Taking a Look at the Fundamentals of HCM Solutions Amidst All the New Trends

HR Departments everywhere continue to adjust to the ongoing disruptions to the workforce, organization as well as slow economic activity and decreased HCM spending budgets in the aftermath of the pandemic. Particularly in Asia/Pacific, many organizations have delayed their digital transformation efforts, leaving them unprepared to support emerging ‘new normal’ work trends and processes and to formulate a fitting HR transformation strategy. HR leaders in the region are trying to quickly catch up in business and talent agility by making investments in enterprise applications a top priority, with HCM platforms leading the investment roadmap.

However, with all the hype around new trends in HR technology, it is important to take a step back and realistically look at where a company is in their HR maturity cycle to determine what they truly need from an HR platform. In most cases companies need HCM solutions to help them in two key areas:

  1. Transaction processing for HR admin, including employee record keeping, time and attendance recording, payroll calculations, leave, expense, loan management, and so on. When companies are small, they typically manage these things manually, but as they grow they need to use software to manage the increasing number of transactions.
  2. Strategic HR for employee development, including appraisals, performance monitoring, succession planning, career development, recruitment, and others. Again, these can be handled manually in small organisations, but larger companies need formal systems due to the complexity of the systems, and larger numbers of staff.

Business Benefits of HCM Solutions

HCM Solutions for HR admin provide business benefits such as –

  • Improved efficiency
  • Better compliance and lower risk
  • Less staff turnover

HCM Solutions for strategic HR provide business benefits such as –

  • Improved employee engagement
  • Lower staff turnover
  • Better targeted and more efficient training programs
  • Better allocation of human resources
  • Lower risk via better succession planning

Special Business Benefits for High Headcount/Low Labour Cost Organisations

This category of business includes (some) manufacturing, distribution/logistic companies and other businesses with a high headcount but a relatively low labour cost

For this type of organisation, the primary objectives are often to control costs, ensure labour availability, and minimise staff turnover.  In some cases, there is also a requirement for regional-level reporting.  HCM solutions can support these requirements as follows –

  • Control costs via tight granular control on attendance recording
  • Implement detailed attendance policies
  • Detailed scheduling functionality to ensure staff availabaility
  • Complex leave policies to follow legal requirements and ensure staff availability
  • Accurate pay calculations to help minimise staff turnover
  • Audit trails to reduce risk of fraud
  • Workflow to control the payroll data and processes
  • High level reporting for corporate requirements

The Software as a Service Model

Historically, HR software licences were paid for upfront, with an annual maintenance fee, and software hosting by the customers’ IT staff on their own premises. This model had the following drawbacks –

  • High upfront cost of the software (and implementation) meant there was a huge initial investment and a significant lag before any benefits were attained. In the worst cases, the implementations were abandoned before completion and the software cost was written off.
  • Software hosting on the customer premises is of variable quality. Issues we have seen include ransomware attacks, the physical hosting location not being secure, and others. All these of course add costs to both the customer and the software provider
  • Some customers do not regularly install the software patches supplied by the vendor. This leads to issues such as software not behaving as expected, security problems, and finally, that each customer’s environment is different, resulting in slower issue resolution and increased support costs.

Over the last ten years or so, the software sales model (for all types of business and other software) has shifted from a licence sale model to a monthly rental cost. This rental cost normally includes the software licence, the support fee and the hosting. Benefits of this approach include lower upfront cost, elimination of customer hosting issues, and automatic installation of patches leads to lower support cost. For these reasons, Software as a Service is the prevalent purchase model today.

Can we Help?

Humanica and Data On have been providing HCM solutions for SE Asia since 2003.  We have localised versions for Philippines, Singapore, Indonesia, Malaysia, Thailand, Brunei, Vietnam and the Middle East, and further customers in Australia, Lao PDR, Maldives, Cambodia, Korea, Japan and elsewhere.

If updating your HCM solution would improve your organisation, we’’d be delighted to assist with your planning.  Feel free to reach out to me, Matthew Pearson, by email at [email protected] or by phone/WhatsApp/Facetime at +66 820 950 880

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