Why HR Technology Needs to Focus on Being More Business-Centric

Leave it to Amy Wilson, principal analyst and vice president at Constellation Research, to cut to the heart of the issue human resource professionals face today as they consider where their organizations are headed with HR technology.

Here’s what she writes at the beginning of her latest research study, People Management Technology: A New Framework for Delivering Business Results:

Due to mounting pressures to leverage people to get better business results, technology leaders will face significant HR technology investment decisions in the next three years. However, current frameworks and decision criteria focus on an HR department separated from the business. These legacy frameworks provide a limited view of what needs to be achieved. The technology picture needs to focus on infusing people decisions and business decisions together to focus on solving business problems, not further enhancing HR capabilities. Technology leaders need a new framework to make next-generation investment decisions.”

Getting business stakeholders to see the value

“Infusing people decisions and business decisions together” would seem to be a simple and logical concept, but that hasn’t always been the case.

As Wilson noted, “Technology plays a critical role in an HR executive’s goal of impacting the business. However, the technology in place today is likely producing the opposite effect and the HR exec is looking for buy-in to change that.”

She added: “Buy-in can be difficult when business stakeholders don’t see the value. The report helps the HR leader present a picture to their business stakeholders that addresses their needs in particular, highlighting what kinds of investments are needed to accomplish those goals.”

People Management Technology: A New Framework for Delivering Business Results (you can get a report summary, or buy the full study here) lays out “a new framework for evaluating people technology decisions in an age of increased demands on business results.” It also gives insight into emerging trends, as well as advice for technology and HR leaders “as they make next-generation investment choices in the next three years.”

New Framework focuses on impacting the bottom line

Here are some of the key points made in the report:

• “HR” Technology is HR – not business – centric. From the report: “HR technology frameworks to date have reflected HR departments’ focus on efficiency and effectiveness … Business users were added as administrative participants. Meanwhile, data transfers such as payroll journal entries and headcount budget numbers loosely connected HR to business functions.”
• Business needs more from HR Technology. From the report: “Today, this is not enough. Pressure grows for businesses to positively impact success through better people management … Yet, the HR technology view still misses key elements of business success. Business outcomes take a backseat to HR features and functions.”
• A new, more business-centric framework is required. From the report: “The shift from HR efficiency and effectiveness to business performance is a fundamental change that must be driven down to all levels of HR operations. This means that companies must evolve people, processes, and technology to move from HR process to business results focus … from siloed HR look-ups to people decisions integrated into core business processes … (and) from HR programs at the center to a strong foundation supporting business goals.”
• The new framework focuses on impacting the bottom line. From the report: “The new people-centric approach requires a new type of business-centric HR framework – it is no longer sufficient to bolt-on business users and solutions as an afterthought to HR technology. Such a strategy is incomplete, relying on outdated frameworks to inform what is important to HR, but not to business success.”
• Business comes first in People Management Technology framework. From the report: “The people management technology framework is business-centric, rather than HR-centric, and allows businesses to better impact results through more effective people management. The framework is comprised of four components: Business Management, Strategic Programs, Transactions, and Master Data.”
• Business Management: People planning, insight, and operations drives the process. From the report: “The technologies that provide visibility and support to business leaders as they plan, operate, and gain insight into their businesses are emerging and evolving rapidly. Incorporating these tools into the technology framework changes the conversation between business leaders and HR leaders. Instead of HR on one side and business on the other, the two blend together to solve people and business challenges simultaneously.”

What HR executives should take from this

There’s a lot more to this report, but as you can probably tell, it strongly gets behind the point that Dr. John Sullivan and many others have made over and over: that HR needs to be much more business-centric — especially when it comes to utilizing HR Technology.

When I asked Amy Wilson, via email, “what is the critical thing (or things) that senior HR executives should take away from this report?” Here’s what she said:

I originally intended to focus on these new business management tools and how they could be added to an existing eco-system to deliver immediate value. But, the further I dug, the more I found the changing needs of the underlying platform – how all of the layers of the ecosystem need to evolve to address business demands. I think it’s difficult for people to connect all of these things together, particularly when everything is changing so quickly. My hope is that this paper addresses the challenge so many HR leaders face.

I still think that investing in business management tools first is a good approach, particularly when HR executives face an uphill battle for major investment. But, while bringing new value to the business with these add-on tools, HR executives should have a bigger plan in mind that involves foundational changes.”

If you are dealing with your HR technology system — upgrading, replacing, or bringing in something new altogether– you should probably read People Management Technology: A New Framework for Delivering Business Results from Constellation Research before you do. My guess is that it will make you think more about what you should be doing, and why.

You can hear Amy Wilson from Constellation Research talk about this report on The Bill Kutik Radio Show (archived here at Knowledge Infusion).