A recent Gartner study suggests that cloud solutions accounted for nearly all new implementations of HCM technology in the past two years. Deriving value from a move to SaaS HCM solutions requires careful advance planning.
In traditional human capital management (HCM) systems, processes and systems are not updated frequently even when they don’t address changing business needs. Any change that was required typically led to a huge transformation project in terms of both time and costs. This approach is no longer aligned with the business goals of organizations in today’s uncertain and volatile business environment. Instead, modern businesses need the ability to adapt to changing needs and change course quickly and easily.
The first step is to evaluate the current and future needs of your organization. Consider likely changes in your organization’s strategy or workforce and evaluate existing vendor agreements. You will get the most out of the move by recognizing the business value of new capabilities, such as analytics.
Begin the transition to the cloud by taking these key steps:
1. ALIGN YOUR HCM STRATEGY WITH BUSINESS OBJECTIVES
Everything devised in the HCM strategy should be aligned to the purpose of the transformation. For example, if the goals are operational, such as improving innovation and operational efficiency, your HCM strategy must be designed to target those goals. Understand your organization’s investment priorities, risks, and opportunities before moving to the cloud. You must choose a solution that is aligned with your own digital roadmap and addresses both your present and future needs.
2. EVALUATE YOUR HCM TECHNOLOGY PROVIDER
Evaluate your HCM technology providers’ agility to accommodate frequent revisions or multiple variations of the process in the same organization, instead of providing just a list of features to support specific process steps. Assess whether the technology provider is able to support an agile HR process and to provide upgrades with minimal testing and zero downtime. Assess their architecture roadmap as this will determine their ability and speed to innovate. In the case of global upgrades, assess their capabilities for country-specific components, such as payroll and benefits management, including providing localizations and business process outsourcing partnerships.
3. EVALUATE ON-PREMISES CUSTOMIZATIONS
Determine whether your on-premises customizations make sense in today’s business environment. Will the customizations affect your ability to take advantage of modern SaaS capabilities like mobile, social, and real-time analytics? PaaS extension capabilities may reduce your need for long-standing customizations and speed up future application upgrades and adoption.
4. INVOLVE ALL STAKEHOLDERS IN THE PROCESS
According to research from McKinsey & Company, when leaders verify that front line staff feel a sense of ownership toward change and take the initiative to drive it, have a 79% success rate.
Include HR users in addition to functional and process personnel throughout the update process. While their involvement is unlikely to be required on a full-time basis, HR users should form part of a wider community to provide support, guidance, and testing. Educate HR stakeholders on the differences between cloud and on-premises delivery. Internal process and cultural changes are often necessary to bring your employees on board with the changes, especially when mobile and social technologies are part of the SaaS offering. Additionally, defining roles and responsibilities by agreeing who should lead and participate in the product update process well before the upgrade process can help you avoid any last-minute glitches.
5. EVALUATE VENDOR SERVICE CAPABILITIES
Prioritize vendor service capabilities along with HCM functional requirements to identify best-fit vendors. Vetting the functional and technical fit of prospective solutions is not enough. Service components such as account management, customer support, and customer communities are being overlooked by organizations while evaluating vendors. Assess the following customer satisfaction criteria that will help you select best-fit vendors.
- How quickly and effectively a vendor responds to customers
- The ease with which customers can engage with product and engineering teams
- The ability for customers to engage directly with each other, peer to peer
6. ASSESS TALENT CAPABILITIES AND REQUIREMENTS
During the transition, your organization will need a workforce with capabilities and skills it does not currently have. These skills are critical and will need to be developed or acquired in some way either through training or hiring. HR must assess the current talent in the organization and work with the leadership team to identify gaps, and then develop a plan to close these gaps.
7. DEDICATE RESOURCES TO CHANGE MANAGEMENT
Late adopters of cloud HCM applications will be making a giant leap in terms of collaborative processes, data availability and mobile capabilities. These are impactful process changes that can alter the roles of, and the relationships between, managers, HR, and IT staff, and other employees. The importance of change management cannot be overestimated. Given the more frequent cadence of SaaS release cycles, it is advisable to incorporate some change management as an ongoing function.
8. ASSESS ANALYTICAL CAPABILITIES
Assess your HCM solution’s ability to improve the data-driven decision-making capabilities for different users – employees, managers, and HR – combining data from across your HR applications, not just within functions or modules. Your cloud HCM solution must provide analytical capabilities that would enable your HR departments to hire the kind of employee who fits the company’s culture and has the best possibility of meeting organizational goals.
9. ASSESS AI CAPABILITIES
Applications of AI go across all HCM functions including HR administration, talent management, HR service delivery, and workforce management. However, they are mainly applied in employee- and candidate-facing applications such as talent acquisition and virtual assistants. Decide whether you would like to be an early adopter of AI functionality and determine the impact of AI on your HR processes. If you decide to go ahead with AI, partner with internal data science specialists to examine and test the readiness of embedded AI capabilities being developed by your HCM technology provider.
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