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Building and Retaining an Innovative Workforce Using Talent Management in mySAP ERP

by Harry West | SAPinsider

April 1, 2005

Innovation drives business success, so more and more companies are finding that sustained success demands a stable supply of top-level talent and an effective Talent Management solution -- putting the right people with the right skills in the right locations. Learn how to tap into mySAP ERP HCM applications to enable a comprehensive approach to tackling today’s most relevant talent management issues.

It is no secret that innovation drives success in today's economy. Some companies innovate by designing breakthrough products that their competitors can't match. Others design internal processes so complete, integrative, and ingenious that they achieve lasting advantage over their competitors. Others foster innovative relationships with business partners that create new revenue opportunities. The common thread is that sustained success requires creativity, which in turn demands a stable supply of top-level talent.

This leads to a number of questions for the business or HR executive: Is innovation a capability all companies have? Do we have it? How can HR help to promote this kind of creativity? How can managers in line organizations carry out their ever-growing workload of standard processes with minimal resources, and still come up with breakthrough ideas?

In many such cases, the way to answer these questions is to initiate a comprehensive Talent Management approach that is in sync with the company's designated strategy and objectives. The goal of such talent initiatives is relatively straightforward. Keith Gardner of Towers Perrin HR Consulting simplifies Talent Management for his clients by focusing them on "the right people, in the right locations and jobs, with the right skills." Many SAP customers are currently researching where to invest their HR IT resources to maximum effect in the next few years. As SAP customers become increasingly aware of what Talent Management initiatives can do for the company, a common question SAP hears from its HR customer base today is, "We need a Talent Management solution — can you help us decide what we need and where to start?" Talent Management is an excellent place to invest for companies that rely on innovation to stay ahead — and is also a key initiative for mySAP ERP HCM. But the question is, where to begin?

The Talent Management Market Situation

Figure 1 shows some of the complexity facing HR and HR IT decision makers today. Many companies own some or all of the processes shown in Figure 1, but have implemented them separately. Or perhaps the applications are from different niche vendors and are not fully integrated or enabled with analytics. At any rate, there are many different processes involved in identifying, attracting, and retaining key talent. Many point solutions along that process chain are marketed as Talent Management solutions. But what they often fail to take into account is that all of the applications in Figure 1 have a role to play in executing a Talent Management strategy. The key to success is to focus on a comprehensive, strategic approach that does more than solve pain points in individual areas.

Figure 1
Applications and Processes Involved in Identifying, Attracting, and Retaining Talent

For a company to maximize its talent base and enable innovation, Talent Management needs to be a contextual system, embedded in the organization's DNA, that flows from the formulation of strategy to its execution and results monitoring. While there is no such thing as a single application that alone provides a comprehensive Talent Management solution, mySAP ERP HCM provides an integrated set of applications that enable not only point solutions, but a comprehensive approach to managing talent.

Talent Management: The ERP Context

SAP's Human Capital Management system is a part of the mySAP ERP solution powered by SAP NetWeaver. Such a portal- and analytics-enabled ERP solution provides a great advantage for a Talent Management initiative, because any approach to Talent Management must be anchored in corporate strategy and must be enabled via role-specific applications for many kinds of employees: executives, line managers, HR employees, candidates, trainers, learners, and more. Only a complete and integrated solution allows for a truly holistic approach to managing talent effectively.

In the ERP world, companies use software to plan and execute strategy applying financial, human, and logistical resources in the most efficient way possible. SAP has long been known for its capabilities in enabling the supply chain, ensuring that a company has enough materials on hand to execute its strategy without constraints. Likewise, the SAP Financials solution offers a Financial Supply Chain Management capability that ensures the cash-to-cash cycle is efficiently executed and profitability is maximized. Just as these supply chain applications eliminate financial and logistical constraints, Talent Management eliminates human capital constraints on strategy execution using a systematic approach to sourcing and influencing talent. This understanding is crucial not just for appreciating the value of Talent Management, but also for getting buy-in beyond the HR department and enabling a truly comprehensive approach that goes beyond point solutions in individual areas.

Talent Management eliminates human capital constraints on strategy execution using a systematic approach to sourcing and influencing talent.

How SAP Applications Span the 4 Keys to Successful Talent Management

So what are the key applications that SAP provides for managing talent and executing these processes? What follows are the four major functional areas — the most critical processes — that any Talent Management system must address, and a look at how SAP, beginning with mySAP ERP 2004, addresses them:

1. Define/Communicate Strategy

The most fundamental step in the process is often also the most haphazard — the ability to define and communicate a strategy. SAP enables you to take a more structured approach to planning. Strategic Enterprise Management (SEM) provides a scorecarding capability and strategy maps that define an organization's objectives — for example, expanding into new markets, which will require additional training or staff — with complete granularity. mySAP ERP users can leverage the Enterprise Portal and Business Intelligence components of the SAP NetWeaver platform to communicate the strategy to key managers and employees throughout the global workforce, and monitor its execution. For example, through the Management Cockpit in SAP Enterprise Portal (see Figure 2), HR executives can get a quick overview of the most relevant HR-related KPIs needed to analyze the composition of the workforce, and take quick action. In this way, the Enterprise Portal becomes an important channel for publishing strategic KPIs to the managers responsible for maintaining them. SEM, part of mySAP ERP, provides you with an excellent starting point when beginning any Talent Management initiative.

