Podcast
October 2010
Anthony Vitiello: Greetings and welcome to the autumn 2010 podcast from Volt Consulting – Managed Service Programs. Volt Consulting – MSP produces these recordings, bringing together human capital industry thought leaders from within the broader Volt organization, as well as from the respected community of analysts, sourcing advisors and other industry authorities to deliver penetrating insights into topics of interest to enterprise organizations around the globe.
My name is Anthony Vitiello, and I will be the moderator of today’s panel. Today’s topic is The Value in Human Capital Management Solution Architecture. To help us gain insight into these questions, we’re pleased to have a pair of experts on our discussion panel today.
First I would like to welcome Liz Herbert from Forrester Research. Liz Herbert is a principle analyst for Forrester Research, joining the Forrester organization in 2002. Liz helps clients understand the ERP implementation provider landscape as well as best practices for provider selection, RFPs for implementation process, and provider governance models. The practice areas under her purview and relevant to today’s discussion include sourcing and procurement, sourcing strategy and execution, systems integration and vendor management techniques. Hi Liz and thanks for being with us today.
Liz Herbert: Hi everybody. Thanks for joining in to today’s podcast.
Anthony Vitiello: Great. Also joining us from Volt Consulting – Managed Service Programs is Jerome Gerber. Jerome is a vice president of client solutions for Volt Consulting – Managed Service Programs. And Jerome has over 20 years of combined procurement, human resources and staffing industry experience and has been with Volt since 2000. In 2005 Jerome created the client solutions department within Volt and became Volt’s top procurement specialist, managing the relationship between Volt and America’s largest group purchasing organization. In 2009 Jerome led efforts to create the foundation of what would become Volt’s workforce architecture strategy. Jerome is one of Volt’s Six Sigma champions and has served on the board of directors of the Staffing Association of Minnesota. Hi, Jerome, glad to have you with us.
Jerome Gerber: Great to be here, Tony, and looking forward to the podcast today.
Anthony Vitiello: Excellent. So today’s discussion, we’re going to delve into the recent emergence of solution design services that are currently being offered by purveyors of human capital management solutions. We want to find out what these offerings entail, why they’re necessary and why they’re coming to market now, and maybe some discussion about what sort of value these solutions deliver.
So let’s get right to it. This first question I’m going to direct to you, Liz. What are the reasons, in your estimation, behind the apparent push to offer solution design services on the part of human capital management providers? I think many listeners of our podcasts in the past might recall there were virtually no such offerings available even five years ago, and yet today they seem to be proliferating. Is this simply a marketing device or are there real business needs driving the providers to offer such services?
Liz Herbert: It’s a great question. And what we’re seeing are two key dynamics in the market that are driving the need for these kinds of services. First we see companies, particularly as the economy turned downward in 2008 and 2009, struggling to remove cost and in many cases having to work with a reduced resource set internally. At the same time, we’re seeing that companies are much more focused on the business value of initiatives that they are undertaking. Oftentimes they’re a higher level of executives driving these initiatives, all the way up to the board of directors.
So when Forrester works with our clients, and we hear the drivers that are leading them to look into these more holistic third-party offerings, we find that it’s that balance of lacking the right resources and the capacity of resources in-house, the right skill sets and the right knowledge of best practices and newer initiatives that are relevant to their strategies. And that’s often driving them to work with third-party firms that can really help them design an overall human capital management approach and strategies; starting with the business process, defining business benefits, and all the way through to the technologies and sourcing dynamics that will ultimately drive their success.
And we are seeing, now that the economy has started to show some signs of positive recovery, the companies are much more focused on growth, competitive strategy and going back to revenue generating type initiatives. So they’re really looking to move beyond simple cost cutting and get into the next phase of selective sourcing of technologies and solutions providers.
And then of course at the same time, we see that companies often find they can get the most value by investing with a third-party who can really deliver more of a managed service or a managed approach to help them with their business transformations. That includes managed services. That also includes some of the trends that we’re seeing around outsourcing, and of course software as a service and cloud technologies as part of their strategies.
Anthony Vitiello: That’s real interesting. You know, Jerome, I think you might be able to help us examine what would happen to organizations who are failing to be fully prepared and properly defining the criteria for the RFP from services procurement solutions providers and what happens as a result of that.
