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Drive HR Efficiency with Shared Services: 5 Success Factors for Taking HR Services to the Next Level

by Heike Kolar | SAPinsider

April 1, 2008

Increasing efficiency and adding business value are two of the top priorities of HR professionals. Setting up shared services is one way HR organizations can help meet these goals. Uncover five key factors that mark successful shared services and enhance HR teams.


Today's global markets demand that companies be able to change their business strategies quickly — and then tweak their operations to reflect those adjusted strategies. This flexibility is critical to continued
success; those that can't adapt will fall behind. What many companies may underestimate, though, is
how these shifting strategies impact their workforce operations.

For example, if acquisitions top a company's list of business goals for 2008, then HR departments must keep this business target at the forefront of their own strategy. They must predict and execute on any workforce-related process and operational changes in the company's HCM systems. And they must do all this efficiently. The business counts on HR to provide the right resources and skills in the right places and at the right times — especially during aggressive M&A periods.

HR's quest to bring efficient processes to the rest of the organization begins with determining the right business model to do so.

To support the company more strategically, HR departments also recognize that they need to overcome outdated, costly processes, and that increasing automation in their administrative services offerings can aid them in this attempt. They must identify the right business models and decide on the service delivery strategies they need to operate efficiently. And they must develop key performance indicators (KPIs) to determine how best to further increase efficiency both in their own and in company-wide operations, thereby demonstrating their added value to the broader business.

Consider Shared Services as a Business Model for Efficient HR Operations

HR's quest to bring efficient processes to the rest of the organization begins with determining the right business model to do so (see sidebar). Many companies have already decided to employ a shared services model in HR and other areas, such as finance, procurement, or IT. HR shared services are not a new topic, but HR is now looking to eke out even greater efficiencies through new advances in IT, such as:

  • Automated processing capabilities that tightly integrate with your back-end systems — With the right tools to standardize HCM functions, HR can establish more efficient and transparent end-to-end processes. And with its newest generation of automated processes, SAP allows you to integrate complete process workflows and upload their results into digital personnel files.
  • Service-level agreements (SLAs) — Once an HR department sets itself up as a services provider, it is making a promise to its customers to provide the best-quality services that it can. By establishing SLAs — such as delivering answers to payroll queries within 24 hours — HR can prove to the company that it is fulfilling its promises.
  • Metrics to gauge efficiency and business value — It's also important for HR to establish KPIs and prove the value of their shared services to the rest of the business.

Using new tools and capabilities from SAP, HR departments can enjoy greater efficiency gains with shared services than ever before.

And these are just a few examples of how shared services can heighten HR efficiency.

Taking HR Shared Services Efficiency to the Next Level: 5 Key Success Factors

Of course, each company's workflows and business processes vary, and there are few cookie-cutter approaches to HR shared services that have proven effective across the board. However, there are five important factors that any company considering or working with a shared services approach can follow to fully embrace HR's move to an efficiency-driving, value-adding part of the overall business.

1. Build Your Shared Services Strategy on a Sturdy HCM Platform

Before making any improvements to your shared services approach, it is crucial to ensure that your HR services are built on a dependable, integrated platform. SAP's Human Capital Management (HCM) Service Delivery offering is a flexible framework that enables integrated and automated processing. The offering includes the following features, all of which are delivered with SAP ERP HCM (see Figure 1, callout ):


Figure 1
SAP's HCM Service Delivery offering enables shared services for HR's many customers through a variety of access channels
  • Self-Services, which enable managers to perform tasks — for budgeting or staffing duties, for example — and empower employees to access the data related to their employment, allowing them to view (or even manage and modify) their own information.
  • HR Call Center, which provides a centralized hub allowing HR professionals and service-center agents to process any incoming requests from HR customers.
  • HCM Processes and Forms, a framework based on SAP Interactive Forms by Adobe that allows your HR department to enable standardized, end-to-end HR business processes supported by back-end SAP systems. This framework helps IT create transparent processes so companies can easily prove their compliance.

2. Consider the New "Customers" of HR

As HR's role within the business has evolved, so too have the boundaries of its "customers." HR no longer serves only employees and managers, but also
supports a new breed of customers that includes retirees, prospective employees, and remote users (refer to Figure 1, callout ).

To ensure that all of your customers, both new and old, have a positive user experience, it's important
to familiarize them with your services during onboarding to help them understand and learn to use your HR tools early on. This way, they'll continue to be receptive to any new tools or applications that you may introduce down the line.

Tailoring your access channels to your HR customers' work styles and habits is a sure-fire way to boost the department's value to the rest of the organization.

Remember too that your customers' experience with the HR department is based on the access
point through which they can view their information and find answers to their questions. To ensure that this access point is as useful as possible, I recommend placing your HR offering in a user-friendly
portal that you can then grant all of your employees access to. Those who cannot access the portal — employees working offline or prospective employees, for example — should be able to reach the HR
offering through phone-based scenarios or through offline capabilities that they can connect to from their remote locations.

3. Offer Multiple Access Channels

Because of this widening base of HR customers, it has become more important than ever to offer multiple channels through which they can access HR's services. These channels might include:

  • Portal-based access to self-services and service requests: A portal interface allows users to access all applications and information needed for their business tasks and provides a channel for the company to communicate with its employees. But HR must be aware that these kinds of services should be tailored to their unique user groups; it is no longer sufficient to offer unspecialized services within just one environment.
  • Service access enabled through the Duet interface: This access channel allows your information workers to work within a user interface environment they are already familiar with: a Microsoft Office-based application. Using the Microsoft Outlook calendar, employees can perform HR functions, such as creating time data or requesting absences.
  • Mobile access for workers on the road: This channel enables mobile users to report their hours and to log expenses without online access. This mobile access can also be useful for managers who want to work on performance management documents without having to log in.
  • Intelligent phone, email, and fax access: Users should have access to call in to HR, either through automated processes based on voice recognition or with a direct line to your employee interaction center. This would allow retirees and applicants, for example, to access HR shared services. The same benefits apply for email and fax integration; the HCM Service Delivery offering helps HR customers avoid manual steps, such as re-entering data in a service ticket or uploading an attachment.

