Mark Feffer: Welcome to PeopleTech, the podcast of the HCM Technology Report. I’m Mark Feffer.
This edition of PeopleTech is brought to you by HCM Unlocked, experts who support, build, fix or overhaul your HCM technology or strategy. They focus on HCM tech, so you can focus on your business. Learn more, at www.hcmunlocked.com.
I’m talking today with John Wallace, the CEO of HCM Unlocked. We’re talking about the HCM environment and how it’s changing in this world of Covid-19, and some of the best practices involved in leveraging HR technology for a business advantage.Podcast: HCM Unlocked CEO John Wallace discusses how HCM is changing because of Covid-19, and describes best practices of leveraging HR tech for a business advantage. #HR #HRTech Click To Tweet
John, thanks for being here. Let’s start by talking about the HCM environment. What changes are you seeing right now in HCM technology? What proportion of those changes are driven by Covid-19, and what changes were already underway?
John Wallace: Yeah, I think it’s a great question. There were certainly a number of changes that were already occurring prior to COVID. COVID has certainly accelerated it. What we’re seeing is it’s really a shift beyond core HCM functionality, so core being payroll, time and attendance, HR management.
We’re seeing more of a shift toward talent management. It’s really functions that are used to manage employee, especially with those employees being virtual. If you think about talent management, as we move to an environment where you’re no longer restricted to the restraints of where’s my geographic headquarters, you can tap into a wider talent pool. So companies are looking to purchase, implement, the software to help them do that. They’re also looking at LMS platforms. How do I train a staff that is not on-premise. They’re looking at increased self-service functionalities. Again, I can’t walk down the hallway and help a new hire onboard. We’re going to rely more on technology to do that. I think some of those changes were already occurring, but with the massive swing to the virtual environment, it’s really being accelerated.
Mark: One of the things I’ve noticed is a lot of vendors in the space are adding different features, like video messaging or video conferencing, all of them geared toward the remote workforce, but a lot of them feeling bolted on. Do you think that HCM vendors in general are really rethinking how work is getting done and thinking about changing their approaches to align with it?
John: Yeah. I think you have to. I think you have to have that thought process, because some of these changes are not going away. It’s the incorporation, like you said, of more video, and really it’s a more fluid process as you onboard and bring an employee on. It also leads to, really, the need for better integration. Looking at this as more of an HCM ecosystem saying, “How can I play with some of the best in breed technologies, put them together in a process that makes sense for employees, and it’s easy to use for administrators? So there’s more of an onus today on incorporating technologies, making sure it’s a fluid and comfortable experience, and that you still have that personal touch from a virtual standpoint.
Mark: In general, what HR technology trends are you seeing even above and beyond that? What’s working or what’s not working?
John: We’re seeing businesses start by taking stock of what they have. Oftentimes, before you go to the market and say, “Hey, I need this solution,” you may already be paying for it. As an organization, we did something pretty similar. We use Microsoft for our email and we were also using Zoom for our video calls. It wasn’t until our operations team said, “Hey, why are we paying for Zoom? We have Microsoft Teams. Why don’t we just implement that and make the switch?” Organizations were doing the same thing with their HCM technology. Once they identify what they have and what they don’t have, there’s optimization. How do we get our current tech to work as it should? Again, this is, today, it’s very important when you have a virtual workforce. You need technology that works.
And so, when you’re looking at a situation today where there’s a need to optimize, and there are gaps in the market that’s identified or gaps in your technology is identified, the next question becomes, how do I fill that gap? There’s been a rise in some of the leading vendors and their marketplace working with best in breed solutions. What that leads to is, really, it’s a rise in the need for integrations. We have a team of software developers, and I can tell you on almost a daily basis, we’re getting asked, “Does this technology integrate with that technology? Can we build this API?” It’s new and it’s different. Again, that’s just exponentially increasing as organizations are taking stock of what they have, and then actively looking to plug those gaps.
Mark: Now, when you’re doing this kind of implementation, and integration is a big part of it also, what makes it also difficult, especially when it comes to HCM technology?
John: Yeah, I think that’s a great question. That’s one that we get all the time. I think it starts with having just the right perspective of what needs to happen in an implementation. It’s really, it’s a combination of its capacity and know-how. So, do you have the staff currently, if you’re an organization, that really understands payroll and HR, but they also understand the technology? You’ve got to have the know-how. It’s not just about payroll and HR, it’s about payroll and HR technology as well. Then you have the capacity to do so. If you don’t have the time, it’s not going to happen. I may be really handy around my house, and you can give me a ton of free time, but just because I’m handy around my house, doesn’t mean I can build a house from scratch. It’s a completely different skillset.
I think organizations today in the HCM space are starting to tap into those specialists to help in that process. I don’t think this is something new. Oracle, SAP, Microsoft, they’ve been using third-party implementers, for example, for decades now. It comes down to just understanding, does my team have the capacity? Do they have the know-how? When we get into a situation as a company, again, we help organizations to build their HCM software, to optimize the utilization software, what we’re looking at is a multi-phased approach.
