The Value of Intelligent Services by Eudemonia

The Value of Intelligent Services: Enhancing Every Employee’s Experience September 2015

The Value of Intelligent Services

The Value of Intelligent Services: Enhancing Every Employee Experience With the advent of the Internet, Web-based access to enterprise software solutions ushered in a new era of business computing: employee self-service. Both individual contributors and managers got ubiquitous desktop access to traditional back-office operational systems and thus were enlisted in entering data and processing business-related transactions in their day-to-day jobs. This approach was particularly prevalent in human resources (HR)-related areas. In most cases, the employee individuals actually have the first-hand knowledge of the information or task to be completed or would have had to manually create paperwork to document the issue anyway. The business case for many organizations to adopt these solutions came from the time and/or cost savings that could be gained by offloading much of the data entry and transactional processing tasks from functional workers in human resources or business administration. The savings calculations were simple. If an HR department, for example, had 10 people working 1,600 hours each a year processing new hires, making an average annual salary of $60,000 a year, transferring half the workload representing the responsibility of processing those hires to employees and managers involved would save the department 8,000 work hours. If the positions were actually eliminated, it saved the company nearly a half a million dollars a year ($480,000). At the same time, many organizations, wanting to further streamline operations, established shared service organizations that centralized remaining back-office responsibilities and administrative tasks. Often these teams were designed to operate alongside employee self-service software solutions, performing data entry quality assurance, help-desk, and exception processing support tasks. Some firms looked to reduce costs even further by establishing those centers in countries with lower wage costs or by enlisting third-party “outsourced” service providers that could bring efficiencies through focused expertise and scale. Thus the remaining work could be done for a fraction of the current labor cost.

The Value of Intelligent Services

Self-service Sadly Stalled While elegant in design, by and large the employee experience of the execution of these strategies was not excellent. Self-service adoption was not immediate, user interfaces often not intuitive, and telephone touch pad trees to connect workers to appropriate staff impractical and impersonal. These disparate and disconnected systems and service centers have left many employees frustrated with the support they receive from their employers and with far less time to focus on meaningful work; both meaningful work for the business as well as their professional career development – key to employee retention and engagement today. In addition, workers report being overwhelmed and isolated during events that involve any kind of complexity or uncertainty, such as role changes or relocations. Tasks and transactions even within the same system can seem “dumb” when changes to one piece of data or activity status do not cascade to effect changes in other parts of the system relying on the same data or person to execute or approve. Remote service center staff have typically been unable to understand these more complex issues or are even set up to lend helping hands. Should firms want to add more sophisticated support for workers today, current HR business partner staff and service model approaches could be considerably costly. Business technology company SAP has set out to change this solution and service situation. Starting in its SuccessFactors HR cloud software division, it is developing a capability it is calling “intelligent services.” This paper will outline the potential business cases and benefits of the intelligent services “event” centered approach to integrating and cascading HR system data changes, processes, and activity flows. Benefits from both the front-line employee and back-office service center staff impacts will be reviewed.

The Value of Intelligent Services

Forget Front-line Frustration

In the time and cost-savings calculations above, few firms asked themselves: what happens to the 8,000 administrative hours or more precisely, where does that time go? While automating data collection and processing did bring some efficiency to the work effort, most firms did not overtly plan for the 15 minutes here, 30 minutes there, that self-service responsibilities brought the average employee. Multiply this across not only HR functional areas, but other business processes such as booking travel, filing expenses, requisitioning new hires and supplies, approving invoices and accounts payable. It adds up. Aggregate time the average employee – and particularly managers tasked with documenting approvals – can take hours every week. The interrelated roles and rules they invoke can easily lead workers exponentially astray from customer-driven business activities when changes have to be made. Take for example, a global product manager who supports a $10 million line of business. If she spends 20 hours a month on administrative tasks and effectively has 1,600 productive hours a year to offer her employer (given average work hours in her region and paid time off benefits), she is sacrificing 15% of her time on internal issues and work when she could be supporting customer requests, sales pricing analysis, or supply chain partner inquiries and troubleshooting. Now add in any event of complexity, that involves the employee actor understanding policies, procedures, regulations, even external sources of information and capability, and self-service breaks down. That average one hour a day of administrative self-service can easily double. Consider a simple time off request. Most firms require documentation of the request, its approval, and paid time off benefits accrual. End of automation story.