Tailoring your access channels to your HR customers' work styles and habits is a sure-fire way to boost the department's value to the rest of the organization.

4. Determine Where HR's Expertise Is Needed

HR departments no longer need to be involved every time an employee wants to view or change information. So it's important to adapt your tools and processes accordingly; determine which processes do need HR involvement and which can be left to employees and their managers. The SAP HCM Service Delivery offering enables different levels of HR involvement, depending on what tasks need to be done (refer back to Figure 1, callouts , , and ):
  • Direct data updates — For routine tasks, such as updating employee information, you can empower your employees to directly access this data so they can manage it without any HR involvement.
  • Request-approve scenarios — For tasks that require management's approval, such as requesting time off for vacations or reporting hours, HR can set up approval processes in which employees enter data into an application or a request form that is then automatically filtered to their respective manager. The manager approves or rejects the request, once again without any involvement from the HR department.
  • Request-approve-complete scenarios — For certain processes that do require HR to get involved — if an employee requests an increase or decrease in the number of hours they work, for example — you can set up an extra step to the request-approve scenario that moves the request on to an HR employee, who can now complete the request more quickly than he or she would have been able to in the past.

All of these tasks used to be relegated to HR employees who, more often than not, fulfilled them manually. Automation allows the HR department to reclaim its resources and work more efficiently. For this purpose, HCM Processes and Forms is a strong automation framework. Since the framework uses SAP Interactive Forms by Adobe, its UI is appealing to end users as well as IT departments, as it allows for the standardizing and automating of processes across business roles.

5. Don't Just Rest on Your Laurels; Look to the Future of HR Shared Services

HR departments want to continue proving they can reduce administration costs and improve service quality. Accordingly, they must anticipate the newest, upcoming advances in shared services.

For example, HR teams must ensure that their service offerings continue to appeal to HR customers, especially to the younger generation that comprises the upcoming set of employees. According to a report from the Aberdeen Group, this new generation expects a service offering that provides an integrated experience during their onboarding process1. Expectations have risen — and will continue to rise — as users become more familiar with Web 2.0 technologies and the ease with which services can be executed on the Internet. They have come to expect these same technologies and ease-of-use with internal services as well.

In preparation for this next round of user demands, customers' HR teams should get ready to integrate social networking capabilities and features, such as wikis and blogs, into its service offering.

Is Shared Services the Right Business Model for Your HR Department?

Companies have adopted many approaches to improve the efficiency of their HR processes. But the most successful methods fall under three main categories:
  • Shared services — HR's efforts to facilitate shared services are not new. Since the early 1990s, centralized HR departments have been setting up shared services that empower employees to manage their own data and participate in business processes — such as address updates and time reports — pertaining to their employment. The promise of reducing error rates and avoiding multiple data maintenance processes drove these investments, and the initiative around HR shared services is seen today as an essential and permanent investment for HR.
  • Business process outsourcing (BPO) — Many companies have begun outsourcing some or parts of their non-core business processes, such as payroll or applicant pre-screening, to
    external providers that excel at those activities. This is often a cost-effective endeavor that allows these companies to focus on their core competencies to drive further growth and innovation.
  • Hybrid — A hybrid approach, as its name suggests, is a combination of the shared services and BPO models. In this approach, certain processes are outsourced (payroll, for example), while others that companies prefer to own themselves — including compensation and performance management — are set up within the company.

For those companies that choose to employ shared services within their HR departments, it's vital to first lay the right foundation for such a project. This involves automating your processes and standardizing and consolidating your systems.

As companies migrate to a shared services model, they often struggle with how to prioritize efficiency and effectiveness. Is it better to concentrate on cost reduction and shorter cycle times, or to improve the quality of services offerings? At SAP, we recommend balancing the two approaches: By escalating your HR shared services to the level described in this article, companies can free up resources and budget for more strategic ambitions.


You'd be hard-pressed to find an organization that's not looking to improve efficiency in its business processes. Many companies are now turning to their HR departments to help drive this effort through shared services offerings. Using new tools and capabilities from SAP, HR departments can enjoy greater efficiency gains with shared services than ever before — from opening new access channels to expanding their user base.

This is a golden opportunity for HR departments to prove their value to the broader organization. I would encourage HR professionals to take a long look at the success factors that leading shared services providers have uncovered. Use these key considerations and technologies to help climb into your new role as a strategic partner to the business.

For more information, please visit


Additional Resources

The HR 2008 conference, for sessions dedicated to SAP ERP HCM and optimizing HR shared services (
Implementing Employee and Manager Self Service in SAP ERP HCM by Jeremy Masters (SAP PRESS,

"Getting the Most Out of Finance Shared Services: It Starts with Using ERP to Consolidate and Automate" by Bernhard Fischer (SAP Insider, January-March 2008,

"Manage Employee HR Inquiries and Transactions Globally through Employee Interaction Center" by Amy Shillingford, Bianka Woelke, and Henning Duerholt (HR Expert, Volume 5, Number 6,


Heike Kolar ( is responsible for the HCM Service Delivery portfolio at SAP AG. She works with customers worldwide to determine their strategically important requirements for upcoming SAP releases and SAP enhancement packages. Heike joined SAP in 1998 and has 10 years of experience working with HR and HCM software. She holds a master's degree from the University of Trier, Germany.

1 Aberdeen Group, Inc., The Onboarding Benchmark Report (August 2006).




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