Think globally, act locally - HR Hot Topics


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2013 ADP Meeting of the Minds (MOTM) topic, including HR SaaS, Global Payroll, Harmonization, Data Privacy, and more

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  • Getting to a well managed, standardised delivery model is often a laudable aim, but at what cost? By its very nature, scarce top talent can be found all over the world and is potentially a product of the diversity of their local roots – if we “standardise” the diversity, do we lose potential talent? Similarly, competition thrives on finding that USP or differentiating yourself from your competitors – Darwin’s evolutionary forces push local diversity, whilst increasing global complexity
  • Think globally, act locally - HR Hot Topics

    1. 1. Think Globally, Act Locally: Top Issues Julie Fernandez, Director, ISG
    2. 2. Global Payroll SaaS / Cloud Technologies Process Harmonization Data Security and Privacy Mobility and Workforce 2020 Agenda Today’s most valuable employees possess the ability to think globally, while applying local expertise and pragmatism to the local reality.
    3. 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 Cell: (248) 425-6733
    4. 4. Global Payroll
    5. 5. Payroll Market Trends 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 There is a growing interest in multi-country payroll outsourcing solutions
    6. 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 Payroll Processing Services  Payroll Software or Hosted System  Tax Reporting & Remittance Timekeeping & General Ledger Traditional Processing (Gross-to-Net)  System Admin & Maintenance  Back-End PR System Hosting  Gross-to-Net Calculations Fully Managed Payroll Services  Data Management (Build-to-Gross)  Employee/Manager Self-Service  Payroll system hosting & maintenance  interfaces and uploads  Payroll accruals and accounting  Managing compliance  Special Payments / Off-Cycles  Bonus Payment Calculations  Check and Advice Processing  Employee Reimbursements  WOTC Credits (U.S.)  Year End Tax Filings  Garnishments & Liens  Social Insurance Regulations  Tier II Payroll Inquiries Workforce Administration Benefits Talent Management Compensation Recruiting & Staffing End-To-End Payroll Tier I Contact Center Support PayrollOutsourcing SolutionEvolved
    7. 7. Many Dimensions of a Global Payroll Strategy 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 Pursuit of a global payroll strategy does NOT imply all countries must fit one model and one provider
    8. 8. Payroll Provider Capabilities and Footprint 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 Truly understanding who does what for whom is a difficult picture to construct, as truly “it depends”
    9. 9. HR SaaS / Cloud Technologies
    10. 10. Market Trends: HR SaaS 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 HR was an early adopter of SaaS and will continue to lead in the technology space
    11. 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, Talent and Absence 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. 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. HR SaaS Internal SSC Application Middleware Database Operating System Infrastructure Configuration Provider Managed Customer Managed Application Middleware Database Operating System Infrastructure Configuration Provider Managed HR SaaS BPO Transactions Employee Contact Transactions Employee Contact Employee PortalEmployee Portal BPO providers wrap their portal, CRM, and services solutions around HR systems – Workday is building “services” relationships with Aon Hewitt, IBM and Accenture – Workday self-service also benefits from an HRO provider’s “thin layer portal” to assemble access channels Most large consulting firms have growing SaaS implementation groups
    13. 13. The hype around SaaS requires scrutiny and is not always a “hard dollar” save HR SaaS Growth is Impressive, But Caution Advised 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… 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
    14. 14. Process Harmonization
    15. 15. “Standardization” as the New Normal Common requirements 20% covered Standard ERP Customer Requirements Common requirements: 80% covered Today’s HCM Preconfiguration: - Global or regional template - Rules and regulations - Process and workflows - Functional building blocks Customer Requirements In the last 10 years, clients have sought process harmonization, but have deployed customization and replicated local practices After years of rampant growth in HRO, providers now drive toward common practices for economies of scale HR SaaS systems used across multiple clients will force HR to pre- configuration, as customization may not be an option
    16. 16. 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 Global Processes and Harmonization
    17. 17. 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? Considerations and Challenges
    18. 18. Data Security and Privacy
    19. 19. 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 – Contracting efforts for outsourced technology and services has included negotiations of stronger language for breach of data privacy and/or security Data Privacy Company Global Revenue 2% of Global Revenue IBM $106.92B (2011) $2.14B Does a Supplier have a process or person that can sign off this level of risk?
    20. 20. Data Security Client ability to perform security audits Client HRIT policies include custom requirements Contract terms & SLAs are customized per client Visibility / transparency into operations and security practices Unable to physically audit a multi- tenant environment; pay extra for process detail to audit 1 Data security policy and controls are similar across clients Standard terms and SLAs which apply to all clients Still much progress to be made as client demand to implement pushes legal to “make it work” Workday / SaaS CautionsTraditional HR Technology / Services Meanwhile, the move toward multi-tenant technology limits a client’s ability to control security policies and audit 1 Recommended 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. 21. Mobility and Workforce 2020
    22. 22. Workforce 2020 Courtesy of Dr. Karie Willyerd, VP and Chief Learning Officer, SuccessFactors From their next organization: 1. Develop my skills for the future 2. Hold strong values 3. Offer customizable options in my benefits and reward package 4. Allow me to blend work with the rest of my life 5. Offer a clear career path Top 5 things Millennials Expect… From a boss: 1. Help me navigate my career path 2. Give me straight feedback 3. Mentor and coach me 4. Sponsor me for formal development programs 5. Accommodate flexible schedules 70% of Millennials see no reason to come to an office to work
    23. 23. Thank you.