HR Going Digital – Ten Observations
Deeper digital enablement within your organization is going to happen, but all too often getting energized to start specific projects is in fact hindered by various elements of inertia. Typically, delays today are down to thinking through the finer details of how to justify a specific or group of projects, how to approach the execution thereof, as well as seeking clarity as to the various underlying initiatives related to change management.
However, today there are a basket of comprehensive operational pressures that continue to challenge all aspects of our decision making. Inflationary pressures, rising interest rates, changing FX rates, issues around retention and hiring of staff, not to mention upward pressure on utility bills. These are all very disruptive to earnings.
All of this points to the fact that cash management will continue to be king as always, and that we will all need continuous access to timely good quality information in human resources management for solid decision making.
Here we share lessons learnt from our working with global corporations, SME’s, and governments in their quest to improve their own productivity, agility, as well as their competitive advantage:-
Many digital projects actually fail during their execution, and some of the causes for this are explored in this section, and again further below. One typical reason is that client project teams have limited representation (or none) from all of the functional areas touched on within a specific process.
In some respects the root challenges faced here are really more down to the project team actually not fully scoping out the objectives that are to be fulfilled during the implementation, nor their key core dependencies to achieve success.
The project scope needs broader management, but not in such an obvious way. Every process can potentially drive other sub-processes, both within and across departments, so knowing how far to drive each project in terms of depth and breadth becomes a really difficult judgement call.
Many organizations just simply touch the surface. They do not get to the stage of thinking through a process on an end to end basis, including how to further leverage digital in those connected secondary / tertiary processes etc. that are driven from the source process data.
As a result, it is often the reality that other functional areas within the corporate are rebuilding the same or similar data sets, albeit with potentially different sets of compliance parameters e.g. cut-off, not to mention the fact that they may be leveraging and paying for different Human Resources software tools, including spreadsheets. This does not maximize the productivity that can actually be achieved within the project.
An important point to takeaway is that the real potential to drive deep productivity actually comes from those projects that leverage x-application, and x-ecosystem processes. This deeply transforms the data so that it is presented in a timely manner in the format of contextual and actionable reports and / or workflows. Another key takeaway is that the reporting here is within a process and not simply at the end of it. This drives value.
Whilst the above might seem quite logical, it can be quite troublesome to achieve in practical terms. Corporates tend to rely on multiple applications from different vendors that have either been purchased or acquired over many years. These HR and ERP systems typically use a varying array of underlying technologies, as well as different sub-versions of it. Some solution sets will be under a maintenance contract, whilst others will have been used without one, not to mention the fact that some products may in fact now be obsolete, or that vendors may not exist anymore.
ERP Systems Integration is therefore not to be underestimated and is it critical to ascertain, as far as possible, implementation areas that are likely to be troublesome. Reason being is that the ERP software skills required for integration are very often not within one single person, but are spread across others, if these older skills can be found at all.
Another point is to think through where the trusted final auditable state of record is being kept within the ERP system. Seems obvious, but all too often work on the connected back office processes is in fact overshadowed by the excitement associated with the more tangible front-end work and therefore forgotten. More to the point, and coming back to the makeup of the project team, it brings home again that different stakeholders have a different perspective on the same data sets, especially when it comes down to compliance and maintaining corporate records.
Whether to deploy native web apps, or whether to rely on progressive web apps i.e. smart web pages using a browser, is a decision that has to be made whenever mobility is being built into a process. There is no right or wrong here and both will often be options. However, the cost of deployment can be very different both at the start and for the duration of use.
As a rough rule of thumb, corporations tend to like the cost efficiencies of web based applications. However, when extending corporate processes to end users or employees, some prefer to create native applications where they are able to go the extra mile in building engaging and richer content. It is the choice of the corporate.
It is however important to also think about the support of mobility apps over their life, and not to see deployment as a one off cost. This is because your requirements will no doubt change over time in terms of depth and breadth to be covered within an application. There will also be enhancements made to the underlying operating systems e.g. Android and iOS which also change iteratively, mainly but not necessarily on an annual basis. Some of these enhancements are in fact incremental, whilst some releases contain larger “beneath the hood” changes that you may wish to leverage if it adds sufficient value. Regardless, at a macro level mobile apps should be kept within the lifecycle of operating system support.
