Detecon Opinion Paper HR-IT Maturity: Findings in Telco Industry and Recommendations for HR & IT Executives

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HR-IT Maturity: Findings in Telco Industry

and Recommendations for HR- & IT-Executives

2009 / 05

HR-IT Maturity

Opinion Paper 1 Detecon International GmbH

Table of Contents

1 Executive Summary.............................................................................................2 2 Context for HR-IT in Telcos .................................................................................3

2.1 Telco Industry Environment.........................................................................3 2.2 Detecon’s HR Maturity Study in the Telco Industry .....................................4

3 HR-IT Maturity .....................................................................................................6 3.1 Detecon’s HR-IT Maturity Model .................................................................8 3.1.1 The impact of HR-IT on the overall HR Maturity..........................................8 3.1.2 First maturity level (Personnel) ..................................................................10 3.1.3 Second maturity level (HR Contributor) .....................................................11 3.1.4 Third maturity level (HR Service)...............................................................12 3.1.5 Forth maturity level (HR Business Partner) ...............................................13 3.1.6 Fifth maturity level (HR Leader).................................................................15 3.2 Analysis of HR-IT.......................................................................................16 3.2.1 Input for Model Development ....................................................................16 3.2.2 Parameter of the Model .............................................................................17 3.2.3 Analysis of the Maturity Profile ..................................................................17 3.2.4 Maturity Profile per HR Capability Area.....................................................19 3.3 Key Findings in HR-IT ...............................................................................20 3.3.1 Overview and peer groups ........................................................................20 3.3.2 HR Executives and Business Executives ..................................................23

4 Conclusion and Recommendations...................................................................25 4.1 General recommendations ........................................................................25 4.2 How to Achieve the Next Maturity Level? ..................................................27 4.2.1 How to Achieve Maturity Level 2 (HR Contributor) ....................................27 4.2.2 How to Achieve Maturity Level 3 (HR Service)..........................................28 4.2.3 How to Achieve Maturity Level 4 (HR Business Partner) ..........................30 4.2.4 How to Achieve Maturity Level 5 (HR Leader)...........................................31 4.3 Where to invest?........................................................................................33

5 References ........................................................................................................35 6 The Author.........................................................................................................36 7 The Company ....................................................................................................37

HR-IT Maturity


1 Executive Summary

Most Telco companies are feeling the pressures of change in their markets; changing market environments, competitive pressures and increasing customer demands are concerns throughout the industry. These concerns are driving them to look for new ways of gaining greater efficiency and effectiveness throughout the organization. As a result they are taking a much closer look at human resources issues than ever before.

Analyzing systematically different aspects to improve human resources leads at a certain point in time to the consideration of the IT support of the HR functions and processes. Besides improving the delivery of the existing HR processes HR-IT may be used as an enabler for new HR functions and services.

While in traditional HR-IT initiatives the focus was on streamlining by improving HR processes, the current HR transformation initiatives focus on raising the strategic profile of HR.

The introduction of technology may produce all of the above benefits for HR and thus increase the speed and quality of information and drive down costs.

However the impact of HR-IT is something that requires further examination since the introduction of new technology in HR has in general operational, relational or transformational effects. To cover these issues the study is based on:

The existing literature regarding HR and technology, with particular attention paid to the focus areas detailed above

Interviews with experts in the area of HR and business in order to identify the current status within this area

Recommendations based on best practices regarding an organisation’s use of technology in HR, and the impact of this technology within the areas of special interest.

HR-IT Maturity


2 Context for HR-IT in Telcos

2.1 Telco Industry Environment

Telco companies are facing an increasingly dynamic and competitive market which is forcing them to continuously reposition themselves to secure mid- and long-term survival and growth. Potentially disruptive technological trends1 as well as the process of deregulation are challenging the traditional telecommunication industry’s structure fundamentally.

Telco Environment

Demand/MarketDevices multifunctional anduser friendlyUniversal seamlessintegrated serviceMobile content & broadbandservicesConvergence of needs

Deregulation/PoliticsRegulation of networkaccess and servicesService obligationsInterconnection prices

TechnologyFixed-Mobile-ConvergenceNext GenerationNetworks/IP networksVoIPTriple PlayNetwork platformapplicationsWireless 3G / Wimax

New CompetitorsMVNO’sTV-Cable ProvidersMedia & BroadcastingRetail market

Market ParticipantsFixed Line Carriers

Mobile Carriers

Internet Service Providers

Service & Solution Providers

Telco Retailer (Reseller)

Content Providers (Broadcaster)

Figure 1: Competitive Environment of Telco Industry

This highly competitive environment and changing structure is also challenging the traditional HR agenda in the Telco industry. What is emerging is a more pro-active, business driven role in the organisation. This shift is being driven by the following challenges:

Managing the transformation from a technology driven to a service driven industry on the level of organisational processes, roles and capabilities

Managing the skill shifts required by the shorter product life cycles and higher customer service demands triggered by new, innovative products

Managing large scale lay-off programmes and related motivation and engagement issues of employees, especially for incumbent fixed line operators

Managing the business impact of socio-demographic changes and the aging population, especially in Western countries

Ensuring and improving the competitiveness, changeability and innovative capability of the HR function.

1 Fixed-mobile convergence, triple play, IP-TV, Next Generation Networks, etc.

HR-IT Maturity


Telco companies started to monitor the required transformation process and the links of HR practices with organisational success. They started to implement HR information technology to safeguard the business strategy and human resource targets.

To determine where Telco companies are in their HR transformation process Detecon conducted a survey with over 50 Executives on HR Maturity in the Telco Industry.

2.2 Detecon’s HR Maturity Study in the Telco Industry

The intention of the Detecon HR Maturity Study was to look at the development of HR practices in the Telco industry through a maturity model framework. The maturity model developed by Detecon is based on HR evolving into a more strategic position. The purpose of using such a framework is to focus the analysis of HR’s strengths, development areas and next steps in a structured way.

The survey was conducted drawing on the methodology of a previous Detecon study on CRM (Customer Relationship Management) maturity completed in 2005. The HR maturity model that is the basis for this survey combines Detecon’s HR Best Practice Approach and elements of Carnegie Mellon’s People Capability Maturity Model (P–CMM®, 2001). The study was conducted with 24 companies from Western and Central Europe, Middle East and Asia.

Telco Segements (All Participants) Regional Representations (All Participants)

Others14%

Mobile41%

Fixed Line 45%

Central Europe37%

33% Western Europe

13%Asia

17%Middle East

Figure 2: Demographic Information of Participants in Detecon HR Maturity Study

The construction of the Detecon HR Maturity Model allows the study to combine three aspects of HR – ‘Levels of HR Maturity’, ‘HR Capability Processes’ and ‘HR Capability Areas’.

The first element – levels of HR maturity – refers to five distinct levels of Maturity that HR can function within. HR progresses from one level to the next as the function matures. Each stage that is reached is the foundation for the next level.

HR-IT Maturity


The five levels of HR maturity as defined by the Detecon HR Maturity Model are:

Anticipates market developments and initiates people related measures

Line manager fully enabled to manage their Human Resources

HR Leader5

Establishes HR Strategy as part of Business Strategy Demonstrates quantifiable contribution to business“Sits at the Executive table”

HR BusinessPartner

4

Helps Line Managers solving problems for all operational HR processes (recruiting, induction, training, etc.)

HR Contributor2

Provides Service to increase business results and develop core competencies (e.g. performance, people aspects of change initiatives, talent pool, etc.)

HR Service3

Personnel1

Administrates effectively

Safeguards payroll and other HR administration topics

Figure 3: Detecon HR Maturity Model: Levels of Analysis

The second element - HR Capability Processes – refers to the grouping of capability areas into three distinct processes: Plan, Build and Run. The Plan Capability Process works as the interface between HR and Business Strategy. The Build Capability Process acts as the underlying enabler (HR organisation, HR processes, HR roles and HR-IT) for providing HR capabilities. The Run Capability Process is the actual service and transaction delivery of HR within the company. There are ten core areas of HR capabilities, which are grouped into the three high level capability processes.

HR Core Processes

RecruitingPerformanceManagement &Compensation

Training & Development

Retention & CareerManagement

Leadership Management

Change Management &Communication

HR Strategy

HR Planning & Controlling

HR Organisation & Services HR-IT (eHR)Build

Plan

Run HR Core Processes

RecruitingPerformanceManagement &Compensation


Retention & CareerManagement

Leadership Management

Change Management &Communication

HR Strategy

HR Planning & Controlling

HR Organisation & Services HR-IT (eHR)Build

Plan

Run

Figure 4: Detecon HR Maturity Model: Areas of Analysis

Within each capability area, the maturity level is defined by attainment of key milestones and goals. The overall maturity level is composed of the sum of the maturity within each capability area.