Jerome Gerber: Well one of the things that we’re unfortunately seeing in the marketplace today is that there is a significant turnover from one provider to another. And what we started to uncover when we looked deep into the root cause of challenges is that the companies that hired these managed service providers and these human capital management solution providers are not clearly defining what their needs are. And so, therefore, without defined needs it’s hard to establish who is the right provider to deliver those needs. Quite often we see people get excited about new creative and innovative delivery techniques in the marketplace, but they may not address the distinct business needs that an organization might have. So while the desire to drive costs and increase service and really bring innovation to an organization’s human capital management solution, often can be the main point of disillusionment and cause the program to not meet its overall objectives.
The challenges that we often see is that the provider that is selected might not have the right mix of business and technical knowledge. So when you look at the delivery mechanism of how the supplier supporting the human capital management solution, if they’re not engaged to the right mix and have the right delivery model aligned to what the organization’s expectations and business requirements are, you’re going to see a high probability of failure.
Another area where a lack of defined business requirements will impact an organization is the changed management approach. When a human capital management solution has not been properly defined and the business needs are not properly met, the issues that many companies are facing are the inability to get adoption from the chosen providers. So when those needs are defined, when those business requirements are clearly communicated and the proper supplier is selected, the risk of having poor adoption goes away tremendously.
And then trying to identify who and which provider has the right depth of expertise; which provider is the best solution for you. And unfortunately when an RFP is not clearly defined, and as one of our customers told us who had gone through this process and was getting ready to issue a schizophrenic RFP because they didn’t know what they needed, so they were going to ask for everything. And the challenge comes in to the risk of turnover and the risk of trying to find and pick the right supplier goes up dramatically because there’s no way to compare two providers or three providers apples to apples. And without having that clearly defined need and idea of what you need to have to meet your human capital needs, it’s almost impossible to compare suppliers.
Anthony Vitiello: It definitely sounds complex, but it makes a lot of sense. Well I guess that bring us to the next question, which really I’d like both of you to sort of weigh in on. I guess we’ll start with Liz. What would you characterize as the top three most important benefits an organization could expect to reap from engaging a solution architect or a similar solution design service? You know, is it all about just preparing for a smoother implementation or does it go beyond that?
Liz Herbert: For the clients that we’ve been working with at Forrester, we’re finding that it goes far beyond that. In fact, for many companies one of the biggest benefits of working with a solutions architect in this capacity is being able to get better value for the dollar and faster time to value. Most companies realize that by using a third-party services firm to help them with their overall strategy and technology design they’re getting the benefit of a population of skills who’s up to speed on the latest and greatest and the best practices that they might be able to learn from. Versus oftentimes the struggle they face with their own internal resources, of keeping them trained and fresh on all of the new technologies and processes that are becoming relevant for their particular goals.
A second key goal that we see is, really building on that, it’s the idea that companies are able to get more innovative ideas of how to use technology and how to design processes. Because these services providers that they’re working with are solely focused on being able to drive value out of the overall human capital management process, and learning from a multitude of clients what are some of the ways to do that.
Finally what we see is that many companies want to understand more about how to design these processes. A lot of companies that come to Forrester, they need help defining their KPIs and they need help understanding what are some realistic goals and metrics versus peers that they may be competing with or companies with similar characteristics. And that again is an advantage of using these third-party companies who really have that broader perspective from working across a number of different clients.
Jerome Gerber: And to Liz’s point, the one thing I’d like to add is some of the lessons that we’ve learned is that faster time, the ability to get an organization’s employees aligned properly toward making a good decision, what we often found is going into these exercises that the diverse team that’s brought together to evaluate the business needs had never worked together as a team before. The organizational alignment has not ever existed before in addressing a human capital solution. So bringing the business players, the procurement specialists, the risk management folks, the using community together to help set those expectations and to align those business goals, drives a lot of the change management that’s going to occur six months down the road because people are in alignment and in agreement as to what the decision should be.
It also helps to identify which of those internal resources are going to be champions of the project, where your challenges will exist because of individuals who aren’t going to contribute or want to be a part of the end solution, so you have the ability to identify some of those things even before the project kicks off, before the supplier is selected, before the implementation starts. So you have the ability to direct your solution provider down that right path.
And then comes together of really driving that overall governance of having everyone aligned to a simple defined set of goals. And so from this perspective you can start measuring overall cost factors. You can also start looking at the soft costs and the soft value of bringing the right solution in. You’re also looking at who and which supplier is going to be the right cultural fit for you as an organization. And that, at the end of the day, when you start to look at three or four suppliers that will all realistically get to similar price points with the right negotiation, to helping you choose which is the right supplier that is going to fit within your organization and is going to help your organization meet your overall objectives.
