Why HR departments are the greatest technology innovators
Steve Cardell, October 28, 2013
Human Resources Management (HRM) is undergoing a surprising revolution. The business function, which is often given the smallest IT investment budget, is riding high on the waves of technology.
At the top of the agenda are emerging technologies such as; Social Media, Mobility, Analytics and Cloud (SMAC) that are currently gracing the front page of every analyst report. Though still in its infancy, like all other emerging technologies, SMAC has the potential to transform the technology landscape.
Though it currently accounts for only a tiny fraction of the total global IT spend (approx. $3 trillion); SMAC is becoming a priority across HR functions, traditionally considered to be corporate technology laggards. Today HR is jumping to the front and showing the way to the rest of the business. There are three driving trends that have coalesced to create the perfect storm in HR, resulting in innovation as a surprising consequence.
Increased business need
While academic articles on HR strategy talk about employee engagement and motivation, the truth is that HR has suddenly become important because of the global recession. According to The 2012 Aberdeen Group HCM Report, the number one driver for HCM efforts is delivering greater organisational efficiency; true for 46% of firms. Simply put, businesses need a greater return from their HR departments'. And whilst this may seem rather mercenary, the facts underpin the need. As the business environment becomes more challenging, the demand from a company's 'human capital' is similarly increasing, even more so in the last two years.
HR's poor starting position
The Aberdeen Group found that 53% of HR functions still spend far too much time on day-to-day tactical activities that add no value. HR doesn't have the tools for managing and developing the HR assets they own. According to the same Aberdeen report, on average only 43% of firms have employee self-service and only 54% a recruitment technology platform. Being in a poor starting position, one might think is not a driver for innovation. But as is often said, necessity is the mother of innovation.
Innovation in the technology provider market
HR has a number of unique factors that allow it to tap technology in a more accessible manner than most other business functions. The first is that it can take advantage of consumer technology. The arrival of Facebook and other social media sites, coupled with 'never off-line' 3G mobile technology means HR functions can quickly become a member of relevant social groups bringing together people who have skills that complements the business. They can also stay in touch with ex-employees and track careers of potential future executives. And they can do this all for free - the perfect price-tag for an underfunded HR function.
HR also benefits from being fairly homogenous from company to company. This allows it to do things most other functions can't. Firstly, a move to Cloud is much simpler. It can accept pre-configured, best practice solutions more readily than other functions even in very large enterprises. This is aided by the fact that the existing technology platform is probably so poor that a Cloud-based solution will be better. Cloud offerings are not well-tailored and have functionality limitations for other areas that have enjoyed investments over the years. This doesn't hold true for most of the HR processes/functions. Also, large enterprise HR functions have been able to leverage solutions developed for the mid-market (SMB) channel which is highly unusual.
Large enterprise technology typically comes from a small stable of providers; SAP and Oracle being the global leaders. The mid-market players have been unable to crack the large enterprise market because of scalability, resilience, security and functional richness concerns. But as HR processes in small and large companies are similar, and because mid-market companies today consume almost all applications via the Cloud, the large enterprise's ability to buy-in this model is fast and involves a lower risk. A dramatic shift in business needs, innovation borne from necessity, and a group of innovative providers have all conspired to push HR to the top of the pack in becoming the technology innovators.
Steve Cardell is president of enterprise services and diversified industries at HCL Technologies