Last Friday, I had a lengthy and frank conversation with HCM consultant Jarret Pazahanick of EIC Experts. In the last few years, Jarret has evolved into one of the most influential bloggers and practitioners in the SAP HCM space, but not without controversy. I wanted to better understand what motivates Jarret's blog posts, and also dig into the customer lessons he has learned after 15 years as an HR consultant. Of course, how HR has changed and the impact of cloud was also on the agenda. And, yes, SAP versus Workday. Here's the highlights.
Jon: Jarret, why are you such a polarizing blogger?
Jarret: I think the polarizing piece of it is that I only blog when I feel passionate about something. I don’t have a blogging calendar. Some of those articles don't make SAP happy, but I think customers can figure out who is being authentic and who is in it for the long game.
Also, everything's not black and white. If you see someone out there who’s always saying, ‘X is awesome’ or ‘X is awful,’ to me, I just tune right out. SAP is doing things that are very good. SAP is doing things that aren't good. Oracle's doing things that are good. Oracle's doing things that are not good. Workday, the same thing, although you don't see as many ‘what Workday's not doing well’ posts because there's a bit of a love affair with them right now. People want to see a balance, and it's not black and white. I think that comes across in my posts.
Jon: You’ve been an HCM consultant for around 15 years now, right?
Jarret: Yeah. Actually, I celebrated my 15 year anniversary this week. Quite a move from the grocery business.
Jon: What has changed the most on HCM projects since you started?
Jarret: One of the biggest changes is the move from HR being more back office to being more of a strategic thing for companies. Some would say that HR is the hottest area in software out right now. Firms are looking at their employees as a real strategic asset and they’re asking, ‘What technology can we use that will help us with that?’
I also think we're in the early innings of a multi year shift from on-premise software cloud based offerings. There are some real, tangible benefits out there for HR customers that are using true multi tenant SaaS.
Jon: I keep hearing that HR is strategic, but many companies still seem to relegate HR to the back office. How do you explain that?
Jarret: Companies will claim that employees are their greatest asset, yet only a small portion have aligned their business processes and HR technology to support it. I think the technology is further along than most companies are. Companies want to take the business processes they had 15 years ago and put them into these new systems. Obviously that's not a very good match.
But I do think that over the next three to five years, if companies want to stay competitive, they are going to have to truly invest in their people. That means moving to a more strategic HR. The firms that don’t do a good job of this are going to have serious challenges in their industry. I am a big believer in the value of strategic HR versus the traditional back office functions, but the best run companies do a great job of both, often being aided by HR tech.
Jon: What is your day job like?
Jarret: Companies look to me to come in and help maximize their investment in the technology that they've already bought. Down the road, I'd like to get into a role where I help companies determine what software solution to use. But for the last 15 years, they've already chosen SAP HR, and they want to find an honest, reputable consultant that's going to come in and help them try to get the most bang for their buck.
Jon: As an independent consultant, how do you have the most impact?
Jarret: The true consultants out there are the ones that not only understand the technology, which, in SAP’s case, can be very confusing. There's so many ways you can configure. If I'm doing a payroll project, it's important that if I'm talking to the payroll manager, I shouldn't be using any SAP jargon. I should be using payroll jargon that they understand. It's up to me a consultant to make that translation between the business and IT and the technology.
From an independent standpoint, I think the key is just being honest with customers. If there's something that they want that the software just can't handle, or if it's going to be really complex, let them know that. Give them all the facts and let them know on the front side, as opposed to after go live or as you're coming up to go live. I've seen some cases where the SI has really taken advantage of customers. Having that independent voice can really keep a project honest.
Jon: Are your customers more interested in solving HR pain points around globalization, or installing new functionality?
Jarret: Some customers are really looking to take the existing business processes they had 15 years ago and put them into a new system. Those are the ones that really have some challenges. Other customers are looking at a new software system as on opportunity to review and rethink their business processes. Those are the companies that I enjoy working at a lot more. Because you're able to fit them in with the software a little bit better. But you're also able to really make some positive change.
