In the absence of metrics, it becomes difficult for a CHRO to demonstrate the connection between HR technology investment and the organizations competitive advantage
With technology investments on the rise in India, companies need to go to the drawing board and ask the question: Are we buying products or solutions to business challenges? Even as six out of 10 companies are planning to increase the HR technology spend, as per the People Matters HR technology Study 2015, only 19 per cent of companies are reporting their HR technology strategy to be a success, making the question even more pertinent.
People Matters HR Technology Study 2015 brings data, facts and some answers about this fascinating industry that is poised to change the way organizations view the HR function. Conducted in the months of June and July 2015, the Study saw a participation of 155 leaders from Indian companies, MNCs and small and medium sized companies, to identify the prevalence of HR technology in Indian businesses and the RoI of such solutions. While organizations under various segments have acknowledged the importance of HR technology and applications, tech adoption has not been completely successful. According to the Study, a whopping 31 per cent of leaders do not measure RoI of HR technology. For businesses that don’t start with the problem in mind but with the product, the RoI of technology becomes a suspect. This acts as one of the biggest setbacks to a successful tech adoption process.
In order to successfully transition to a technology enabled system, it is significant to evaluate and analyze the core business objective behind the decision. “It is important to identify areas of business concern and then strategically adopt technology rather than first buying a tool and then creating a strategy around it,” says Richard Castellini, Senior Vice President Corporate and Business Development, CareerBuilder.
Drivers of tech adoption
So, what drives organizations to adopt HR technology? Deepa Chadha, Head HR at Bharti Airtel says, “Organization scale and the need for employer branding are two of the core drivers of tech adoption. Other factors behind the need for HR technology are effectiveness and data accuracy.” Today, the importance of real time access is increasingly being looked at by organizations of all sizes. “Penetration matters as much as reach. Hence, developing a system that can be reached from anywhere is the way to go,” argues Yuvraj Shrivastava, Head Employee Service at Aircel. While the drivers for tech adoption may be similar across all companies, success of HR tech solely depends on identification of organization goals and business challenges.
There has been a big shift in who drives the HR technology buy. Traditionally, it was the CIO or the CEO from the C-suite, but lately, it has shifted to the CHRO— as reinforced by the Study. The Study reveals that today, in 67 per cent of the organizations, the CHRO acts as one of the core influencers in getting a business buy-in for HR technology. Going deeper, 45 per cent of the CHROs act as the final decision maker for HR technology investment. Aaron Green, Vice President-HCM Strategy, Oracle, substantiates this aspect of the study by stating that “Historically, it has been the IT and the CFO who have been major stakeholders in putting technology in place based on the requirements of the HR executives. But now, in a big shift, it is the CHRO or the Managing Director of HR who makes major part of the decision regarding selection, adoption and management of HR technology.”
Need to measure ROI
While 67 per cent of the CHROs are in charge of HR technology adoption, 31 per cent do not measure RoI of technology. This startling fact has highlighted the aspect that organizations have not thought through the ultimate vision and the key goals of tech adoption. As iterated by Deepa Chadha, “It is the business needs that will help define ROI. When technology is adopted as a solution to a problem or as an investment for the future, ROI can is measured in terms of the technology’s success against its vision. But when technology is adopted merely as a popular product that is available in the market, then it becomes difficult to capture ROI of such investments.”
Oracle’s Aaron Green adds, “Knowing which direction the organization is headed is important. Concrete understanding of the kind of changes that you are trying to incorporate for organizational growth is the first step in the process of successful tech adoption.” It is the lack of a clear focus on goals and vision that makes it impossible to measure ROI of technology. Without the measurement of ROI, there can be no accuracy in HR metrics and analytics. In the absence of these metrics, it won’t be possible for the CHRO to demonstrate a connection between HR technology and organization’s competitive advantage.
Another major problem that acts a deterrent to tech adoption is the involvement of multiple stakeholders. The Study revealed that 56 per cent organizations believe that the involvement of multiple stakeholders acts as a major barricade to successful tech adoption. Further, 54 per cent say budget constraint is a major hurdle, while 42 per cent uphold resistance to change as an obstacle to successful implementation of HR technology strategy.
Further, 39 per cent of the respondents believe that a major pitfall in the tech application process comes from the need to identify immediate results. “Companies should freely invest in technology, keeping in mind that better the technology, better will be the outcome in the long run. Not getting caught up looking for immediate results is important,” says Ajoy Jauhar, Head – HR automation, Indian Hotels Company Ltd.
As the CHRO is one of the core influencers in the tech adoption process, HR needs to take complete control when it comes to technology adoption, including accountability of technology in meeting business goals. It is only then that HR can deliver fast results in tune with the changing business landscape. For this, the most important focus for companies should be to know why they are investing in technology. “Like it’s said in Alice in Wonderland that if one doesn’t know where one is going, then it doesn’t matter which road is taken,” reminds Amit Aggarwal, Senior Vice President and Chief Learning Officer of Genpact.