The Value of Intelligent Services

Business Breakthrough Big

Most core HR systems today can do the basic time-off data capture, but with SAP SuccessFactors intelligent services capabilities, when a worker triggers a time off request, the system routes the documentation capture, but then notifies both manager and employee to consider if work goal plans should be adjusted (and work responsibilities should be reallocated). Then it updates the SAP collaboration platform Jam to notify other workers of the absence throughout the period of leave. It also alerts any other application that may “subscribe” to her time-off events during the leave. Similarly, when a worker becomes a first time or new manager (typically just a data entry position change in core HR software), SAP SuccessFactors will kick off tasks establishing new learning activities, a review of new team and goal plans, and performance review calibration participation as appropriate. Again, looking at the worker and the related work efforts as a result of the business change, not just the data entry. In this way, SAP SuccessFactors is not asking the worker to simply document what the business needs, but what the employee needs. It takes the next step towards instantiating the change in the workplace to give workers productive time back. This is the next meaningful step change in business computing. Over time, SAP will be monitoring for other interconnections between events, systems, and activities to begin recommending additional next steps and cascaded changes.

Savvy Service Solution Of note, SAP SuccessFactors has a unique capability called Central Service Center, which allows customers with centralized support functions to use SAP as the platform to enable staff-based services and support. Machine learning technology will be able to surface those situations where it makes sense for service center staff to surgically step in and alleviate breakdowns and bottlenecks in the employee workflows and processes.

The Value of Intelligent Services

This will help staff reallocate work and approvals as appropriate. For the first time, on-line and off-line activities and interactions can be surfaced and solved for in tandem to further streamline workforce support. In this way, the employee experience of both the software and support infrastructure provided to them improves. Culturally, it also puts a priority back on their productivity and personal time.

Bring Back-office Benevolence In light of or in anticipation of these more complex business requirements and capabilities, shared service organizations (including the third-party outsourcers that may serve them) have been evolving from their earliest days. No longer can businesses “lift and shift” their old ways of doing things off-shore from headquarter locations simply for the labor cost savings. Companies have recognized the real challenge of changing the way they operate to be more efficient on the back-end. They also acknowledge the trade-offs of driving more self-service solution adoption across their employee bases on the front-end. Given the fast pace of technological change, many are indeed more conscious that shifting too many tools and tactical business tasks onto workers. This simply leaves their regular work undone. To solve for this, some companies have established global business service (GBS) functions that collapse the traditional siloed shared service or outsourced functions for finance, HR, and information technology (IT) into more outcome-oriented support centers. These blend and balance fiscal, personnel, purchasing, and productivity enablement responsibilities of the business into one area. Their intended outcomes are often reflected in their organizational names: Employee Experience, Organizational Effectiveness, People and Culture, or Workforce Support.

The Value of Intelligent Services

Centers Needs Smart Solutions In this way, specialist service center staff are responsible for the software solutions, call centers, and help desks that can address technology, policy, procedure, and informational issues that workers struggle with in tandem these days. As such, these new scenarios cry out for a more progressive technology like intelligent services. And as software automation advances, centers need to elevate the capabilities of their teams to provide more employee advice and decision support than tactical and technical support to workers. Turn-over in call centers can top 100% annually (typically because of poor career development prospects), so offering more interesting work and advancement is key. This means intelligent services capabilities are a great compliment to the global business service organizational evolution as staff can now monitor not just solution up-time and first-call resolution metrics, but where human intervention and ingenuity is needed. As system changes and events cascade other actions and create additional employee frustrations and day-to-day work distractions, service staff can step in. To this end, they may gain the satisfaction of truly serving and solving for colleagues challenges and improving business processes and programs. In this way, intelligent services can open up new opportunities for process streamlining as well as enhance employee satisfaction – for both front-line and service center workers alike.

