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2013 ADP Meeting of the Minds (MOTM) topic, including HR SaaS, Global Payroll, Harmonization, Data Privacy, and more
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Think Globally, Act Locally: Top IssuesJulie Fernandez, Director, ISG
Global Payroll
SaaS / Cloud Technologies
Process Harmonization
Data Security and Privacy
Mobility and Workforce 2020
Agenda
Today’s most valuable employees possess the ability to think globally, while applying local expertise and pragmatism to the local reality.
Speaker Bio
Julie Fernandez – Director, ISG Director in ISG’s global HR advisory services, focused on multi-
process HR sourcing in both outsourced and shared services models, HR technologies, and talent solutions
Global Payroll Process Lead responsible for all payroll IP, tracking emerging trends, service provider capabilities, etc.
Last 8 years with ISG focused exclusively on helping large, complex HR organizations with assessments, vendor selections, renewal strategies, and M2MSM analysis
15 years’ prior experience as a Service Provider establishing HR shared service centers for large multi-national clients
Fluent in French and Spanish, some Arabic
Julie.fernandez@isg-one.comCell: (248) 425-6733
Global Payroll
Payroll Market Trends
Significant interest across all buyers in establishing a global payroll strategy supported with regional payroll delivery
Clients are centralizing payroll decisions to reduce costs; reduce compliance and financial risk; and leverage systems, processes, and governance
Payroll frequently serves as the most updated employee record in countries without an HRIS system or without integration to a global HRIS, making it top-of-mind for global HRIS strategy and discussion
Recent wave of corporate restructuring (M&A, divestitures) has resulted in a renewed focus on the need to rationalize and consolidate providers in-country and across countries
Clients opting for a Workday’s global HCM quickly realize there is no solution for global payroll
There is a growing interest in multi-country payroll outsourcing solutions
Payroll Outsourcing SolutionsRight sized payroll means there is no broad “one size fits all” when it comes to broad payroll outsourcing
HR Outsourcing
Payroll Processing Services Payroll Software or Hosted System Tax Reporting & Remittance
Timekeeping & General Ledger
Traditional Processing (Gross-to-Net) System Admin & Maintenance Back-End PR System Hosting Gross-to-Net Calculations
Fully Managed Payroll Services Data Management (Build-to-Gross) Employee/Manager Self-Service Payroll system hosting & maintenance
interfaces and uploads Payroll accruals and accounting Managing compliance
Special Payments / Off-Cycles Bonus Payment Calculations Check and Advice Processing
Employee Reimbursements WOTC Credits (U.S.)
Year End Tax Filings Garnishments & Liens
Social Insurance Regulations Tier II Payroll Inquiries
Workforce Administration Benefits
Talent Management Compensation Recruiting &
StaffingEnd-To-End PayrollTier I Contact Center Support
Payr
oll O
utso
urci
ngSo
lutio
n Ev
olve
d
Many Dimensions of a Global Payroll Strategy
Regions direct efforts to develop shared services support and an integrated user experience for HR and other SG&A functions
– Balancing local language and regulatory knowledge with leveraged sourcing
Helping clients to make order of global payroll chaos is based on– Client’s own current state, footprint, key payroll systems and providers
– Right-sized payroll scope
– Payroll provider capabilities and footprint
– Planned and articulated business case driving what is actionable
Clients and providers alike continue to resort to RFIs as a very flawed means of “fishing” for a world of global pricing– Payroll scope and delivery requirements are not adequately defined in an RFI– Providers offer a range of capabilities, which are described– RFI fee estimates for a global laundry list of countries are of little value without more
definition
ISG clients use Mark-to-Market® data to estimate provider fee ranges and to identify sourcing opportunities that are actionable
Pursuit of a global payroll strategy does NOT imply all countries must fit one model and one provider
Payroll Provider Capabilities and Footprint
HRO providers with global scope HR often provide payroll on an ERP platform for only the largest countries (IBM, Aon Hewitt, Accenture, Xerox)
Global heritage payroll providers are expanding services and geographic footprint on “global” platforms (ADP, NorthgateArinso)
Regional payroll providers are frequently identified as part of existing vendor landscape (EMEA-SDWorx, APAC-Talent2, LATAM-Toutatis)
– Generally serve a handful of co-located countries
– Alliances among regional providers are seen for responding to broader RFPs