The first is design. Sometimes, companies just, they don’t know what they don’t know. What can we get the system to do? We’ve got an ideal for a workflow for onboarding an employee. How do we build that? That’s the first step is, what does design look like? Oftentimes, companies need help with figuring out, what are my design options?
The second piece, and I think this might be the most difficult piece of an implementation, is the data migration. How do you properly get the data from your existing system into your new system? And then, during that blackout period, during the data conversion, how do you maintain two systems at the same time, especially if you’re not as trained in your new system that you’re purchasing? We identified that as a massive challenge.
What we did, because we already had these fantastic developers as part of our team, is we built, and it’s proprietary to us, a data validation tool that takes, what does the current system data points look like, what does a new system look like, and it cross-compares. In addition to that, it’s also a smart tool. If I have a social security number, for example, if it says ABC in system one and ABC in system two, yeah it matches, but we know that ABC is not a relevant character for a social security number. I think that’s incredibly important.
In the current environment today, data validation is an art when it should be a science. Anything data-driven should be scientific. What’s happening is companies are essentially downloading Excel documents. They’re doing V lookups, and they’re just spot comparing different sections to see if the data transferred over correctly. The problem with that is, if you don’t catch a mistake, you might not see the ramifications for that for a couple months. It really could be a ticking time bomb. If you look at the statistics, insurance states that 70% of HR managers would consider their [inaudible 00:08:03] as failure. I think the data is probably one of the biggest reasons why.
And then finally, what makes these process so difficult, final important piece, is the proper deployment of the technology. An HCM system, especially if it’s new, is not going to work effectively if all end users don’t know how to use it. We’re talking about, really, hands-on training beyond just the administrators. Do the employees and the managers understand how to use their technology? If you don’t figure out a way to train everyone, there’s going to be problems. I think that’s going to lead to the perception that we had a failed rollout.
Mark: It must be made even more difficult by the fact that the HCM technology tends to hit every part of their company.
John: That’s a really great point is that it’s not like this system sits with just accounting, or just sales, or just marketing, or just finance. It’s a fact that every employee is going to use a system, and they’re going to use it in a different capacity, so you can’t just do a blanket rollout, a blanket training. Everyone uses it a little bit differently, depending on their role and function within your organization.
Mark: Can you talk about the ASO model? What is it? How does it work? How do you use it?
John: In simplest terms, the ASO model is technology plus people support. It’s having skilled specialized labor to help drive and utilize your technology.
Mark: Where is it now in terms of adoption by employers, and where do you think it’s going?
John: This is a perfect example of a trend that is significantly accelerating because of COVID. Now, we already saw an increase in a buyer’s appetite for the ASO model. But organizations today are starting to see that it really makes a ton of sense for them to upskill their labor around utilizing HCM technology and significantly drive down their fixed labor costs. With the increased acceptance of a virtual workforce model, I personally believe that the traditional way to staff your payroll department with W2ed employees is obsolete. I’m not saying that there won’t be one or two payroll HR people, and of course it differs depending on the size of your organization. If we’re focusing on the mid market, I really think that businesses are going to want to strategically approach this, upskill their staff, and significantly drive down their fixed labor costs by tapping into a specialized workforce model. That is the ASO model. There really is no benefit of having a full-time employee or employees driving that software. You can get experts to do it at a fraction of the cost.
Mark: In the HR world, I can hear people saying, or asking, what’s the difference between an ASO model and, say, a PEO? Could you explain that?
John: Sure. I mean, the big difference there is that the PEO is going to add the insurance line, so whether it’s a worker’s comp or health insurance. Whereas, the ASO is just technology people. If the ASO is technology plus people, the PEO is technology, plus people, plus insurance. I’m not advocating that we don’t need an HR team, because I think you do, but it’s about strategic HR. If you look at Amazon, for example, if anyone’s received a package from Amazon, the person who delivered that package and the fleet of delivery trucks, those are not Amazon employees. That function’s very important to the business, but those are not employees. Now, it doesn’t mean that you outsource the strategic functions of what’s Amazon’s growth initiatives and their vision for the future, but there are certain tactical components within payroll and HR that really don’t make sense to keep in-house.
Mark: What do you think the future of the model is given all that’s going on in the world right now?
John: Massive growth. I really do. I think, if we were to look at this two, three, years from now, this is the way to do business if you want to be cutting edge and want that competitive advantage over your peers, tapping into more skilled labor, driving down fixed costs, making better decisions because you have optimized and fully rolled out HCM technology. As you mentioned, labor drives a business, so having technology that is fully built out, and operating smoothly, and producing your data that you can act on and make the right decisions, again two to three years from now, I think the ASO model is the norm.
Mark: Well, thank you. Thanks very much.
John: Thanks, Mark.
That was John Wallace, the CEO of HCM Unlocked.
And this has been PeopleTech, from the HCM Technology Report.
Brought to you by HCM Unlocked. They focus on HCM technology, so you can focus on your business. Learn more, at www.hcmunlocked.com.
And To keep up with HR technology, visit the HCM Technology Report every day. We’re the most trusted source of news in the HR tech industry. Find us at www-dot-hcm-technology-report-dot-com. I’m Mark Feffer.
Sign up for our newsletter here.