Everyone wants the flexibility to work from anywhere, but from a corporate viewpoint this comes with risks, so it is always important to think about compliance and security from the ground up. In other words, who has access to the ERP system and from where, and what processes are in place for staff changes, i.e. employee starters and leavers.
Also critical, for reasons that are explained in more depth below, is ensuring that there is full compliance to handle the continually emerging data management regulatory environment e.g. GDPR (EU), PIPL (China) etc., both within the country, and for any cross border data transfers (including onward transfers). Undertaking this means that it is vital to know how and where data fields are being processed on an end to end basis, noting that the definitions between legislations can be different. Case in point, the definition of personal information within GDPR and PIPL.
Touched on above, reporting continues to be a troublesome area for many corporations, and this is where you can end up working for your system rather than it being vice versa. There are a number of factors to work through here.
The technology within modern analytics based systems is very powerful, but the challenge for many today is still in getting access to timely high quality dependable and trustworthy HR management data that is built and transformed from various sources, prior to detailed review.
Also important to note, is that some older style analytical human resources management systems cannot necessarily do everything that you require, meaning that you typically have a situation where users are leveraging and paying for different reporting systems or even more likely have a situation where they continue to use inefficient productivity diluting spreadsheets.
Next is that often these analytical systems are positioned at the end of a process, and not within it. You need the latter in order to add real time value to your operations. However, to achieve this goal you will need to incorporate reporting within the process itself. This is fundamental, but hard to achieve with older technologies.
Of course digital today is not simply about replicating older static style reports into a process, either at the end or during its execution, as large reports with no context are unwieldy from an end user management perspective. Already today too many HR system reports are maintained (at great cost) but not read.
Modern technologies today are able to drive actionable contextual alerts and / or workflows. The same tech can also be leveraged to the more static form of human resources management reports i.e. segments, balance sheet, profit and loss, and cash flow etc. How a process is structured is key and this is explored in further detail in another section below, but an example for reference follows here.
Applied to the more traditional more static forms of reporting leads the human resources management system to auto read say segment reports etc and to provide you with ranked variances plus other relevant documentation at summary and / or entity level (i.e. not all docs but delivered smartly according to your materiality levels eg over $X or the top ones that represent XX% of the balance etc.). The same applies within a process i.e. real time actionable information (that can be derived) can be delivered to the right person for corrective actions.
Bringing data together from different ERP systems for onward actionable contextual presentation requires data transformation, which only modern tech can do. This coupled with the compute power to execute it are the very core reasons why human resources management reporting has been trickier to execute in the past, and why it is still very troublesome for many today.
Why? Most often the issues faced by corporates is due to the fact that to make individual data points useful they have to be transformed with other data points from other systems (with appropriate authority) to produce meaningful reporting outputs that can be acted upon.
Today’s process design, which is described below in detail, is very granular, meaning that processes contain no excess functionality. As a result, programs are smaller and execute more quickly. It also provides enhanced future proofing capability of being able to leverage latest technologies i.e. Google’s packaged AI or other specialist algorithms from specialists or to incorporate your own algorithms. This granularity also explains how reporting can be added to be within a process for purposes of value creation.
As IT services are more prolific than ever before this means that end users have the need to handle both qualitative and quantitative data sets which some modern HR systems can do. This also reflects that today there are many more data types than ever before that need to be handled, so one needs to ensure that your ERP system of choice can in fact handle these different formats.
Looking forwards, you should anticipate increased reporting activities that execute both x-application and x-ecosystems, with both being driven by extensive leverage of API’s. Specifically, this ability to work across human resources management systems is the missing link in corporate reporting today, and without it the timeliness and quality of data is impacted. Solving this point means that reporting issues are significantly reduced or removed altogether.
Additionally, this is also very significant for your ESG reporting that will have to be executed across year-ends, where subsets of data will need to be transformed into meaningful KPI’s or OKR’s for onward stakeholder consumption.
In essence and conclusion for this section, HR systems today can be designed to be proactive not reactive both during and at the end of a process.
