Workforce Management for Human Capital Management

Historically workforce management has been centered on tracking time and attendance, absences and leaves. Organizations view the time and attendance system as the top priority to integrate with the payroll system; in our payroll management benchmark researchvr_Payroll_Management_06_what_to_integrate_with_payroll_management half (51%) of organizations called it very important. However, only one in five have integrated the two to streamline processes. So limited an administrative and operational focus does not contribute to improving worker productivity or manager efficiency. Moreover, such an approach can foster employee turnover and undermine worker satisfaction and loyalty. Our research analysis underscores that paying insufficient attention to the worker experience can degrade employees’ sense of accomplishment and in some situations also degrade the customer experience.

Of course, managing the costs and efficiency of schedule-, time- and pay-related tasks, including compliance, remains important. However, these tasks, as well as those above, can be more easily accomplished with advanced workforce management software. Used to full capability, it can manage this operational environment and help managers drive not just productivity but also the success of the organization while also engaging the workforce.

Out of necessity, workforce management software is evolving as an integral part of systems for business units and for human resources. Importantly, advanced workforce management systems typically include analytics that help management understand workforce performance; in our previous workforce management research 61 percent of organizations said that analytics is important to workforce management. For example, analytics applied to optimization of schedules can help organizations manage workers to their expectations. Analytics also is critical to optimize workforce performance and to enable members of the workforce to understand their contributions to the success of the organization. Furthermore, analytics can guide executives and managers to improve decision-making and rectify issues that could be leading to increased costs and be out of compliance with regulations. Many organizations, however, are not prepared to undertake these efforts; they still use an array of spreadsheets or tools that are not synchronized with real-time data from workforce management systems.

As organizations evolve, their needs for more efficient and engaging workforce management is transforming workforce management. We have begun to explore this category further in new benchmark research on Workforce Management for Human Capital Management. This new research will gather and analyze data on enterprises’ current workforce management practices, the software they use and their plans for the future. Here are some of the aspects we will explore.

The availability of next-generation workforce management systems (which include analytics) through cloud computing facilitates adoption of and access to these applications and the information they use. In our previous research one-fifth (19%) of participants expressed a preference to use cloud computing for workforce management, and we expect this percentage to grow as the attraction of deploying software as a service in the cloud influences buying decisions. For most organizations there is value in having the vendor manage the implementation and maintenance of the systems, and the ability to stay current in newer releases also is significant. Organizations are most concerned with time to value in new implementations and efficiency of their teams in using it. Depending on their needs and budgets, they can choose to deploy it in a single customer private cloud or a multitenant public cloud.

Likewise the proliferation of mobile applications for workers and managers in today’s workplace dovetails with the interests and proclivities of the increasingly younger workforce. Almost half (45%) of organizations in our previous research indicated that they will deploy such new applications to improve productivity. We expect the readiness of organizations to use mobile devices including wearables will further increase demand for advanced workforce management. The use of smartphones to access information about employees, payments and benefits and corporate policies makes it easier for workers to review and request changes to schedules; it is a key way to provide the flexibility demanded by workers who want to balance their personal and business lives. Organizations that do not embrace mobile devices for their workers and managers risk decreases in productivity and workforce engagement that could lead to increased employee churn.

Younger workers also are comfortable collaborating using social technology such as messaging, forums and open threaded dialogue on topics. Employers need to learn to interact with them accordingly to retain talent; at the same time, these methods provide an opportunity to further optimize workforce management by engaging workers in new ways. These innovations include assigning goals and rewarding achievement along with using new communication channels to resolve issues quickly, easily and interactively – more than half of organizations in our research identified these capabilities as important. As social forms of collaboration become part of the communication fabric, organizations can gain valuable feedback from workers and also provide coaching to increase their effectiveness. Efforts to improve the skills and competence of workers also can benefit from learning management and other systems that are accessible on mobile devices.

