By 2025, half of enterprises worldwide will have invested in a cloud-deployed HCM suite for administrative HR and talent management, according to Gartner, and 20 percent will have created an HR innovation practice. Here's a look at what's driving those changes.
In this business environment of digital disruption, organizations that are agile far outpace their competition. Constant change can be a challenge, but as Workday CFO Robynne Sisco has said, “Having the ability to adapt and respond—whether it’s your mindset, the way you plan, or the technology you use—will help ready you and your organization for the road ahead, wherever it may lead.”
Forward-thinking HR leaders agree. ”By 2025, half of midmarket and large enterprises worldwide will have invested in a cloud-deployed human capital management (HCM) suite for administrative HR and talent management,” according to the recent “Gartner 2019-2021 Strategic Roadmap for HCM Technology Investments.”¹
Why are they making this investment? Cloud HCM technology, the report states, enables a more agile HR function. And HR has to be more agile to address issues such as shifting skill requirements, hiring and retention in a tight talent market, a changing workforce, and the need for greater diversity throughout organizations. Put another way, HR needs to be more agile to help the overall organization be more agile.
Successful transformation—which includes fully realizing the value of digital solutions—depends on thoughtful examination of a company’s current state and potential future state. In the future state, “HCM requires an agile mindset, led by HR but involving the entire organization in continuous experimentation,” according to the Gartner report. Key ingredients for HR digital transformation include a willingness to implement organizational change, alignment between HR and IT, and a strategic roadmap for creating a digital workplace.
HR digital transformation isn’t simply a question of redesigning processes. “Organizations must address evolving work environments, flexible working arrangements, a volatile regulatory landscape, and tightening labor markets,” the report explains. “The coalescing of these trends challenges existing organizational structures, processes, and enabling technologies, at a scale and with a complexity that is daunting and potentially overwhelming.”
The misstep many organizations make when deploying new technologies is to copy existing processes in the new system, rather than commit to complete HR transformation. “There’s no room for complacency in today’s fast-paced business climate,” said Javier Delgado, managing director, Business Network Builders, a professional services firm that deployed a single system for financial management, HR, and professional services automation. “To continue our upward curve for growth, we needed to innovate using modern cloud services to transform our business, become more agile, and maintain our quality of client service.”
A successful deployment of HCM technology hinges on HR’s ability to apply a wide lens and make changes that support organizational redesign. According to the report, that includes the following:
Organizational redesign, as the name implies, doesn’t focus on the HR function alone. HR needs to take the lead, the report states, but other functions, particularly IT, need to work in tandem.
A 2018 article from Deloitte Insights on human global capital trends echoes Gartner’s finding that senior leaders cannot work in silos. “Senior leaders now realize that they must move beyond their functional roles and operate as a team,” the article states. “In this new construct, C-suite executives combine business unit and functional ownership with cross-functional teaming to run the organization as an agile network.”
Cathy Armor, director for people at Cambridge University Press, helped her organization move to an HCM solution, and her experience supports the research from Gartner and Deloitte. “One of the best things we did was to build a cross-functional project team with IT, HR, legal, payroll, and project management,” she said. “You have to have those stakeholders at the table and ensure you have the buy-in from those who will be driving the project forward.”
Digital disruption has affected all industries and organizational functions, and HR is no exception. When considering adoption of HCM technology, teams need to think about both the short and long term, and the technology’s agility moving forward.
When professional services firm Booz Allen Hamilton adopted an HCM solution, Sarah St. Clair, vice president of people services, understood that change wouldn’t happen overnight. “It’s a constant, evolutionary endeavor, “ she said. “Technology is always changing. As leaders, we need to fully understand our organization’s business goals and culture, and sequence new technologies at the speed in which we can make the most out of them and enable our employees to fully adopt them.”
When it comes to HCM technology, says Gartner, “many organizations are partway through the transition from on-premises solutions to cloud applications for core HR and talent management.” Organizations need to think about their strategic roadmap, and “review their entire HCM application landscape and plan for the necessary changes during the coming years.” Here are a few critical questions to consider:
By 2025, according to the Gartner report, “20 percent of enterprises with more than 5,000 workers globally will have created an HR innovation practice to facilitate ongoing experimentation and piloting of emerging technologies.” It’s unclear how the other 80 percent of enterprise are preparing for the future state of their digital workplace, but if they aren’t asking themselves the tough questions and preparing for change, they risk getting left behind.
¹”Gartner, 2019-2021 Strategic Roadmap for HCM Technology Investments,” Ron Hanscome, Helen Poitevin, John Kostoulas, 30 July 2018.
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