Niche payroll aggregators specialize in services to small employee populations spread across many countries, targeting value to a client’s “tail” countries (CloudPay, Safeguard World International, Celergo)
– Generally manage payroll processing with in-country partners that comply with their model to ensure aggregate payroll data and reporting
– Payroll services are right-sized to suit small country needs
Truly understanding who does what for whom is a difficult picture to construct, as truly “it depends”
HR SaaS / Cloud Technologies
Market Trends: HR SaaS
Most HR Talent Management platforms (compensation, performance, ATS, LMS, etc.) have been cloud-based for years and are well accepted by buyers
SaaS solutions continue to gain traction:– Workday’s native SaaS platform is rapidly evolving from a US-centric mid-market
core HR technology player into a strong competitor to Oracle and SAP for large, complex global companies
– Oracle completes Taleo acquisition in April 2012; Taleo has been integrated into Fusion as the HCM module
– SAP closes SuccessFactors acquisition in March 2012 and is now actively marketing its HCM, “Employee Central”
– NgA offers its SAP-based “euHReka” platform in a SaaS model with HR administration and support services
– SaaS solutions delivered by Ultimate Ultipro, ADP Vantage, Ceridian Latitude and Sapien address the needs of mid-market U.S. firms
All of these providers are struggling to keep up and to gain a fraction of the publicity and media attention as Workday
HR was an early adopter of SaaS and will continue to lead in the technology space
Market Trends: Workday
Workday is providing a formidable challenge with a number of significant, recent wins with large multi-national companies:– Client base has grown from 105 clients at the end of 2010 to 350+ clients
now
– Looking to continue rapid expansion but likely years away from being profitable
– US and Canadian payroll platforms are “live” with no further geographic expansion planned; however, Workday has established relationships with several payroll providers
– Modules for Organization Management, Compensation, Talent and Absence each with robust business analytics
– Roadmap recently updated for Applicant Tracking System (1st half 2014) and Big Data Analytics (2nd half 2013)
– Workday only handles about 25% of their implementations
HR SaaS Internal SSC vs. HR SaaS BPOThe HR SaaS delivery model does not address buyer’s desire to outsource routine transaction processing, configuration and call center support.
HR SaaS Internal SSC
Application
Middleware
Database
Operating System
Infrastructure
Configuration
Prov
ider
Man
aged
Cust
omer
Man
aged
Application
Middleware
Database
Operating System
Infrastructure
ConfigurationPr
ovid
erM
anag
ed
HR SaaS BPO
Transactions
Employee Contact
Transactions
Employee Contact
Employee PortalEmployee Portal
BPO providers wrap their portal, CRM, and services solutions around HR systems
– Workday is building “services” relationships with Aon Hewitt, IBM and Accenture
– Workday self-service also benefits from an HRO provider’s “thin layer portal” to assemble access channels
Most large consulting firms have growing SaaS implementation groups
The hype around SaaS requires scrutiny and is not always a “hard dollar” save
HR SaaS Growth is Impressive, But Caution Advised
SaaS Marketing Position Buyers should check to see if…
Only pay for what you use Annual, up-front payment required
Turn the service off whenever you want Multi-year commitment required
SaaS is cheaper Dependent on number of interfaces
SaaS is faster to implement Inability to customize
SaaS is easier to support The right (new) skills exist internally
SaaS is very flexible Standard terms & SLAs are acceptable
Many others…
Operations cost trends by platform (ERP v SaaS) are not available to substantiate marketing messages which assert key messages including – Pay-as-you-go pricing as significantly lower than purchase-maintenance models
– Material savings to employee and manager level operations due to ease-of-use
– Elimination of infrastructure, upgrades, and maintenance activities
Process Harmonization
“Standardization” as the New Normal
Common requirements20% covered
Standard ERP
Customer Requirements
Commonrequirements: 80% covered
Today’s HCM
Preconfiguration:
- Global or regional template- Rules and regulations- Process and workflows- Functional building blocks
CustomerRequirements
In the last 10 years, clients have sought process harmonization, but have deployed customization and replicated local practices
After years of rampant growth in HRO, providers now drive toward common practices for economies of scale
HR SaaS systems used across multiple clients will force HR to pre-configuration, as customization may not be an option
