Cargotec finds €2m value of cloud in SuccessFactors rollout
- After an 8-month roll-out of a global cloud HR system as a proof point for global digitalization, cargo handling systems maker Cargotec can show €2m savings
Rolling out a single, cloud-based system globally in just eight months to replace 140 separate HR information systems is a tough enough proposition in itself. But the stakes were even higher at Helsinki-based Cargotec, a €3.7 billion, 11,000-employee, cargo handling systems maker with operations in 51 countries. The CEO wanted this big-bang cloud HR implementation to be the company's proof point for further global digitization projects.
Heini Kämi, director of HR roadmaps, processes and tools, was recruited to lead the project for the HR team after an extensive career in HR implementation at Nokia. She says:
We had the history that many good project plans were initiated but not completed. This one was a different one, where the management was pushing to have results — and no delays.
No pressure, then.
The SAP SuccessFactors system went live in December 2014 with 8,000 users on the EmployeeCentral HR information system along with performance management and compensation. Having the cloud-based system in place transformed the performance and salary review process in 2015, says Kämi. Previously, performance reviews had been a largely manual process that involved some 30,000 paper documents, spreadsheets and Word files passing around the company.
For three months every year, HR were only administrators because we had performance reviews going on.
Putting the entire process into a single, cloud-based process has cut in half the time HR has to spend on it. But much more important is the impact of greater transparency on salary reviews. It had never previously been possible to compare salaries and performance across equivalent job roles in Cargotec's three separate operating businesses spread across many geographies.
For the first time the company has been able to put salary reviews into the context of an overall budget and then decide where best to allocate that spend. Cargotec estimates this has saved €2 million ($2.2m) on the total. That's a rapid return on the project investment, says Kämi:
My boss is convinced it has already paid itself back.
Fact-based people management
The outcome of the salary review is a potent example of how assembling information in a single system has made it possible to make better HR decisions. That was always a guiding principle of the project, says Kämi.
Fact-based people management, this is what we kept on repeating.
The biggest business benefit is the visibility that top management is getting. Fact-based people management is the real thing.
Even so simple a thing as putting the organization in place. You can see where you are and who you are reporting to, who your peers are and so on.
Inevitably, one of the most important aspects of the implementation was preparing a global template for employee information and then assembling the data. Cargotec is made up of three separate brands — MacGregor, Kalmar and Hiab — each of which has its own operations around the world. The global template was designed with workshop participation from all the key business units, and then a team of 92 HR contacts from across the company were tasked with the job of collating master data from their own business area and uploading the resulting spreadsheets to a Sharepoint folder.
The first round of data gathering was done in July 2014, including everything except salary data. That left enough time to iron out any kinks before a second round two months before the go-live, which updated the existing data and added compensation information. That upload went well but took longer than planned, using up some of the slack in the project plan.
A sea-change in HR engagement
The December go-live brought together the fruits of that preparation, together with a single framework for job descriptions. For the first time, management could see global head count and salary data as well as an organization chart with a consistent job architecture. There was also a self-service portal that managers, employees and HR were all able to use to view and manage data.
It is such a sea-change in how staff are now able to engage with the HR system that Kämi says some of the local HR specialists had difficulty adapting.
From our part the biggest challenge was, how can you make those HR people let go? They were coming to us that the system was misbehaving — but it was only that the manager had started to use something.
The final phase of the project is currently in progress, adding succession planning and talent management. Then there will be a pause to let things settle down before adding further capabilities such as time management and recruitment.
Meanwhile one California-based acquisition that currently uses Workday will migrate its 400 employees to the new system by the end of this year.
SuccessFactors was the obvious choice as Cargotec already has a significant commitment to SAP, says Kämi.
For us it felt like a natural thing to do — and it made sense to go straight to a cloud solution.
Looking back, the one thing she would do differently would be to stand firm against finance colleagues when they requested variations from the global standard.
We did give a little bit up to our finance team. Now those are elements where we are constantly having data quality problems.
As SAP's Thomas Otter remarked when I met him later on the day of this interview, we often forget how frequently HR is at the forefront of technology adoption.
At Cargotec, the SuccessFactors roll-out has been the standard-bearer for global digitalization of a formerly fragmented process, at the behest of the CEO. This is a pattern being repeated across many enterprises, sometimes deliberately as in this case, more often serendipitously. But once HR has proven that it can be done, other departments such as finance, procurement and IT will face similar pressures to bring in more consistent processes because of the now-proven impact on management visibility and operational efficiency.
It's quite a burden of leadership for HR to carry, but as this example shows, with proper preparation and firm management it can deliver impressive results.