HR as a Success Factor

Web-based applications in HR management offer added value

Working with cloud solutions is becoming increasingly important for the HR function in companies. Based on initial practical experience, concrete added values as well as challenges have been on the management agenda for some time - from decision-making to implementation to daily use. Expectations of the solution to be introduced are always high.

"Having a global HR IT system with all relevant information available worldwide in the highest quality is highly attractive. Our study allows a realistic and holistic view of the topic of the HR cloud - from the selection of the appropriate systems and implementation to use and further development in daily business," explains HKP Group partner Holger Jungk. And HR executive advisor Andreas Enneking, who is responsible for the study project on behalf of SAP, adds: "Our interviews with HR IT managers from companies with different levels of experience with HR IT cloud solutions offer highly individual insights, provide strong arguments for their use and identify critical success factors."

HR Cloud and Alternatives

The goals appear highly achievable in an HR cloud. However, there are also success-critical challenges such as the integration and management of parallel desktop and web-based solutions in hybrid scenarios as well as the targeted integration of end users with a simultaneous focus on efficiency. On the plus side of the use of an HR IT cloud solution, from the point of view of HR managers, there are above all consistently harmonized, simplified and globally scalable processes as well as higher and secured data transparency and quality.

In general, the decision-making process as well as the introduction of cloud solutions in HR management requires joint efforts by the IT and HR functions, with the latter taking the lead role. Efficient HR processes combined with a positive employee experience in use require an active leadership role by HR.

This is the conclusion of the study "HR in the Cloud: High Benefits, Typical Challenges", published jointly by HKP and SAP. The quantitative and qualitative analysis is based on comprehensive structured interviews with HR IT managers from 17 internationally active companies with headquarters in Germany on motives, framework conditions and experiences in the use of cloud solutions in the HR function.

Employee Experience

The triggers and backgrounds cited by the study participants for the introduction of an HR IT cloud solution are very individual, but can be summarized in four overarching categories. In the foreground is the need for a transnational, end-to-end integrated HR IT landscape with a rapidly decreasing proportion of legacy systems and isolated applications. Such modernized HR IT is also seen as a prerequisite for efficient global growth as well as for a contemporary employee experience, which in turn increases acceptance among managers and employees in the application. Finally, the cost argument is also a central point in the decision to introduce an HR IT cloud solution - albeit downstream, as the desired efficiency gains are often not yet realized in the transition phase. Companies are looking for cost optimization compared to applications on their own servers, as well as efficiency and scalability aspects.

The study participants are currently confronted with challenges with regard to the introduction or use of HR IT cloud solutions, which can be classified in three areas: First, the management of hybrid HR IT landscapes. There is no alternative to a stable data flow and the avoidance of duplicate data maintenance. As a rule, classic HR IT landscapes (on-prem) hosted on their own servers are not completely replaced by cloud solutions. In this regard, study participants most frequently referred to the necessary continuation of payroll accounting. The heterogeneity of the HR IT world is thus often first reinforced by the supplementary introduction of a cloud system. Thus, practice shows that interfaces are often only implemented and functioning in some regions and legal entities. Integrations that do not function perfectly continuously tie up resources.

Clear governance

One-fifth of the study participants say that the integration between HR IT cloud solutions and legacy systems works smoothly, with the focus on payroll and time management systems. In general, clear governance, where which data is maintained, and the avoidance of media discontinuities and duplicate data maintenance are critical to success. Any manual intervention required for data maintenance or to ensure the flow of data entails risks and has a negative impact on resource efficiency.

"The study shows that there is a long way to go before we have a uniform or at least stably integrated HR IT landscape. But this is the basis for high user acceptance," explains Dorothee Peukert, Customer Success Partner at SAP. She recommends close integration of both business and technical teams throughout the entire process, from selection to testing of interfaces and overall functionality. "This approach reduces risks, allows errors to be identified and rectified quickly, and thus creates the necessary acceptance among users," says the HR IT expert.

Secondly, employee experience: the key is to strike a balance between acceptance and efficiency. In general, user-friendliness and user orientation are key success factors for the establishment of cloud solutions. However, the survey shows great potential for optimization in this respect, for example in employee and manager self-services (ESS/MSS), which is generally due to the introduction by HR IT or IT-savvy power users from the HR department. The perception of the broad user base in terms of a positive employee experience is often not the focus. In addition, only a few study participants succeed in integrating employees without their own company PC.

HKP Director Colin Stein therefore emphasizes: "To achieve the goals associated with a cloud solution, the perspective of all employees must be taken into account. In this change process, HR is required to design processes with a positive employee experience in mind - without losing sight of efficiency. It is advisable to involve employees at an early stage and to create targeted training offers in order to make the application experience positive and to be able to realize efficiency gains even in the transition phase."

Third, HR ownership: HR's leadership in terms of functional requirements, system selection, implementation and further development is significant.

Transformation processes

From the perspective of the HR managers surveyed, HR must take a leading role in the selection, introduction and use of an HR IT cloud solution, although the overall process can only be successful in collaboration with the IT function. However, the majority of respondents state that their HR-specific cloud solutions were introduced primarily for IT reasons, not least to reflect the company's global growth. The contemporary positioning of HR is seen several times as an important point of such a transformation step. Measured against this, however, HR aspects are not sufficiently present in the process. Against this background, HKP partner Holger Jungk demands: "HR should assume the central role in the introduction and use of an HR IT cloud solution right from the start. The establishment of an HR IT cloud solution should be seen as a transformation and not as an IT project. Clear governance models and processes under the leadership role of HR are therefore a must!"