Transcript of "Think Globally, Act Locally: Top Issues"
Think Globally, ActLocally: Top IssuesJulie Fernandez, Director, ISG
AgendaToday’s most valuable employees possess the ability to think globally, whileapplying local expertise and pragmatism to the local reality. Global Payroll SaaS / Cloud Technologies Process Harmonization Data Security and Privacy Mobility and Workforce 2020
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
Payroll Market TrendsThere 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
Payroll Outsourcing SolutionsRight sized payroll means there is no broad “one size fits all” when it comesto 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 ServicesPayroll 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
Many Dimensions of a Global Payroll StrategyPursuit of a global payroll strategy does NOT imply all countries must fitone 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
Payroll Provider Capabilities and FootprintTruly understanding who does what for whom is a difficult picture toconstruct, 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
Market Trends: HR SaaSHR was an early adopter of SaaS and will continue to lead in thetechnology 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
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
HR SaaS Internal SSC vs. HR SaaS BPOThe HR SaaS delivery model does not address buyer’s desire to outsourceroutine 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
HR SaaS Growth is Impressive, But Caution AdvisedThe 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…
“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
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
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?
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
Data SecurityMeanwhile, the move toward multi-tenant technology limits a client’sability 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 serviceprovider to provide outcomes of independent audit reports. Combine this with ISO 27001 certification.
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 path2. Hold strong values 2. Give me straight feedback3. Offer customizable options in my 3. Mentor and coach me benefits and reward package 4. Sponsor me for formal development4. Allow me to blend work with the rest of programs my life 5. Accommodate flexible schedules5. Offer a clear career pathCourtesy of Dr. Karie Willyerd, VP and Chief Learning Officer, SuccessFactors