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Never before has the notion of the “Human Factor” been of greater significance to a company’s success.  In the past decade, people-related topics have seen a greater presence in business discourse than ever before, from management literature to the business sections of most major newspapers.  HR transformation strategies can be found within the investment portfolio of nearly every company – regardless of size, industry, or geographic home.  The reasons for this are clear.  The profound structural transformation of traditional business models through digitization must be mirrored and supported by both corresponding people and HR strategies.

At the same time, the face of the workforce is rapidly changing, with an increasingly diverse set of needs based on age, gender, ethnicity, religion, talent or contracting models.  Driven by web-based software architectures, broadband network capacity and device-independent mobile technologies, human capital software solutions have become readily available that can be consumed as on-demand and location-independent services (SaaS). They differ from traditional, on-premise HR software solutions as follows:

• Ease of use and shorter implementation timeframes

• More effective enforcement of business process harmonization, based on preconfigured standard processes (best practices)

• Rapid and ongoing innovation cycles

• Modern and mobile user interfaces, similar to apps that employees utilize in the private sphere

• Reduced and variablized operating costs

According to market observers, HR functions will be the first to transfer completely to the cloud. This is why SAP is focusing its innovation investments completely in its HR cloud-based solution suite, SAP SuccessFactors, while reducing the development of its classic on-premise solution, SAP ERP HCM, to merely maintain legal compliance and improve user experience according to the company’s FIORI design guidelines.

This convergence of a thirst for change within the HR realm along with the appeal of cloud-based HR solutions has generated an unprecedented wave of transformational change in employee-related concepts, processes, and structures worldwide.  These trends go beyond companies’ HR functions to affect organizations as a whole.  Those who manage people must adapt to the ever-changing needs of their workforce, while embodying these new management principles and ideals. The HR functions are the primary agents and orchestrators of this change, but at the same time have to consider their own futures when it comes to their roles and required capabilities in the digitized enterprise.  Therefore, HR transformations seek to change the HR functions of an organization, but also fundamentally challenge the approach to managing talent and people-related capabilities of the enterprise as a whole.

Nonetheless, holistic HR transformations that are driven and enabled by cloud-based software solutions can only fully benefit from the above-mentioned technological advantages if they are approached differently than their on-premise based predecessors, as follows:

• The HR functions must be willing and able to take full accountability for the success and outcome of an HR business transformation within the company – this responsibility cannot be delegated to the IT function.

• The business processes must be strictly oriented to the pre-configured best practices of cloud solutions, while the burden of proof of any non-feasibility shifts from IT to the business, requiring a sustainable paradigm shift.

• Custom-built applications and extensions to the standard functionality of the cloud solutions must remain the exception and not become the rule (Adopt vs. Adapt).

• The project methodology must be consistently oriented to the needs and expectations of the ultimate users (“consumerization”) and must remain based upon short, quick, and agile development and validation iterations.

• Key to a successful cloud-based HR transformation program is an HR enterprise architecture team who holistically designs the future HR model on both the business and technology side, holding the reins of transformation across all functional projects and the full transformation life-cycle in their hands.

Experience shows that cloud-based HR transformations which reflect these principles in the design, software selection, and implementation phase of the project have a higher chance of running effectively and meeting defined goals and expectations.