Human Capital Trends: Clouds in the Forecast
Deloitte Insights video
Cloud computing has created virtually limitless options of how and where work is done, which in turn has created a number of challenges and opportunities for human resources (HR) leaders. HR has a responsibility to help the organization adjust its people and processes and they are positioned to do so because many HR organizations learned valuable lessons as early cloud adopters. Watch this episode of Deloitte Insights to learn more.
Stephen Redwood, Principal, Deloitte Consulting LLP
Debi Hirshlag, Vice President of Human Resources, Workday
Sean O’Grady (Sean): Hello and welcome to Insights where today we will be discussing the application of cloud technology in the Human Resources field with Debi Hirshlag, Vice President of Human Resources at the Silicon Valley software services firm Workday. Now, prior to Workday, Debi helped lead the world’s largest rollout of a core HR system in the cloud. Alongside Debi in the studio, we are welcoming back Stephen Redwood, a Principal with Deloitte Consulting. Now, Stephen, I would like to know, is cloud technology disrupting the HR space? And if so, what exactly is driving that?
Stephen Redwood (Stephen): I think it would be safe to say that it is certainly disrupting this space, Sean. I think there may be three things particularly important to this. The first thing is when you think about the scalability of cloud operating in a multi-tenancy type environment, the economies of scale that companies can get from operating that kind of space will have a dramatic effect on their business model. The implication of that I think is the second piece of this, which is that when you have the opportunity to change your business model and operate in different ways because of those economies of scale, you can start to rethink the way in which you structure the business, in the way which you allocate work around the organization. And then the third piece follows directly from those two, which is that when you start to move around with your business model and the way you organize business, that implies that people are going to do things differently. If things are being done differently, then you need to rethink the talent space. So, the potential impacts of moving to a cloud environment are really quite powerful. So, Debi, it sounds like table stakes is that there is disruption with cloud technology in HR, but I am interested to know, what opportunities and challenges is that disruption causing in your field?
Debi Hirshlag (Debi): Certainly far more opportunities than challenges but let me start with a couple of the challenges because I think people should be aware of them. I think, first of all, a lot of the purchasing decisions are made or certainly influenced by the finance and IT organizations in companies and those organizations have traditional and long-term relationships with on-premise and ERP vendors and it is sometimes hard for HR to get them on their side, especially when we are talking about cloud application. So, a little bit more influence and selling is needed there. Secondly, I think there are a lot of companies right now that are saying that they are SaaS or cloud based and we kind of call them fake SaaS sometimes because although they certainly are hosting the software and hosting your data, they haven’t necessarily found a way to do seamless updates and functionality delivery so that companies are sort of suffering through some of those bumps. So that is kind of a buyer beware situation. On the positive side, many, many more things; I think cloud-based vendors are able to deliver a new functionality or capitalize on new technology advances much more quickly, giving their customers those advances through software updates. Additionally, companies themselves, as their business changes, reorganizes or M&A, they can respond more quickly through pretty easy configurations and changes in their own software that they can do without getting a lot of software developers involved and things like that. Thirdly, the back of most SaaS applications is pretty open, so you can integrate very easily to other applications that you have both on-premise and off-premise legacy or SaaS allowing all of your systems of records to talk to one another. In a true SaaS model, you are all on the same version allowing peers at other companies to network about ideas that they have had, problems they are encountering, things that they are doing with their application of SaaS. Moving on from there, IT departments, they are typically pretty busy and getting a SaaS-based application frees them from having to manage all the production and on-premise maintenance of that application. And then lastly, I think that users tend to adopt these modern user interface SaaS applications much more quickly allowing companies to have a broader and faster adoption.
Sean: Thank you very much for that. Stephen, I would like to turn it over to you for your perspective on the market at large?
Stephen: Well, I think Debi has nailed it really, but I will add maybe a couple of comments. One is around user adoption, I mean that’s a challenge because the way in which adoption needs to be approached. It changes as you move toward SaaS-type environments. In traditional environments, technology adoption is over a long period of time, 6, 9, 12 months not impossible. In SaaS environments, you have got a much tighter implementation cycle, so people have to adapt and adopt in much faster cycle time. So, that is one challenge, which is out there. Another consideration I think for some companies is that you are getting companies who are moving into the cloud space by becoming providers themselves and when they are starting to become companies that are offering a cloud service as opposed to just bringing in one in-house, that can have a very significant implication further way in which the whole business model operates clearly. And then, maybe finally, I just mentioned the security issue which is you have got companies who quite rightly have concerns to ensure that the level of security is at least equivalent, if not better, than the ones they can be sure that they have on an in-house type platform.
