Julie Fernandez is the director of ISG's global HR advisory services. She discussed several top issues for HR, including: 1) Global payroll is a growing area of interest, as companies seek to centralize payroll decisions and leverage systems across regions. 2) SaaS/cloud technologies like Workday are gaining traction for HR functions. While marketing touts benefits, operations cost trends comparing SaaS to on-premise are unclear. 3) Process harmonization and standardization are becoming the norm, as pre-configuration and common practices enable economies of scale. However, customization needs balancing global equity with local requirements. 4) Data security and privacy are key concerns given sensitive HR

1. Think Globally, Act
Locally: Top Issues
Julie Fernandez, Director, ISG

2. Agenda
Today’s most valuable employees possess the ability to think globally, while
applying local expertise and pragmatism to the local reality.
Global Payroll
SaaS / Cloud Technologies
Process Harmonization
Data Security and Privacy
Mobility and Workforce 2020

3. Speaker Bio
Julie Fernandez – Director, ISG
 Director in ISG’s global HR advisory services, focused on multi-
process HR sourcing in both outsourced and shared services
models, HR technologies, and talent solutions
 Global Payroll Process Lead responsible for all payroll IP, tracking
emerging trends, service provider capabilities, etc.
 Last 8 years with ISG focused exclusively on helping large,
complex HR organizations with assessments, vendor selections,
renewal strategies, and M2MSM analysis
 15 years’ prior experience as a Service Provider establishing HR
shared service centers for large multi-national clients
 Fluent in French and Spanish, some Arabic

4. Global Payroll

5. Payroll Market Trends
There is a growing interest in multi-country payroll outsourcing solutions
Significant interest across all buyers in establishing a global payroll
strategy supported with regional payroll delivery
Clients are centralizing payroll decisions to reduce costs; reduce
compliance and financial risk; and leverage systems, processes, and
governance
Payroll frequently serves as the most updated employee record in
countries without an HRIS system or without integration to a global
HRIS, making it top-of-mind for global HRIS strategy and discussion
Recent wave of corporate restructuring (M&A, divestitures) has resulted
in a renewed focus on the need to rationalize and consolidate providers
in-country and across countries
Clients opting for a Workday’s global HCM quickly realize there is no
solution for global payroll

6. Payroll Outsourcing Solutions
Right sized payroll means there is no broad “one size fits all” when it comes
to broad payroll outsourcing
HR Outsourcing Workforce
Benefits
Administration
End-To-End Payroll Talent Recruiting &
Compensation
Management Staffing
Tier I Contact Center Support
Fully Managed Payroll Services
Payroll Outsourcing
Solution Evolved
 Data Management (Build-to-Gross)  interfaces and uploads
 Employee/Manager Self-Service  Payroll accruals and accounting
 Payroll system hosting & maintenance  Managing compliance
Traditional Processing (Gross-to-Net)
 System Admin & Maintenance  Special Payments / Off-Cycles  Social Insurance
 Back-End PR System Hosting  Bonus Payment Calculations Regulations
 Gross-to-Net Calculations  Check and Advice Processing  Tier II Payroll Inquiries
Payroll Processing Services
 Payroll Software or Hosted System  Year End Tax Filings  Employee Reimbursements
 Tax Reporting & Remittance  Garnishments & Liens  WOTC Credits (U.S.)
Timekeeping & General Ledger

7. Many Dimensions of a Global Payroll Strategy
Pursuit of a global payroll strategy does NOT imply all countries must fit
one model and one provider
Regions direct efforts to develop shared services support and an integrated
user experience for HR and other SG&A functions
– Balancing local language and regulatory knowledge with leveraged sourcing
Helping clients to make order of global payroll chaos is based on
– Client’s own current state, footprint, key payroll systems and providers
– Right-sized payroll scope
– Payroll provider capabilities and footprint
– Planned and articulated business case driving what is actionable
Clients and providers alike continue to resort to RFIs as a very flawed means
of “fishing” for a world of global pricing
– Payroll scope and delivery requirements are not adequately defined in an RFI
– Providers offer a range of capabilities, which are described
– RFI fee estimates for a global laundry list of countries are of little value without
more definition
ISG clients use Mark-to-Market® data to estimate provider fee ranges and to
identify sourcing opportunities that are actionable

