Human Capital Management (HCM) Outsourcing - SAP

As more firms look to outsource elements of their HR function, service providers need to offer risk mitigation, process improvement and cost savings to attract new customers. Standardised software solutions are making this possible, says Synco Jonkeren, SAP.

The HR function was among the first to become established as part of the outsourced services revolution. Now, as the market for business process outsourcing for Human Capital Management (HCM BPO) continues to grow, firms are looking to hand over more HR processes to external service providers.

This has increased the pressure on service providers and software developers to look for more synergies, unearth more efficiency through process improvement and consolidate a services architecture that facilitates both service delivery and transformation.

SMART INTEGRATION

Among the developers that have responded to this pressure is SAP, a leading provider of enterprise software, which has continued to develop industry-leading HR business solutions.

Synco Jonkeren, director of HCM BPO for SAP AG, says, 'Our state-of-the-art HCM business processes scale very well in an outsourced environment. Our service providers can also leverage SAP's Enterprise Services Architecture (ESA), Netweaver, and our multi-tenant architecture. HCM BPO has been a tradition for us, and payroll outsourcing has been around for many years, but now organisations can also add value by outsourcing additional processes through high-quality applications, like, for instance, Talent Management.'

SAP's platform, mySAP ERP Human Capital Management, is the basis for systems such as GlobalViewSM, the HR and payroll solution of ADP Employer Services, which is a leading outsourcing services provider in the sector. Such solutions are now becoming much more widespread, and GlobalView is itself now operating in 32 countries as the BPO platform for around 190,000 employees.

CONTROL

The SAP HCM offering also builds on SAP's Netweaver platform, which simplifies the transfer of non-core business processes outside an enterprise while offering full control of integration, information and workflow. With this powerful platform, SAP's solution helps BPO service providers to assist their customers in tying the HR function to their strategic goals and business results, so that senior executives get an insight into true workforce performance.

'We have seen that some organisations had HR systems but had been unable to fully leverage them,' says Jonkeren. 'With the service and functional expertise from our outsourcing providers, they have been able to reach the potential of the application.'

QUALITY IMPROVEMENTS

Starting from integrated master data management, SAP has invested in portals, smart self-service capabilities and enhanced workforce analytics as part of its drive to lead the HCM market. Combined with the domain-specific expertise of the service providers its BPO program supports, SAP is helping firms achieve quality improvements and cost reductions through economies of scale and smart integration, and to mitigate risks in the areas of compliance, transformation and system operation.

'We see the HCM BPO market as strategically important, which is why we have designed a specific program for it, and why we have large, global service providers wanting to leverage our technology,' notes Jonkeren. 'We saw the trend coming.'

INCREMENTAL OUTSOURCING

'Leveraging SAP's standard HCM solution helps integration, and also means firms can easily outsource incrementally, and can choose to take a process back in-house, or switch providers, if necessary. Using a standardised HCM platform strengthens the customer's position. You don't want to be locked in by proprietary solutions.'

In the future, SAP is looking to invest more in HCM BPO, in order to further increase its solution's compatibility with other applications, improve decision-support capabilities, and further invest in SLA and governance coverage. With software developers like SAP investing so much in HCM BPO, the market is expected to continue growing rapidly.