Anthony Vitiello: So it definitely sounds like the consensus is that it’s something that’s useful in the beginning, but pays dividends throughout the life cycle of the project. So that’s very interesting. So let’s move on to the next question, which is for Liz. And we’d like to ask what Forrester has been hearing from clients regarding their exposure to these sorts of solution architectures and design services in the market, and have you heard that users found them to be worth the effort?
Liz Herbert: What we’re finding in most of our surveys and the work that we’re doing with clients is that overall they tell us that they’re satisfied. If you ask them overall did they get value out of these partner services, they say that they did. And typically they give very high marks on criteria like would they recommend this provider to a peer or to a colleague.
On the other hand, when we really drill in to what are some of their concerns or what would they have liked to have seen go better, there are many cases where they say, you know, we contracted with this firm because we wanted to get the benefit of best practices. We were looking for them to really guide us with some innovative ideas and help us understand what types of best practices are being implemented across these processes. And the more we look into most of the situations where companies are telling us that, they often have not done a good job on their part articulating what their business goals are when they engage with these providers. Closely related to that, they oftentimes have lacked the formal governance throughout the relationship that they may have intended to have or thought they might have but not done a good job of defining thoroughly.
So typically when we see that companies get more specific with what they’re looking for, what their real goals are and tie that into the way that they pay or at least metric the provider, so metrics that are based on the provider’s ability to drive best practices or come to the table with innovative ideas, the more that we see companies are even more satisfied with these kinds of services.
Anthony Vitiello: Excellent. So the next question we’re going to direct to you, Jerome. Are all these service offerings created equally, or more to the point, what might a potential customer look for in determining who to engage for this kind of service?
Jerome Gerber: The most important thing that I try to advise companies when they’re looking at a path to go is to look at the tools and methodologies that are being utilized to capture and to help make the delineation. For instance, Volt Consulting uses Six Sigma methodologies. In our experience, those have been some of the most progressive tools in helping to capture understanding the voice of the customer, understanding the business needs and helping to clearly delineate and communicate those business needs. And in our circumstances we have no issues with providing all the data and all the tools that were used in all the results back to the customer to be shared with every supplier as a part of the process. And that is another element that I would expect that any solution provider offering these types of services should be willing to do to be able to ensure that every supplier is on equal footing as they’re going through the process of evaluation.
We had one organization that recently went through an RFP for about 50 million dollars and human capital management total spend, and issued an RFP to 12 suppliers and issued them 13 questions that specifically told them what their business needs are, what their business requirements are, and asked each supplier to respond as to how they would deliver and meet that business need. It enabled that organization to compare every supplier apples to apples to apples. And from Volt Consulting’s perspective, we want to give our customers the ability to make better decisions. And the way to do that is to communicate very clearly to the customers and to the suppliers what the needs are as a part of this human capital solution.
Anthony Vitiello: Does that align, Liz, with the sorts of things you advise your clients with regard to how they score potential providers?
Liz Herbert: Absolutely. In fact, Forrester has often used a framework for some of the clients we’ve worked with that hones in on six key categories. Certainly knowledge of the business process; that human capital expertise that companies are looking for. Technical skills that are relevant to the particular category that includes the new technologies. Breadth of offerings. You know, can the provider support both process design as well as help with the technical implementation. Overall methodology and approach. That includes things like Six Sigma and other components of the methodology and approach. Cultural fit. And a lot of that ties into the softer factors. You know, if this is a team that’s going to be in there working day to day with your team, is it a good fit? Does their culture match the way that your company does business? And then finally, this component of innovation and strategic direction. We find that companies who think about that up front in the selection criteria are much more likely to get the benefits that they’re hoping.
Anthony Vitiello: Well it definitely sounds, again, like there’s a lot of accord and agreement between the perspective of the analyst and the perspective of the solution provider representative here. So that was actually the last question we had, so I’m going to wrap things up here by saying that it seems that all the authorities on today’s panel would agree that there is a significant value in engaging solution architect or solution design services at the outset of putting together a human capital management program. And that seems to be the general consensus. So we’d like to thank both of you guys for spending the time to help us talk through these offerings and what they mean and what value they bring.
For listeners who’d like more information about this topic, you can get a white paper on solution architecture, which was produced by Volt Consulting – Managed Service Programs. That’s available at www.voltmsp.com/sa for solution architect. You can also visit forrester.com, which is a veritable wealth of information on this and a whole wide host of other topics. And I guess that’s it. So I’d like to thank you, Liz Herbert and Jerome Gerber, for you time and efforts today. And we will talk to everybody in our next podcast. Thank you very much. Have a great day.
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