business case

lessons learned

HRIS AND SAAS/CLOUD

FREDRIK REXHAMMARH T T P S : / / W W W . L I N K E D I N . C O M / P R O F I L E / P U B L I C - P R O F I L E - S E T T I N G S ? T R K = P R O F - E D I T - E D I T -

P U B L I C _ P R O F I L E

Business

drivers from

HR and IT

perspective

2014-08-20 2

BUSINESS CASE

Business needs Relevance

Life cycle management of old legacy

HR systems including local payroll and

local HR systems

Common situation in many companies. BPO is a viable option but not

self-evident.

ERP system without consolidated

functionality for talent management

Common variant of this which includes that an ERP system which is

in place but lacks consolidated functionality for talent management

Need for unified and global HR

processes which are mutually

reinforcing.

Common situation in companies where stand alone solutions have

been implemented.

Need for all HR processes to interact and feed each other and use

core data.

For example - compensation management uses core people data and

feeds into performance which in turn is the foundation for talent and

succession.

Consolidate IT systems in HR i.e. lower

IT costs and more efficient IT

management

3

BUSINESS AND IT MANAGEMENT NEEDS-TOGETHER ACT AS DRIVERS TOWARDS CONSOLIDATED SAAS SOLUTIONS

Core HR system•Master register for employees

•Basic data /Manager team structure

•Basic HR processes

Payroll including time, travel & expenses•Local vendors due to law requirements

•Local due to integration with payroll

Recruitment

•Recruitment portal

•CV database

Performance

Management•Goals

•Performance review

Learning•Training admin

•Self service catalogue

•e-learning portal

•Certifications

•Learning history

One or more

standalone talent

modules

Core HR

People information

(master) and basic

people processes

Country based

(laws and

regulations

EXAMPLE HRIS ECOSYSTEM- ONE OR MORE NON CONSOLIDATED ISLANDS

One or more stand

alone talent modules

Local country based payroll

Talent/Succession• Talent review

• Succession

planning

…Global ERP system

Compensation• Salary revision

• Job grading

One or more local HR

systems …. OR …

EXAMPLE CONSOLIDATED SAAS ARCHITECTUREE X A M P L E V E N D O R X W I T H B O T H G LO B A L H R A N D TA L E N T I N T E G R AT E D W I T H LO C A L PAY R O L L

Compensation management

Global Core HR

Consolidated view of all

employees and organization

•Provides access to all talent

modules for all managers

and employees

Performance

and Goals

Succession

Talent reviewLearning Recruitment

Local payroll for different countries

Access

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Business

value

Compensation

management

New core HR

system with

basic people

processes

Performance

management,

talent review and

succession

planning

Learning Recruitment

STEP BY STEP PROJECT DESIGN POSSIBLE WITH MODULAR SYSTEM DESIGN

Ongoing launch and training initiatives

SAAS SOLUTIONS IN HR-REQUIREMENTS AND POSSIBILITIES

7

Can be part of CIO strategy where HR is a possible area for SaaS IT

delivery

HR is not core business in terms of IT solutions

Compare with on premise costs

Mature and proven SaaS solutions are available today

Internal IT has problems with building and maintaining competence for

small specialized areas such as HR

Less strain on internal IT resources with SaaS

Competence shift necessary in IT when we go for new internal platforms in lifecycle

management

HR preparedness to adapt to best practice processes and rely on

standard application configuration

Business case should focus on business value as well as lower TCO for

HRIS

20/01/2015 8

TOTAL COST OF OWNERSHIP ON PREMISE- IN THEORY

Init

ial lice

nce

in

vestm

en

t

22

% s

up

po

rt

22

% s

up

po

rt

22

% s

up

po

rt

22

% s

up

po

rt

22

% s

up

po

rt

Up

gra

de

pro

ject

eve

ry 3

:rd

ye

ar

Unit price TCO 5

20/01/2015 9

TOTAL COST OF OWNERSHIP ON PREMISE – IN PRACTICE

Init

ial lice

nce

in

vestm

en

t

22

% s

up

po

rt

22

% s

up

po

rt

22

% s

up

po

rt

22

% s

up

po

rt

22

% s

up

po

rt

Lack of internal IT resources

specialized in HRIS requires

consultant support to use the

vendors support correctly

Co

nsu

lta

nt

su

pp

ort

Co

nsu

lta

nt

su

pp

ort

Co

nsu

lta

nt

su

pp

ort

Co

nsu

lta

nt

su

pp

ort

Co

nsu

lta

nt

su

pp

ort

There are often more major releases

but the business cannot always

manage projects for all versions.

Frustration for the business to lag in

functionality creates an upgrade

pressure. In this case 2 major upgrades

over a 5 year period.

2 m

ajo

r u

pg

rad

es

ove

r 5

ye

ars

2 m

ajo

r u

pg

rad

es

ove

r 5

ye

ars

Unit price TCO 5

Inte

rna

l

SLA

Inte

rna

l

SLA

Inte

rna

l

SLA

Inte

rna

l

SLA

Inte

rna

l

SLA

20/01/2015 10

SAAS DELIVERY REWARDS CONSOLIDATION

- THE MARGIN COST OF ADDING A MODULE IS LOWS

aa

S f

ee

fo

r co

re/fi

rst

mo

du

le w

hic

h in

clu

de

s

infr

astr

uctu

re

( h

igh

pri

ce

ap

pro

x 7

0%

)

Ad

d-o

n

mo

du

le 1

(5-1

5%

)

Ad

d-o

n

mo

du

le 2

(5-1

5%

)

Margin cost for adding a new

module is low. Alternative cost

for Add-on module 2 is a new

SaaS service provider

relationship and possibly

integration.