As HR is business driven, HR capabilities exist in different parts of the organisation, both within and outside of HR departments. Therefore we considered it essential to have both the HR and the business perspective of HR capabilities in order to determine a more holistic perspective on HR Maturity of the organisation.

In the next section the Maturity Model and the survey findings for HR-IT are further explored.

HR-IT Maturity


3 HR-IT Maturity

The impact of technology has grown considerably in recent years in all areas. This also includes the human resource management. Information systems have been developed for the support of administrative and data recording purposes up to recruitment and selection, flexible benefits, development and e-learning. HR-IT now also supports shared services and self-service environments.

Improved information technology makes it possible that much administration can be accomplished by the use of self-service or automated systems. HR is thus able to increase its strategic contribution to the performance of an organisation and to become true partners in the business.

Furthermore the use of HR-IT is substantial for a HR department operating in different regions and possibly within different time zones. Such a kind of global job sharing requires a well implemented and operating HR-IT to ensure a correct and efficient workflow.

In addition, the use of technology in HR appears to be necessary to support the availability of up to date and detailed information, including indicators regarding people and human capital. This can help HR to play a more strategic role by providing management with tools and information to drive managerial decisions.

Businesses increasingly utilize information technology to design, support and offer their HR services. This trend has also provided substantial benefits for the HR function.

Organisations also utilize HR-IT or electronic human resource (eHR) systems to enhance the efficiency and effectiveness of the HR function. Beside efficiency and effectiveness the role as an enabler and cost cutting aspects usually trigger HR-IT initiatives.

Improving HR-IT services for employees allows HR departments to move from the execution of routine tasks to more strategic concerns of the business. Thus an excellent support by HR-IT can allow the transformation from administrative expertise to offer strategic business partnership, change management and employee advocacy.

Although the changing roles and responsibilities of HR have been identified only gradually, there is evidence that HR has to perform a transformation redefining the issues the HR department has to master in order to fulfil the desired services. To master this shift, a better understanding of the business including knowledge about financial management, external competitiveness and customer demands will be required from HR.

Beside those external effects there is a growing need for organizations to possess capacities for change. So the HR function must drive a cultural change to support HR systems. HR needs to guide managers and employees to use these tools and take responsibility for managing their own and others’ employment information.

Such a HR-IT system can range from simple spreadsheets enabling complex calculations to comprehensive HR-IT applications. However, it can always be assigned to four key components of an HR-IT system employee-facing, strategic, expanded and core.

HR-IT Maturity


Employee-facing

Manager self-service

Employeeportal

Employee self-service

Strategic

Work forceplanning

Stock andincentives

Learningmanagement

Employeeperformance

Compensationplanning/analysis

Expanded

Time andattendance

Schedulingand labor

management

Contingentstaffing

Health andsafety

Recruiting

Core

Benefitsadministration

Payroll

Positionmanagement

Employee recordsand personnel

actions

Competency andcareer planning

Salaryadministration

Internationalassignments

Work forceanalytics

Successionplaning

Employee-facing

Manager self-service

Employeeportal

Employee self-service

Strategic

Work forceplanning

Stock andincentives

Learningmanagement

Employeeperformance

Compensationplanning/analysis

Expanded

Time andattendance

Schedulingand labor

management

Contingentstaffing

Health andsafety

Recruiting

Core

Benefitsadministration

Payroll

Positionmanagement

Employee recordsand personnel

actions

Competency andcareer planning

Salaryadministration

Internationalassignments

Work forceanalytics

Successionplaning

Figure 5: HR-IT key components (Source: Forrester Research, Inc.)

A HR-IT system may be used within particular HR functions for recruitment and selection, performance evaluation, compensation and benefits, training and development, health and safety, employee relations and legal issues, and retention and work-life balance. One or more systems can thus support the HR and employee requirements across the entire employment cycle providing:

Management of all employee information;

Reporting and analysing of employee information;

Company-related documents such as employee handbooks, emergency evacuation procedures, and safety guidelines;

Benefits administration including enrolment, status changes, and personal information updating;

Complete integration with payroll and other company financial software and accounting systems;

Applicant and resume management.

To summaries HR-IT can in this context be seen as a system that helps to acquire, store, manipulate, analyse, retrieve, distribute and verify information about an organisation’s human resources.

An effective HR-IT system can provide support for almost anything the company needs to process and analyze about applicants, employees, and former employees. So managers can have prompt access to all the information they need to legally and effectively support the success of their employees. Additionally the support of an appropriate HR-IT system can allow the HR staff to concentrate on more strategic tasks or enable an improvement of the provided service offerings.

HR-IT Maturity


3.1 Detecon’s HR-IT Maturity Model

The use of information systems enables organizations to manage an increasing number of HR tasks in an effective manner and to offer information as well as knowledge to the desired peer persons. This can lead to an improved competitive advantage. In order to show the impact of HR-IT Detecon has developed a maturity model with five levels.

HR-IT integrated in global IT system environmentHR and Business requirements are integrated in the design of eHRHR-IT offers support for the key business processes (resourcing, retention, etc.)

HR-IT aligned with overall HR, IT and Business strategyWorkflow mgmt, self service functionalities (MSS/ESS), HR data warehouse availableImplementations of eHR accompanied with change mgmt.HR-IT offers full support for HR processes.

HR-IT strategy in placeHR-IT with HR information portal integrated in ERP systemHR department steers design and implementationHR-IT supports key HR processes.

No HR-IT strategy in placeDifferent, independent HR-IT applications in placeNo involvement of HR department in the design of HR-IT infrastructureNo systematic support of HR processes.

HR LeaderHR BusinessPartnerHR ServiceHR

ContributorPersonnel

1 2 3 4 5

First discussion of HR-IT-strategy on corporate levelIntegrated HR Administration System (HRIS) HR is involved in design of HR-ITHR-IT offers basic, standardised support for administrative HR processes (payroll, admin).M

atur

ity L

evel

Dev

elop

men

t







1 2 3 4 5

First discussion of HR-IT-strategy on corporate levelIntegrated HR Administration System (HRIS) HR is involved in design of HR-ITHR-IT offers basic, standardised support for administrative HR processes (payroll, admin).M

atur

ity L

evel

Dev

elop

men

t

Figure 6: Detecon HR-IT Maturity levels

The five levels refer to different degrees of maturity and are named as:

1. Personnel

2. HR Contributor

3. HR Service

4. HR Business Partner

5. HR Leader

The levels describe supposed correlations between the HR-IT and the overall Maturity. Within the model an increase in the levels identifies a higher maturity.

3.1.1 The impact of HR-IT on the overall HR Maturity

Information technology can often be not only an enabler but also a driver. So the impact of an investment in HR-IT is critical for an increase in the process performance enabling the affected employees to concentrate on their core fields of expertise. The following figure shows the assumed hypothesis for the impact of HR-IT on the overall HR maturity.

HR-IT Maturity


Full Process Support within an Self Service

Environment

Strategy Support and Anticipative

Analysis

Standardised support for Key Functions of HR

Standardised Administration, Basic Process Support

Hypothesis

2

3

4

5

HR-IT Maturity CurveIm

pact

on

HR

Mat

urity

Integration & Automation of HR–IT

Low

High

Low High

Manager Self ServiceEmployee Self Service

HR Data Warehouse

Corporate data integration

automated standard reports and basic data flexible, ad hoc reports

Intranet Portal

Learning Management System

e-Learning solutions

2 3 4 5

A certain HR-IT Maturity is important for other HR Capability Areas to develop along the different maturity levels. Figure 7: Impact of HR-IT on Overall HR Maturity

The left side of the figure shows the assumed curve which connects the integration and automation of HR and thus the impact of an improvement of the supporting information technology. The figure starts on the lower left corner and then increases through an improvement of the HR-IT maturity till it reaches the upper right corner on level five and thus the point of a HR Leader. By an increasing integration and automation of the HR processes it is assumed that the impact on the overall HR Maturity also increases.

The right side of the figure summarises the impact on the overall HR maturity starting with level two. Level one is not shown in the figure since at that level there is no systematic IT support of the HR processes. On maturity level two only a standard administration and basic process support by HR-IT exists. As shown on the HR-IT Maturity Curve this has a low impact on the overall HR Maturity.

When a company reaches the HR Service maturity level (3) it usually has a standardized support for the key functions of HR. This signifies an enhanced integration and automation of the HR department and is associated with improve in the overall HR Maturity. However the increase is not always obvious since it depends on the actual characteristic of the company and is usually under proportionate as there are other factors influencing the overall HR Maturity.

When the company reaches the HR Business Partner level (4) and has full process support together with a self service environment, the increase in the maturity level goes along with a further integration and automation of the HR functions. This level of HR-IT has a greater impact on the overall HR maturity and leads to much more efficient processes and thus enables the HR function to enhance its service spectrum.

