When it comes to working out your HR Technology landscape (or to use the technical term – solution architecture), there is no one size fits all approach.
Each organisation chooses an architecture that fits with their overall strategic direction, current landscape, culture, management attitudes and other factors.
Additionally, you can’t always choose your landscape – most organisations aren’t in the position to start from scratch and need to deal with legacy apps.
Here at Navigo Research we see the following architectures playing out:
- An “All in one” platform – A solution that covers 70-80% of your HR functionality requirements with some point solutions filling the gaps
- Dual Platform – two big platforms, usually HRIS and Talent Management doing most of the work
- Master and slaves – One main platform doing 40-60% of your HR functionality with a lot of Best of Breeds in place
Regardless of the option a common approach to Business Intelligence/Reporting and Integration will be required.
Each of the three options are not mutually exclusive and your company may end up with a mixed-style environment.
But let’s take a look at the first option – the “all in one” platform.
Option 1 – All in one
This option sees a single all in one solution covering Payroll, Core HR and Talent Management. This solution may also be part of a broader ERP covering finance and other functional areas.
An “all in one” should aim to deliver 80% of all functionality needed reducing application management complexity.
Where functionality within this solution does not meet the needs of the organisation, best of breed applications can then be purchased to fill the gaps.
Organisations should decide on Reporting and Integration Frameworks before making any purchases so that these new solutions can plug into a broader architectural framework
Benefits of an all in one
Limited vendors to manage
No context switching for users – they stay in one system for their HR business processes
Very little integration to manage as it’s one source of truth and usually part of a larger ERP.
Simplified IT footprint if on-premise solution.
Potential alignment with other departments, particularly Finance
If moving to this model replacing payroll is costly and takes significant time and resources.
All in one solutions potentially involve hefty implementation fees.
Potentially offer less of a functional match than other solutions – they tick the box on some functionality but don’t do it well.
Greater change management to align with the ‘ERP-way’
Who uses them?
You tend to see all in one solutions where an organisation is going through major growth and there is a full scale program of new systems.
Mining companies that are in pre-operating stage who scale from 200 employees to 2500 employees may choose an “all in one” as solutions have been specifically built/configured for their industry (think SAP).
Vendors that come to mind in this space include – Workday (doesn’t do Australian Payroll), SAP, Oracle at the top end. In the mid enterprise space Technology One and in the small business space solutions like PeoplesHR.
Option 2 – Dual Platform
A dual platform architecture is where there exists two HR solutions (typically Core HR/Payroll and a Talent Management solution) providing the majority of HR functionality.
Where functionality within these two solutions does not meet the needs of the organisation, best of breed applications fill the gaps.
Dual platforms usually evolve over time
Dual platform architectures often evolve and are not specifically designed – as HR shores up ageing HRIS platforms.
For example an organisation with a HRIS bought years ago for transactional HR (payroll and master data record keeping) then introduces a Talent Management Solution for performance management and recruiting.
In the Australian market, examples of this dual platform approach include Chris21 and Pageup, Alesco and Cornerstone, Empower and Silk Road.
The battle of the banjos
Challenges with dual platforms include integration and source of truth issues.
We’ve seen more then one organisation battle over which system is the master data source for position/establishment information as it resides both in the HRIS and TMS.
This can get further complicated when responsibility for payroll resides in finance.
Having disciplined HR Information Management policies (a blog post for another time) is essential so it’s clear which system is acting as master/slave for different pieces of information.
Should you keep your dual platforms?
Many organisations running dual platforms are not in a position to rip and replace (or perform open heart surgery as Jason Averbook describes it) their 5 year old HRIS and 2 year old TMS, so you need to make the most of your situation.
Evaluate the strengths of both vendor solutions to determine where you should invest in rolling out more functionality. To keep data consistent between the two, clearly defined data ownership rules need to be established which then drives how integration works.
When two becomes one
We are seeing more organisations reviewing their legacy dual platform approach moving towards a single HR platform for the majority of their functionality. Best of breed solutions are used to fill gaps in the unified platform.
Interestingly, the payroll function is starting to be considered a best of breed solution and being treated separately to core TMS/HRIS.
A dual platform approach may not look like the best solution, but at the beginning of our series we said there is no absolute right HR solution architecture
Option 3 – Best of Breed
This practice of using a patchwork of point solutions to deliver HR functionality can be said to be a “best of breed” approach.
Best of breed solutions tend to have deep functional capability in their domain, offering businesses flexibility and convenience to match their requirements.
Of course, the downside of a best of breed approach is integration and reporting – pieces that need to span the whole puzzle.
Why best of breed?
Like the dual platform approach, best of breed architectures tend to evolve over time as HR’s needs change.
Typically, the payroll/HRIS system is the master system of record and hard to move off, so its easier for HR to purchase additional products to improve the delivery of HR.
Best of breed (or point solutions, if you like) deliver quick wins, give you high levels of functionality and ensure you’re not locked to one single vendor.
As specialised smaller apps, these vendors usually have deep domain knowledge, are keen for your business, and want to keep you happy for the long term.
What are the pitfalls?
On the negative side, best of breed solutions give you more vendors to manage. There may be a risk with smaller vendors over financial stability or being an acquisition target from larger players.
From a systems perspective, the two major issues are integration and holistic reporting of your HR information. Both can be solved, but there is additional costs and management involved.
Patching together a raft of point solutions requires some planning – solutions that speak web services and an integration approach like SOA (Service Oriented Architecture).
Integration will be necessary so the disparate solutions feed your data warehouse, giving you consolidated reporting. Effort will be required to align data models from the different systems.
Where do you find this approach?
Like in our dual platform scenario, you can fall into a best of breed approach through mergers, management/staff changes or vendors acquisitions.
Currently, not many larger organisations willingly choose this approach to their HR Tech landscape – the complexity and management is too high.
This may change in the future as cloud solutions mature, offering “plug-n-play” integration with other like minded apps.
You can already see this emerging in the SME space, with the ability to tie a Xero (finance and payroll) to BambooHR (core HRIS) and to Deputy (timesheets) – with no vendor intervention required. In the enterprise space, larger vendors like SAP and Saba are offering app stores to build against their API platforms.
As this plug-n-play world emerges, HR may be able to develop their own “all in one” through a bundle of best of breed solutions.