Forward Motion

Analyst and HR Technology Conference® panelist Jim Holincheck talks about some of the key trends in HR technology today.

Tuesday, August 1, 2006
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The old Chinese proverb, "May you live in interesting times" certainly seems to apply to HR executives these days. From outsourcing to talent-management suites to software-as-a-service, HR organizations are faced with an array of choices to make as they continue their evolution from a transactional role to that of strategic business partner. The price for making the wrong choice can be steep, however, which is why getting good advice is especially important these days.

Jim Holincheck, a Chicago-based analyst with Gartner Inc. who's been following the trends in HR technology for quite some time, is more qualified than most to provide such advice. He regularly counsels clients from large organizations on technology-related issues. He's also been a member of the HR Technology Conference®'s analyst panel ever since its inception in 1998, and will be appearing on the panel again at this year's show, which runs Oct. 4 through 6 at Chicago's Navy Pier. (See for more information.)

Andrew R. McIlvaine, HRE's special sections editor, spoke recently with Holincheck about workforce analytics, software as a service and why talent-management applications are a lot like home-entertainment furniture.

What are you hearing from clients in terms of their biggest concerns or frustrations in terms of HR technology -- in other words, what needs of theirs are going unmet?

There are a fair number of frustrations out there. One that I'm hearing in particular is that clients continue to spend a lot of money on administrative applications -- you hear a lot of angst out there about the cost of that. Second is, there are some questions in peoples' minds about integrated talent management and the inability to get everything from a single vendor, and I'd agree with that: The breadth and depth is improving, but it's still something that has room for improvement, which is why I think we still have a few more years of evolution to go through.

Then there's the outsourcing side of the equation and the questions many people have about whether to get on the outsourcing bandwagon -- if they should be looking at some of the more standard processes such as payroll or at more comprehensive outsourcing. It's one of those things that folks are still having a hard time getting their arms around.

I get a lot of calls from clients that go something like this: "This is where we are today; we've got some things we like in terms of what we've got; other things we'd like to improve. I've done shared services, looked at outsourcing, what comes next?"

We've got all these things in the mix in terms of outsourcing, workforce management, figuring out what the right strategy is, making sure you've got the right deployment model for those applications and supporting those processes on a global basis. Even the ones that have done it well are sort of trying to figure out what comes next.

There's more and more pressure to cut costs, even for those who are efficient. You've got this looming demographic issue, with some looking more closely at talent management and succession planning, and they know they are not really where they want to be. They need to do more to partner with the business, and don't necessarily know how. It's an interesting time. 

You recently wrote that talent-management applications are a lot like home-entertainment furniture. Could you explain what you mean by that?

It refers partly to my frustration with my home-entertainment center. I don't think the folks who make home-entertainment furniture have done a good job of keeping up with the evolution in large-screen TVs. I live in a vintage condo and the rooms are really small and have a defined space for fitting in the television cabinet, but the only cabinets that will fit in the room won't hold a TV with a screen larger than 36 inches. There are very few options that are designed to accommodate all the different sizes of TVs that exist.

In terms of the fit of [HR] applications, unlike home-entertainment furniture, the vendors learn better over time in terms of how to make those applications fit better to customers' needs. The downside is that, historically, the way that's been done is through adding more tables and more configuration options, which tend to make the applications more complicated as well, so it requires someone with a high degree of skill to figure out how to get the desired results.

Subject-oriented architecture has an opportunity to change that -- instead of having one big, monolithic application, you'd have more discrete services, and if you're not using a particular service, you wouldn't need to have visibility into those configuration options. A by-product of that is you'd have a simpler application.

One of your upcoming areas of research will focus on the "next generation" of workforce analytics. What sort of innovations do you hope to find or see occur with regard to workforce analytics?

I think if you look at most of what's available today for analytics, you see things focused on dashboards and key-performance indicators, and a lot of them provide a view of how efficiently HR's doing its job: time to hire, cost per hire, whether performance reviews have been completed, whether compensation plans have been submitted on time, and so on.