8. Payroll Provider Capabilities and Footprint
Truly understanding who does what for whom is a difficult picture to
construct, as truly “it depends”
HRO providers with global scope HR often provide payroll on an ERP
platform for only the largest countries (IBM, Aon Hewitt, Accenture, Xerox)
Global heritage payroll providers are expanding services and geographic
footprint on “global” platforms (ADP, NorthgateArinso)
Regional payroll providers are frequently identified as part of existing
vendor landscape (EMEA-SDWorx, APAC-Talent2, LATAM-Toutatis)
– Generally serve a handful of co-located countries
– Alliances among regional providers are seen for responding to broader RFPs
Niche payroll aggregators specialize in services to small employee
populations spread across many countries, targeting value to a client’s “tail”
countries (CloudPay, Safeguard World International, Celergo)
– Generally manage payroll processing with in-country partners that comply with
their model to ensure aggregate payroll data and reporting
– Payroll services are right-sized to suit small country needs

9. HR SaaS / Cloud Technologies

10. Market Trends: HR SaaS
HR was an early adopter of SaaS and will continue to lead in the
technology space
Most HR Talent Management platforms (compensation, performance, ATS,
LMS, etc.) have been cloud-based for years and are well accepted by buyers
SaaS solutions continue to gain traction:
– Workday’s native SaaS platform is rapidly evolving from a US-centric mid-market
core HR technology player into a strong competitor to Oracle and SAP for large,
complex global companies
– Oracle completes Taleo acquisition in April 2012; Taleo has been integrated into
Fusion as the HCM module
– SAP closes SuccessFactors acquisition in March 2012 and is now actively marketing
its HCM, “Employee Central”
– NgA offers its SAP-based “euHReka” platform in a SaaS model with HR
administration and support services
– SaaS solutions delivered by Ultimate Ultipro, ADP Vantage, Ceridian Latitude and
Sapien address the needs of mid-market U.S. firms
All of these providers are struggling to keep up and to gain a fraction of the
publicity and media attention as Workday

11. Market Trends: Workday
Workday is providing a formidable challenge with a number of
significant, recent wins with large multi-national companies:
– Client base has grown from 105 clients at the end of 2010 to 350+ clients
now
– Looking to continue rapid expansion but likely years away from being
profitable
– US and Canadian payroll platforms are “live” with no further geographic
expansion planned; however, Workday has established relationships with
several payroll providers
– Modules for Organization Management, Compensation, Absence, and
Talent each with robust business analytics
– Roadmap recently updated for Applicant Tracking System (1st half 2014)
and Big Data Analytics (2nd half 2013)
– Workday only handles about 25% of their implementations

12. HR SaaS Internal SSC vs. HR SaaS BPO
The HR SaaS delivery model does not address buyer’s desire to outsource
routine transaction processing, configuration and call center support.
BPO providers wrap their
HR SaaS Internal SSC HR SaaS BPO
portal, CRM, and services
Employee Portal Employee Portal solutions around HR
systems
Customer
Employee Contact
Managed
Employee Contact
– Workday is building
Transactions Transactions “services” relationships
with Aon Hewitt, IBM and
Configuration Configuration Accenture
Application Application – Workday self-service
also benefits from an
Managed
Provider
Middleware Middleware HRO provider’s “thin
Managed
layer portal” to assemble
Provider
Database Database
access channels
Operating System Operating System
Most large consulting
Infrastructure Infrastructure firms have growing SaaS
implementation
groups

13. HR SaaS Growth is Impressive, But Caution Advised
The hype around SaaS requires scrutiny and is not always a
“hard dollar” save
Operations cost trends by platform (ERP v SaaS) are not available to
substantiate marketing messages which assert key messages including
– Pay-as-you-go pricing as significantly lower than purchase-maintenance models
– Material savings to employee and manager level operations due to ease-of-use
– Elimination of infrastructure, upgrades, and maintenance activities
SaaS Marketing Position Buyers should check to see if…
Only pay for what you use Annual, up-front payment required
Turn the service off whenever you want Multi-year commitment required
SaaS is cheaper Dependent on number of interfaces
SaaS is faster to implement Inability to customize
SaaS is easier to support The right (new) skills exist internally
SaaS is very flexible Standard terms & SLAs are acceptable
Many others…