The top or HR Leader level (5) is reached when the HR-IT offers strategy support and anticipative analysis which can for example be achieved by a defined HR data model supported by a HR data warehouse. At this level there is a high integration of HR-IT and a high automation within the HR functions and processes. At this level also continuous improvement of HR-IT takes place.

HR-IT Maturity


Within the following subsections each maturity level is described in more detail in order to identify the characteristic items for the specific maturity stage. The description also offers an initial idea of how to improve the maturity of the current HR-IT. However the main focus of this description is a classification of the different maturity levels and thus a vision for further development.

3.1.2 First maturity level (Personnel)

The first or basic level is determined by a highly hands-on execution of the processes. So the execution is often not transparent, difficult to monitor and highly people-intensive. This level is called Personnel and outlined in the following figure.

Figure 8: Detecon HR-IT Maturity “Personnel”-level

On the first maturity level there is no HR-IT strategy to follow and thus there is no guideline for the IT within HR. Rather it is a combination of isolated systems and applications kept alive by manual workarounds. In this context the IT systems and applications may by themselves be state-of-the-art but overall neither fulfil the requirements of the HR function nor increase the efficiency.

Usually only few IT solutions are implemented to support the HR function. This situation often emerges if a company only invests in HR-IT to follow regulatory constraints or to ensure fundamental services. This often means that processes like payroll are outsourced to a service provider.

Furthermore if there are HR-IT solutions, they work independently and isolated. So there is no exchange between different applications or information systems. The exchange between different applications is predominantly realized by manual workarounds or highly customized interfaces.

This scenario often emerges, if the information systems for the HR functions are installed without involvement and specification by HR. Whether this is the result of an insufficient integration of the HR function or an inadequate communication between HR and IT is not in focus here. Rather the situation is often characterised by an information system which does not fit the needs of the HR function.

HR-IT Maturity


A HR-IT at this maturity level is characterized by the following four key points:

No HR-IT strategy is in place;

Different, independent HR-IT applications are in use;

No involvement of HR in the design of an HR-IT infrastructure;

No systematic support of HR processes.

Due to the insufficient application landscape there is no systematic support of the HR processes. However from a general point of view, if the IT infrastructure does not offer a sufficient support, it should at least be highly standardized. If such a company will additionally follow the recommendations expressed in chapter 4, the maturity of its HR-IT will improve soon and so its overall maturity.

3.1.3 Second maturity level (HR Contributor)

The HR-IT of a company has reached the second level of maturity, if there is an initial discussion on HR-IT strategy on corporate level. Thus HR has achieved that there are HR specific requirements on the information technology which need to be considered. This however means often a lot of work for HR and requires a certain culture within the company. Beside an expected increase in efficiency this might be a first step of HR to get involved in overall company decisions and move from its outside position as support function to a core function of the company.

Figure 9: Detecon HR-IT Maturity “HR Contributor”-level

Beside the fact that HR is now realized as a core function, the participation in the IT-strategy discussion gives HR the chance to express its requirements for the company’s information technology.

Furthermore HR has an information system which is integrated in the overall IT. Some of the HR processes are connected to other key processes by an overall data-management system. This again leads to an increased efficiency in- and outside of the HR department.

HR-IT Maturity


Beside the integration of the information system HR is at this level involved in the design of its information system. So HR was able to play a role in the design of the HR information system. Thus the fit between the information system and the needs of the HR department should be better now but might still not have reached the desired level. At this level the IT-support is limited to the basic administrative HR functions like payroll or admin.

However at this maturity level there is usually little or no customization of the applications but they are standardized and connected to other information systems of the company. This leads at least to a marginal increase in the efficiency of the HR processes and builds a foundation for further development.

Overall there are four key issues for HR information technology to operate on HR Contributor level:

First discussions of HR-IT-strategy on corporate level;

Use of an integrated HR Information System (HRIS);

Involvement of the HR department in the design of the HRIS;

Offer of basic, standardized support for administrative HR functions (payroll, admin) by the HR-IT.

3.1.4 Third maturity level (HR Service)

The next maturity level for the information technology of the HR function is the HR Service level. At this stage the discussion of possible HR-IT scenarios has been further developed and stipulated in a HR-IT strategy.

Of course developing a HR-IT strategy can not be done alone. Instead this level requires a further integration with other functions of the company e. g. the IT department. However, beside developing a vision and formulating a strategy, it is necessary for HR to find a sponsor or to get the money to implement the strategy which is most of the time remarkably more difficult than developing a realistic strategy.

Figure 10: Detecon HR-IT Maturity “HR Service”-level

HR-IT Maturity


One point to be considered in the HR-IT strategy and implemented with the greatest priority is a better integration of HR-services with the other functions of the company. To do so HR will need to improve its information portal and integrate it in the corporate communication system. This integration and the resulting closer connection of between production and human resource planning allows a more accurate forecasts. The more accurate forecasts again increase the overall productivity. Additionally it offers an easier access to the data provided by HR. However, at that point the focus is more fundamental or system related than data maintenance.

Together with the integration of the HR information portal most HR processes should be supported by HR-IT. This means HR-IT has to be designed to support the processes not the other way around. To achieve such a process support process-owners should be nominated defining the requirements and ensuring that the IT implements systems and applications accordingly. To implement the HR-IT support the key processes should be the first to be integrated, reducing workarounds and manual execution.

Overall the key factors for a HR information technology to be at the level of a HR Service are:

• A HR-IT strategy is in place

• The HR-IT with the HR information portal is integrated in the Enterprise Resource Planning (ERP) system

• The HR department steers design and implementation of the HR-IT

• The HR-IT supports most of the HR processes

At this level a fairly well IT support for the HR processes exist, but can still be increased by different actions in order to reach the next level.

3.1.5 Forth maturity level (HR Business Partner)

To achieve the HR Business Partner level the existing HR information technology needs to be integrated in the business and IT strategy. By this integration the requirements of HR and thus its strategy may not be forgotten.

Figure 11: Detecon HR-IT Maturity “HR Business Partner”-level

HR-IT Maturity


The HR-IT strategy is now fully aligned with the overall IT and business strategy. So the former isolated HR-IT is now a real part of the overall IT infrastructure. This means of course that HR supports and participates in the strategy development. Also HR and its IT requirements correspond to the overall IT and business strategy.

Since the IT strategy is usually derived from the overall business strategy it should be aligned with the HR-IT strategy. Beside a further alignment of the HR-IT strategy the service offering of HR is extended. So a workflow management is now available within the company to enhance the ways to coordinate and monitor the employees.

The HR department offers self-service functionalities for different employee groups. There is a management self-service functionality as well as an employee self service system (MSS/ESS) to further decrease the workload of HR support processes and increase the number of services offering additional value to the company. Furthermore HR has a data warehouse system implemented to find the best suitable employees and to offer the required trainings.

With the self-service functionalities the company has also implemented further eHR functionalities. So e-Learning tools are available, performance and compensation features are implemented and other tools expanding the service offerings of HR and by that adding value to the company.

The HR department on this level offers full IT support for all central human resource processes. Thus the processes are highly automated and HR has started to take action to increase its service offering and better fulfill demand and needs of employees and management. At this level HR is able to operate efficiently and cost-conscious within all key processes.

The key processes are full aligned to the HR-IT and thus match perfectly the IT support. This means of course that the IT support is well integrated within the other HR functions, their IT support, and of course within the information structure of the company. So the former isolated solutions which fit the needs of HR and where uses on the levels below gave way to integrated solutions.

Altogether there are four relevant points which a company has to achieve in order to be a HR Business Partner in HR-IT:

HR-IT strategy is aligned with overall IT and business strategy;

Workflow management, self-service functionalities (MSS/ESS), HR data warehouse are available;

Implementations of eHR are accompanied with change mgmt.;

HR-IT offers full support for the key processes of HR.

If a company has already reached that level, there are only a few more things to do to be a HR Leader in HR-IT.

HR-IT Maturity


3.1.6 Fifth maturity level (HR Leader)

With the fifth or HR Leader level a HR department has a best in class HR-IT support. To achieve this level HR-IT has to fulfil all requirements from the lower levels and some additional key points as shown in the following figure.

Figure 12: Detecon HR-IT Maturity “HR Leader”-level

At this level the HR-IT strategy has to address the long term strategy. HR is required to support proactively the business strategy. In order to fill this position HR needs to acknowledge new HR and IT trends to support human resource within the company and initiates discussions with the IT department and the board.

The HR-IT is now not only fully integrated in the local IT environment but even in the global IT system environment. There are no workarounds necessary and there is no isolated IT for HR. Instead the HR-IT is fully integrated in the company IT system. There is an overall data base for HR functions administrated by HR and a direct data exchange between HR and the other functions within the company.

