What is human capital, how does a company manage it, and why does it need to? These were some of the questions covered by Doug Reed, SAP America vice president for human capital management (HCM), in a webinar entitled “People Power for Small and Midsize Businesses.”
Human capital management, he began, includes the acquisition, development, motivation, and empowerment of the skills, experience, and knowledge of a company’s workforce for the success of the enterprise. In other words, it’s not just about people, but about strategy – even including the impact on shareholder values.
Today’s business economy is facing a labor shortage and an aging workforce, he said, combined with increased employee mobility and an estimated 137 million employees worldwide engaging at least part time in telecommuting. Further complications arise from an increasingly global workforce, with overseas employment by U.S. companies growing by 4 percent a year.
As a result of these and other factors, CFOs today are looking more closely at HCM’s contribution to enterprise potential, said Reed. New measurements of corporate success have gone beyond a narrow bottom-line approach to embrace concepts like the balanced scorecard, and collaboration across corporate boundaries has become the norm.
The inescapable conclusion, he continued, is that an integrated human relations (HR) solution is necessary for the success of any growing business today, large or small. And on the legal side, the lack of an HR solution threatens to put a company in conflict with government regulations such as the Sarbanes-Oxley Act, which requires much more detailed and extensive reporting than in the past.
The place of mySAP HR
SAP, he said, is experienced at both ends of the size spectrum. Today, nearly two thirds of its installations are in SMBs – companies with under $500 million in revenue – and mySAP Human Resources (mySAP HR) can serve these businesses well. “All major analysts show mySAP HR to be the global leader,” he noted, underlining its 60 different country versions, 8,500 customers worldwide, and more than 11 million users. SAP employs 450 HR developers at five development centers, plus a staff in Palo Alto, California, devoted to U.S.-specific requirements.
mySAP HR is based on a mySAP Enterprise Resource Planning (mySAP ERP) core, and Best Practices for mySAP HR are also available free of charge to SAP customers to accelerate the implementation of mySAP HR. Best Practices for mySAP HR features the processes most commonly requested by SAP customers, preconfigured to create a template covering 90 percent of most customers’ needs, which can be further tweaked to meet a customer’s specific requirements.
With these preconfigured processes, customers can rapidly implement integrated HCM business activities such as personnel administration, recruitment, benefits administration, compensation management, standard and ad hoc reporting, and retirement. Existing SAP customers, he added, can leverage their talent, infrastructure, and SAP configuration for lower total cost of ownership (TCO).
Extended capabilities of mySAP HR include employee self-service (ESS), manager self-service (MSS), payroll, benefits, time management, organizational management, workforce reporting and analytics, balanced scorecard integration, an employee interaction center, and performance management. For SAP America customers, it provides U.S.-specific preconfiguration that is fully integrated with SAP R/3 functions. Altogether, said Reed, mySAP HR supports the business processes that SMBs need while enabling faster implementation and reduced implementation risk.
Partners in HR
Reed also lauded two SAP Business Partners, Emeritis LLC and Premier HR, at the webinar.
Emeritis, he said, “has extended HR to the next level.” An SAP Services Partner since 1998, it has developed HCM Express, a qualified, pre-packaged mySAP All-in-One solution which is fully integrated with SAP Financials and Controlling (FI/CO). It offers a 100-day, fixed-scope, turnkey implementation for as little as $100,000. Emeritis has added extensive reporting capabilities, as well as customized accelerators to simplify the implementation process, keeping it on time and within budget.
Premier HR, an SAP Services Partner focused exclusively on mySAP HR, said Reed, can provide a fixed-fee, 11-week implementation based on its packaged solution for $60,000-134,000, depending on scope, which is determined through a complimentary fit assessment. Implementation risk is reduced by the use of implementation accelerators, documentation, and user training. The Premier HR solution is available for releases of SAP R/3 up through SAP R/3 Enterprise.
mySAP HR for growth
Following Reed’s presentation, Dave Hapner, who manages the SAP staff and systems for PGT Industries, discussed his company’s decision to implement mySAP HR. Founded in 1980 “in a garage,” PGT is a leading manufacturer of custom windows, doors, and porch enclosures, with 1,900 employees in Florida and North Carolina. The company has experienced double-digit growth over the past four years, reaching a revenue of $220 million in 2003.
PGT was looking for a solution that would fully integrate human resources and payroll to meet the company’s rapid growth and help accelerate that growth in the future, said Hapner: “We didn’t have electronic workflow for HR, and it was not integrated in the least with payroll. We depended on Excel spreadsheets and filing cabinets. Our payroll system was run internally and was restricted on what could and couldn’t be done.”
Hapner said his company was looking for a best-of-breed product that was scalable, stable, and guaranteed by a company that was itself stable. “We found other products that looked good, but the financial status of these companies gave us concern. We feel happy with the selection of SAP. It’s good for moving into the future and across the enterprise. We were looking for comprehensive functionality. SAP has grown a lot over the last few years and is now the frontrunner in the HR solution they offer.”
PGT implemented mySAP HR with Payroll, Clock Events, Organizational Management, Recruitment, Personnel Development, ESS, and MSS. “We didn’t do a turnkey implementation as Doug described,” said Hapner. “We used a consulting firm [Emeritis] in a very aggressive implementation. They told us what we needed to add to get exactly what we wanted. I highly recommend Emeritis.” Payroll with Clock Events was implemented in five months, followed by a separate implementation of the other components chosen.
Paperless flow and employee ownership of data
PGT now has complete integration of HR master data and payroll, he said, replacing archaic systems with an electronic, paperless data flow. mySAP HR even led to the re-engineering of some of the company’s HR processes: “We decided to reengineer our whole recruiting process based on the SAP Best Practices for recruiting,” Hapner noted.
He added that the SAP solution has fostered employee ownership of personal data and that the company now manages people less, their resources and skills more: “We know where they are, we can move them and plan training and development easily. And it has greatly streamlined open enrollment for benefits.”
Echoing a comment by Reed that the number of those involved in maintaining the technology usually goes down following a mySAP HR implementation, Hapner indicated that developers supporting the system had gone from four to one, “and consulting has dropped to almost zero dollars.”
What were the most important lessons learned from the PGT implementation of mySAP HR? First, the importance of implementing in manageable phases – “When you see SAP, you’ll want it all at once, but be reasonable,” he cautioned. Second, assembling the necessary resources for an HR implementation is critical to prevent the project from dragging out and costs from escalating. He also emphasized the importance of working with a trusted implementation partner, in this case, Emeritis. Lastly, he said, “get your CFO involved – he was our biggest supporter.”
Looking to the future, Hapner said that PGT was planning to add mySAP CRM, expand portal use for customer service and inventory control, and widen its adoption of SAP FI/CO tools.
To view a replay of the “People Power for Small and Midsize Businesses” webinar, go to www.sap.com/solutions/smb/allinone/newsevents/smbconferences.asp.
For more information on qualified mySAP All-in-One solutions, including solutions for Human Resources, please visit www.sap.com/solutions/smb/allinone/prepackagedsolutions/