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New Report Pinpoints 20% to 80% Cost Savings with HR Applications
Applying technology to automate HR processes can cut administrative costs by 20 percent to more than 80 percent, according to a new report analyzing more than a decade’s worth of HCM research and
ROI studies.
Among the most productive areas for automation is enabling open enrollments, which frequently results in savings of more than 50 percent, according to CedarCrestone, which authored “The Value of HR Technologies: Metrics and Stories.” The report analyzes 10 years of the organization’s surveys, as well as other industry research and three case studies (To download the complete white paper, please visit).
HCM technology implementations generally occur in two phases, both of which can provide value to organizations, says Lexy Martin, director of research and analytics for CedarCrestone. Phase 1 automates HR processes to streamline operations, reduces HR head count, or frees up HR staff to work on strategic rather than routine tasks.
“When a company moves to self service and open enrollments, everything can happen online, which eliminates the need for a large number of administrative-services personnel,” she says. Organizations that move to an HR shared service center and self-service operations typically require about 18 percent fewer HR staff members, the
report concludes.
Phase 2 technologies extend automation to processes such as performance, talent, and recruiting management, which don’t yield head-count reductions but can create revenue growth and other ROI benefits, Martin says.
Because these technologies are newer, incomplete data has made their benefits harder to quantify, she adds. However, that’s now changing. Martin says that one recent survey respondent quoted a 15 percent improvement in revenues from performance management activities.
The CedarCrestone research also found that business intelligence (BI) for HCM will be one of the hottest technology areas for 2008. Initial cost savings will result as organizations consolidate multiple reporting systems into enterprise-wide implementations. After that, areas like talent management will benefit as companies use BI to quantify the impact of their HR endeavors. “Organizations will be able to better determine if they are hiring and keeping the best people, and if they are rewarding people appropriately to keep them performing optimally,” Martin says.
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