Whilst on this point, qualitative processes for cybersecurity and ESG can go a long way to help you get messaging across to your employees re being cyber safe at work, and also communicating your policies on ESG. For the latter, it is proven to drive staff retention if done well, as it bridges the gap between management and staff as to what is being done. In many corporates there is a knowledge gap in this area.
One of the implications of contextual actionable reporting is the degree of automation, and whether it should be fully or partially automatic. What is often not described though, is that depending on the complexity of the task, ie complex process by many people or a complex task by a few, is that the end user may need time to be comfortable with any full automation scenario by working through a number of end-user controlled user interface (UI) iterations. This is both to fine tune the process and to ensure that it is behaving as intended. In other words the UI becomes simplified or disappears over time.
It is also worth drawing out at this point that the process owner can be different from the process operator, meaning that a lot of complexity can in fact be removed from daily operations, thereby providing a higher level of accuracy, i.e. the underlying activity is actually happening automatically in the background.
Coming back to the project team here, if senior management have knowledge of what is being achieved, then processes can be replicated elsewhere within the organization. An easy example, which is not relevant to everyone but which gets the point across, is month end reporting where one entity’s reporting pack produced as an output then becomes another entity’s input for ongoing processing. This vertical approach extends productivity benefits, recognizing that there will be some localization differences to handle across entities.
As one additional takeaway, a process can be deployed as either 3, 2, 1 or 1, 2, 3. The difference here between them is who controls and maintains the detailed logic of the process i.e. the HQ drives the process 3,2,1 where HQ forms are completed by a remote entity or the subsidiary produces a reporting pack 1,2,3 and then sends it to the HQ. Put another way, challenging areas of operation i.e. no expertise exists in an entity can be centralized with a 3, 2, 1 deployment option.
As always it comes down to priorities.
When it comes to business workflows within a corporate entity, there are two macro points to draw out that might help you position different types of the more specialist-like processes that are over and above the more simple point to point ones that you may establish. These can be defined as complex tasks undertaken by a few people. Examples here might be lease management, capex management, and consolidation. Or complex processes undertaken by many. Examples here might be budgeting and FP&A.
So, looking deeper using lease management as an example, contracts can be exploded into their ongoing accounting entries over the life of the lease with the ability for the real time tracking of payments made by end users, or if nothing is received to drive corrective action workflows within the human resources management system. This example also brings out something very critical which is the leverage of different payment options for easier end user payments and specifically the leverage of Open Banking API’s. Later on below, you will see that payment options can be added @anywhere within the process to facilitate local and global treasury decision making.
Capex brings out another point and the fact that a process can be enriched. In the case of capex to ensure that an item is insured, that it is proactively added to cybersecurity processes where required, and that it contains enough detailed notes. Where relevant and for large items, building modifications, i.e. deconstructs / reconstructs can also be taken into account where these are required to fit an asset into the building.
Workflow systems were traditionally good at getting a document from point A to B to C, but were weak in functionality once a document arrived at any waypoint. Today’s modern systems can do both. This is not to be confused with RPA, which is great for the automation of standard repetitive processes (typically volume based) noting that RPA can be used with or without AI for document onboarding.
Today’s regulatory and compliance requirements are far more complex, as is the protection of private company information from threat actors, particularly around payments. Business Process Compromise (BPC) is one such area getting a lot of attention from corporates. This goes to prevent payments from being redirected to a threat actors controlled bank account through a process of social engineering. So, in this case more sophisticated checking and validation processes are put into place for material payments i.e. payroll, bonuses, supplier payments etc.
Another example where additional sign off processes might be put into place are for critical onward report submissions e.g. budget submissions to HQ to ensure that nothing is sent until approved by the right person.
One of the most powerful drivers of “productivity gains” comes from the leverage of API’s, regardless of whether they operate x-application or x-ecosystem, but for different, albeit similar reasons.
X-application solves a typical stumbling block for corporates in that they enable relevant information from various applications to come together from different places for decision making and to facilitate the production of high quality actionable contextual reporting and workflows. X-ecosystem knocks down barriers. For example considering payments, they allow for the deep leverage of well-established service providers thru deep automation.