But in general, everyone wants to standardize their HR processes globally as much as they can. The problem is various pieces of technology and HR just don't lend themselves to that. Payroll's a good example. You can standardize your payroll to a certain degree, but the US tax laws are different than Great Britain’s tax laws and the Australian tax laws.
Jon: What is something all HR customers struggle with?
Jarret: Most companies really want to get accurate reports out of the system, but a lot of them struggle with it. I’ve heard people say, ‘We invested $100 million in this software system and we can't even do a headcount report.’ I shake my head in amazement at that. Sadly, there's big Fortune 500 companies that don't know how many employees they have working for them. This is after they spent $100 million on a big enterprise software system.
Jon: Any more advice for HR customers?
Jarret: A few more things - don't let the consulting company provide you the resources. You interview every resource. Two, retain your internal knowledge. The last thing you want is to go live with a product and six months later have some of your team leave. That means being flexible on the salaries for skilled employees. Testing and change management are two big ones that a lot of times just get thrown in late. These systems are complex; you want to get buy in. As far as testing, you just can't test enough, especially when it comes to areas like payroll and other areas where, if you're off by a dollar on someone's pay, the project is going to be a failure.
Jon: Is cloud the future of HCM?
Jarret: The firms that are doing a lot of innovation, whether it’s SuccessFactors or Workday, they're doing it in the cloud. One of the reasons that they are able to innovate is because they have a true multi tenant structure in place. Typically, that means they have one code base and each customer will have a different client within that structure. It enables the vendors to be able to innovate more quickly.
Some of these SaaS firms started from a lot lower functionality standpoint, but they're catching up. Very quickly, they will be past where some of the legacy software firms are. I've heard some of the SaaS vendors in the HR space talk about 25 percent of their usage is coming from mobile devices, which is phenomenal.
Jon: You’ve sparked several controversies by juxtaposing SAP with Workday in particular. What motivates those comparisons?
Jarret: When I first started working in the grocery business, we always looked at our competitors. That was one of the ways we got better. There’s no doubt that Workday is doing some great things in the HR space. I understand that pushes SAP's buttons. I got my first dose of that two years ago, when I said Workday was a huge threat to SAP. I had a lot of people saying, ‘Where are you coming from? This is a little tiny firm. This is crazy.’ When you look two years later, you could see that I wasn't that far off.
Jon: Dennis Howlett thinks they're going to have a billion dollars in revenue run rate by 2015, which would not be a tiny company anymore.
Jon: But it is kind of interesting, because you don't have any commercial ties to Workday. Yet you have used them as a basis to criticize SAP, which is the community where you make your money day to day.
Jarret: It’s a good point, because I do make 100 percent of my income from SAP consulting. When I praise Workday, it's because I think they’re doing something well. I'm sure I've made quite a few friends at Workday over the years by complimenting some of the things they're doing.
Jon: Quite a few Twitter favorites…
Jarret: (Laughs) Let's be honest; it’s only been over the last couple years that competitive pressures have really forced SAP to really focus on HR again. There's no doubt in my mind that SAP would not own SuccessFactors today if it wasn't for Workday. But as I mentioned, I still think we're in the early stages of a major move to HR software as a service.
A lot of customers are looking at their investment in HR and they're short listing Workday and SuccessFactors. At the end of the day, SAP has to do the things to make it competitive if it wants to continue to protect and grow its business.
Jon: Speaking of vendor skirmishes, what were your quick hit reactions to Oracle’s earnings call, where Larry Ellison mentioned HCM on more than one occasion?
Jarret: When I start to hear companies talk a lot about their competitors in an earnings call, that means that they've become a real pain point for them, and the number of times Oracle mentioned both Workday and SAP tells you those two companies are hurting their business. I haven't said this a whole lot, but many of the things that frustrate me about SAP, I personally think SAP is doing a lot better job on those than Oracle.
Image credits: Cloud Computing Concept © Chariclo - Fotolia.com, photo of Jarret Pazahanick - Martin Gillet.
Disclosure: Jon and Jarret are both SAP Mentor volunteers. SAP, Oracle, and Workday are all diginomica premier partners as of this writing.