Driven by the evolving nature of talent and challenges to retain it, advanced workforce management now has capabilities to address spectrum broad range of human capital management needs. Using it senior management can gain greater insight into the workforce in action while improving the work experience and complying with relevant policies and regulations. Most organizations will find that investment in workforce management can be justified by its ability to ensure compliance with regulations regarding the Affordable Care Act, the Family and Medical Leave Act and a growing variety of locally established worker rights mandates.

Employers are recognizing the value of a new generation of workforce management systems in enabling organizations to meet requirements beyond managing schedules, absences and time off. For example, one-third (34%) of those participating in our payroll management research said they plan to deploy new workforce management software by the end of 2016. Almost half (47%) said they are not satisfied with their current product’s functionality. Workforce management VentanaResearch_NGWFM_BenchmarkResearchas it is evolving addresses concerns common to all industries and will play a key role in tomorrow’s human capital management. Finance and operations management should examine the benefits it will deliver by bringing more efficiency into their processes, in particular ensuring a more engaged and longer-tenured workforce that contributes to financial profitability.

Implementing this new generation of workforce management will require an in-depth understanding of the options available and the people, processes, information and technology issues that must be addressed. Our new Workforce Management for Human Capital Management benchmark research will examine advances in the three years since our previous research was published. I believe that workforce management has a stronger role to play in efforts to achieve operational excellence and customer satisfaction and that the benefits organizations can realize from using these applications can be significant. Please look for upcoming announcements of how you can participate in and learn from this cutting-edge research.


Mark Smith

CEO & Chief Research Officer

Evolving to the Next Generation of ERP Systems

The enterprise resource planning (ERP) system is a pillar of nearly every company’s record-keeping and management of business processes. It is essential to the smooth functioning of the accounting and finance functions. In manufacturing and distribution, ERPvr_Office_of_Finance_01_ERP_replacement also can help plan and manage inventory and logistics. Some companies use it to handle human resources functions such as tracking employees, payroll and related costs. Yet despite their ubiquity, ERP systems have evolved little since their introduction a quarter of a century ago. The technologies shaping their design, functions and features had been largely unchanged. As a measure of this stability, our Office of Finance benchmark research found that in 2014 companies on average were keeping their ERP systems one year longer than they had in 2005.

Recently, however, we have seen signs of change. The evolutionary pace of technologies that shape the design of ERP systems has been accelerating over the last couple of years. In addition to the cloud there are in-memory computing; analytics and planning integrated into transaction processing systems; mobility; in-context collaboration; and more intuitive user interface design. While ERP vendors generally acknowledge these innovative technologies, our research and conversations with ERP software users indicates that they are just beginning to make their way into product design and thus far have had little impact on the market.

Then there’s the buzz about “consumerized” ERP and other business applications – fresher designs that look and interact with the user like consumer software such as mobile apps on smartphones. Established screen layouts and process designs often are legacies of technology limitations that no longer exist. In addition, increasing numbers of users don’t want or need to interact with their business applications through desktop or laptop computers. Support for mobile devices has become common, but gestures and other new user interface conventions that expand and improve the ways in which users can interact with their system on other devices such as laptops are a likely future capability, especially as touch screens become common on all devices. Voice interaction, a potentially powerful advance, is still in its infancy. Notifications and approvals increasingly will be accessible from wearable devices and mobile technology watches. Since all business is collaborative, we expect in-context collaboration capabilities to evolve rapidly to improve productivity in every business function, enabling greater responsiveness to customers and speeding the completion of core processes.

vr_Office_of_Finance_20_finance_prefers_on-premisesDespite the growing popularity of cloud-based systems, the  issue of where ERP systems should reside is not settled. The cloud is likely to account for a substantial portion of the market. But it’s useful to remember that even though our research shows that resistance to cloud-based ERP is ebbing and that cloud ERP vendors’ sales have been growing faster than on-premises vendors, the cloud still has a small share of the installed base. A significant challenge for vendors of multitenant software as a service (SaaS) is that the key benefit is also a constraint. Because buyers configure the features and capabilities rather than customizing the core code base, implementations can be faster and less expensive. In issuing new releases or modifications to the software, the vendor makes those changes to the code that everyone is running, either immediately or after a grace period. This requires far less work for the customer than having in-house IT personnel update on-premises versions and patches.

