Your SlideShare is downloading. ×
GlobalHRstudio focus workshop: Best Practices to Build the HR BPO Business Case
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

GlobalHRstudio focus workshop: Best Practices to Build the HR BPO Business Case

1,370
views

Published on

Best Practices to Build the HR BPO Business Case

Best Practices to Build the HR BPO Business Case

Published in: Education, Business, Technology

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,370
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
172
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Best Practices to Build the HR BPO Business Case Paris - April 26, 2010 ©2010 Global HR studio, Inc. Proprietary and Confidential
  • 2. Agenda
    • Master your business case from the start
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Reasons for the business case
    • The different forms of the business case
    • Assess your own situation - The “As Is” analysis
    • Explore the future - the “To Be” analysis
    • What are others doing ? - A review of HR BPO business cases
    • Different sectors, different needs ?
    • What went well - Success stories
    • What could have gone better - Challenges not to overlook
    • Welcome speech and workshop introduction
    • Networking cocktail and walking dinner
    • Coffee break
  • 3. Business case objectives
    • The objective of the business case is to identify costs reduction opportunity and value add trough process improvement, technology and outsourcing
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • As Is assessment
    • To Be criteria and alternatives
    • To Be assumptions & scenarios
    • Findings: As Is & To Be comparison, current costs/future costs, TCO, impact on the organization, value adds
    • Financial: Payback period, Cashflow, Financing
    • Rollout plan and how to transition the HR organization
  • 4. Business Drivers for the Business Case ©2010 Global HR studio, Inc. Proprietary and Confidential Company Compliance
    • Corporate Governance Sarbanes Oxley
    • Payroll complexity and rate of change
    • Standardization, efficient processes
    • Service Level Agreement, KPIs
    • Risk management
    Growth Technology
    • Globalization
    • Mergers and acquisition
    • Emerging business
    • Shared Service Centers
    • Cost effectiveness & value to business
    • Increase flexibility and scalability
    • Decrease interfaces maintenance/ payroll platforms
    • Increase use of ESS/MSS
    • Decrease risks on system availability, systems upgrades
    • Develop controls (disaster recovery plans, data protection)
    • Increase flexibility
  • 5. Timing of the Business Case ©2010 Global HR studio, Inc. Proprietary and Confidential ©2010 Global HR studio, Inc. Proprietary and Confidential Implementation Process Select Partner…Finalize ROI, Contracts & Service Level Agreements Establish future organizational model - both target & interim steps Initiate & Communicate Change Program and Mobilize Project Resources Justify Investment…Establish Savings Potential…gain CapEx Approval Program Preparation Client Readiness Country Preparation Blueprinting (Requirements Gathering) Realization (Configuration Testing) Final Preparation Go-Live & Support
  • 6. What sort of Business Case?
    • High Level Business Case
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Often early in process
    • Overall strategic direction set by Board - “focus on core” - “increase shareholders value” - “outsource where possible”
    • Tactical/operational plans under consideration
    • Multiple future scenarios considered
    • Current & future costs based on ratios, extrapolated data, assumptions
    • Justification of Investment (JOI) to secure CapEx/funding
    • Identifies big wins (& loss) areas - savings and value add
    • Considers impact of rollout phasing and cashflow
    • Vendor data - initial proposal stage
  • 7. What sort of Business Case?
    • Detailed Business Case
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Finalization of Business Case
    • Close to contracting
    • Validation of earlier high-level figures and assumptions
    • Future scenario determined
    • Outsourcing partner selected
    • Phasing confirmed - country & functional rollout - interim stages
    • Focus on selected partner scope functionality - what tasks they do for us?
    • Retained organization - What tasks will we keep in-house?
    • How many FTE’s well we need - roles, structure, level, location
    • Confirms savings, return on Investment (ROI) & cashflow
    • Often used in contract negotiations to get “Best & Final” pricing
  • 8. ADP Business Case Approach ©2010 Global HR studio, Inc. Proprietary and Confidential Findings Analysis Data gathering Preparation Phase Activities
