Q: How about it? Do most companies view employees as an “expense”?
When we’re talking about traditional HR solutions — those dedicated
to administrative tasks such as payroll, benefits, and time management
— there is a good deal of truth to this statement. One key goal has
historically been to minimize the cost of the underlying transactions
associated with maintaining a workforce. And that is a worthy goal, one
that is essential to keeping costs in check, particularly in today’s
economic climate, and one that has sold a lot of mySAP HR licenses!
But HR organizations are no longer performing
just these perfunctory administrative tasks. Human Capital Management
(HCM) has come of age. HCM, true to its name, refers to HR processes that
treat employees as strategic assets to be optimized, not just expenses
to be minimized. Many SAP customers are now actively pursuing this strategy
and implementing IT processes that support the notion that people are
crucial competitive resources that can ensure a sustainable, competitive
Q: What does it mean to treat employees as “strategic assets,”
and how can IT processes be expected to do this?
Treating employees like strategic assets means recognizing that, like
other company assets, continual investment in the workforce and the solutions
that support them is necessary to keep the business moving forward. These
investments include solutions and strategies to identify the skills and
potentials of your people, understand what they need to increase their
contribution to business success, and implement behavioral influencers
to ensure that company goals are met and exceeded. Leveraging the technologies
that are available today can provide companies with insight on how best
to invest in these assets.
What does this mean at the process level?
Ultimately, you need to know what you have and how to influence behavior
to achieve the desired output. Managing employees as strategic assets
means linking multiple processes together to effectively influence an
employee’s behavior and drive results. Here, we create an end-to-end
process by integrating performance management, which links corporate
goal setting to individual objectives, appraisals, which provide
the feedback, and compensation management (incentives, bonuses,
merit raises, and stock options), which provide the reward. Recruitment,
organizational management, and career and succession planning are also
initiatives that can be bolstered by processes — the kind
embodied by mySAP HR (see sidebar on the next page). These processes can
be used to continually and systematically align employees with corporate
goals and objectives, provide managers with a clear and effective means
to motivate behavior accordingly, and then continually monitor the results
and metrics of how well they’ve married the two.
A good example of such a process is what
I call “people budgeting,” the integration of workforce cost
planning with the overall corporate budgeting process. An effective budgeting
process includes headcount planning based on business needs and available
budget. To account for the multiple workforce costs that go beyond salaries
(training expenses, travel, benefits, etc.), you can simulate different
headcount levels and integrate the costs associated with them. This enables
much more effective planning by providing a more comprehensive view of
overall workforce costs which, in turn, enables better headcount planning
and more accurate budget plans. Over time, as environments change, decision
makers and line management will have ongoing access to both analysis tools,
in order to monitor adherence to the budget, and simulation tools to make
Or from a project management and product
life-cycle management point of view — again, you can look at integrating
the kinds of projects you need to accomplish with the kinds of people
you have to accomplish them. Do you have the people to staff these projects?
Do you have the necessary knowledge within the organization?
At SAP, we define Human Capital Management as the aggregation of
multiple process areas, each supporting the people within the organization
(see Figure 1). Each process area is integrated and extends
throughout the organization, and is comprised of individual components
corresponding to strategic HCM business processes. These processes
build a comprehensive strategy that enables the company to maximize
the contribution of its people.
| Process Area
||Contribution to HCM
|Employee Transaction Management
||mySAP HR supports and integrates all the employee transactions
necessary to run the business, contributing to a lower overall cost
• Time Management
• HR Administration
• Global Employee Management
• Legal Reporting
|Employee Lifecycle Management
||mySAP HR supports all the phases of the employee lifecycle
— attract/hire, deploy, develop, influence, and retain —
to ensure that the business can maximize and leverage its human capital.
||•Recruitment and Talent Management
•Training and Event Management
|Employee Relationship Management
||mySAP HR leverages multiple technologies
and delivers collaborative solutions that enable employees to build
relationships, leading to increased employee efficiency and productivity
throughout the business.
||SAP Employee Productivity Suite
• Manager Services (team management, change requests, monitoring,
• Employee Services (life and work events, collaboration tools,
travel and expenses, etc.)
|Workforce Planning and Analytics
||mySAP HR delivers planning, simulation, and measurement
solutions to help the business plan for workforce needs and measure
workforce successes based on strategic corporate goals and objectives.
||• Balanced Scorecard
• Benchmarking and Analytics
• Succession Planning
• Organizational Management
• Workforce Cost Planning and Budgeting
||mySAP HR Processes
Q: Function by function, process by process, mySAP HR’s offerings
don’t look all that different than the offerings of your leading
competitor. What’s the difference?
There are two key differences. The first is on the transaction
side. From a feature/functionality point of view, we offer payroll, benefits,
and HR administration for 50 different countries. And we include any kind
of reporting that’s necessary. Nobody can match us on either count.
And that’s just for starters. In terms of country functionality we
dont deliver just a collection of taxation rules. We have built
solutions that reflect a thorough and effective understanding of each
country, not only with regard to compliance of rules, but also embodying
local best practices. The ROI of having country-specific functionality
is immense. It means global customers — of which we have many —
don’t have to develop country-specific solutions themselves or pay
a third-party to do it. It means that it all runs on an SAP platform,
and it means that it is all maintained by SAP. One-stop shopping means
a global company realizes a much lower cost of ownership.
The second difference is the degree of
integration between mySAP HR and your other SAP processes. From a strategic
point of view, you will have access to employee data from all the different
enterprise processes that you manage — processes such as Finance,
Supply Chain Management (SCM), Product Lifecycle Management (PLM), Customer
Relationship Management (CRM), and especially things like consulting,
deployment, and schedule optimization. That’s where the real strategic
value comes in. You don’t have to build these interfaces. Integration
is built into the product. Moreover, you can view it in real time. If
you need to make a personnel decision concerning your supply chain processes,
you have immediate access to it with this interface. In this way, mySAP
HR functionality can ultimately drive business value by connecting people
with enterprise business processes and by tightening up the entire value
chain of the organization.
Overall, nobody can exceed the functionality
we offer today. We deliver Human Capital Management for your business
— the integration of people and people processes into business strategy
and business processes. So that as you do strategic planning and execute
operations, the people management pieces are completely integrated with
how you run the business.
Q: What advice can you offer IT teams as they start to support HCM-driven
People are very dynamic assets. They’re multidimensional, with skills
and abilities, experience, personality, behavior, past performance, and
aspirations. HR organizations are now looking for a much more refined
and targeted set of solutions to effectively manage these workforce dimensions.
Further, HCM solutions and services are unique in that they touch every
member of the workforce.
Taken together, these needs make technology
a crucial part of implementing and enabling effective HCM strategies throughout
the business. The key to successful delivery of these solutions and services
is to understand that, across the organization, different people will
have different expectations of system functionality and may have different
needs for system access. Employees and managers need very intuitive, easy-to-use
transactions, where HR professionals demand more functionality and information.
Workforce roles may drive the need for multiple access channels, so browser,
mobile, and voice technology will be critical to engaging everyone in
IT plays a key role in this landscape,
leveraging Internet-based and multiple communication tools to enable HCM.
Partnering with HR can enable both groups to jointly provide better strategic
management of the workforce and effectively drive company goals and results.