Karen Beaman over at Jeitosa recently wrote about the unbundling of HCM systems that we’ve been seeing for many years now. She is exactly right, that often times the unbundling of HR applications away from a central ERP system provides for more agile HR service delivery. Traditional ERP systems have not been growing at the pace they once were, Talent systems are getting implemented left and right with little or no coordination, and we seem to be going into a market where point solutions rule.
This shift is causing the modern organization to un-bundle and then re-bundle their activities and infrastructure into more agile, nimble structures that can change and scale up or down as business needs dictate. So what does all this means for the modern HR organization and for HR technology? HR has long been an organization that has worked across boundaries, and functions such as benefits and payroll have long been outsourced to third-parties. Yet, the un-bundling of HCM will have a much farther reaching impact. Beyond benefits, payroll, and call centers, we are seeing the un-bundling of HR services from RPO (recruitment process outsourcing) to off-boarding and the un-bundling of HR technology from licensed enterprise resource planning (ERP) software to subscription-based software-as-a-service (SaaS). ((Beaman, Karen. May 27, 2009. “Unbundling HCM.” Retrieved from www.jeitosa.com on September 15, 2009.))
I have nothing against either the point solution or the ERP system. Either way there are tradeoffs to be had. What an organization decides to implement is really quite up to it’s own needs. However, there are a few problems I constantly see as organizations go towards a path of more point solutions:
- Forgetting that there is a lot more integration in an ERP system than meets the eye. Simple data interfaces are often not enough, and while every vendor touts tight integration, rarely is it true. You can get enough integration, but at some point, you just need to realize the tradeoffs. Let’s take job and competencies for example. Job definition and benchmarking is a core part of the core HCM system, and it honestly should live in the HCM and not somewhere else. To do good job design and benchmarking, you should have job attributes associated with it, some of these come in the form of competencies. However, if you put competency libraries in the core HCM, you now have a (perhaps) very large set of data that needs to get integrated with every talent application that you own.
- Forgetting the foundation is also a very common problem. Not only do some organizations deal with having talent systems that are independent of their HCM, but some have multiple talent systems. Trying to cross the lines on those same foundational competency data models across recruiting, performance, development, learning and succession platforms is a major headache if you decided to source each component independently.
- Forgetting the process is my last major headache. One must really ask the question if you can have a single end to end process that managers will love if you have so many systems. After all, usability is probably more important than functionality, so forcing managers to have different user experiences for performance, compensation, etc is a major risk from the change and adoption standpoint.
I’m not suggesting that ERP is the way to go. Indeed there are major benefits to going the point solution road, but we often forget that it’s not as easy as an interface. There are some pretty serious integration, process, service delivery and change issues to be tackled here. Forget them, and risk failure. Even the best laid out plans for system implementations can’t help you if you ignore them.