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Avoiding common cloud HCM pitfalls

A consultant who helps companies deploy cloud HCM technologies explains the groundwork needed to blaze a clear path to the cloud.

What common pitfalls do companies face when they move their human capital management (HCM) systems to the cloud?

They don't realize the impact of applying a cloud solution to thceir organization. Traditionally, especially compared to finance departments, HR departments don't have a standard way of operating. There is some change in the HR domain -- especially taking place in the U.S. -- where institutes come up with a standard approach for HR. The majority of cloud HCM solutions are based upon that best practice way of working.

HR departments, especially in Europe, still have to bridge the gap between what they do right now and a new way of operating that is aligned with a cloud HCM solution.

That's the starting point. The best projects I've seen start with an HR transformation initiative. If I look at the majority of HR organizations, they have the pitfall of working on a very ad-hoc basis -- they basically do firefighting -- and they [are] … never able to overcome all those firefighting issues and change things at the root.

What you want to do -- and you want to do it for a number of reasons -- [is] standardize your operating models [and] … your processes. First of all, it will allow you to create a service portfolio, and it will make the activities you do as an HR department measurable. If you standardize the processes, it will also enable you to benchmark internally and externally and, therefore, provide very valuable information to your executives [to say], 'This is what I'm doing; this is how I'm doing it; this is how I'm doing it compared to others -- and, therefore, it's the most efficient and cost-effective way of operating.'

You enable yourself to run an efficient operation, and it will allow you to focus on those activities that will add value to the customers.

[Plugging in cloud HCM services], especially if you want to do it one by one ... is a strategy of a number of the solutions [on the market], where it is scalable and applicable in a coexistence mode.

Core HR is, most of the time, the last component you want to move to a cloud. [But] if you do an HR transformation, it's actually the first component you want to move to the cloud, merely because, when it comes to usability and ease of use, cloud solutions … are based on [sites like] LinkedIn [and] Facebook, and people find it easier to use it, and therefore you will have less of an adoption step to take than if you start using PeopleSoft as your core and the PeopleSoft self-service component.

If you look at the current state of HR, it's highly fragmented, and it's isolated -- HR is a separate entity. Whereas, if you look at more innovative companies, what they do, for example, is remove the walls between the silos of finance, HR, IT -- all of those support functions -- [and] move it into one service center and come up with an integrated model. Only a few companies have such initiatives. DSK is one of them.

The majority of companies have a siloed approach, and within that siloed approach, it's separate sub-silos. Recruitment is completely separate from learning. Learning is completely separate from core HR. Core HR is quite separate from payroll.

Unfortunately, what you see right now with this [Oracle] coexistence approach [is] they combine a PeopleSoft core HR with Fusion compensation management. Then you're still in a siloed mode.

The biggest problem with these types of solutions is [they're] so fast to implement that organizations cannot keep up with the pace. It's a complete shift from the old days where you started to get requirements, and then one year later came up with a system, and then figured out if the requirements had changed. Now, it's a [checkbox] you fill in, and then it's ready. And then everybody [panics because they anticipate the change to come].

Make sure you start with this initiative in HR transformation. You've already started to change your organization, so people are adopting the change already. Then, when the system comes in, it's more or less training them on a system that is aligned with their new process.

This expert answer is from an interview conducted by Executive Editor David Essex at the Oracle OpenWorld 2014 conference in San Francisco. Read more OpenWorld news.

Next Steps

Understand cloud HCM trends

Learn how to pitch cloud HCM to the CFO

Read about SAP's HCM moves to the cloud

Dig Deeper on Cloud HR software

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