Capable and Cost-‐effective Typically services organizations have been priced to support businesses on a full time equivalent (FTE) basis, or how many people would it take to support the functional area of the business process being changed or replaced. Simple math like in the examples above. Savings are achieved by saying of the 800 hours left for HR administrative support, if centralized and made more efficient, 560 would still be needed.

The Value of Intelligent Services

Relocating to a low cost country means instead of paying $60,000 per year per person, the cost would be $30,000. Savings: $390,000. Revamping this approach with intelligent services, however, companies can eliminate much of the dumb data entry and HR follow-up work of shared service employees. They can also consider repatriating staff or relocating to areas with more skilled resources, aligned time zones, or better language skills to improve the employee experience. Even at higher average wages or team development expenses, companies could reduce cost by further lowering service center staff requirements through more targeted value-added work. Intelligent services help guide event-driven workload allocation processing, transition decision support, and employment and work-related advice, resulting in more satisfied employee “customers.” More importantly, average front-line employee productivity can improve. If five of those product directors got 10% of their time back to drive business expansion, it could result in $5 million of top-line growth, a conservative estimate. Employee retention and engagement improvement through enhanced satisfaction with workforce support adds another level of business cost savings. If a firm avoids losing just one $150,000 salaried product director, it avoids the typical two times salary cost of $300,000 to replace her, not to mention the value of the institutional knowledge the individual had in the organization. If it is able to retain and promote even a fraction of its service center representatives, the savings add up exponentially as well. With joblessness in leading economic engine countries like the United States and Germany near traditional definitions of full employment, employee burn-out and retention costs are real for businesses to consider today. While companies and individuals alike will have to be vigilant that regained time is expended wisely, the time has come to acknowledge these challenges and consider new solutions.

The Value of Intelligent Services

Conclusion When manufacturing companies look to expand production and profitability, they model the output if all of their equipment and plants are running at their most efficient capacity, constrained by hours of operation. If companies routinely budget for equipment up-time and reasonable productive lifecycles for machines, why should the workforce be any different? Economists have been stumped since the last financial crisis as to what will raise workforce productivity and sustain business growth and expansion. Automation and outsourcing drove the last great wave of productivity – perhaps a more intelligent approach to workforce support services will drive the next. Working hours and labor productivity in the modern era are complex topics, but the economic calculations around time can be relatively simple. What the workplace and workforce needs today is both new thinking and new tools to address some of the interrelated issues this paper has discussed. Intelligent services, with its focus on interconnecting not just data points between systems but the events and actions that must be taken as a result of change, is indeed a step-change in business systems and support solutions today. The fact that it incorporates the ability to learn where employees are struggling and needing enhanced support is an even more powerful approach. This paper predicts that disconnected and disparate self-service systems, particularly a sea of best-ofbreed software as a service (SaaS) solutions, will seem as archaic and arcane to workers in a few years as do the green-screen mainframe systems of 20 years ago or the desk-top driven client/server model many firms are considering replacing. While consumers with free access to apps online have some tolerance for poor (or non-existent) support, enterprise technology buyers’ and users’ patience and productivity are running thin when and where they invest their limited time and money today.

The Value of Intelligent Services

Intelligent services promises to connect the dots not only between software solutions but the workers and staff that support them as well, improving the productivity and employee experience of all parties. Economists define “opportunity cost” as the value of the time any individual spends not doing a task when they are working on something else. Arguably too many businesses have not considered what opportunities they were forfeiting when looking to reduce back-office operational costs over the last decades. It is time for companies to consider where they may find and support improved productivity and progress for their firms. Looking at the systems, services, and staff they already have is the place to start.