Talent management has been a front-runner for global process harmonization, including globally deployed systems and processes most frequently achieved in:
– Compensation (annual bonus and merit programs)
– Performance management (performance review cycles) and succession planning
– Corporate learning programs (ethics, data privacy, etc)
Talent acquisition strategies may be globally driven, but require local knowledge of talent markets and local execution
Global benefits planning that looks to balance global equity with local requirements (both regulatory and market)
Global delivery models seek to leverage common processes for back office and contact center that can be enabled by common systems, workflow, and automation
– Balance needs for language support and local subject matter expertise
– Mixed delivery models address workforce administration and payroll where there is scale or incorporate local SMEs to ensure regulatory compliance and local expertise
Global Processes and Harmonization
Global initiatives are more commonplace, with a centrally-led project rolling out new technology or services to a region or to all countries
– Global and/or regional templates will define the “standard” with local input needed to determine how to best apply one of many possible rules or processes
Broad scope and aggressive timeframes may conflict with work councils and can preclude the client from changing practices in some countries
A dedicated change management program can greatly increase success but is often understaffed, unfunded, or an after-thought
Local practices around the world increasingly affect our own HR and Payroll strategy and delivery, for example:
– U.S. Benefits has had auto-enrolment in retirement programs for years. In recent months, U.K. companies finally have to auto enroll all employees onto standard pension schemes by law. So, where will the auto enrolment expertise and systems come from?
– What do you know of data security and data privacy standards and legislation in Europe?
Considerations and Challenges
Data Security and Privacy
Data privacy is a key concern because of the sensitive nature of HR and Payroll data
– Each country has its own legislation around data privacy
– Europe (Germany) notorious for the most stringent requirements
– Trend for individual countries to tighten data privacy legislation in order to be perceived as “safe” places to do business
Stakes are much higher outside the U.S. in terms of potential cost to clients for breaches
– New data regulations such as the Proposed EU Data Regulations involve considerable penalties (maximum tier of fines of 2% of global revenues).
• Sample implications for a third party provider
– Contracting efforts for outsourced technology and services has included negotiations of stronger language for breach of data privacy and/or security
Data Privacy
Company Global Revenue 2% of Global Revenue
IBM $106.92B (2011) $2.14B
Does a Supplier have a process or person that can sign off this level of risk?
Data Security
Client ability to perform security audits
Client HRIT policies include custom requirements
Contract terms & SLAs are customized per client
Visibility / transparency into operations and security practices
Unable to physically audit a multi-tenant environment; pay extra for
process detail to audit 1
Data security policy and controls are similar across clients
Standard terms and SLAs which apply to all clients
Still much progress to be made as client demand to implement pushes legal to “make it work”
Workday / SaaS CautionsWorkday / SaaS CautionsTraditional HR Technology / ServicesTraditional HR Technology / Services
Meanwhile, the move toward multi-tenant technology limits a client’s ability to control security policies and audit
1 Recommended that clients get SOC 2, Type 2 certification in place in the contract which requires the service provider to provide outcomes of independent audit reports. Combine this with ISO 27001 certification.
Mobility and Workforce 2020
Workforce 2020
Courtesy of Dr. Karie Willyerd, VP and Chief Learning Officer, SuccessFactors
From their next organization:1. Develop my skills for the future2. Hold strong values3. Offer customizable options in my
benefits and reward package4. Allow me to blend work with the rest of
my life5. Offer a clear career path
Top 5 things Millennials Expect…From a boss:1. Help me navigate my career path2. Give me straight feedback3. Mentor and coach me4. Sponsor me for formal development
programs5. Accommodate flexible schedules
70% of Millennials see no reason to come to an office to work
Dem
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Wor
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Thank you.
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