Oracle Fusion Human Capital Management improves productivity and drives efficiency and effectiveness.
by Ognen Borozanov, March 2013
While financial metrics such as market share, revenue, and profit margin are of primary interest for a company’s executives, metrics on how growth impacts the people, organization, and underlying processes usually takes a back seat. That is, until the organization and support processes begin to slow down or even bring growth to a halt. In such cases, a strong talent management system such as Oracle Fusion Human Capital Management (HCM) can help.
In one example, an international high-tech company with more than 4,000 full-time employees in 15 countries has doubled in revenue and headcount over the last four years—mostly through mergers and acquisitions activity. The plan for the next three years is to grow another 50 percent. The key question their human resources (HR) board faces is: can the HR organization support that growth, while not growing at same rate?
The company faced typical HR challenges: Too much time was being spent on manual HR transactions to authorize, track, monitor, and report on simple employee administration transactions. Data integrity remained an issue—while it was relatively easy to get a stable figure on headcount per country, any numbers based on gender, age, or educational level would require up to 30 emails or phone calls to be placed to put together the information. This was usually two to three weeks out of date by the time the report was done.
Also, hiring and learning were not aligned to the needs for certain skills and resources, while performance management was lacking a clear link between results expected from the knowledge workers and their compensation. Instead of spending time on benchmarking compensation, corporate HR managers spent most of their time on gathering data and reporting.
Underpinning these issues was a lack of a single view of the employee data and statistics. This was driven by the lack of standardization across countries, because each country had a different system and often different processes. The HR board members decided to base future HR strategy on implementing a fully integrated HR system for all business lines. They explored a number of options including Oracle Fusion HCM.
Driving HR efficiency and effectiveness
Management predicted that Oracle Fusion HCM would drive HR efficiency by introducing automated approval workflows and increasing employee self-service capabilities. This would result in a reduction in HR administration costs by decreasing the current HR coverage ratio by 19 percent. Management also expected to increase employee retention through increased transparency in compensation and performance policy, linking the evaluation process to compensation, and a system-facilitated dispute resolution designed to empower employees. The resulting benefit would be reducing voluntary attrition for key sales and engineering staff from 14 percent to 13.4 percent, thus reducing cost of replacement by approximately US$350,000 per year. Lastly, HR managers expected automatic integration of employee records with the learning system to reduce manual workarounds and enable reporting and controls. These improved controls would improve cost monitoring and were expected to deliver a five- to 10-percent reduction in learning fees and associated costs.
Improving line managers’ productivity
With Oracle Fusion HCM, the IT team saw a great potential to reduce line management time spent on HR administrative duties. The key enablers were self-service capabilities for approvals and workflows and for talent management. The expectation was that the increased self-service would help managers reduce their admin time from well over two hours per week to just less than one hour per week, thus resulting in US$1,115,000 worth of annual efficiency gains. Managers would further save time through an automated, workflow-enabled performance management system that was expected to reduce the preparation time for the annual performance cycle by approximately 25 minutes per employee appraisal—a gain of another US$105,000 per year.
Improving employee productivity
The key benefit from Oracle Fusion HCM would be helping to reduce the overall ramp-up for new employees. New engineers and sales professional currently need 12 months to two years before they reach full productivity. The key capabilities identified were:
Automated on-boarding process
Improved employee collaboration including network at work and social integration
Enhanced user interface and mobility features
Better resource matching through predictive analytics and goal management
As a result, the company expected that every month, reduction of the ramp-up time would result in the company being able to bill additional hours of its engineers amounting to an annual benefit of US$1,038,000. In addition, the self-service capabilities for profile management and performance management, as well as the integrated and workflow-enabled appraisal process, were expected to drive further savings in time spent on administration. Each employee could reduce their preparation time from currently 14.5 minutes per week to 9 minutes per week, resulting in US$540,000 efficiency gain.
TCO and implementation roadmap
Originally, the customer planned to follow a traditional three-year roadmap to implement core HR functionality, followed by an unspecified period where new functionalities could be added. However, the company chose a hosted software-as-a-service approach. The proposed phased, modular approach, developed jointly with the customer and the systems-integrator partner, would cut the implementation time down to 18 months.
The benefits of Oracle Fusion HCM
The benefits that executives at this high-tech company expected with Oracle Fusion HCM can be gained by management at enterprises around the world. If the goal is to increase productivity, accelerate business performance, and lower cost of ownership, Oracle HCM Cloud can do so as a software-as-a-service solution available by subscription. From recruiting and retaining talent to accurately forecasting future workforce needs, Oracle Fusion HCM enables the enterprise to optimally manage HR operations with strategic business initiatives in mind.
Ognen Borozanov is director, Insight and Customer Strategy at Oracle.