These are important things because HR wants to be able to provide efficient services; what's really been lacking is the ability for HR to understand how different types of interventions that happen in the business impact specific business results. In a research note I published last year, I tried to explain, using a couple of examples, how that might change or how that might look different in the future.

What I think is needed is workforce diagnostics -- I've been tossing that term around, but the idea is to take data about talent performance, KPIs of business success, not just HR efficiency, and try and better understand the relationship between the two.

Can you give me an example?

Let's say my business objective is to raise sales by 20 percent and I'm looking at opportunities from a human-capital-management perspective to do that. One thing I've been looking at is trying to figure out what the characteristics are that make someone a successful manager or sales executive.

So let's say a company did a 360 assessment of all its sales executives and looked at the results and correlated that data with the performance-related data of those managers and executives, saw what their sales were, looked at what competencies they had and figured out what competencies mattered. They found that three or four competencies were really common to high performers and figured out that, if they could hire for those competencies, and develop them within their existing leadership team as well as when they promoted people internally, they would probably increase their sales significantly.

So they changed their training and development programs and their hiring practices, and they were able to show they could hire effectively externally instead of always promoting from within. So they were able to show a dramatic increase in sales. It's more than just automating the 360 process, but using that data coming out of that process to push the [business] forward.

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The recent managerial departures at Hewitt Associates (the CEO's retirement and the departure of the head of HR business-process outsourcing) have generated some concern about where HR BPO is heading. Do you share those concerns?

What I said a few years ago I still believe: What's going to happen in HR BPO is pretty similar with what IT outsourcing went through. The initial deals done were 10-year deals, huge contracts. What happened was, after the first few years of the contract, the vendor and customer really figured out what it was going to take to have the relationship and the deals got redone and vendors figured out what it was going to take to successfully and profitably deliver their services.

There was a lot of negative press while this was going on [at the same time vendors and clients were going through] this learning process. I think we're still in the "feeling out" process for that, and don't know if the challenge will prove to be insurmountable or not. I think the vendors are learning all the time and will figure out how to get more scale and efficiencies, and work with customers on how they get to a better standardization of things. I'm certainly concerned, but I don't want to push the panic button at this point, either. It's just a natural stage of evolution.

What do you consider to be the most exciting or promising areas of HR technology today?

I've been a big proponent of talent management. That's really at the core of what HR should be about, and it always gets me excited. The analytics I talked about before, the workforce diagnostics -- that's going to be a hot area. Workforce management is another one: labor scheduling and time and attendance is a hot area and one that's going to have specific bottom-line benefits, but it also tends to be very industry specific.

Software as a service (also known as software on-demand) is taking off in the human-capital-management space. What are some key questions HR people should ask when they're evaluating this software?

We just published some research on this area. Some key questions you want to consider should focus on the basic things in terms of service levels, understanding the vendor's data center and the capabilities that exist there. Make sure you're comfortable with the standards and level of security. Also, if it's a third party providing those data-center capabilities, then make sure you conduct due diligence on them as well, so you're not going to face some painful migration down the road.

You should also have an understanding of the economics and business model of SAAS vendors: They don't recognize revenue the same way as traditional vendors do, so they can be generating a fair amount of cash but not be profitable just because of the way revenue gets recognized; so it's important to understand that.

I think we'll see talent management becoming the big focus; I think we'll continue to see additional automation starting to happen and breaking down some of those functional silos that exist within the human resource organization so we can do a better job of focusing on talent. The technology is getting better at supporting it, getting more flexible, and innovative delivery models such as SAAS are helping in terms of deployment and the speed of updating with new functionality.

I think a lot of positive developments are going on, although we will have some folks who maybe aren't so successful in implementing these things. But we will see a lot of success as well, and I'm looking forward to the next couple of years. I think a lot of good things are going to happen.

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