Figure 2
SAP Enterprise Portal Gives Executives a Quick Overview of the Most Relevant Key Performance Indicators

2. Identify/Predict Talent Gaps

Once strategy is in place, how can you measure what you already have? This crucial part of the SAP system for Talent Management is one that every SAP customer implements first, and often quickly forgets: the Enterprise Organizational Structure. This hierarchy contains an enormous amount of information that the HCM system needs to properly manage talent: which organizations exist, who manages which teams, who reports to whom, what kinds of jobs and positions are assigned to which teams and locations. The HCM system allows companies to create highly detailed descriptions of objects attached to the organizational structure, enabling comprehensive position control. Users can define profiles for jobs that clearly designate what type of talent is required for each job.

Using the Qualifications Catalog in HCM, SAP customers can assign specific skills or certifications that a position requires, and even track those skills that atrophy over time to ensure employees keep up to date. With an accurate structure and an organizational plan that leverages basic HCM attributes such as qualifications, companies are able to map out which positions are strategic and crucial for innovation. For many long-time SAP HR customers, the Qualifications Catalog is another of those areas that you may not be fully tapped into, and should revisit when planning a Talent Management initiative.

In addition, SAP's Workforce Analytics provides the insight that managers need to identify talent gaps, or predict talent shortfalls based on simulations of anticipated business changes. SAP provides numerous standard queries, such as turnover analyses, overtime analyses, and skills analyses for evaluating a company's headcount and competencies, as well as portal-based role-specific UIs for delivering this data to the proper decision-makers in each organization. For example, Workforce Composition Planning (see Figure 3) is a tool for modeling the composition of the workforce based on a number of factors, including attrition rates, expected business volumes, or any combination of company-specific factors. Powered by the Business Intelligence capabilities of the SAP NetWeaver platform, the data from this SAP Analytics application can be used to inform the staffing and budgeting processes.

Figure 3
SAP's Workforce Analytics Provides Tools for Modeling the Composition of the Workforce

3. Provide for a Better Workforce with the Right Hiring and Skills Base

Effective Talent Management does not focus only on recruiting; it also provides your current workforce with the skills it needs. SAP's E-Recruiting system, and its associated analytics capabilities, can enable a company to construct a common talent pool that stores data on internal as well as external candidates. Recruiters can employ the tool to attract and communicate with qualified candidates through any number of communication channels, and companies can construct hiring workflows that will, for example, include the line manager in the requisition and recruiting process.

Bringing new talent into the company is not the only answer to a talent shortfall, however. Sometimes the key is to "upskill" the talent you have in house already, the people who understand your business the best. With mySAP ERP, all employees can be connected through the Enterprise Portal to a Learning Management system, the SAP Learning Solution, which delivers targeted learning objects to the workforce based on each employee's job profile and qualification requirements.1 In addition, with mySAP ERP 2005, scheduled for release in September, SAP is adding a new Succession Management capability that allows planners to search for and identify the right internal or external candidates to fill key positions before they become vacant, such as when a senior executive nears retirement or comes in line for a significant promotion.

4. Monitor, Influence, and Retain

Companies need to have an eye on strategy as they evaluate individual workers, especially in key positions. The Performance Management solution within mySAP ERP HCM allows companies to evaluate the performance of a global workforce in a consistent, role-specific tool (see Figure 4) that can measure results objectively based on defined KPIs, as well as subjectively by direct managers and other appraisers. This enables companies to ensure that top performing employees are recognized and offered valuable training opportunities, project assignments, and promotions that keep them aligned, but also happy and creative.

Figure 4
Performance Management's Role-Specific User Interface

Performance Management results can directly feed the integrated Enterprise Compensation Management solution, which identifies best performers and ensures they are appropriately rewarded. And SAP's Business Intelligence provides KPIs that enable users to monitor important workforce and business metrics, allowing for recalibration of the Talent Management initiative as needed to ensure consistent strategy execution.

Talent Management and Innovation

Talent Management is a critical topic today because innovation has become the mantra for success. To compete, a company must differentiate itself in a sustainable way. This is not possible without having the right people, highly motivated, and available when they are needed the most. As the economy continues to rebound and more and more companies migrate from cost containment to growth, the management of talent will become a critical activity for all competitive firms.

Within mySAP ERP, customers can find the solution to their Talent Management questions. SAP customers can implement Talent Management solutions as their resources allow — few companies implement the entire HCM suite in a single project — but still drive toward creating a holistic Talent Management system based on compelling, results-oriented analytics that will complement corporate strategy and drive innovation. For more information on Talent Management, please visit

1 For more on SAP's Enterprise Learning solution, see "Enterprise Learning — Linking Training to Company Performance" by Tammie Eldridge in this issue of SAP Insider (

Harry West is a Product Management Director at SAP Labs, LLC. He has been with SAP for 10 years and currently manages the Talent Management applications in the mySAP ERP HCM solution. He holds a B.A. (International Languages and Business) from the University of Scranton and an M.B.A. (Technology Management) from the University of Washington Business School. You can reach him at


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