Alt

ern

ati

ve S

aa

S

so

luti

on

fo

r A

dd

-on

mo

du

le 2

(7

0%

)

Inte

gra

tio

n

co

st

Functional area Consolidated SaaS solution Standalone solutions

Consolidated solution X yearly SaaS fee N/A

HR Core Included in consolidated solution X yearly SLA

Payroll 0,5 X yearly SLA 0,5 X yearly SLA

Compensation management Included in consolidated solution 0,5 X yearly SLA

Performance Included in consolidated solution Manual process or 0,5 X for

extra licenses in standalone

solution.

Talent review and succession Included in consolidated solution Manual process or 0,5 X for

extra licenses in standalone

solution.

Learning Included in consolidated solution Manual process or 0,5 X for

extra licenses in standalone

solution.

Potential yearly IT costs for HR 1,5 X 2 – 3,5 X

20/01/2015 11

BUSINESS CASE TCO POTENTIAL

Effect Quantifiable Values

Controlled workflow for managers and HR

The manual excel based process is replaced with a controlled workflow with

monitoring and audit trail capabilities.

X

less hours spent

Quality

Lower risk

Efficient administration X less FTE Effectiveness

Improved reporting X less FTE Effectiveness

Quality

Common process which avoid risk of extra costs due to process inefficiency

for example: salary increases due to local, non-aligned manual processes with

lack of decision support..

X

Potential

less cost increase

Effectiveness

Quality

20/01/2015 12

OTHER BUSINESS CASE EFFECTS

DON’T FORGET TO BENCHMARK WITH BPO- ESPECIALLY FOR PAYROLL

On premise internal IT solution

Setting up

SaaS based IT

management

2014-08-20 14

LESSONS LEARNED

INTERNAL SLA FOR CLOUD

15

Internally more generic IT services not specialized HRIS competence is st i l l needed in an internal SLA Integrations and file transfer

Network

Security

Technical application management (i.e. deeper technical knowledge about Fusion configuration)

Make the most of the SLA with the SaaS vendor i .e. set up ef ficient system administration Vendor support portal

Named account manager for ongoing dialogue

Customer networks both supported by vendor and bi -lateral

Customer advisory board

SaaS does not remove the need for internal system specialists and experts On the contrary! In-house specialist who can reconfigure and adapt business process

configuration creates capability to respond to business needs and drive HR process alignment.

Secure support from third par ty application consultants when needed

THE SELECTION AND EVALUATION PARADOX

16

Current

solution

Proposed

solution

Theoretical

ideal

We spend to much comparing this

• Data privacy

• Disaster recovery

• Service availability

• Integrations

• etc.

Legal requirements

...when we should consider this

Security

Architectural review

Penetration tests

Rights to perform

penetration tests

Regular third party

test reports

”Large vendor

advantage”

Process audit

reports

Rights to inspect

premises

17

Data pr ivacy

No data outside EU including disaster recovery

Named data centre

List of sub-contractor entities

Bound by same conditions as Vendor

Use EU model clauses for data management outside EU

Vendor should comply to al l local legislation as a contract clause

Adherence agreements between company and other legal entities

CLOUD – SECURITY – DATA PRIVACY

Data

processing

agreement

External part

Company

Other legal unit

Adherence

agreement

Data

processing

agreement

Sub-contractor

GOVERNANCE/REVIEW MATRIX

18

What Who How When

Penetration tests Third party or internal department Separate agreement with vendor

is always required

On suspicion or major

architectural changes.

Review third party security

reports

Third party conducts test. Vendor delivers tests to

customers for review

Regular basis i.e. yearly

Review third party process

audit reports

Third party conducts audit. Vendor delivers audit report to

customers for review

Regular basis i.e. yearly

List of sub-contractor entities Vendor keeps an updated list and

report changes to customer.

When changes occur

Inspect premises Customer staff or third party Visit datacentres

Follow legislation on personal

data integrity

Customer and vendor´s joint

responsibility

Follow updates and proposals for

changes in legislation. Prepare

actions within customer

organization or vendor delivery.

Continuous

Vendor follow up Customer vendor management Vendor meetings to inform and

possibly align strategies

Quick implementation

possibi l i t ies in system

requires flexible

implementation

partners…with

….step-by-step approach

with agile thinking and

successive deliveries

“Large vendor

advantage” i .e. they can

deliver on extensive

security and data

processing

requirements.

Competence build up in

business necessary to

keep up with new

features and versions

19

Plenty of init ial bugs in

new systems

Secure

configuration/admin

services directly via

support without large

implementation project.

Have vendors al ign with

par tners so customers

can have solution SLA:s

and knowledge about

co-existence and

integrations.

Make sure best practice

processes are in place

– not just a bunch of

functionality

You select a vendor not

only a solution…trust on

that vendors ambition

and capabil i ty to be in

the frontl ine.

Internal support

Top management

support

IT strategy support

Cooperation with risk,

legal and compliance

etc.

Lack of understanding

and resistance in some

parts of IT can exist

even with management

support

THINGS TO CONSIDER

Fredrik Rexhammar

https://www.linkedin.com/profile/public -profile-settings?trk=prof -

edit-edit-public_profile

1/20/2015 20

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