Perhaps the statement that we now live in a “point solution world” for HR is a bit bold. Certainly in large and medium sized organizations, ERP deployments are still strong. However, we do know that these same organizations are increasingly looking at point solutions even if they have had long term ERP strategies. Current day economies combined with lower short term costs for SaaS provide good business cases for deployments that have to happen in the next couple of years, or as bridges of functionality until a long term solution has been developed. The question in the marketplace is now “what is happening in core HR?”
Core HR is more of a commodity than ever. Truly it has simply turned into a specific set of functionality, and that which made it strategic before has been ripped out of core and placed into other applications or engines. First, let’s look at commoditization. At one time, the ability to provide table driven data validation, full effective dating, and robust compliance was the domain of a few major players. Now, these functions are a part of almost all major HRMS solutions offered at any price.
Second, we look at functionality that used to make core HR solutions strategic. I’ll call these workflow and analytics. From the process standpoint, end to end solutions no longer exist in the HRMS application. Indeed, end to end workflow barely exists at all. Point solutions have virtually disabled the ability to flow work and approvals through multiple products with different approvals in each. While it is possible to utilize a workflow engine to accomplish this, the cost is prohibitive to all but a few very large organizations, and I have not seen HR a high enough priority anywhere to deploy it. Analytics on the other hand have almost been fully removed from the HRMS application. Value can’t be provided by core HR if none of the talent, payroll and benefits data sits in other applications or outsourcers. Indeed, as the value of analytics comes from cross functional data analysis, business intelligence is really the domain of massive data warehouse applications.
Third, the old employee and manager self service systems are mature and ubiquitous. Having employees enter in their new phone number is not very exciting anymore, and the real self service functions of performance reviews or compensation processes are generally removed to the talent systems. Instead, we move to massive portal environments that remove the existing self service functions from each individual application and centralize the user interface.
If indeed the HRMS application has been commoditized in terms of functionality, then the lowest price point that offers scalability and good data architecture (not all applications out there are very pretty from the backside) would seem to suffice. Scalability obviously so that your organization can not only grow, but store greater amounts of employee effective dated rows over time. Good data architecture because the ability to port data into data warehousing applications as well as integrating to other point solutions will be made much simpler.
3 responses to “Core HR in a Point Solution World”
I visited the top of the Empire State Building recently and had a flashback to King Kong. If my memory serves me correctly, one of the quotes from the movie is “it was beauty that killed the beast.” Per “Core HR In a Point Solution World” it was the commoditization of itself that killed the HR function.”
Please allow me to illustrate with a recent example. I recently discussed the use of a metrics-driven dashboard with a multi-billion dollar retailer. While HR was amenable to the concept of using business metrics, such as revenue and profit per employee (at the national, regional and local level), HR recognized it wouldn’t know how to act on the information and implement changes, particularly in poorer performing locations. In addition, being a resource constrained HR function (hmmmm, isn’t that every HR function?), HR felt they wouldn’t have the FTEs to act on the information. In essence, instead of welcoming the opportunity to improve revenue and profits, HR opted to stay in its administrative role. HR immediately shut down the concept of doing the math (“isn’t this what the accountants are for?”).
So, here we go again. in spite of all of the progress HR technology has made, it seems like HR itself is still in the dark ages (yes, I recognize this is a broad generalization). The bottom line is HR continues to have the opportunity to de-commoditize itself and become a true business partner through analytics and business intelligence. If HR itself thinks and acts like a commodity, how is is possible HR technology will help HR connect the dots?
Re: “Core HR in a Point Solution World” perhaps I could mention some of our anecdotal experience, working with SMB’s. Of course the SMB environment is very different than the MLE one, but maybe there are some interesting cross-learnings I could offer. We could call it a ‘Post-Point Solution World’ – allow me to explain what I mean.
The SMB experience with first-generation point solutions was similar to their larger peers, with the difficulty and cost of integration, and the inability to deliver a seamless and comprehensive functionality footprint that met each organizations’ unique needs. This was aggravated by SMB constraints on resourcing projects to integrate such disparate components.
For a while ERP for SMB looked like an option. But the reality we see now is that there’s very little appetite for the “rip-and-replace ERP forced into SMB format” approach as well (in parallel to o.p.). Many SMB’s have by now invested significant effort and dollars in automating key areas, and are no longer willing to scrap that investment for a one-size-fits all end-to-end solution. But having said that I don’t believe we are going back to point solutions, I believe we are looking forward to flexible, third-generation solutions that fill in the gaps to leverage that existing investment. Post-point or multi-point solutions, where key pieces of functionality are clever enough to integrate amongst themselves, and with other 3rd-party components to deliver the best of both worlds.
So the technical challenge presented to SMB solution developers (such as ourselves) is to offer modular components that (obviously) integrate with one another amongst the subset of what is deployed, but also integrate painlessly with other pre-existing components to provide the comprehensive coverage and value of an ERP but without the painfully long project and investment timescales.
I wrote a short piece on this topic here: http://bit.ly/1yFnoJ
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