The HR and Business requirements are combined and lead to an adequate design of HR-IT. The applications within the HR-IT functionality are the result of the Business needs and the desired service offers from HR. In addition HR-IT on this level has to offer full support for all key processes of HR.

A company has reached this HR-IT maturity level, if its HR-IT is characterised by the following four key points:

HR-IT strategy addresses long term strategy;

HR-IT integrated in overall corporate IT system environment;

Both HR and Business requirements are considered in the design of HR-IT;

HR-IT offers full support for the key business processes.

If a company has reached this maturity level of HR-IT the only further objective is to ensure that it stays at this level and to improve the other HR capabilities.

HR-IT Maturity


3.2 Analysis of HR-IT

3.2.1 Input for Model Development

Thinking about the improvement of HR-IT, raises the question whether a company should invest in HR-IT and which benefits emerge from this investment. To address the question two different scenarios can be considered as shown in the following figure.

Distribution of Enquiries to HR – Lower Maturity Distribution of Enquiries to HR – Higher Maturity

Changes and improvements (e.g. automation of administration and processes) of the HR-IT environment have a strong impact on the HR delivery and employee services. They enable HR to shift resources from administrative

work to more value adding delivery models and services.

Figure 13: Why to invest in HR-IT environment?

On one hand the distribution of enquiries in HR-IT on a lower maturity level. This means that the considered company has a maturity level equal or below HR Service level. In this case the company should invest more in HR-IT in order to enable the employees to focus on further improving the HR function. Thus the objective on these maturity levels should be to invest in the automation of basic functions.

On the other hand, if the company has already achieved a HR Business Partner or HR Leader level, then the investment should be focused on further developing the professional services of the HR department. Since at those levels the Web-based Applications and the HR Admin support are implemented, the investment in HR-IT can be reduced. The HR-IT moves in this situation out of the focus. Due to the already high automation the HR department is able to improve other HR capabilities. However, the HR department has to ensure that the HR-IT stays at the achieved high level of maturity.

From this general point of view it is a good way for the HR department to first invest in HR-IT and then, together with a well operating HR Administration, concentrate on improving the HR services. However, whether this assumption holds is addressed in the following.

HR-IT Maturity


3.2.2 Parameter of the Model

To identify the key parameters of the HR-IT Maturity it is necessary to address four primary domains of HR competence: knowledge of the business, delivery of HR services, change management, and technology expertise. Given the specific focus on the impact of technology on the competence in the HR functions, four parameters are relevant. Each of the four parameters is briefly described below.

Knowledge of the Business: Refers to the extent to which the HR department understands the financial, strategic, and technological capabilities of an organisation. This is fundamental for HR to offer acknowledgeable strategic contributions.

Delivery of HR Services: HR must have competence in areas such as staffing, development, compensation as well as employee and labour relations. Fundamental knowledge in the HR functions is critical to deliver state-of-the-art, innovative HR services that add value.

Change Management: Effective change agents are able to diagnose and solve problems, build relationships, articulate a vision, set a leadership agenda, and implement goals. To be an effective change agent HR has to be able to detect trends and early signals and initiate flexibility in the rapidly changing business environment.

Technology Expertise: As information emerges as an enabler or even key driver for HR services, it becomes more and more important for HR to demonstrate technology expertise. It must be able to teach others how to use their systems. Furthermore technology expertise is important to manage technology vendors and to ensure seamless delivery of excellent services.

Finally HR departments must be capable of using technology to collect data and transform it into strategically valuable information. HR departments are increasingly faced with the need to identify technology requirements, managing technology vendors and mobilizing technologies to support and evaluate the HR function.

3.2.3 Analysis of the Maturity Profile

In order to analyse the Maturity Profile of a company a set of seven questions was presented to the HR Executives. To also get a comparison value from inside the company selected questions were also presented to Business Executives within the same company. The following table shows the set of questions for the HR Executives.

HR-IT Maturity


No. Question (HR Executive) Answers

5.1 What is the current status of your HR-IT strategy?

a) No HR-IT strategy is formulated. b) HR-IT strategy has been discussed on corporate level but not yet

formalised. c) HR-IT strategy is in place to support HR services. d) HR-IT strategy is aligned to overall IT and business strategy. e) HR-IT strategy addresses long term strategic considerations of the

organisation.

5.2 How would you describe your current HR-IT architecture?

a) There are independent HR-IT applications. b) There is an integrated HR Information System (HRIS) which uses a

standardized HR-IT platform. c) Integrated HR ERP system with HR information portal. d) Based on an HR ERP system, workflow management and self

service functionalities (ESS, MSS) as well as HR Data Warehouse are available.

e) HR applications are integrated into the global IT system environment and support global HR programmes and reporting.

5.3 How would you describe the design and implementation process of HR-IT systems in your organisation?

a) HR department is not involved in the design and implementation of HR-IT systems.

b) HR department is involved in the design of HR-IT systems. Users receive basic training.

c) HR department steers design and implementation of HR-IT systems. d) HR-IT systems implementations are accompanied by change

management processes. It is regularly improved to meet business requirements.

e) Business and HR requirements are combined in the design and integration process of HR-IT and leads to increased employee engagement in the organisation.

5.4

(9.1) How is your HR Controlling supported by HR-IT?

a) There is no systematic IT-support for HR Controlling. b) HR-IT delivers automated standard reports and basic data (to

support operational business needs). c) HR-IT delivers flexible, ad hoc reports in addition to automated

standard reports and data. d) Self-services (e.g. MSS) enable the user to receive role-based,

customised reports. e) HR Data is integrated in corporate controlling IT system.

5.5

(9.2)

In which way is your People Performance Management process supported by HR-IT?

a) There is no IT-support for People Performance Management process.

b) HR-IT offers basic support (e.g. templates for targets, appraisals). c) HR-IT supports the People Performance Management process by

workflows, covering performance appraisal, employee development and salary review management.

d) HR-IT supports the entire People Performance Management process and monitoring.

e) HR-IT links People with Corporate Performance Management.

5.6

(9.3) How is Training and Development supported by IT?

a) There is no systematic HR support for Training and Development. b) Training and Development Services are supported by Intranet portal

solutions. c) Training and Development Services are supported by interactive e-

Learning solutions. d) The Training and Development Services are supported by a

Learning Management System with Employee Self Service. e) The Training and Development Services are available globally on a

24/7 basis.

5.7

(9.4)

How is your Career & Succession Planning supported by IT?

a) There is no systematic IT-support for Career & Succession Planning. b) Career & Succession Planning is partly supported by HR-IT

(competency and skill gap analysis as well as position evaluation). c) Career & Succession Planning is fully supported by HR-IT (including

potential analysis). d) HR-IT supports succession planning scenarios. e) Career & Succession Planning is supported through IT-based best fit

search for suitable talents and organisation wide career planning (talent management).

Table 1: List of questions and answers for the HR and Business Executives

HR-IT Maturity


In case there was a corresponding question for the Business Executives the number is shown in brackets. A closer look at the questions shows that the last four questions were presented to both business executives and HR executives. The answers to the questions are assumed to correspond directly to the maturity level of the considered area.

3.2.4 Maturity Profile per HR Capability Area

The impact of technology on other HR capabilities is now examined more closely. Organisations use HR-IT across a range of functions, including absence management, training and development, rewards, managing diversity, recruitment and selection.

By looking at the administration, it has changed because of technology improvement and internet. The use of self service solutions allows employees to record their desired absences and enables managers to go online and check the available workforce at any time.

Training and development is another field in which technology has made a large difference. Online training offers a number of advantages as learning can be accomplished free of time and space restrictions, supporting employees to learn faster and at their own convenience as well as tracking the success of the training more convenient.

There is obviously potential for improvements in costs, time and efficiency which result in increased maturity. However a central question remains: How is the HR-IT Maturity measured? To identify the maturity level within HR-IT a maturity profile referring to key areas within HR-IT is used.

The key areas for the maturity profile were indicated by the experience of project know-how from Detecon. The maturity profile given by four areas indicate the overall HR-IT maturity. Such a profile with sample values is shown in the following figure.

HR IT Maturity per HR Capability Area

Auto

mat

ion

&IT

Sup

port

Controlling

Low

High

= bullet size: ease of automation/outsourcing

Training PM Career

2

3

4

5

1

Example

Figure 14: Maturity Profile per HR Capability Area

HR-IT Maturity


The four HR capability areas indicating HR-IT maturity are controlling, training & development, performance management and career management. The degree of automation and IT support within the controlling of HR activities is assumed to be a central factor for the maturity of HR-IT since a well implemented controlling is necessary to evaluate all other HR service offerings.

Training and development is identified as a key factor. Therefore a comprehensive e-Learning offering is assumed to be necessary for an advanced HR-IT maturity.

