ERP and the Ford Taurus

Ah, 1997.

Elton John's Candle in the Wind was on the charts, you saw Titanic two or three times,  and one of America's top selling cars was the Ford Taurus.  Maybe you bought one, or more likely had one as a rental car. I swear I drove a Ford Taurus something like 72 weeks in a row when I was still in ERP consulting. 

 Stylin' in the Taurus

She's a beauty, no?

You know what else you might have purchased in 1997? 

Your ERP system. The same one that still runs your HR, Payroll, Accounting and Distribution processes.  In 1997, about $14B was spent by organizations on ERP.  By now you would have had to go through two or likely even three significant upgrades, each one getting progressively more complex, costly, and time consuming.  But underneath it all, the chances are the 'core' of the system is still largely the same as the 1997 model.  The data model you are using today, is probably largely unchanged from the original version of the system you implemented in 1997.

What about your business? How many things have changed since 1997?  Would you still make the same ERP purchase decision today that you did in 1997, when chances are you were in a panic over Y2K and you were pretty sure your Cobol mainframe system was going to spontaneously combust?

Is it really time for your organization to begin to let go of the loyalty to a system you bought over a decade ago? 

Many organizations still feel the need to only look to their ERP solution and try to add-on Talent Management functionality, or the ATS module rather than do a comprehensive assessment of the market, the business issues, and make an informed decision about the right technology solution for the business. 

You eventually sold (or junked) that '97 Taurus, didn't you?

NOTE : I ran this post, more or less on my old Wordpress blog, but after an interesting Twitter chat with Byron Abramowitz and Michael Krupa about ERP, upgrades, and creaky data models, I decided to run it today.  Also, it was WAY easier than writing a whole new post.

How much HR Technology do you need?

One of the really cool bonuses of teaching a class at RIT, which has many deaf and hearing-impaired students, is that frequently classes are supported by a C-print Captionist.  For those who are not familiar with the term, a C-print Captionist creates a complete transcript of everything that is said in the class, (similar to a court reporter).  During class, the captions appear immediately on a computer screen setup near any students who need to rely on the captions to better follow the class dialogue.  A day or so after class, the full transcript is converted to a document, which students can download, and that I also post on the class wiki.  It is also interesting for me to take a quick review of the transcript to do sort of a 'self-evaluation' of sorts. 

In class this week we were focusing on Performance Management as a part of an Integrated Talent Management strategy, and discussing the software solutions that support the performance management processes.  Yesterday I was reviewing the transcript and came across this.  One student, posed the following question:

If I have a small company and if I wanted to use regular paper or forms (for Performance Management), can I still be effective? Or is it necessary to use or incorporate technology?

In class, in real-time, with 20 people looking up at me for wisdom I gave the following answer (slightly edited for clarity, and to make me appear more intelligent):

Since you are in the HR technology class, I am going to tell you that you have no success using paper forms. (Laughter).  It can be effective for small companies to use paper. But we for a larger organization (paper) is not going to allow a company to leverage their talent in a way to seize opportunities. If a company decides they need to exploit a new market and buy a new factory or hire a bunch of new people and you don't have systems like these in place, being able to deliver on those strategic plans becomes hard.  Companies that aren't exploiting technology are at a disadvantage. Very small companies can live without this stuff. Once you start moving up the market in size and reach, especially global reach, this is important.

 A decent answer, I think in the moment.  If I had more time to reflect on the issue and the answer, I might have talked about the Gen Y worker not wanting to work for an organization with such primitive processes, or the efficiencies and cost savings that can be derived with simple automation. 

But at the core the question of how much HR Technology an organization 'needs', has to be answered by each organization individually.  I don't think there can be a generic 'blueprint' that says, if an organization has 1,000 employees, then they must have systems for X,Y, and Z processes.  It just is not that simple.  Which is why I suppose we have an HR Tech class, and why there are several consultancies that assist organizations develop their HR Technology strategy.  The uniuque characteristics, challenges, and culture are all factors in the discussion.

How much HR Technology does your organization need?

The Weakest Link

When an enterprise adopts an ERP system to support most or all administrative functions certain efficiencies are certain to be gained with the inherent integration of data. The list of employees entered in the HR module is automatically that same list available for Accounting and Procurement processes. The organization structures and physical location information is shared throughout the system, so fundamental changes need only be made once, in one place. From a technical perspective, there are often efficiencies and cost savings for be gained from the standardization of operating systems and core database technology. It becomes somewhat easier to find technical talent, as you can focus on candidates with very specific skills.

But the advantages of central ERP are starting to hamper many HR departments’ ambitions to deploy more strategic Talent Management applications. ERP vendors have only recently begun to improve or augment their Talent Management functionality in order to provide a better solution set in this area, (which is the fastest growing sector in HR Technology). Many of these new features will require entire ERP system upgrades for HR departments to try and take advantage of. Remember, ERP upgrades require all components of the system go through the upgrade. So, if an HR department wants to deploy some new Talent functionality, they will have to rally support of Finance, Procurement, and possibly other areas to agree to submit to a major upgrade.

Typically, (especially with Finance groups), those conversations do not go very well. The vast majority of finance departments prefer the reliable status quo. Can you even think of any great innovations in accounting software that would encourage a finance department to want to upgrade?

Quite naturally, either for reasons of functionality, or inability to justify an ERP upgrade, many HR departments will gravitate to third-party best of breed solutions for Talent Management solutions. But then a new challenge faces HR, namely having to convince the IT department that the introduction of a new technology won’t lead to excessive integration work, potential security issues (many of best Talent solutions are SaaS offerings), and an increase in the overall support responsibility.

So no matter which option HR chooses, some kind of internal conflict in likely to arise. For me, I am a staunch proponent of HR departments taking a strong position and advocating for the best overall solution, which more and more is a best-of-breed package. For many HR departments, the right move is to get off the ERP treadmill.

That also could be the latest ERP upgrade I have been involved in has been an unabashed disaster, but that is a post for another day.