample HCM Suite Responsibility Matrix

 

Task
Central IT
Application Leader
Project Management Office
HR Resource
  • Change management
   
 
  • Project management of HCM technology as finite projects with clear deliverables aligned to business goals with executive endorsement
   
 
  • Coordination of resources required to execute change and deployment of new HCM suite features (including talent analytics, AI and ML)
   
 
  • System administration (including management of security permissions and system access)
     
  • System configuration for both existing and new business processes and functions
     
  • System integration and dependency management
     
  • Product service management, support and escalation
  • A dedicated contact to log and manage cloud HCM tickets
  • Vendor support analytics to ensure SLAs are met
     
  • Vendor contract management (negotiation, contract reviews, interpretation and governance of legal and compliance aspects)
 
   
  • Strategic design of the cloud HCM roadmap to deliver organizational priorities (including identification and monitoring of the skills and resources necessary for ongoing HCM cloud suite delivery)
 
   
  • Ongoing management and execution of the cloud HCM roadmap with advance awareness and planning for system updates
  • Keeping informed of product direction and how it meets the needs of your organization
 
   
  • Formation and engagement of an HCM ambassador community.
  • Coordinated changes, business process improvements and adoption of new cloud HCM features at a local level
 
   
  • HCM suite analytics super user (creates custom-made analytics to inform business decisions as required)
  • Active contributor in product user communities (influences vendor product roadmap, innovation and HR industry and business process best practices)
     
 
Source: Gartner
Figure 1 offers an example of how roles and responsibilities can be assigned across HR and IT.
Figure 1. Roles and Responsibilities for HCM Release Management
Roles and Responsibilities for HCM Release Management

Prioritize Vendor Service Capabilities Alongside HCM Functionality to Identify Best-Fit Vendors

By definition, investing in and implementing an HCM technology means that you are committing to a relationship with a vendor’s product and organization for a number of years. The implementation involves a considerable investment of time and money that you might reasonably expect will lead to a worthwhile return on that investment.
Figure 2 shows the different areas offered by cloud HCM vendors. Those listed will be quite familiar to application leaders who have undertaken previous HCM implementation projects. A thorough understanding of all of these areas will assist in helping organizations select best-fit solutions for their projects.
Figure 2. Assessment of Cloud HCM Vendors
Assessment of Cloud HCM Vendors
Gartner has previously written Best Practice research notes on HCM to help organizations pick best-fit solutions. However, vetting the functional and technical fit of prospective solutions is not enough. There are many other facets of a vendor’s solution that should be scrutinized.
Elements that are often overlooked by organizations include service components such as account management, implementation quality and access to customer support (particularly access to regional support). Most vendors offer some level of remote support, and application leaders should use multiple data sources (including Gartner Peer Insights) to determine relative customer satisfaction with support-related criteria. Access to customer communities and peer networks is also essential, especially for insights regarding how other clients successfully overcome issues and challenges. Access and quality of support, effectiveness of ongoing product learning, and peer feedback can represent significant contributions to the experience received and overall satisfaction with HCM suite.
Some vendors perform much better than others in differentiating the aftercare services that they offer. In general, however, Gartner inquiries and research shows that, for organizations of all sizes and industries, there is room for improvement.
In one recent inquiry, a client explained how he was pleased overall with a vendor’s product capabilities but had become disillusioned with the vendor. After implementation, the vendor showed a lack of interest and empathy in rectifying issues arising from workflow configuration limitations. They also did not provide a roadmap for a well-being module as promised, nor a timeline for delivering nonstandard analytics. Subsequently, the client has actively begun looking for a new solution, in preparation for when the current contract expires.
Performing due diligence on customer satisfaction is a critical activity that will help you deduce best-fit vendors.
Contributing factors include:
  • How quickly and effectively a vendor responds to customers.
  • The ease with which customers can engage with product and R&D teams.
  • The ability for customers to engage directly with each other, peer to peer.
Many vendors now employ customer success managers to positively affect long-term customer retention. However, effective account management is crucial to both the implementation and postimplementation phases of your project, due to the nature of the day-to-day support it provides. You must validate any account management resources and arrangements to determine their suitability to your organization, and their ability to react to project needs accordingly.
You should seek to clarify:
  • If the account management personnel have relevant experience of working with organizations of a comparable size and complexity.
  • If the account management personnel have relevant experience of working with organizations in comparable industries.
  • How/if the account management arrangement will change before and after implementation, and how the customer success manager role will work in tandem.
  • How many other customers your account manager will be supporting (and their general shape and size) to ascertain if there will be enough bandwidth to support your needs sufficiently.
  • How/if the account management arrangement will fit key project stakeholders and working groups geographically (in other words, do locations and time zones correlate for frequent and easy access where needed?).
It’s not enough to focus on the “general” service offering of a vendor. A deeper investigation is required to truly corroborate the vendor’s ability to deliver on your customer support and account management expectations.
Recommendations:
  • Use the experience of customer references (whether vendor provided, through peer insights, or via online user groups) to understand areas of satisfaction and disappointment in customer support and account management.
  • Request temporary or “view only” access to the vendor’s customer community to see how enhancements and issues are evaluated and prioritized.
  • Evaluate the details of the vendor’s customer support service-level agreements. Doing so will give you an understanding of how and when the vendor aims to respond to issues that arise during and after implementation.
  • Assess and understand the difference between account management and customer success arrangements to determine the proper escalation path for issues.
  • Request evidence of how your vendor’s account management personnel are equipped to deal with issues that relate to regional/local best practices and compliance needs. This will minimize the risk of delays associated with these types of issues.
  • Create a go-live plan that stipulates minimal or no immediate changes to customer support or account arrangement. This will support a smooth transition from implementation to a live product, the period in which most arising issues will need support from the vendor.

Topics: Insider, HRIS, Technology, HCM