Performance management especially leads to a high workload if it is not sufficiently automated. This is especially true if the required data for the payroll needs to be processed manually.

Career management is also often in focus, especially if employees with the skillsets required are neither available on the labour market nor recognizable internally. In this case a good IT support with a HR data warehouse system can help.

The focus for the HR-IT maturity profile is merely based on the use of HR-IT as an enabler. Beside the maturity level which is shown for each capability area, the figure addresses the degree of automation or outsourcing of these areas. This is presented by the size of the bubbles.

It is assumed that the automation and IT support for the other areas has about the same level as the one shown. This might of course not always be the case but gives on average a good idea about the overall HR-IT and reduces the amount of necessary questions and duration to answer them.

Since these four capability areas are mostly independent, it is not possible to rank these areas or to give a general recommendation which maturity level to improve first. As there is no ranking there is also no weighting factor to give the overall HR-IT maturity. Rather the overall maturity is the result of the average of the maturity values of the four areas.

Recommendations which area is the first to improve by the HR-IT and the resulting sequence to implement IT support can only be given after an analysis of the specific company and the local peculiarities.

3.3 Key Findings in HR-IT

The results of the survey include two perspectives: the peer group companies in the Telco industry as well as the interval results from the business executives. First the inter-company comparison is presented.

3.3.1 Overview and peer groups

The answers of a HR Executive on the current situation of the HR-IT within its company are compared with the answers of others on their current situation. This comparison is done within different cluster and presented in the following.

HR-IT Maturity


The average result per category of all interviewed companies is addressed. This shows that there is currently an average maturity level of 2.81 within the HR-IT maturity of the considered companies as shown in the following table. The HR-IT maturity is thus a little below the average of all categories which is 2.97 and is relatively constant within all participants, which means that there is little variation around the average value.

HR Strategy

Change Manage

ment

HR Planning &

Controlling

HR Organisation

and HR Services

HR-IT (eHR)

Recruiting Performance Management & Compensation


Retention, Career and Leadership

ManagementCarrier 1 3,50 3,50 2,83 3,33 2,79 3,00 3,50 2,64 2,90Carrier 2 4,17 3,70 3,50 2,75 2,79 3,17 3,58 2,57 3,50Carrier 3 4,00 2,20 4,17 2,50 2,93 4,67 4,33 2,93 3,10Carrier 4 3,00 3,10 2,67 2,17 2,43 3,00 3,33 2,29 2,90Carrier 5 4,33 3,70 4,33 2,67 4,00 3,50 3,75 2,93 3,40Carrier 6 3,50 2,00 2,50 1,33 2,25 4,33 3,00 2,83 2,00Carrier 7 3,33 3,60 3,00 3,80 3,43 3,33 3,17 2,71 3,00Carrier 8 4,00 4,20 3,33 3,00 4,14 3,67 4,00 2,86 3,60Carrier 9 3,00 2,10 1,50 2,75 2,21 3,33 3,25 2,36 3,10

Carrier 10 3,00 2,30 2,83 1,75 2,50 2,33 1,92 1,64 2,10Carrier 11 4,17 3,70 3,33 3,75 2,79 3,00 3,00 2,43 2,00Carrier 12 2,44 2,33 3,00 2,97 3,00 3,00 2,78 2,67 2,73Carrier 13 2,50 1,90 2,33 3,42 3,07 3,33 2,58 2,64 2,50Carrier 14 3,67 3,00 3,67 4,20 2,71 3,00 3,67 2,43 2,60Carrier 15 4,33 4,20 3,33 3,40 3,29 3,00 3,17 2,43 2,60Carrier 16 3,44 3,73 3,67 3,78 2,67 3,22 3,89 2,81 3,13Carrier 17 3,67 3,60 1,67 3,20 2,14 2,33 1,67 2,00 2,00Carrier 18 2,00 2,00 1,33 2,40 1,14 2,00 1,67 1,86 2,00Carrier 19 2,67 2,30 2,33 2,58 2,86 1,67 1,75 2,21 1,90Carrier 20 3,67 4,40 3,33 3,80 3,29 3,33 4,17 3,43 3,40

… 4,00 3,60 3,00 4,40 3,29 1,33 3,67 2,14 3,40Average 3,38 3,12 2,89 3,06 2,81 3,03 3,19 2,55 2,72

Average Results per Category

Table 2: Average Results per Category.

This result shows that there is generally a need for a further improvement of the HR-IT. If the HR-IT is assumed to be a driver for the development of the whole HR within the company, this becomes even more relevant and necessary. The relative strength by the variation from the mean value shows that the variation is between 1.30 and -1.70. Thus there is less variation within HR-IT than in the other capability areas. Due to the small variation a company is able to get a leader position with little effort.

After this general overview now the results of different peer groups are considered. A closer look at the fixed line carriers shows that the HR-IT maturity is with 3.13 almost at the average level of the maturity of all carriers. The average over all categories and all carriers of that group shows a value of 3.09. The following table gives an overview over the results of this peer group.

Peer Groups: Fixed Line

HR Strategy

Change Manage

ment

HR Planning &

Controlling

HR Organisation

and HR Services

HR-IT (eHR)




ManagementCarrier 4 3,00 3,10 2,67 2,17 2,43 3,00 3,33 2,29 2,90Carrier 5 4,33 3,70 4,33 2,67 4,00 3,50 3,75 2,93 3,40Carrier 7 3,33 3,60 3,00 3,80 3,43 3,33 3,17 2,71 3,00Carrier 8 4,00 4,20 3,33 3,00 4,14 3,67 4,00 2,86 3,60

Carrier 10 3,00 2,30 2,83 1,75 2,50 2,33 1,92 1,64 2,10Carrier 11 4,17 3,70 3,33 3,75 2,79 3,00 3,00 2,43 2,00Carrier 13 2,50 1,90 2,33 3,42 3,07 3,33 2,58 2,64 2,50

… 3,44 3,73 3,67 3,78 2,67 3,22 3,89 2,81 3,13Average 3,47 3,28 3,19 3,04 3,13 3,17 3,21 2,54 2,83


Table 3: Average Results per Category in Peer Group “Fixed Line”.

The peer group “Mobile” shows an average value of 2.83 for HR-IT. This however is 0.25 below the overall average in this peer group of 3.08. But like in the “Fixed Line” group there is less variation than in the other capability areas.

HR-IT Maturity


Peer Groups: Mobile

HR Strategy

Change Manage

ment

HR Planning &

Controlling

HR Organisation

and HR Services

HR-IT (eHR)




ManagementCarrier 1 3,50 3,50 2,83 3,33 2,79 3,00 3,50 2,64 2,90Carrier 2 4,17 3,70 3,50 2,75 2,79 3,17 3,58 2,57 3,50Carrier 3 4,00 2,20 4,17 2,50 2,93 4,67 4,33 2,93 3,10Carrier 6 3,50 2,00 2,50 1,33 2,25 4,33 3,00 2,83 2,00Carrier 9 3,00 2,10 1,50 2,75 2,21 3,33 3,25 2,36 3,10


… 3,33 3,47 3,56 3,72 2,95 4,11 3,78 3,14 2,40Average 3,59 3,01 3,04 3,02 2,83 3,33 3,45 2,63 2,86


Table 4: Average Results per Category in Peer Group “Mobile”.

Comparison of the two peer groups “Fixed Line” and “Mobile” shows that the overall average within the two peer groups is almost identically but the IT support within the mobile group is about one third maturity level below that of the fixed line group. This is even more interesting since it might be expected that the companies within the mobile group are more technologically oriented than the established ones. However a reason for that issue might be that the companies within the mobile group are not above the threshold to seek for “formalization” yet and still do things very hands-on.

A closer look shows that the focus within the mobile group is shifted towards Performance Management & Compensation and Recruiting. This might indicate that the mobile carrier are less interested in an enhanced IT system to support an efficient HR than to offer a basic HR function and prefer to recruit the people they need over offering services to develop employees.

Now the different regional peer groups shall be compared. Within Western Europe the maturity level in HR-IT averages 3.14. This value is a below the overall average of the carriers capabilities with 3.21. The variation of the value is below that of the other categories.

Regional Peer Groups: Western-Europe

HR Strategy

Change Manage

ment

HR Planning &

Controlling

HR Organisation

and HR Services

HR-IT (eHR)




Management


… 3,00 2,10 1,50 2,75 2,21 3,33 3,25 2,36 3,10Average 3,63 3,40 2,83 3,08 3,14 3,38 3,50 2,63 3,30


Table 5: Average Results per Category in Peer Group “Western-Europe”.

Within the peer group “Central Europe” the average result is 3.00 and thus 0.10 units above the overall average as shown in the following table. Compared to the “Western Europe” peer group there is no remarkable difference in the overall or in the HR-IT maturity.