14. Process Harmonization

15. “Standardization” as the New Normal
In the last 10 years,
clients have sought
process harmonization,
but have deployed
customization and
Customer
replicated local practices Requirements Common
requirements:
After years of rampant 80% covered
growth in HRO, providers Customer
now drive toward Requirements Today’s HCM
common practices for
economies of scale
Preconfiguration:
HR SaaS systems used - Global or regional template
across multiple clients will - Rules and regulations
force HR to pre- - Process and workflows
Common Standard - Functional building blocks
configuration, as requirements ERP
customization may 20% covered
not be an option

16. Global Processes and Harmonization
Talent management has been a front-runner for global process
harmonization, including globally deployed systems and processes most
frequently achieved in:
– Compensation (annual bonus and merit programs)
– Performance management (performance review cycles) and succession planning
– Corporate learning programs (ethics, data privacy, etc)
Talent acquisition strategies may be globally driven, but require local
knowledge of talent markets and local execution
Global benefits planning that looks to balance global equity with local
requirements (both regulatory and market)
Global delivery models seek to leverage common processes for back office
and contact center that can be enabled by common systems, workflow, and
automation
– Balance needs for language support and local subject matter expertise
– Mixed delivery models address workforce administration and payroll where there is
scale or incorporate local SMEs to ensure regulatory compliance and local

17. Considerations and Challenges
Global initiatives are more commonplace, with a centrally-led project rolling
out new technology or services to a region or to all countries
– Global and/or regional templates will define the “standard” with local input needed
to determine how to best apply one of many possible rules or processes
Broad scope and aggressive timeframes may conflict with work councils and
can preclude the client from changing practices in some countries
A dedicated change management program can greatly increase success but
is often understaffed, unfunded, or an after-thought
Local practices around the world increasingly affect our own HR and Payroll
strategy and delivery, for example:
– U.S. Benefits has had auto-enrolment in retirement programs for years. In recent
months, U.K. companies finally have to auto enroll all employees onto standard
pension schemes by law. So, where will the auto enrolment expertise and
systems come from?
– What do you know of data security and data privacy standards and legislation
in Europe?

18. Data Security and Privacy

19. Data Privacy
Data privacy is a key concern because of the sensitive nature of HR and
Payroll data
– Each country has its own legislation around data privacy
– Europe (Germany) notorious for the most stringent requirements
– Trend for individual countries to tighten data privacy legislation in order to be
perceived as “safe” places to do business
Stakes are much higher outside the U.S. in terms of potential cost to
clients for breaches
– New data regulations such as the Proposed EU Data Regulations involve
considerable penalties (maximum tier of fines of 2% of global revenues).
• Sample implications for a third party provider
Company Global Revenue 2% of Global Revenue Does a Supplier have a
process or person that
IBM $106.92B (2011) $2.14B can sign off this level of
risk?
– Contracting efforts for outsourced technology and services has included
negotiations of stronger language for breach of data privacy and/or security

20. Data Security
Meanwhile, the move toward multi-tenant technology limits a client’s
ability to control security policies and audit
Traditional HR Technology / Services Workday / SaaS Cautions
Client HRIT policies include custom Data security policy and controls
requirements are similar across clients
Contract terms & SLAs are Standard terms and SLAs which
customized per client apply to all clients
Unable to physically audit a multi-
Client ability to perform security
tenant environment; pay extra for
audits
process detail to audit 1
Visibility / transparency into Still much progress to be made as
operations and security practices client demand to implement
pushes legal to “make it work”
1Recommended that clients get SOC 2, Type 2 certification in place in the contract which requires the service
provider to provide outcomes of independent audit reports. Combine this with ISO 27001 certification.

21. Mobility and Workforce 2020

22. Workforce 2020
70% of Millennials see no reason to come to an office to work
Top 5 things Millennials Expect…
From their next organization: From a boss:
1. Develop my skills for the future 1. Help me navigate my career path
2. Hold strong values 2. Give me straight feedback
3. Offer customizable options in my 3. Mentor and coach me
benefits and reward package 4. Sponsor me for formal development
4. Allow me to blend work with the rest of programs
my life 5. Accommodate flexible schedules
5. Offer a clear career path
Courtesy of Dr. Karie Willyerd, VP and Chief Learning Officer, SuccessFactors

23. Thank you.