Trapped
SteveI had yet another of what has become a semi-annual discussion with an HR Technology friend that runs all the HR Technology systems for his shop - Payroll, Benefits, etc. for a medium size organization.
Flickr - guppiecat
They run one of the major Enterprise Resource Planning (ERP) solutions for all their HR Technology, and the ERP also supports Finance and Logistics. The solution has been in place for over 10 years, and has undergone 3 or 4 major upgrades in that time.
Over the 10 years when considering license, maintenance, upgrades, hardware, and labor, this organization has easily $10 - $15 million into this platform. Normal processing works perfectly fine, the payroll runs, employees get enrolled in benefits plans, etc., some manual processes have been automated, but no real 'transformative' HR technology has been implemented.
Why is this important?
My friend, the HR Tech person, has been advocating for the last few years the implementation of new technologies for two of the main organizational 'pain points' : Recruiting and Applicant Tracking, and Performance Management. He (correctly), has determined that there are numerous third party solutions available offering far superior functionality, user experience, and configurability that the related functions in the ERP suite.
He has articulated a plan, documented his strategy, and prepared a solid business case for these projects. Sure, there are cash expenditures and internal labor costs for these projects, but they are reasonable, and since the solutions he has recommended are delivered in Software as a Service (SaaS) mode, there are not any massive, up front capital expenditures.
Unfortunately for my friend, and for his organization he has been unable to proceed on these projects. And the reason for the decision is not completely what you think, it is not purely financial.
It is rather a more philosophical issue that can be summed up as follows:
'We are millions of dollars in to this system, and it already has the functionality we need? No way we are bringing in another technology'.
This organization, like many others, is in the ERP Trap. So much time, money, and internal investment into a solution that it can paralyze the organization from moving forward on any 'non-ERP' related HR and workforce technologies. A technical decision made, in this case over 10 years ago, continues to have repercussions today.
This part gets kind of gross
You have all heard the old legend that a coyote that gets caught in a steel leg trap will eventually chew off their own leg in order to escape. But the coyote, when trapped, does not immediately begin gnawing on its own leg. That is a crazy, and quite painful reaction.
No, the coyote waits, and only after the leg has gone numb, and all other possible escape options have been evaluated and discarded, does it take extreme measures to free itself from the trap.
Back to my friend's organization. How long until it goes 'numb' before it makes the decision to break free from the ERP trap and stop letting a decade-old decision drive today's critical workforce technology decisions?
How bad does it have to get before they are willing to do whatever it takes to get out of the trap?
Reader Comments (9)
Great post - one that applies in almost any "change" situation. One thing that isn't mentioned that is another big issue... no one wants to say... "Yeah we spend $15 million but it won't do this..." - No one can admit it (the system) won't do something since it probably was sold in with the idea that it will do EVERYTHING we need.
In most cases you have to wait until the person who made the decision is gone - or something dramatically changes in the company (merger, acquisition, etc) that changes the initial assumptions on which the decision was made.
No one likes to be wrong.
I love the story at the end - hadn't heard the "numb" part but it makes sense - literally and figuratively.
It sounds to me like the HR group in question needs to first document and agree a vision for where it is going with its HR technology in the coming years. In the context of the companies IT “big picture” and based on cost savings and minimising any risks to the business. This would inevitably raise the issue that the organisation has no intention of evolving its current IT infrastructure and would enable a discussion to be started that could establish the HR team as a thought leader in the organisation. It may be a long journey, but a valuable experience.
Steve
This is often the case but, I do see situations where the ERP recruitment system just doesn't do the job. It is even funnier when one of the big two ERP vendors don't even use their own e-rec system instead using a 3rd party best of breed app. That's almost like the coyote chewing off his leg before he gets caught in the trap just to make sure he never does get caught (in the trap)!!
See you in London?
Peter
@Paul - Thanks for the thoughts, these project usually do have change management issues from the very beginning that serve to make the whole situation much more difficult
@Jerry - That would be the best approach going forward, I agree. I hope that the HR group can get its act together soon.
@Peter - great point. I know exactly what you mean. I will be ar TruLondon next year, I look forward to meeting you and the rest of the UK based folks.
Steve,
Good points - my only caution is that when the HR decision makers are not technology savy enough and they are making decisions on what the point solution offers in terms of pure look and "bells & whistles" . In many cases in my consulting career, a 70% fit on their ERP solution is just as good as an 80% fit on a point solution - the 10% differential is often nice to have stuff that the HR department wants but the users see little value in.
Good article and thanks
Rob - Australia
Rob - Thanks for making that point, it certainly has merit. No solution is perfect, and sometimes 70% can be better than 80% as you describe. Thanks for reading and sharing your comments.
Steve:
I can only quote our mutual friend Naomi Lee Bloom. In this situation, companies act when they *must* do something that their current system can't do.
And an historical anecdote. Tesseract was the mainframe HRMS gold standard in the 80's and early 90's, until displaced by PeopleSoft's client/server system. Ferociously hard to implement -- four years for a large company -- but you could make Tesseract do anything.
Years after owner Gary Durbin had sold the company, I asked him how many clients were still on it. He estimated 125 of the original 150! When I expressed shock, he said, "Bill, when you spend $20 million in 1989 dollars to implement something, you don't jump off fast."
IBM still uses it for payroll.
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