Regional Peer Groups: Central Europe

HR Strategy

Change Manage

ment

HR Planning &

Controlling

HR Organisation

and HR Services

HR-IT (eHR)




Management

Carrier 1 3,50 3,50 2,83 3,33 2,79 3,00 3,50 2,64 2,90Carrier 3 4,00 2,20 4,17 2,50 2,93 4,67 4,33 2,93 3,10Carrier 4 3,00 3,10 2,67 2,17 2,43 3,00 3,33 2,29 2,90Carrier 5 4,33 3,70 4,33 2,67 4,00 3,50 3,75 2,93 3,40

Carrier 10 3,00 2,30 2,83 1,75 2,50 2,33 1,92 1,64 2,10Carrier 11 4,17 3,70 3,33 3,75 2,79 3,00 3,00 2,43 2,00Carrier 13 2,50 1,90 2,33 3,42 3,07 3,33 2,58 2,64 2,50Carrier 16 3,44 3,73 3,67 3,78 2,67 3,22 3,89 2,81 3,13Carrier 19 2,67 2,30 2,33 2,58 2,86 1,67 1,75 2,21 1,90

… 3,33 3,47 3,56 3,72 2,95 4,11 3,78 3,14 2,40Average 3,39 2,99 3,21 2,97 2,90 3,18 3,18 2,57 2,63


Table 6: Average Results per Category in Peer Group “Central Europe”.

HR-IT Maturity


The “Middle-East & Asia Pacific” peer group shows a remarkable difference between the HR-IT maturity which is given by 2.36 and the overall maturity by 2.63. This result, however, is very constant. So there is no extreme variation.

Regional Peer Groups:

Middle-East & Asia Pasific

HR Strategy

Change Manage

ment

HR Planning &

Controlling

HR Organisation

and HR Services

HR-IT (eHR)




Management

Carrier 6 3,50 2,00 2,50 1,33 2,25 4,33 3,00 2,83 2,00Carrier 12 2,44 2,33 3,00 2,97 3,00 3,00 2,78 2,67 2,73Carrier 14 3,67 3,00 3,67 4,20 2,71 3,00 3,67 2,43 2,60Carrier 15 4,33 4,20 3,33 3,40 3,29 3,00 3,17 2,43 2,60Carrier 17 3,67 3,60 1,67 3,20 2,14 2,33 1,67 2,00 2,00Carrier 18 2,00 2,00 1,33 2,40 1,14 2,00 1,67 1,86 2,00

… 2,33 2,40 1,33 2,00 2,00 2,33 2,33 2,57 2,40Average 3,13 2,79 2,40 2,79 2,36 2,86 2,61 2,40 2,33


Table 7: Average Results per Category in Peer Group “Middle-East & Asia Pacific”.

The maturity level of HR-IT within Middle-East and Asia Pacific is about 0.8 or one maturity level below the level of Western-Europe. However, this does not only affect the HR-IT but the whole HR function which with a value of 0.58 is more than half a maturity level below the Western-Europe level.

Up to this point only the views from the HR Executives were considered. However, once in a while the inside view differs from the outside view. Therefore a comparison between the answers of the HR Executives and the Business Executives will be considered in the following.

3.3.2 HR Executives and Business Executives

After the inter-company comparison now the intra-company comparison will be considered. The comparison shows that the maturity level identified by the HR Executives is overall about one level above the maturity recognized by the Business Executives. The average maturity for all capability areas is illustrated in the following figure.

HR Strategy ChangeManagement

HR Planning &Controlling

HR Organisation& Services

HR-IT (eHR) Recruiting PerformanceManagement &Compensation

Training &Development

Retention,Career &

LeadershipManagement

HRM

L

Overall HR Exec. Mean Overall Bus.Exec. Mean

Figure 15: Comparison of overall HR Executive and Business Executive Means.

HR-IT Maturity


This figure shows that the individual recognition within a company can differ and beside that might show that HR Executives and Business Executives look at the same situation with different focus and requirements.

A closer look at the data shows that the mean value of the differences between the view from the HR and the business Executives is with 1.27 the largest for "HR-IT". This is a very surprising result as HR-IT is often seen as a “front running enabler”. Thus the result obviously contradicts the maturity of HR-IT papers published by IT companies.

This discrepancy might identify the interest of the Business Executives in a more enhance HR-IT support or more general that business has quite different expectations or requirements.

HR Perspective Business Perspective

HR Strategy 0.72 (51.84%) 0.78 (60.84%)

Change Management 0.67 (44.89%) 0.61 (37.21%)

HR Planning & Controlling 0.69 (47.61%) 0.66 (43.56%)

HR Organisation & Services 0.56 (31.36%) 0.34 ( 11.56%)

HR-IT 0.67 (44.89%) 0.45 (20.25%)

Recruiting 0.39 (15.21%) 0.51 (26.01%)

Performance Management & Compensation 0.80 (64%) 0.65 (42.25%)

Training & Development 0.40 (16%) 0.56 (31.36%)

Retention, Career & Leadership 0.61 (37.21 %) 0.52 (27.04 %)

Table 8: Correlations between capability areas and overall maturity.

From a business perspective there is a strong link between the maturity levels of HR controlling, HR strategy and HR-IT. A reason for this might be that a HR strategy development requires transparency on the current HR activities which requires a sufficient controlling and is often supported and ensured by an adequate HR-IT support. Thus an active HR strategy often focuses on a HR-IT development and is supported by a sophisticated controlling to track the progress.

However the reasons for the findings before have to be analysed in the actual situation. But this is for sure a field which requires a more detailed analysis and might offer a chance to set up a discussion not about HR but with HR.

HR-IT Maturity


4 Conclusion and Recommendations

Conclusion and recommendations are given in three parts. First it is dealt with general conclusions and recommendations based on the maturity model. After that recommendations for the move from one maturity level to another are given in more detail. Based on these recommendations finally the question concerning the best investment alternative for a company is addressed.

4.1 General recommendations

Looking at the literature reveals the following arguments in context of HR-IT:

"While e-HR may be part of an overall transformation, it is merely a way to deliver HR administrative services. HR transformation must change the way to think about HR's role in delivering value to customers, shareholders, managers, and employees and not just about how HR services are delivered and administered....Unless the entire array of HR practices collectively adds value for key stakeholders, transformation has not occurred.” [David Ulrich and Wayne Brockbank: “The HR Value Proposition” (2006)]

American Research claims that “...cycle times in HR processes are cut on average by 62% and cost per HR transaction was down by 43%.” [CIPD Report: “The Changing HR Function” (2006), Page 8 Column 2.]

“The CIPDs 2003 survey suggested that HR professionals believed that time spent on administration was limiting their ability to be more strategic. Yet freeing up time through automation does not guarantee that the time saved will be spent in the 'right' areas, as Lawler and Mohrman concluded in relation to e-HR. The SHRM research came to the same conclusion....” [CIPD Report: “The Changing HR Function” (2006), Page 8 Column 2.]

Thus even with an improvement of the quality of information available, an improvement of the speed at which information is available, an aligning of different HR processes, and a cost reduction, it has to remain clear that the function of HR-IT is an enabler not more but sometimes less.

To achieve an optimal support from HR-IT a number of key issues and questions need to be answered:

• What are the value drivers for HR-IT? • How can the impact of HR-IT be measured? • How does technology affect the current HR processes? • What impact has the enhanced information technology had on the role of the HR

function? • How does the IT support the recent trend to devolve much of the transactional work

of HR to the line? • Who supports and sponsors the implementation of the IT within HR? • HR Business Partner are expected to drive the systems in the business, how can

they be supported most effectively?

HR-IT Maturity


In the following recommendations or key topics are given to improve the HR-IT Maturity Level. However, the following recommendations cover only the key points for an improvement of the HR-IT maturity. For a more detailed recommendation it is necessary to analyse the specific environment and actual situation of the respective company.

This analysis can only be done in a direct contact with the company. However, Detecon offers well established and practical proven methods and tools to perform such an analysis and then give an individual roadmap to improve the HR-IT and by that the overall HR Maturity.

Consider long term strategy of business Fully align HR-IT with business needsIntegrate HR-IT into global IT Provide link to other company issues trough IT

Align HR-IT with HR-, Business and IT strategyIntroduce workflow mgmt, self service functionalities (MSS/ESS), HR data warehouseProvide full support for HR processes

Establish HR-IT as part of HR StrategyIntegrate HRIS in corporate ERPEstablish HR portalFacilitate ownership in the design of HR-ITProvide IT support for key processes of HR







1 2 3 4 5

Nex

t Ste

ps

for M

atur

ity

Prog

ress

ion

(to n

ext l

evel

)

First discussion of HR-IT-strategy on corporate levelIntegrated HR Administration System (HRIS) HR is involved in design of HR-ITHR-IT offers basic, standardised support for administrative HR processes (payroll, admin).