    • Identify Project Team
    • Kick Off Project
    • Alert Regions & Local Players
    • Introduce the business case approach and confirm scope
    • Agree on the future scenarios to be considered
    • Prioritise the key value add/soft benefits expected from the future solution
    • Agree the scope of data gathering required
    • Questionnaires
    • Telephone Discussions
    • Conference Calls/WebEx
    • Meetings
    • Build on any existing data that is already held corporately
    • Confirm assumptions to be used in the business case calculations
    • Client Team send out questionnaires - chases up & validates
    • ADP - complete pricing template
    • Project Team consolidate data
    • Work jointly on analysis
    • Agree& Detail baseline & assumptions used
    • Compile Business Case Analysis Template & Input ADP pricing for future scenarios
    • Review Value Add assessment
    • Calculate Savings & ROI / Roll out Plan
    • Draft findings
    • Final presentation of Findings & Recommendations
    • Future Vision & Retained Organization
    • Costs Comparison – Current vs. Future Savings
    • Value Add
    • Transition planning
    • Next Steps
  • 9. Status: AS IS and TO BE not easy to assess ©2010 Global HR studio, Inc. Proprietary and Confidential TO BE How are we going to get there?
    • Lack of visibility on Costs
    • Lack of visibility on Risks
    • Scope is not well known
    AS IS
    • Options on the market
    • Scope
    • Impact on the organization
    • Transition
  • 10. Building the TCO
    • Scope
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Geographic Scope
    • Payroll HR Time Self Service Corporate Reporting Payroll Accounting
    • Country Specifics - Lodgments, Tax filing, benefits garnishments, declarations, P11D’s participation& intéressement
    • Costs
    • Hidden/Corporate Costs
    • Avoided Costs
    • FTE - direct & indirect costs
    • Outsourcing costs
    • IT Costs – IT FTE Systems, licences, maintenance amortized upgrades, interface
    • Replacement systems
    • Rollout of new functionalities to match To-Be offer
    • IT _ Multiple interfaces/ Upgrades
    • Compliance Cost – SOX internal quality audits
    • Consolidated reporting
    • Overpayments
  • 11. How ADP support the AS IS ©2010 Global HR studio, Inc. Proprietary and Confidential AS IS AS IS Findings Value Add questionnaire Functional Questionnaires complexity assessment, scope validation Costs Questionnaires Payroll, Time …
    • Lack of visibility on Costs
    • Lack of visibility on Risks
    • Scope is not well known
  • 12. Country Data Gathering Questionnaires ©2010 Global HR studio, Inc. Proprietary and Confidential
  • 13. Criteria for the TO BE ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Options on the market (one-to-many)
    • Processing services
    • Managed services
    • Comprehensive services
    • Functional Scope
    • Payroll, HR, Time,
    • ESS/MSS
    • Automation – interactive forms
    • Future Operational Model
    • Shared Service Centre
    • CRM tools
    Geographical scope Functional scope Service levels
    • Geographical Scope
    • Global, Regional
    • Countries
  • 14. ADP Service Options
    • Processing Services : Traditional “service bureau” relationship where clients leverage ADP’s hosted systems, ADP provides back office processing and administration.
    ©2010 Global HR studio, Inc. Proprietary and Confidential COS Managed Services
    • Managed Services: In addition to Hosted Systems & back office processing, ADP also provides front office administration
    • Comprehensive Outsourcing Services (COS) : In addition to managed services, ADP also answers direct employee requests and queries
    Processing Services
  • 15. How ADP support the TO BE ©2010 Global HR studio, Inc. Proprietary and Confidential TO BE Responsibility Matrix, retained profiles Functional & Geographical coverage Service levels and definitions
    • Options on the market
    • Scope
    • Impact on the organization
    • Transition
  • 16. ADP Responsibility matrix ©2010 Global HR studio, Inc. Proprietary and Confidential
  • 17. ADP Sample Role Descriptions ©2010 Global HR studio, Inc. Proprietary and Confidential
  • 18. Impact of Transition on the Business Case ©2010 Global HR studio, Inc. Proprietary and Confidential AS IS TO BE How are we going to get there?
    • Project methodology
    • Rollout plan
    • Resources
    • Set-up costs
    • Social costs and impact
    • Costs savings
    • Payback and financing
  • 19. Don’t forget to include Added Value
    • “ Price is what you pay - Value is what you get” , Warren Buffet
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Value will be perceived differently by different stakeholders