With regard to x-application, FinTech and Insurtech use the same / similar technologies described herein. The end result is a much more engaging user experience that is both coupled and augmented by extremely efficient back office processes for compliance. This in overall terms achieves the same result as “legacy systems + much administrative work”, but is all executed in a much shorter time frame. Everyone wins.
Touched on in various places above, achieving trusted “partial or full automation” does take time and effort by the process owner. Many users in more complex cases actually utilize a phased approach to simplifying the UI to a point where it might not be needed at all.
This approach ensures that the behavior of the ERP system is as expected, recognizing that each step taken is both auditable by users and repeatable. Transactions can be enriched as well with other key data reference points to avoid confusion. For example, transactions may be enriched with an entity transaction source reference number or description during segmental analysis which solves typical traceability issues. Another example might be including the calculation methodology in any tiered allocation process, solving the issue as to how a number was derived.
Whether you call automations BOTS or Virtual Assistants, they can augment a process by producing actionable contextual alerts / workflows for onward processes, or simply auto reading human resources management reports to rank variances. Material differences can be analyzed as required to the degree of materiality required by a user. Note here that compliance control on cross border data transfer flows for certain types of personal information can also be put into place, which helps you avoid significant compliance penalties.
In essence, and certainly a far more fun way of expressing it, these BOTS / Virtual Assistants have virtual eyeballs i.e. ranking, and virtual fingers i.e. pointing out to the process owner some trend irregularities that are inconsistent with prior results, noting that these finger alerts do not appear on the reports ie on screen only. They can also construct smart forms so that only the information required is shown, thereby reducing transactional errors where manual input is required by users i.e. forms submitted to users are system built for the volume of transactions at hand (easier to handle, less mistakes, and less paper).
Regulatory environments are changing. At a holistic level a corporate needs to fully understand how data fields are managed for execution for both compute and storage activities on an end to end basis, especially when cross border data transfers containing personal information are taken into account. With regards to the latter point GDPR and PIPL have stringent requirements, but also have similarities and differences to each other.
Today’s granular ERP systems facilitate the understanding of what is taking place step by step for both the application and underlying processing, noting that API’s to third party systems need to be fully reviewed and understood to ensure that personal information is being handled correctly.
By virtue of the fact that processes can be designed at an ultra-granular level means that there is more flexibility for future proofing than before. For example, algorithm(s) for AI can be incorporated into a process at any point, and rather than re-invent something that already exists, 3rd party algorithms can also be added using API’s.
Process Definition. The Key to Success
Modern day business software functionality is very powerful, and enables process design and execution to be ultra-granular x-application and x-ecosystem, recognizing that value creation always requires extensive deep data transformation and automation to be useful.
Explaining this further at a granular level as to how these processes work. They go from data collection (including RPA, if required for document onboarding that can be with or without AI), through all required data transformations / enrichments to contextual actionable reporting / visualizations +/or workflows @anywhere @anytime within a process + API’s @anywhere to other applications or ecosystems (including the leverage of Open Banking API’s w/payments @anywhere) + simulations. This creates a Digitally Enabled Process (DEP) that can be re-engineered iteratively or replaced from scratch.
More holistically, your business flows would involve the following components, Your Mobile Apps + Your Unique Digitally Enabled Processes (DEP) (with the flow structure as outlined above) + API’s + Your Applications (new and old), all coming together both with high levels of data quality and with full and comprehensive levels of compliance.
This combination of technologies is very flexible & powerful and is suitable to drive end to end business workflows for both quantitative and qualitative data sets on an auditable and repeatable basis, both locally and cross border.
The pace of business continues to accelerate and unlike before, today’s ERP systems are able to work at an ultra-granular basis for both intra and inter departmental workflows, whether they be qualitative or quantitative in nature. Whilst it is easy to theoretically isolate an end to end process, the practical realities in a business environment today means that there are complexities to handle, so priorities need to be set and tackled either iteratively or as a big bang to move a corporation ever forwards.
FlexSystem is a financial, human resources, and operations business software vendor to 1 in 10 Forbes Global 2000 (May 2020), and 1 in 5 Global Fortune 500 (August 2020), operating at the intersection of new digital process and payment technologies, whether on-premise or cloud, to provide you with iterative opportunities for value creation.