Discuss possible HR-IT scenarios (HR-IT Strategy)Involve HR-functions (HR department) in the design of eHR

Mat

urity

Lev

el D

evel

opm

ent

Consider long term strategy of business Fully align HR-IT with business needsIntegrate HR-IT into global IT Provide link to other company issues trough IT

Align HR-IT with HR-, Business and IT strategyIntroduce workflow mgmt, self service functionalities (MSS/ESS), HR data warehouseProvide full support for HR processes

Establish HR-IT as part of HR StrategyIntegrate HRIS in corporate ERPEstablish HR portalFacilitate ownership in the design of HR-ITProvide IT support for key processes of HR







1 2 3 4 5

Nex

t Ste

ps

for M

atur

ity

Prog

ress

ion

(to n

ext l

evel

)

First discussion of HR-IT-strategy on corporate levelIntegrated HR Administration System (HRIS) HR is involved in design of HR-ITHR-IT offers basic, standardised support for administrative HR processes (payroll, admin).

Discuss possible HR-IT scenarios (HR-IT Strategy)Involve HR-functions (HR department) in the design of eHR

Mat

urity

Lev

el D

evel

opm

ent

Figure 16: Overview over the Next Steps for all maturity levels.

In the following each recommendation focuses only on the increase by one level. It is obvious that the model assumes that a company climbs one level after the other as it is shown in the figure above.

HR-IT Maturity


4.2 How to Achieve the Next Maturity Level?

4.2.1 How to Achieve Maturity Level 2 (HR Contributor)

Before any change within the actual HR-IT infrastructure is started the initial step should be to analyse the actual situation and to set up a development strategy. To support this behaviour a company should follow some guidelines.

Figure 17: How to Achieve Maturity Level 2?

The company needs to prepare different possible scenarios for current and future needs and in cooperation with the IT department or an IT service provider set up a basic HR-IT vision. Such a vision again has to be aligned with the existing HR strategy or should be developed together with an overall HR strategy.

Additionally all HR-functions should be involved in the design of the HR-IT and the selection of the supported processes and services. This approach has the advantage that all functions can address their needs and the resulting solution is supported by all parties involved.

Such an approach will improve the process and service quality of all HR functions which should be the major objective of the change or adaptation of the HR-IT. However, the desired solution also depends on the actual pain-points within HR. But such an aligned approach should be addressed within every improvement.

Furthermore it should be considered to improve the actual HR-IT by the use of standard applications and integration of the existing HR-IT solutions. However, it has to be kept in mind that the objective is to build an infrastructure which supports the overall IT and especially the HR strategy for the next years.

This can mean that there will be no further change within the HR-IT for the next couple of years but after that a complete new HR-IT infrastructure will be installed. However, with such a plan a company has to ensure that the HR-IT and HR employees are actually able to execute the processes and services required until the structural change is completed.

An initial step in this context can be the use of standardized spreadsheets to perform a number of calculations that were previously problematic. These calculations can e.g. be for redundancy payments, maternity pay, top-up payments for workers, or annual leave.

HR-IT Maturity


The use of these standardized spreadsheets has the effect that calculations are both transparent and consistent, and therefore increase the perceived credibility of the HR department to management. The use of this technology can also save time since it was previously performed manually.

To summarize there are three recommendations to improve the performance of HR-IT and lead to an increase of the maturity within this capability area:

Discuss possible HR-IT scenarios (HR-IT Strategy);

Involve HR-functions (HR department) in the design of eHR;

Standardize and integrate HR-IT applications.

By following these recommendations the next level will be reached soon and the improvement of the HR-IT will improve the HR service offering and the processes within the HR department.

4.2.2 How to Achieve Maturity Level 3 (HR Service)

How can a company further grow its HR-IT in order to move to the next level? A first step is to further extend the discussion of possible HR-IT scenarios and come up with a HR-IT Strategy.


One aspect of a HR-IT Strategy and an additional point to consider is the connection between a HR Information System and the corporate ERP. A better integration of the HR-IT in the corporate infrastructure improves the access to the data relevant for HR. Additionally this offers a chance for an automatic data transfer e. g. for time recording.

Furthermore together with the integration of the HR-IT in the corporate ERP-System a company should start building a HR information portal. To offer its services to other functions within the company HR should set up an individual information portal. Beside the fact that the employees get current information the HR information portal has the additional advantage that the visibility of the HR function increases.

HR-IT Maturity


Additionally effective communication systems can have a significant effect on the motivation and commitment of employees. Employees who are kept well informed and who are given the feeling that their feedback is appreciated by the organisation often develop a higher commitment to the organisation.

The first step in the implementation of a HR information portal is usually to offer static HR related information over the intranet. This can then be enhanced by providing downloadable HR forms and as the next step by using the system to facilitate staff feedback.

Together with the HR information portal, HR should take over its relevant functions in the design of HR-IT. Thus the HR-IT should support the processes not the other way around. To achieve this, process-owners have to be installed and should be encouraged to define their requirements for the HR-IT.

However, it has to be ensured that the interfaces between the different processes and their supporting HR-IT fit together. This does not mean that a fully integrated HR-IT solution has to be designed covering the needs of all HR-functions. But there are two fundamental guidelines for the design of the HR-IT: On one hand it should work well together with the other information systems within HR and within the company. On the other hand there should be as little customization as possible.

To install the HR-IT support for the processes the key processes are the first to be well integrated and thus have a reduced amount of workarounds and manual execution. Thus if there is already a corporate information system installed the HR key processes should be the first to be integrated.

However, during the integration it is necessary to keep in mind that other IT systems and processes within and outside of the HR department have to interact with the new processes and systems. This interaction has to be ensured at least at the current level during and after the adjustment.

To summarize the key factors for a transfer from the HR Contributor to the HR Service level there are five recommendations to follow:

Set up HR-IT Strategy;

Integrate HRIS in corporate ERP;

Set up HR information portal;

Facilitate ownership of HR-functions (HR dept.) in the design of eHR;

Provide IT support for key processes of HR.

After the implementation of the five recommendations described above a company is at least at maturity level three.

HR-IT Maturity


4.2.3 How to Achieve Maturity Level 4 (HR Business Partner)

At this level a fairly good IT support for the HR processes exists. However, it can still be improved. In order to do this the HR information systems and the already existing HR-IT strategy need to be further integrated with the business and IT strategy. By this integration the focus to support the HR department and thus its strategy must not be forgotten.

With an increased level of maturity in the other HR functions the HR strategy should by itself become more integrated with the business strategy. Since the IT strategy is usually derived from the overall business strategy it automatically should be aligned with the HR-IT strategy. While this is generally the case it still has to be explicitly ensured within the considered company.


Beside a further alignment of the HR-IT strategy the service offering of the HR department should be expanded. The impact of technology on communication and employee engagement is however, within HR not limited to the use of intranet for the basic functions described above.

The introduction of a self-service HRIS is a way to increase the service offering. So by the use of a HRIS the employees are able to modify their own personal data. This again will have a direct impact on employees and can thus improve the recognition of HR. Indeed, it is essential that the issue of employee engagement is addressed by the introduction of technologies in HR. Particularly those technological advantages that directly affect employees such as self-service systems, should be communicated in order to be successful.

The HR department should also introduce an enhanced workflow management system to upgrade the ways of coordinating and monitoring employees. Another point which has to be covered within the development and introduction of new services is a HR data warehouse system. These systems should be introduced to satisfy a number of business needs, providing of reliable and accurate information, supporting cross-reference information from different HR functions, and reducing costs.

Beside additional service offerings by a workflow management system, self service functionalities (MSS/ESS) and a HR data warehouse the HR department has to increase the

HR-IT Maturity


IT support for the HR key functions. To reach the next level at least the HR key functions should have a comprehensive IT support.

To offer a comprehensive IT support means of course that the HR-IT is well integrated with the HR functions and of course with the overall information structure of the company. So the isolated solutions tolerated on the lower maturity levels are now to be replaced by integrated systems.

Overall the key points for a transfer to the next level are given by:

Align HR-IT strategy with business and IT strategy;

Introduce workflow management, self service functionalities (MSS/ESS), HR data warehouse;

Provide full support for HR key functions.

At the moment these three key points are implemented the company has reached the fourth maturity level.

4.2.4 How to Achieve Maturity Level 5 (HR Leader)

If a company has already reached level four, there are only a few more things to do to become a HR Leader in HR-IT. However, before these things are approached all other capability areas should be improved accordingly. Thus further activities in the field of HR-IT are to be coordinated with measures in the other capability areas.