Debi: But I think there are some things that HR can do to make sure the implementations go well. There are a variety of things and things that come to mind, first of all, you are usually putting in a system of record, granted there are some niche application in HR, but often times, we are talking about a core HR system of record, which benefits the entire company. So if we position the project as a company project, something that will benefit the company and not just the HR function, I think that makes the projects go well because you get the sponsorship at the levels you need; partnering with IT and Finance who benefit greatly from having this great, accurate, modern system of record makes a big difference as well; and then also I think making sure that the workforce whether it’s the Human Resources function, the managers, or the employees who interact with this system understand this new technology they have been given, the value of having self-service access and frankly what’s their role in keeping data accurate.
Sean: Let’s pick up on that value thing that you just mentioned, so how are organizations measuring the value of a cloud implementation?
Debi: Certainly, several things that make sense to me. First and foremost, if you believe that what you are implementing is going to add value, this speed of deployment and the speed of adoption of that deployment is pretty critical. I want my company up and live on that adoption as quick as possible. At Workday, some of our customers are literally implementing full systems of record, including maybe self-service, benefits, talent, even payroll in a matter of months whereas a typical on-premise ERP can certainly take a year or more. Secondly, the user adoption that we just mentioned and that adoption is typically from bottom to top. You have got HR people deep in the system, you have got managers working with their own data on their teams and you have got employees themselves managing their own records keeping their data fresh, doing benefits open enrollment, changing addresses and those types of things. Thirdly, very important, reduced total cost of ownership. HR budgets tend to be lean in a lot of organizations and we are finding at Workday that our customers are saving 30% to even 60% on total cost of ownership of both purchasing the software, implementing it and ongoing maintenance and configuration and changes of that. Improved data integrity — I am an HR person and data is important to me. We have more people seeing data. You have got HR people in the records, you have got managers managing their teams and seeing that and then you have the employees themselves that can look at their data and make sure is my salary right, am I titled properly, am I in the right location reporting to the right manager? That all becomes very visible. And then I think, last but certainly not least, is the fact that because you have more access to data and better analytics and dashboards that I think companies from top to bottom are making better decisions.
Sean: Thank you very much for that. Stephen, your perspective on the market.
Stephen: The other way in which companies are finding value is the intrinsic value that people get from working with cloud technology. So, we are seeing employees working with new technologies, which are better suited to their expectations in the modern age, not some old traditional system that can constrain you in many ways. And it promotes an environment, a culture of an organization, which is with the times intent on providing the latest and greatest technologies that could be available and that has a knock-on effect for employee engagement. You can use that kind of information as part of your recruitment drive, particularly younger candidates are going to be interested in hearing about that kind of thing is an indication, a kind of symbolic sign, “This is a company that’s kind of with it up with the modern age and they are not going to be working with some old antiquated-type technologies.”
Sean: My last question is for both of you. We can get started with you, Steve — in this way, we don’t get any thunderstorm here — if an organization wants to have a positive implementation process, what would be your recommendations to that organization?
Stephen: Sean, I don’t think there is rocket science in this. It’s probably the rules that apply to implementing the cloud technology the same that apply to implementing other technologies and to each process change, new organization structures; you name it, project planning. Program management is important and good program management starts with a proper assessment of what are your needs. There are so many choices out there now and understanding clearly both what you need and then matching that to what is being offered is clearly fundamental to be able to make a good selection choice. That’s Step No. 1. Step No. 2 is having made the choice, it is communication, clearly helping people understand what the transition is about, why you are doing it, what it is going to feel like, how the journey is going to play out over time, what their expectation should be is critically important. And then just having a good plan and picking the right people to put it in place is fundamental to it.
Sean: Let’s start with you, Debi.
Debi: I mean the other thing I might add is really being careful about your vendor selection. With an on premise or ERP decision, you basically buy the application, buy the software and then you are off on your own, maybe with your implementation partner. When you are in a cloud or SaaS model, you have a partnership with that provider for a long period of time. They are giving you new functionality and updates, they are your support desk, they own your data, they are hosting your data, so you need to pick a partner that you feel like you can have a long-term good relationship with.
Sean: Folks, thank you both very much for your perspective today.
Debi: Excellent. Thanks.
Stephen: Thank you.
Sean: You’re welcome. We have been discussing the application of cloud technology in the HR field with Debi Hirshlag, Vice President of Human Resources at Workday and Stephen Redwood, a Principal with Deloitte Consulting.
If you would like to learn more about Debi, Stephen, or any of the topic discussed on today’s broadcast, you can find that information on our website. It is www.deloitte.com/insightsus.
For all the good folks here at Insights, I am Sean O’Grady. We will see you next time.
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