HR must standardize to face change, says SAP’s Mike Ettling

SUMMARY:

Cloud brings necessary standard best practice processes to HR to better manage change, argues SAP’s new cloud lead Mike Ettling

Mike Ettling, SAP
Mike Ettling, SAP

In a 30-minute conversation at today’s HRTech Europe event in London, SAP’s recently recruited head of Cloud for HR, Mike Ettling, spoke exclusively to diginomica about the challenges facing HR, what cloud means to SAP’s customers and the rationale behind yesterday’s acquisition of Fieldglass.

Getting into a better position to manage change is a big driver of cloud adoption by HR organizations, he told me:

“If there’s new thinking, it’s very easy to adopt the innovation because we can deploy the technology to enable that into our entire user base and they can adopt it very quickly.”

“This is why I think HR is rapidly adopting cloud faster than any other back office process. There’s much more to gain. The value to grab is greater.”

Contingent and crowdsourced labor

One example of that new thinking is the flexibility that increased use of contingent labor is bringing to enterprises. The addition of the Fieldglass contingent labor management technology is a response to those changes, said Ettling. Its cloud-based functionality will interact with both SuccessFactors on the HR side and Ariba for procurement:

“From an HR perspective, contingent workforce is growing faster than permanent. This is about bringing contingent workforce management into the suite.

“The second aspect is, we also own Ariba. Contingent labour sits nicely in the middle … it’s not just an HR play, it straddles HR and procurement.”

We discussed how growing use of contingent forms of labor in the enterprise will also extend to various forms of crowdsourcing. Ettling commented:

“The concept of crowdsourcing is a growing feature in the world of contingent labor. All crowdsourcing is, it’s an instantaneous contract for a very short-term labor service. There’s no difference other than the time frame.”

Standardizing for flexibility

The key to taking advantage of these new capabilities is removing the lack of flexibility that HR organizations have built in by adopting non-standard processes, said Ettling:

“HR has the least standardized back office function in an organization. Processes are very disparate, highly unstandardized. Organizations are saying, we can’t afford this any more …

“One of the big promises we see cloud computing delivering on is standardization.

“If you can standardize, automate and socially enable your processes, your manual processes just melt away and you can focus on the problems and less on the administrative process issues.”

This entails a change in implementation methodologies, he added, since the traditional approach of customizing the application to the organization has to replaced by one in which it is the organization that has to adapt to the standardized processes:

“In the old days of implementing on-premise, the devil was in the detail of the SI engagement.

“In the cloud world, the devil is in the detail of the change management. You need to change your organization to adapt to these best practice business processes.”

On-premise diamonds, cloud stampedes

Ettling emphasized that the move to the cloud has to be carefully planned for many of SAP’s 14,000 on-premise HR customers (while a further 4,000 are using cloud services).

“The absolute diamond I’ve been given are my 14,000 on-premise customers. We can migrate them in different ways to the cloud …

“Right now in the cloud world, there’s a bit of a stampede going on. You can get hurt quite badly. HR can least afford the injuries from a stampede.”

SAP aims to reduce the risk by offering connectors that allow customers to migrate at their own pace rather than making the shift all at once, he said.

“What all of that does is enable you not to be crushed in the stampede to the cloud. Too many cloud providers are selling a story of rip-and-replace. It can be an absolute disaster.”

Another point of differentiation, he claimed, was the work that SAP has put into localization of its cloud-hosted EmployeeCentral HR system.

“We felt that localization and catering to local country needs was going to be a key requirement. I challenge anyone to show me a cloud HR system more capable of dealing with localization requirements. Many of our competitors’ solutions, you’re just not going to have the localization features.”

Change is in the air for HR

In common with a recurring theme at the HRTech Europe event, Ettling spoke of the currents of change in HR:

“HR is going through some pretty fundamental changes in the world of work.”

He cited four big trends:

  1. For the first time in history, we have five generations at one time in the workforce, with millennials having a big influence on introducing new patterns and styles of work.
  2. Talent management remains a top priority for executive leaders: “CEOs are still saying talent management is not solved.
  3. Business processes need to be slimmed down and sometimes eliminated altogether — “melted” — by taking advantage of process automation and standardization on best practices.
  4. The role of the chief HR officer has been changing and CEOs have been much more involved in strategy. “There are only two levers you can pull to effect business change — people and finance.”

Ettling’s appointment was announced earlier this month and he formally takes up his position on April 1st. He was previously chief executive officer at global HR and payroll services provider NGA Human Resources.

Disclosure: SAP is a diginomica premier partner.

Image credit: Mike Ettling headshot courtesy of SAP.

    Comments are closed.

    1. freebalance says:

      This notion of standardizing for flexibility is counter-intuitive. There is value to standardization, as the article points out. Standardization reduces flexibility. The point is that systems need to support appropriate flexibility – it’s a value trade-off.

    2. Mike Ettling has a very valid point here. I had endless discussions with HR process owners about simplifying workflows and processes and aligning to best practice. People get quite emotional about processes they have build up over the years and are not always prepared to make some sacrifices. Especially in global organisations, every business unit will think they are special and unique, but the truth is that very often they could all align with a little bit of goodwill and effort.  

      A system doesn’t always have to provide the solution to every single possible scenario. A lot of the complexity can often be kept to the level of the business process itself, without the need to move every detail to the system level and increase complexity and cost. One of the reasons organisations move to Cloud solutions is standardisation and cost savings. However, when moving from this strategic decision down to implementation, I notice a lot of resistance from the process owners. It’s key to include the senior decision makers in some of these discussions/decisions to keep the implementation cost, scope and complexity of long-term maintenance under control. I can’t emphasise enough the importance of the design workshops pro implementation. Always check the impact on cost/maintenance of your decisions.

      Having said all this, in some cases the HR solution will be required to support very specific workflows and processes, be it for legal reasons or legacy. And this is where a good Cloud solution can stand out from the rest. As long as the organisation is aware of the impact and prepared to pay the bill long term.