ISM Indirect/Services Group Web Seminar

ISM Indirect/Services Group Web Seminar

Successful Procurement of HR

Services ―What You Need to

Know!

Don Glade is the industry’s leading authority on determining the TCO of HR, benefits, and payroll service delivery.

Hundreds of organizations have engaged with Don to use his proprietary financial analysis tool to understand the true costs associated with HR, benefits and payroll service delivery. His firm analyzes, quantifies, recommends and monitors solutions his clients have implemented to optimize their investments. Ultimately, clients reduce service delivery costs while increasing efficiency, mitigating risk and streamlining their regulatory compliance.

Immediately Prior to founding Sourcing Analytics in 2003, he was director, global human resource solutions for PricewaterhouseCoopers where he established a human resource administrative consulting practice that assisted clients with all aspects of the delivery of HR, benefits, and payroll services to employees.

A frequent public speaker, Don has addressed the Society for Human Resource Management, the International Society for Certified Employee Benefits Specialists and more and has published several articles and white papers on TCO in his field of expertise.

He earned a B.A. in Economics and Political Science from Duke University.

Agenda

Procuring HR Services – The Differences

Service offerings in the HR Area

The procurement professional as facilitator

The role of cost dynamics in HR procurement

Building a business case

Web Goals

What will we accomplish today?

Understand how HR procurement is different

Provide ‘food for thought’ for better

effectiveness in the next HR procurement

process


What makes Procurement in HR so

“special?”

The People!

Pay (Labor) Benefits


For many organizations, Labor is the

number one expense HR’s mission is to attract, RETAIN and ICENT

employees

Any activity that touches the employee group makes

HR apprehensive

“Touch” can be more important than technical

expertise to an HR professional

Often-times, HR professionals don’t have expertise in

the traditional business drivers such as cost analysis,

ROI, and risk


And the impact on the procurement

professional is? HR tends to get defensive towards “outsiders” getting

involved in decision making around the delivery of HR

services

Process bottlenecks in sourcing and selection become

commonplace

Business case development is inadequate and often

misses the mark with executive decision-makers

Ultimately, “do-nothing”, or status quo becomes the

de facto course selected

Service offerings in the HR Area

What are the services offered in the HR Area?

Traditional 401(k)

Pension

Benefits Administration

Payroll

Time & Labor

Management

Emerging HR Administration

Talent Management

Recruitment

Work Force Management

Learning & Development

Compensation


Procurement to the rescue!!! Understanding the sensitivities of the HR department is

a great start

Come in as a partner in the process, rather than an

expert in procurement

Use the expertise of the HR professional rather than

isolating that expertise

Be flexible to allow for variation from the traditional

RFP approach

Provide ‘food for thought’ to for better effectiveness in

the next HR procurement process


Example I - Isolating the expertise: A large organization was searching for a benefits

administration outsource provider

The procurement department controlled every aspect of the

traditional RFP process, isolating the service providers from

the service buyers – all questions had to go through

procurement

Result: The best providers bowed out of the process, the second tier

providers were the only respondents

HR wasn’t able to find a suitable provider, and the process

failed


Example II - Flexibility: A large organization was searching for an HR BPO provider

Recognizing the intricacies of the market and complexities

of the services desired, the organization determined that a

“reverse RFP” was the best approach

Procurement became the managers and facilitators of the

project

Result: HR was able to more quickly and with less cost secure the

services of a top-tier provider and successfully implement

sooner than ever anticipated


Procurement in the HR area is all about services Although HR service providers “productize” their offerings,

make no mistake, you are purchasing services

Whether it’s premise based technology, SaaS,

administrative outsourcing or anything else, HR is about

servicing its clientele: the employee and management

Unlike purchasing raw goods, or “widgets”, in the HR area,

services purchased impact the People-Process-Technology

trinity

Pushing on costs in one area will impact the other

Understanding the dynamics of the cost shifting is critical!


TCO is an approach for quantifying the end-to-end costs of a process

One Time Costs

Initial system installation

Upgrades Consultant

feesTCO

Ongoing Costs Labor for

administration Labor for system

maintenance Non-labor costs

Great Moments in Cost History

1626 – Dutch purchase Manhattan Island for $24 million

1803 – U.S. purchases Louisiana Territory for $15

million

1982 – Pentagon purchases hammer for $435

1997 – Windows 95 PC TCO calculated at $9,784


Critical to the success in any procurement is

driving the process across the goal line! Financial acumen is not a typical trait of the HR professional

Procurement can be a great partner by involving the

financial resources early in the process to assure the data

necessary for ROI analysis later in the process

Procurement has the experience needed to translate the

goals and analysis into a language the executive decision

makers speak (Business Case!)

HR has the in-depth knowledge for building the case for

change


What is “The Case For Change” The cost and ROI discussion has been illuminating, but it

isn’t yet a business case. First and foremost comes

establishing why any action is necessary.

Executive decision-makers need to know why “do nothing”

is not an option.

There are always competing requests for capital

improvements, and most will be viewed as more critical to

the future of the business.

HR hasn’t traditionally been able to demonstrate

contribution to the bottom line performance from a

revenue or cost perspective.


The case for change includes how and why

the chosen provider was selected Typical reasons for selection, beyond cost, include:

Culture, Vision, financial ability to meet the vision,

leading edge or fast follower, proven track record

Avoid the “checklist” mentality that boils everything

down to metrics and weightings. Remember, this is a

“high touch” area

Procurement’s best role is to facilitate and provide the

structure and guidance for HR to navigate the

approval process


The business case is much more than a

simple numbers analysis: The Case for Change - Why is the status quo not an

acceptable option?

Presenting / Evaluating the Alternatives - What

options were explored?

The Selected Alternative – What has the team

determined as the best option?


The business case is much more than a

simple numbers analysis: Making the Case for the Selection:

– The Financial Case– The Non Financial Case

Implementation Plan

Corporate requirements such as: Capital

Appropriations Request, Procurement requirements,

etc.

ISM Indirect/Services Group Web Seminar

Questions????

Donald Glade

President, Sourcing Analytics

[email protected]

770-509-4816

ISM Indirect/Services Group Web Seminar

Documents

Transcript of ISM Indirect/Services Group Web Seminar