“HR has a lot of strategic potential”

February 9, 2004 by admin

How wide-spread are Human Resources Management systems in companies today?

Jooss:We can assume that every company uses Human Resources Management systems. This differs of course depending on the size and industry. SAP solutions for Human Resources and Human Capital Management are implemented in practically every company with more than one thousand employees in Germany, where they are primarily used to carry out administrative tasks, for example, payroll, management of master data for employees and applicants, management of Time Management data, or event management.

But that’s not all – what else can HR systems do?

Jooss:They are still not used often enough to implement corporate strategies. Up to now, HR systems have not been integrated to the extent that they could be. They have much more potential and power. For example, they could be used to incorporate all employees involved in Human Resources processes. What better place is there to find talent than in the “talent pools” of today’s HR applications? What better place to organize training measures? Where better to implement the guidelines for travel planning and expenses more efficiently than in the Human Resources systems? A number of companies have recognized this, and it is a factor that ultimately leads to market success and customer satisfaction.

Does this mean that Human Resources and business processes are increasingly becoming merged?

Jooss:In company decision-making, the Human Resources department holds some of the most important information. The strategic added value does not come from the HR solution alone, it comes from the combination of this with the business processes. Our customers are therefore tending to combine personnel and business data more and more. As a result, they can determine, for example, the behavior of the fluctuation rate in relation to the production quantity or sales statistics issued by the company. Let me give another example. Imagine a company has plans to expand internationally. In this case, it is extremely important to know how many employees speak the language of the target country. How long does the personnel department need to provide employees with the necessary language qualifications? This can be an important factor determining the speed of expansion. And if the personnel department has the relevant information, and is treated as a partner, then it has broken through into this strategic area, which in many cases is still a closed door.

What do employees have from new HR solutions?

Jooss:In cross-company areas such as Accounting and Human Resources, companies are under extreme cost pressures today. On the other hand, however, the Human Resources department is required to provide employees and managers with up-to-date services. Anyone who uses private online banking as a matter of course will not appreciate having to fill out holiday applications on paper in their place of work. The answer is provided by “self-service scenarios”, which integrate employees and managers into Human Resources processes. The effects are two-fold: administrative processes are carried out more effectively, and completely new services can be offered that were not even possible with the old technology. The same applies for contact with vendors, customers, or applicants. SAP has therefore developed a business-to-administration manager, which enables communication with the authorities to be carried out electronically.

What is the relationship between HR and training?

Jooss: Let us take high-tech companies as an example. The half-life of knowledge has reduced so dramatically that a broad employee base, but also a trader or customer base, must constantly be provided with current information. Previously, the job of Human Resources systems was to manage classroom events and register participants. But by now, mySAP HR has become a central learning platform on which all types of knowledge transfer, and in particular e-learning, are supported. As a result, employees in the workplace can be provided with an ongoing training offering, and are able to obtain qualifications as part of a comprehensive personnel planning program. Traders, customers, and partners can ultimately be supplied with knowledge through the same channel.

Why, according to a user study, are more than 40 percent of personnel managers dissatisfied with HR management systems?

Jooss: That’s easy to explain. In the past, Human Resources management and IT only overlapped in the specific area of payroll, and otherwise, they were worlds apart. In recent years, investments were made in integration and technology, but these did not lead to any subjective improvement to users’ day to day work. We have now made more progress. The compulsory exercises have been done. Companies that have placed their trust in integrated solutions such as mySAP HR can now reap the rewards, and also make use of the software innovations that are still hiding in obscurity.

Can you reliably describe the return on investment?

Jooss:For a long time, we only had analyses from America. Because these rate the ROI potential as very high, we regarded them with some skepticism. We then carried out a ROI study with Deloitte Consulting on 12 German companies of different sizes and from different industries. The result was encouraging, because the analysis confirmed the positive results from the United States. For example, the use of employee self service scenarios revealed potential savings of an average of more than 60 percent.

With today’s technology, is the integration of HR solutions still a subject for discussion?

Jooss:We know from practical experience that every interface is time-intensive and costs a lot of money. The consolidation of system landscapes is therefore a very important subject for our customers. They have seen that heterogeneous system environments cost a lot of money. One of our main challenges and goals for 2004 is therefore to reduce the total cost of ownership for our customers’ software applications. This will be achieved on the one hand via new technology, namely SAP NetWeaver. In addition, we are offering consulting concepts that will cut back heterogeneous system landscapes to an acceptable size.

At the moment, discussions are being held between employers and employees on new models of pay. Will HR solutions be incorporated here to define and simulate the effects of the models?

Jooss: This is a hot topic at the moment. For example, the german employers’ association Arbeitgeberverband Metall has approved a basic payment agreement containing new remuneration models in two pay regions of Germany, and this agreement contains a strongly performance-related component. The interesting thing about this is that this change should not cost the companies any more than before. It is therefore based on a higher degree of performance-based pay through redistribution. Without IT support, this is impossible to achieve. The importance of simulation and planning tools for the implementation of innovative pay systems becomes clear here. At the moment, we are creating a model for the operational implementation of this basic agreement in collaboration with representatives from the relevant associations, in order to make implementation as easy as possible for our customers.

Are you also faced with “showstoppers” that block investment in HR solutions?

Jooss:The showstopper is a “preoccupation with technology”. Anyone in the Human Resources environment who believes that technology will solve every problem will soon see that this is not the case. IT support can never be more than a vehicle for simplifying change processes in Human Resources departments. Let’s not forget that this is always accompanied by changes in the organizational environment. That requires change management, which every company must take into account. A company that ignores this will not achieve success, even with the best technology.

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