The Next Generation of HR Shared Services

THE NEXT GENERATION
OF HR SHARED SERVICES
SUBHEADLINE RUNS HERE AND
HERE AND HERE AND HERE
SAP Executive InsightIt's no secret that implementing HR shared services can help organizations generate significant value through cost savings and increased effectiveness. Two recent benchmarking studies conducted by the Americas' SAP Users' Group (ASUG) and SAP show that performance can be improved by 20% to 30% across HR as a whole. Beyond these impressive numbers, some high-performing organizations even achieve improve-ments in the 40% to 50% range. But if this is the silver lining, the cloudy reality is that many companies are not able to real-ize optimal gains in this area and attain only marginal cost re-ductions and effectiveness improvements.
Why should so many companies fail to meet their own expecta-tions? The answer varies according to the maturity level of shared-services adoption. Fully realizing the potential of shared services requires the following imperatives:. E stablished shared-services organizations must continue to innovate organizational, process, and technology models.. N ew and less mature shared-services organizations must continuously evaluate their operations and implement best practices.
This SAP Executive Insight will focus on best practices that help companies realize the value of HR shared services, high-lighting key areas and addressing three questions:. H ow can underperforming organizations close the gap with top performers?. W hat business practices can companies leverage to improve performance?. W hat is the role of technology for leading-edge performance?
2 SAP Executive Insight - The Next Generation of HR Shared ServicesEXECUTIVE AGENDA
AT A GLANCE
The HR Shared-Services Model: (ASUG) and SAP, substantiate what The numerous successes with HR Creating Value many companies have learned first- shared services, however, do not tell hand: that performance can be the whole story. Many organizations The shared-services model is a long- improved 20% to 30% across HR as a fail to realize the full return value on standing and widely accepted means whole. And high-performing organiza- their shared-services investments. for driving business value - particularly tions can even achieve improvements Some fall short of expectations during in the area of human capital manage- in the 40% to 50% range. the initial implementation period, while ment (HCM). In addition to reducing others are unable to sustain gains transaction costs, companies imple- The studies show that shared-services made for an extended period. And menting a shared-services approach adoption drives improvements in effi- many long-standing shared-services can gain a range of benefits including ciency and effectiveness - and that the organizations, established as the model enterprise-wide talent management, maturity of shared-services organiza- bloomed in the 1990s, have failed to flexible workforce planning, support for tions correlates with improvements in adopt newer technology and business organizational changes, and higher HR efficiency and effectiveness. Key driv- processes and now lag behind, their operational flexibility - especially bene- ers of shared-services maturity are pro- cutting-edge status lost.ficial for mergers and acquisitions and cess standardization, degree of global when entering new markets. coordination, adoption of self-service, and technology integration. The studies A 2007 benchmarking study on human make clear that the more mature the capital management practices and a level of adoption of self-services, the 2006 benchmarking study on shared- more improvements in performance services practices, each conducted by and efficiency can be made (see the Americas' SAP Users' Group Figure 1).
Stage 1: Stage 2: Stage 3: Stage 4:No Shared Emerging Established GlobalService Local Local 32%+
23%+
15% 14%8% 5%1% 0.5%
. Centralization . Process . Global Coordination. Process Automation Standardization . H CM Integrated with ERP. Integrated HCM Figure 1: How . Global HR Master Data Shared-Services . E mployee Self-Service . Manager Self-ServiceNet Cost Savings % Adoption Drives . C ustomer GovernanceEffectiveness Improvement % Improvements in Source: 2006 ASUG/SAP Shared Services Survey (surveyed 150 companies) Efficiency and Effectiveness
SAP Executive Insight - The Next Generation of HR Shared ... [download for more]