Mobile and cloud remain on the rise as one in three private sector organizations plans to overhaul its HR structure over the next 2 years, but the federal government continues to struggle with its own HR tech.
According to the annual HR Service Delivery and Technology Survey from Towers Watson, based on responses from 1,048 companies globally, 33% of those polled plan to increase HR technology spend this year by up to 20%, with continued increases in the use of SaaS systems for core HR and talent management offerings as well as further adoption of mobile technologies as stated priorities.
The study notes:
These investments are directed mostly toward the implementation of new technology and new functionality, including HR portals, talent management solutions, mobile access services and leading software-as-a-service systems such as Workday. The trend toward reviewing and replacing the core HR system certainly continues, but we also see a trend toward greater investment in HR data and analytics, portals, and payroll. About one- third of our respondents reported they plan to spend more in the coming year and 29% of them will be moving to a new core HRMS.
For the second consecutive year, respondents identified streamlining their business processes as the number one HR initiative. More than half (55%) of respondents say they reengineered key HR processes over the past 18 months, while roughly half (49%) improved line managers’ people management capabilities.
The report argues:
For the first time in our survey research, key HR initiatives appear to strike a balance between people, process and technology.We attribute this shift to smart HR investments in initiatives that matter, like streamlining business process and implementing manager self-service, and to a commitment to running the HR function like a business, with an effective mix of strategic perspective and operational discipline.
As in years past, there remains a continued emphasis on talent management. We expect to see business process reengineering and strategic decision making figure prominently in HR transformation efforts aiming to keep the HR function focused, efficient and effective. This is supported by data points that reveal HR’s ambitious plans involving structural changes, continued investment in technology and the alignment of the function with business goals.
Some of the key findings:
- Nearly half of the respondents (46%) reported using mobile technologies for HR transactions, an increase of 10 percentage points since 2013.
- But only one-in-ten (10%) are using mobile access for a majority of HR transactions, meaning there’s a lot of opportunity for growth.
- Adoption of SaaS increased again this year, with 40% of respondents saying they are considering SaaS as their only solution. Workday is the main beneficiary of this increase in adoption according to Towers Watson.
- Over a third (36%) implemented manager and employee self-service initiatives, with 71% of organizations in the US using manager self-service tools this year, compared with 61% in 2013.
- Worldwide, 60% of organisations want to increase their use of manager self-service tools in the future.
- Nearly two-thirds of companies (63%) regularly conduct engagement surveys and use the data to direct people investments.
Mike DiClaudio, global leader of Towers Watson’s HR Service Delivery practice, commented:
Despite cost cutting in some areas of HR, we are seeing a substantial spike in technology spending. Companies are realizing the value that consumer-grade technology brings to HR and are willing to make smart investments that can grow and evolve with the business. It also appears that companies are splitting their investments between core HR systems such as talent management and payroll, and next-generation technology including HR data and analytics, and integrated talent management systems.
But in the public sector...
One sector that could clearly do with more investment in HR tech is the US Federal Government, according to a recent study by the Government Accountability Office (GAO). The report was based on a meeting of chief human capital officers (CHCO) convened by the GAO and resulting in a number of recommendations, including using enterprise solutions to address shared challenges:
Analysis found that agencies have many common human capital challenges, but they tend to address these issues independently without looking to enterprise solutions that could resolve them more effectively. Across government, there are examples of agencies and the Office of Personnel Management (OPM) initiating enterprise solutions to address crosscutting issues, including the consolidation of federal payroll systems into shared-services centers. The CHCOs highlighted human resource information technology and strategic workforce planning as two areas that are ripe for government-wide collaboration.
The CHCOs reported that US government agencies - and sometimes different units within the same agency - are individually procuring identical systems rather than leveraging the purchasing power of multiple agencies to negotiate better prices or services or use shared service centers.Several CHCOs said HR IT systems are antiquated, create functional challenges, and are urgently overdue upgrades. Within agencies, existing HR IT systems do not interface well to one another and are frequently unable to query information.
Despite all this, in 2013 the US government spent $2.4 billion on 622 HR IT investments. That’s just the money they know about. The GAO warns:
We also identified agencies that did not routinely assess their IT investment portfolios to identify and reduce duplicative systems.20 We concluded that without this information, the government may continue to maintain similar IT investments. The CHCO Council’s executive leadership said addressing HR IT was one of the council’s major goals for 2014.
Talent Management is also identified as an area for concern:
Talent management tools lack two key ingredients for developing an agile workforce, namely the ability to (1) identify the skills available in their existing workforces, and (2) move people with specific skills to address emerging, temporary, or permanent needs within and across agencies. The CHCOs said OPM needs to do more to raise awareness and assess the utility of the tools and guidance it provides to agencies to address key human capital challenges. The CHCOs said they were either unfamiliar with OPM’s tools and guidance or they fell short of their agency’s needs. OPM officials said they had not evaluated the tools and guidance they provide to the agencies. As a result, a key resource for helping agencies improve the capacity of their personnel offices is likely being under-utilized.
The GAO report concludes:
While not an exhaustive list, the CHCOs’ three overarching human capital challenges—(1) lack of coordination in a fragmented human capital community, (2) limited enterprise or “whole of government” approaches to address crosscutting challenges, such as HR IT and workforce planning, and (3) a lack of agile talent management—represent an important framework to begin prioritizing and modernizing current human capital management practices to meet the agencies’ missions. Moreover, given the magnitude of the government’s personnel challenges and agencies’ limited resources, it is critical that OPM’s investments in tools, guidance, and other resources are meeting agencies’ needs and are being fully utilized.
We've seen the emphasis the likes of Oracle and SAP are placing on HCM and talent management and we've watched the competitive challenge from Workday kick in. So the results of the Towers Watson study into what commercial organisations are up to come more as validation than revelation.
But the sorry state of HCM in the government sector is lamentable on the one hand and a massive opportunity for providers on the other. Whether the public sector can rise to the challenge is another matter...
Disclosure: at time of writing, Oracle, SAP and Workday are all premium partners of diginomica.