The constraint, however, is that the software cannot be customized. As I’ve noted, the primary barrier to making ERP software more configurable is the inherent complexity of the business processes the systems manage. ERP systems must be able to handle the specific needs of users, which can differ considerably from one industry to another and even between specific micro-verticals that might span multiple business units in a range of industries, locations and jurisdictions. If the software cannot be configured to meet the customer’s feature, functionality and process requirements, and if the customer cannot adapt its operations to these limitations, a cloud-based product isn’t a feasible solution. Many manufacturing and product-centric businesses have found it difficult because their requirements are often too specific and diverse. Unlike with on-premises software, there is no option to customize multitenant SaaS offerings to the needs of a single customer unless the vendor is willing to make the necessary changes to the core code base and the timing of those changes is acceptable to the customer.

Some new supporting technologies will enhance the business value of ERP applications as companies adapt their business processes to take advantage of new capabilities. For instance, in-memory computing platforms and big data likely will change how organizations – especially in finance and accounting – work with computers. Processes can be executed faster, and transaction processing systems can include analytic capabilities. Increasingly, ERP vendors will incorporate performance measurement and monitoring as well as building optimization functionality into business processes.

In-memory processing promises a much more interactive experience while big data management will underpin the sophisticated use of analytics to develop actionable insights, alerts and performance measurement from the masses of data accumulating in ERP systems. Mobile technologies, ubiquitous among the new generation in the form of smartphones and tablets, will drive demand for the availability of on-the-fly analytics and dynamic planning to enhance forward visibility and deepen situational awareness to guide transaction processes. Similarly, the emerging Internet of Things (the network of physical objects embedded with electronics, software, sensors and connectivity to enable objects to exchange data with other connected devices) extends the possibilities for expanding the ERP system’s capabilities in automating the handling of physical assets and the associated record-keeping, analysis and process management.

It’s not just technology. Users of ERP systems are changing, and this is shaping ERP system design. Fresher screen designs and reduced screen clutter are some of the initial improvements. The demographic shift taking place in the ranks of senior executives and managers, from the baby boom generation to those who grew up with computer technology, is creating demand for software that is both more capable and more usable. Soon, to be competitive, ERP systems will have to deliver three major improvements: lower total cost of ownership, a better user experience and greater flexibility and agility.

Despite these growing demands concerning how it works, though, buyers’ expectations for what ERP software should do haven’t changed much so far. But change almost certainly will accelerate over the next five years. Companies’ selection processes are driven largely by their experience with the last generation of products and the pain points they experienced. They view these systems as notoriously time-consuming and expensive to set up, maintain and modify. Indeed, in our ERP research only 21 percent of larger companies said that implementing new capabilities in ERP systems is easy or very easy while one-third characterized it as difficult.

Unlike in the shift from mainframe financial and manufacturing management applications to client/server ERP, this time the larger incumbents will be less vulnerable to disruption. One important reason is that their large maintenance revenue streams provide greater development firepower compared to upstarts. Nonetheless, all vendors will be challenged in the market if they fail to evolve to meet the expectations of a new generation of executives and users. Smaller ERP vendors, whether mainly on-premises or cloud-based, will need to invest in enhancing their software at a faster pace than has been necessary over the past decade.

The ERP software market is poised for the first significant transformation since the 1990s and is the rationale for our new benchmark research we will conduct on this topic. A combination of new technologies and changing user demands will drive changes in system design. The result will be systems that are easier to use and easier to modify to suit the needs of customers. A new generation of users will demand software that makes doing their jobs easier, supports their ability to collaborate and work with the system anytime, anywhere. Change is coming slowly, but the landscape of ERP a decade from now will be very different.


Robert Kugel
SVP Research