Have HRO Service Providers Tapped into the Power of HCM Analytics?

It goes without saying that the HR market has experienced a huge disruption through the use of cloud-based HCM platforms. The reporting and automation on offer have fundamentally changed the way HR managers and employees interact with their organization. Many touch points are now automated or self-serve. These developments have turned the HRO market on its head, with many service providers scrambling to adapt to new practices and technologies and also wave goodbye to many previously human led processes. Underpinning all of this is the powerful new breed of analysis on offer through cloud-based HCM. Of the service providers playing in this market, there is a huge maturity gap in the delivery of this analysis.

Through service provider and buyer data gathered in the upcoming HRaaS Blueprint, HfS looks to lift the lid to examine the maturity level of analytics within the HRO market. The application of analytics within the HRO value chain can be used to address multiple needs on both the service provider and buyer side of the fence, and here HfS identifies the maturity and use case examples of buyer focused HR analytics applications.

At the lower end of the HR analytics maturity scale are HR scorecards. These identify the basic HR elements of an organization including employee number by region/department, attrition, time to hire, cost per hire, etc. These scorecards mainly identify HR KPIs and are therefore essential in HRO delivery. While the information provided by these scorecards is needed by buyers, especially in larger organizations with multiple HR systems, they deliver little value beyond organizational HR clarity. Service providers such as OneSource Virtual and Capgemini have taken these scorecards one step beyond, by benchmarking HR KPIs by industry and region, which can then be measured against client scorecard performance to address performance gaps and develop innovation roadmaps. Scorecard benchmarking is offered by ~50% of HRO service providers as a standalone service, with the remainder who offer this, embedding it within wider MPHRO delivery.

The next stage of analytic maturity aims to address business needs of buyers. One increasingly important need has been employee engagement. In an age where talent is identified as a rarified asset, reducing attrition levels is key to maintaining revenue generation and IP within organizations. Increasing employee engagement plays to this strategy of maintaining talent and drives overall productivity through a more aligned and motivated workforce. Optimizing employee portals on HCM platforms through the analysis of dropout rates and helpdesk queries aims to reduce frustration levels. Analyzing employee engagement in continuous learning initiatives as well as analysis of colleague interactions serve to accurately measure employee engagement and workplace satisfaction.

At its most mature level, HR analytics aims to prescribe management best practice. This is where HR analytics is heading, taking the analysis of these employee engagement metrics, and industry-wide benchmarking and combining them to provide predictive and prescriptive HR analytics offerings. Currently, ~40% of MPHRO service providers are developing HR analytic packages that aim to predict individual employee churn through employee engagement measurements. HR management actions are then prescribed based on industry-wide best practice, which is gathered at the benchmarking level. This is starting to come to market, although at present is still largely at the pilot phase.

A recurring theme from buyers is that they are only satisfied with the HR analytics they have at their disposal for a short period and are constantly looking for the next innovation. One area of innovation that buyers are currently requesting is real time analysis of how HR functions tie into revenue generation. This would represent a real linking of HR into overall business metrics and would represent a milestone in HR analytics. Currently, Capgemini is leading the pack with the development of its Insight 360 package, which ties in with Salesforce to deliver analysis of HR impact on ongoing revenue generation.

Within HR, there is a real need from buyers for an ever-increasing level of analysis. Service providers who can provide this and fully utilize the reporting delivered from HCM platforms such as Workday and SuccessFactors will begin to take an increasing market share in this industry. Service providers and buyers who operate outside of this cloud ecosystem will struggle to keep up in this market.