Methodology Eudemonia was founded to investigate new ways to gain value from more relevant and rewarding human resources (HR) or workforce-related software, services, and support operating models. A key hypothesis of Eudemonia research is that improving the employee experience day-to-day on the job – as well as in providing on-going support in using the technology and tools and consuming the rewards and benefits that employers offer the workforce – will significantly contribute to top line business growth and economic expansion. This is likely achieved through improved workforce productivity and efficiency, enhanced employee commitment and retention, and prioritized time and efforts on delivering business results, including customer service, satisfaction, and innovation. To outline the challenges and opportunities facing businesses in embracing and enabling an enhanced employee experience, Eudemonia drew upon a series of discussions with HR and service delivery professionals familiar with the issues facing businesses and HR today. These include practitioners involved in implementing global HR software solutions and providing service delivery through internal (“captive”), external (“outsourced’), and hybrid combinations of these service offerings to organizations.

The Value of Intelligent Services

Eudemonia also conducted primary research interviews with subject matter experts at SuccessFactors, an SAP Company, related to its new intelligent services capabilities. We would like to extend special thanks to SAP and SuccessFactors for recognizing the significance of the employee experience, its support of this paper, and providing access to its staff, partners, and customers for interviews. Additional intelligent services related information curated by SuccessFactors can be found at http://www.successfactors.com/en_us/lp/intelligent-services.html.

About the Author Christa Degnan Manning founded and leads workforce support research firm Eudemonia. Based on more than two decades of business-to-business market research, operational leadership, and global workforce experience, Christa has identified the need for a new category of technologyenabled business service capability: workforce support services. Inspired by marketing's successful championing of the customer experience, Christa seeks to help businesses align their own workforce support service strategies and models with the right third-party software and service partners to deliver functional capabilities and employee experiences that support productivity, engagement, and workforce efficiency. Prior to this work, Christa served as an innovation director in the Advisory Services consulting unit of American Express Global Business Travel, leading the EXPERT INSIGHTS research and Applied Business Intelligence consulting practices. Before American Express, Christa spent a decade as a business process and technology analyst and practice leader with the Aberdeen Group (establishing indirect procurement and spend category management coverage) and AMR Research/Gartner Group (covering human capital management software and services providers), following five years as a business journalist and media professional with Advance Publications and Ziff Davis. Cited throughout her career in leading business and industry media and contributing thoughtleadership commentary to podcasts and guest blogs worldwide, Christa has been most recently

The Value of Intelligent Services

featured on HCI.org, HR Examiner, HR.Com, HR Tech World, The Bill Kutik Radio Show, SHRM.org, The Company Dime, Workforce, and WTG Events. Christa has a Bachelor of Arts from Barnard College, Columbia University, including studies at University College, University of London, and a Master of Arts from the University of Massachusetts. She has also completed on-going professional development course work in business metrics at The Wharton School, University of Pennsylvania. She can be reached at christa@eudemonia.work and on Twitter @ChristaDegnan.

About Eudemonia From the ancient Greek word meaning "human flourishing," Eudemonia is a new type of systematic research firm focused on the organizational constructs, collaboration strategies, and workforce and talent management solutions that support people in driving positive outcomes for businesses operating globally today. Specifically Eudemonia focuses on understanding evolving human resource (HR) and information technology (IT) service delivery models and evaluating the solution providers that provide digital automation and staff-based service capability to support workforce enablement and organizational effectiveness business functions and shared services organizations. With particular attention on maturing software as a service (SaaS) delivery implications, research and analysis includes organizational support models, HR and workforce-related software and service provider selection criteria, and implementation best practices including on-going innovation consumption, managed services capabilities, and partner ecosystems, such as consulting, systems integration, and business process outsourcing (BPO). Clients Eudemonia serves include investors, operational professionals, and solution provider organizations through annual subscription and ad-hoc advisory services. It also conducts projectbased research and due-diligence to provide education and guidance on workforce support issues and initiatives. For more information or to make an inquiry, please visit http://www.eudemonia.work.