Three Lessons HCM Can Learn from ERP

It’s generally recognized that the Human Capital Management (HCM) space is heating up and that HR professionals and departments are opening their wallets and investing in technology. Existing systems are aging, cloud systems make software easier to buy and advances in user experiences make purchases more compelling[1].

In this flurry of growth, however, it can be easy to lose track of the long game. As we evaluate HCM vendors and a new generation of HCM solutions, we should keep in mind that it is a quickly evolving landscape and there are lessons that can be learned from ERP: an adjacent space that has already navigated the learning curve.

  1. Unified Data Wins

In the ERP space, it’s well understood that having all your data in a single system drives higher efficiencies and provides the business intelligence needed to support better decision making. In the rapidly iterating, cloud-based HCM space, on the other hand, that insight has been largely overlooked. The rise of many disparate offerings has resulted in vendors proposing “integrated suites”, while selling disconnected solutions for recruiting, performance, and HRIS core data, among others.

When business leaders can seamlessly move between functions, they save time and enjoy a better experience. But building a unified platform is costly and vendors hesitate to invest in development when it’s faster to partner. So they continue selling not-so-integrated suites that leave customers with multiple contracts and difficult paths to resolve problems.

“Even adding modules to an existing suite can take two to three years to bear fruit. The benefits are significant if the development effort is successful, as customers will experience better process integration and a seamless user experience”.  Paul Hamerman, Consolidation And Innovation Transform The HRM Vendor Landscape, Forrester Research

To paint a clearer picture of what fully integrated HRM offers—consider your 2014 human capital budget planning. You begin by defining your hiring plans and setting your budget for the year, automatically assigning your projected recruiting costs to the right month since your HCM suite provides the data you need on average time-to-hire and cost-to-hire. Of course, your budget also takes into account the cost of replacement hires, because you have easy access to your employee turnover numbers by department and location. This type of error-proof efficiency simply isn’t possible if you’re running separate recruiting, HRIS, and succession planning tools.

  1. Employee-Driven Workflows

Although the most frequent users of ERP software often work in the finance department, the fastest growing and most successful ERP vendors recognize that they need to build tools that will be used not just by finance, but by people throughout the organization: sales staff entering orders, warehouse staff working on fulfillment and even customers making purchases. In the HR context, this correlates to employees recording sick time, line managers posting results of 1-on-1 meetings or candidates applying for jobs. Although typically selling to champions in the HR department, HCM vendors can’t lose sight of the fact that these tools (like the ERP system) will be used by people throughout the customer organization, not just by the HR department.

By optimizing workflows for end-users, HCM vendors can build solutions that employees and managers enjoy using, rather than tools that make them cringe.

  1. Tools (e.g. Social) Require Context

Every day we read about the launch of a new social platform and how it’s going to revolutionize the workplace. Truth be told, there are only so many uses for pure-play chatting tools.

However, when you unify your data set and focus on employee-driven workflows, you uncover opportunities to collaborate over specific activities; like reviewing a new candidate’s application, celebrating a co-worker’s achievement or discussing a new quarterly objective, just to name a few. These context-relevant collaborations not only increase engagement, but also resolve questions of legitimacy—employees and managers no longer worry that using the chat tool is a distraction or a waste of time.

While these lessons are clear opportunities for HCM to learn from ERP, it’s also true that the learning can go both ways. While advocates of ERP systems understand the power of unified data, employee driven workflows and contextually relevant tools; HR professionals have a better understanding of the people and the stories that drive the organization. And this knowledge, if accessible, can be even more relevant than traditional business data. For example: a strong sales quarter might be as much about a great business model as a single stellar sales leader, or a department suffering from bad turn-over might be due to a toxic employee rather than a shift in production scheduling. In these cases, the specific stories contributing to the situation provide crucial insight. When we link HCM and ERP systems together into a unified suite, we connect the stories and people to the data and processes, resulting in a much deeper, more powerful analysis of business health.

Even more importantly, companies grow when customers buy; customers buy based on emotion and then validate with data[2]. If you have the tools that connect people, stories and emotion to the business data—you have better tools to grow your company.  Because data alone can’t tell a story your customers will care about or connect your people to the vision you strive for.

The original version of this article appeared in the NetSuite Magazine

About Joseph Fung

Joseph Fung is VP HCM Products at NetSuite and Co-Founder of TribeHR, pioneer of the industry’s first social HR platform, headquartered in Boston and Waterloo, Ontario. Connect with him at [email protected]


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