    • Stakeholders analysis will help to identify desired benefits
    • Weighting the desired benefits can provide key selection criteria for future scenario
    • Strive to measure & quantify if possible
    • Include Business Case as part of the Value Proposition even without attaching cash value
  • 20. Value Add: Example of Client Stakeholder Analysis ©2010 Global HR studio, Inc. Proprietary and Confidential Costs savings Reduce internal costs (interfaces, monitoring, skills) Reduce HRIS costs (one platform) Minimize costs through economy of scale Reduced reporting costs –data consolidation & report development Costs Legal compliance meeting internal audit requirements Documentation and control of data transfer / error handling Guarantee SOX compliance and reduce audit fees Compliance Local expertise/support for payroll Select robust and focused partner Long term solution Limit operational risk trough a robust and proven governance model Ensure solution scalability (add. countries, processes, organization) Risk management Increase automatic data entry One system with a comprehensive integration Reduce interfaces ESS/MSS alignment with other processes Facilitation of SAP interfaces for HRIS data Technical Improvement Reduce administrative tasks Be able to focus on what matters (HR) Be able to count people at reasonable costs Reduce errors Benefit from sharing improvement Process improvement
  • 21. Benefits Executives are wanting from Outsourcing (Source: NelsonHall 2010)
    • Mid-market / National
    ©2010 Global HR studio, Inc. Proprietary and Confidential 1) Cost reduction and control 2) Become strategic partner / Stop doing transactional work 3) Compliance / Risk management 4) Improved technology 5) Lack of resources 6) Reduced risk 7) Better payroll data and service 8) Process improvement 9) Dissatisfied current provider 10) Bad experience with internal payroll
    • Large / Multi-national
    1) Cost reduction and control 2) Global / multi-country service using single vendor and platform 3) Improved payroll data and service 4) Process improvement 5) Improved technology 6) Become strategic partner 7) Compliance / Risk management 8) Bad experience with internal payroll 9) Lack of resources
  • 22. Presenting Business Case Findings
    • Context of the Business case - strategic aims, timing etc
    • Summary of Scope - geographical, scenarios, functional scope
    • Data integrity - sources, coverage & assumptions used
    • Inclusions & Exclusions - no surprises
    • Cost comparison - current vs. future
    • “ Avoided Costs to show Like-for-Like Savings Comparison
    • Phasing & Ramp Up - interim stages
    • Investment internal & external transition costs
    • Treatment of Severance costs
    • Return on Investment - Net Present Value & Payback
    • Cashflow Analysis - cost neutral years, financing & amortization
    • Value Add to the business
    ©2010 Global HR studio, Inc. Proprietary and Confidential
  • 23. Vive La Différence!
    • Re TCO savings:
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • “ Cost is top reason why clients outsource payroll today…”
    • “ Client cost savings range from 10% to 45% with an overall average savings of 25%”
    • Re FTE savings:
    • “ The average staff reduction for an outsourced HR engagement is 54%...with upper quartile 76%”
    NelsonHall 2010 Everest Research Institute 2008
  • 24. Example of Current Vs Future ©2010 Global HR studio, Inc. Proprietary and Confidential
  • 25. Example of Cashflow Projections ©2010 Global HR studio, Inc. Proprietary and Confidential Option 1 - Normal ADP Payment Schedule 2010 2011 2012 2013 2014 ADP Implementation Fees Phasing: 303 4,923 2,242 0 0 Client X saving if (-) on Operational costs 0 -804 -4,428 -4,417 -4,417 Cash flow saving if (-) 303 3,945 -2,187 -4,417 -4,417 Payback Period (Months): 31 Option 2: Financing & Amortization ** 2010 2011 2012 2013 2014 ADP Implementation Fees Phasing: 0 2,320 2,320 2,320 2,146 Client X saving if (-) on Operational costs 0 -804 -4,428 -4,417 -4,417 Cash flow saving if (-) 0 1,516 -2,108 -2,097 -2,271 Payback Period (Months): 20
  • 26. Finally Don’t Overlook these Challenges
    • Collecting the right data
    ©2010 Global HR studio, Inc. Proprietary and Confidential
    • Ambiguous questions and answers
    • Missing, unavailable
    • Reluctantly supplied
    • Knowing what your Executives/Finance will include/exclude in/from your calculations
    • Understanding the decision makers criteria for funding approval
    • Resistance to change - even planning for it
    • Defining the scope of the To Be
    • Understanding what is on offer from vendors in the market & specifically from your selected partner
    • Phasing - what by then - not all savings kick in at the same time
    • The time required
  • 27.