HR-IT Maturity


To return to the necessary activities in HR-IT, a central aspect at this level is that HR-IT should now aim to integrate with the global IT. This can be accomplished by the internet or by a company intranet. Such integration enables HR to communicate with and engage a dispersed or even an international workforce.

Additionally for HR-IT to achieve the next level, it should offer different ways to support HR functions:

People development and performance management: Online appraisal systems such as 360-degree feedback, training analysis, career management and succession planning.

Resource management: Online recruitment and selection, induction packages, HR planning and forecasting, time and attendance.

Employee relations and communications: Intranet, shared service centres, organisational development, team development.

HR information and accounting: Intranet, employee and manager self-service, human capital management.

Retention and reward: Payroll, total rewards statements, employee self-service for flexible rewards packages, reward modelling, pension administration.

At this level the HR-IT should furthermore be able to judge and react on new trends and upcoming challenges.

To achieve this goal there are three major topics which might be addressed:

Consider long term strategy of business;

Integrate HR-IT with global IT;

Provide link to other company issues through IT.

After achieving the top level of HR-IT maturity the only remaining task is to ensure that HR-IT stays at this top level which requires sometimes a lot of attention but should be possible by double-checking the gap between the requirements for a HR Leader and the actual information technology within the HR functions.

HR-IT Maturity


4.3 Where to invest?

Now that the identification of the current level and the ways to achieve the next maturity level has become clear, the next even more challenging question is to be addressed. Based on the often limiting budget of the HR function or the overall company, the issue is where to invest first.

To answer this question, the following framework was developed. The information opportunity matrix supports the decision process for HR-IT investments by showing the potential to increase the HR Maturity in relation to the investment effort for different activities. The information opportunity matrix is shown in the following.

Don‘t go!

Gold Mine Opportunity

Why not

Pote

ntia

l to

incr

ease

H

R M

atur

ity(V

alue

add

ed)

Investment EffortLow High

Low

High

Information Opportunity Matrix

HR Data Warehouse

Learning Management SystemEmployee Self Service

e-Learning solutions

Manager Self Service

Flexible, ad hoc reports

Automated standard reports and basic data

Intranet Portal

Corporate data integration

Figure 21: Where to Invest?

Within the two dimensions investment effort and potential to increase the HR Maturity there are four quadrants defined.

The first quadrant in the lower left corner shows low investment effort and low potential to increase the HR Maturity. This quadrant is named “Why not” due to the low investment effort. However, it should be kept in mind that the effect is also only low. This quadrant includes automated standard reports and basic data, flexible, ad hoc reports and an intranet portal presenting general information of the HR department.

The next quadrant addressed here is the so called “Don’t go”. The name results from the fact that items in this quadrant would require high investment effort but have only low potential to increase the maturity level. For this reason the quadrant is empty but may in some companies keep expensive HR solutions which offer little or no benefit to the HR function.

The quadrant above in the upper right corner of the matrix is called “Opportunity”. This quadrant requires high investment efforts but has also high potential to increase the HR Maturity. Examples within this area are Learning Management Systems and corporate data integration.

HR-IT Maturity


There is another quadrant in the top left corner named “Gold Mine”. This quadrant is characterised by minor investment effort but high potential to increase the HR Maturity and thus to add value to the company. It is recommended that a company should start with the HR-IT solutions listed there. This quadrant include Manager self service application, employee self service applications, HR data warehouse systems and e-Learning solutions.

By looking at the different quadrants it becomes obvious that a company that wants to improve its HR-IT and for some reason does not want to go through the maturity levels step by step should start on the left hand side and then move forward to the upper right corner.

Beside an immediate investment in HR-IT, it is much more relevant to recognize that a technical IT appreciation will be a required skill for the future. Technology will play a significant role in the future of HR. Strong HR technology in an organisation will give HR and managers the time, tools and data to manage the people resource more efficiently. The HR practitioner needs to pro-actively lead these changes.

HR-IT Maturity


5 References

Boudreau, John W. & Ramstad, Peter M. (2005) From Professional Business Partner to Strategic Talent Leader: What’s Next for Human Resources Management. NY: CAHRS/Cornell University Christensen, Ralph (2006) Roadmap to strategic HR: turning a great idea into a business reality. New York: AMACOM CIPD (2006) The changing HR Function. The Key Questions. London: CIPD Curtis, Bill & Hefley, William & Miller, Sally (2001) People Capability Maturity Model® (P–CMM®) .Version 2.0. Pittsburg, PA: Software Engineering Institute, Carnegie Mellon University Dalziel, Shirley & Strange, Judith & Walters, Mike (2006) HR Business Partnering. London: CIPD Spehrer-Patrick, Ephraim et al. (2007) HR Maturity - The Progression of HR Capabilities: Findings and Recommendations for Telco Industry Executives. Detecon Study

Nadler, David A. & Tuschman, Michael L. (1997) Competing by Design. Oxford University Press Paulk, M. & Curtis, B. & Chrissis, M. & Weber, C. (1993) Capability Maturity Model for Software. Version 1.1. Pittsburg, PA: Software Engineering Institute, Carnegie Mellon University Ulrich, Dave & Brockbank, Wayne (2005) The HR Value Proposition. Boston, MA: Harvard Business School Press.

Additional Reading

Becker, B. & Huselid, M.A (1998) High Performance Work Systems and Firm Performance. Beer Michael (2001) Strategic HR Management Applications Exercise. Harvard Business School Press CIPD (2006) Human Capital Evaluation Autumn. London: CIPD Report CIPD (2006 revised) HR Business Partnering. London: CIPD Datar Srikant M., Epstein Marc J., Cott Jeremy (2001).Verizon Communications Inc.: Implementing an HR Balanced Scorecard. Harvard Business School Press IOMA (2006) Strategic Human Resource Management: Taking Your Place at the Boardroom Table. Research Report Frangos Cassandra A., Keller Johnson Lauren (2005) Creating a Strategy Focused Workforce by Aligning Key HR Processes. HBSP Article Groysberg, Andrew N. McLean, and Cate Reavis (2005) Delivering Strategic HR Management. Harvard Business School Press Ross, Judith A. (2006) Aligning one Division’s HR to the Corporate Strategy at Lockheed Martin. Harvard Business School Press Rowley, Chris & John Benson (2002) Convergence and Divergence in Asian HR Management. Harvard Business School Press Saloner Garth, Ellis Jim, Tauber Andrew (2000) How the HR Function can Create Value and Drive Strategic Success. Harvard Business School Press Society for Human Resources Management (2005) The Maturing Profession of Human Resources. HR Magazine.

HR-IT Maturity


6 The Author

Dr. Dirk Simon is consultant for Detecon in the Competence Practice Operations & Performance since 2006. Following his studies of computer science and economics he wrote his doctoral thesis on “Strategic Outsourcing” and then started his career as a Management Consultant. He worked in several national and international consulting projects for social, IT, financial service and telecommunication companies mainly with focus on business processes and IT requirements.

He can be reached at: +49 228 700-2628 or [email protected].

HR-IT Maturity


7 The Company

Detecon International GmbH

Detecon International is a leading worldwide company for integrated management and technology consulting founded in 2002 from the merger of consulting firms DETECON and Diebold. Based on its comprehensive expertise in information and communication technology (ICT), Detecon provides consulting services to customers from all key industries. The company's focus is on the development of new business models, optimization of existing strategies and increase of corporate efficiency through strategy, organization and process improvements. This combined with Detecon's exceptional technological expertise enables us to provide consulting services along our customers' entire value-added chain.. The industry know-how of our consultants and the knowledge we have gained from successful management and ICT projects in over 100 countries forms the foundation of our services. Detecon is a subsidiary of T-Systems, the business customers brand of Deutsche Telekom.

Integrated Management and Technology Competence

We possess an excellent capability to translate our technological expertise and comprehensive industry and procedural knowledge into concrete strategies and solutions. From analysis to design and implementation, we use integrated, systematic and customer-oriented consulting approaches. These entail, among other things, the evaluation of core competencies, modular design of services, value-oriented client management and the development of efficient structures in order to be able to distinguish oneself on the market with innovative products. All of this makes companies in the global era more flexible and faster – at lower costs.

Detecon offers both horizontal services that are oriented towards all industries and can entail architecture, marketing or purchasing strategies, for example, as well as vertical consulting services that presuppose extensive industry knowledge. Detecon's particular strength in the ICT industry is documented by numerous domestic and international projects for telecommunications providers, mobile operators and regulatory authorities that focused on the development of networks and markets, evaluation of technologies and standards or support during the merger and acquisition process.

Detecon International GmbH Oberkasselerstr. 2

53227 Bonn Telefon: +49 228 700 0

E-Mail: [email protected] Internet: www.detecon.com

Documents

Detecon Opinion Paper HR-IT Maturity: Findings in Telco Industry and Recommendations for HR & IT Executives