HRO Today had an interesting article about process and governance in the HRO buying lifecycle and applying them to your technology selection. In it, HRO Today looked at three components to the partnership: strategic goals, statement of work, and detailed requirements. Perhaps their intent was not to prioritize, but I think they got these in the wrong order.
Your business environment is fluid, and so are your processes. Due to M&A’s, re-organizations and scope or scale adjustments to your HRO relationship, you may incur costs from a changing strategic direction. You’ll want to ensure that the underlying HRO technology platform is flexible and allows for these types of changes without impacting existing operations or the overall cost structure. ((Jonkeren,Synco, December 2006. “Examining HRO Under The Hood.” Retrieved from HROToday.com on March 2, 2007.))
Scale and scope are difficult today. Most HRO wants us to fit in a nice neat package so they can apply best practices and scalability to our organizations. In fact, that’s why we enter into HRO contracts. However, once we get into them, we often tell our vendors about how unique we are and insist that they cater to those unique needs. Obviously this negates any leveragability they had to fit us into that nice neat package. What’s problematic here is that your environment really is fairly fluid, but large scale implementations of PeopleSoft or SAP are not. Even point solutions can’t move quite as fast as you’d like them to, especially when your HRO vendor expects every detail to be analyzed, written down, and then implemented carefully with extensive testing. (and you expect that too). The HRO world is full of oxymoronic expectations. In the end, it’s about partnership. Realistic expectations and preparation will yield good results. Shoving changes down your vendor’s throat will not – and in the end when you switch vendors, you still won’t see improvements because your ability to manage the relationship was faulty in the first place.
This was my #2 task below strategy.
Process maps, volumes, detailed roles and responsibilities, staff qualifications, etc. are typically lined out in the RFP appendices, including defining post-transaction, outsourcing management/governance/service level management requirements. At this detailed level, you may ask of your provider to explain how the chosen IT solution supports the requirements. ((Ibid))
HRO Today got this one right. You need to know your requirements in order for your HRO vendor to provider the right services. Not only must you have this defined, but you should also know what your current state looks like so you can benchmark the performance of your vendor later on.
Statement of Work:
This is fairly obvious. You simple want to know what’s going to be done, when and for how much. This is where the detailed requirements come in handy. If you have them documented, and hopefully the vendor has participated in these discussions as well, you should have a great roadmap to success.Once you have the detailed requirements, you can then go into the SOW.
The chosen IT solution will have a significant impact on the overall cost structure of the HRO relationship. This includes direct effects (e.g. how the chosen software drives IT costs lower) as well as indirect effects (e.g. how software solutions impact the cost of running processes). It is important that you get insight on the initial transition cost. You want to be up and running as soon as possible with as little impact on staff, processes, and operations as possible. ((Ibid))