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– How challenging can it be?
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Published
4 November 2024
“It is just an HR administrative system. It cannot be that complicated”, seems to be the approach taken by many organisations when they start the journey of implementing a new HRIT system. However, it is not unusual to see even large delays and budget overruns in HRIT implementations. Why is that?
In this article, we explore why HRIT implementations are not “just an implementation”. We explore the role of the HRIT system in the organisation and what it means in terms of risk and complexity when you change it or implement a new one. After that, we dig into the elements that we find add the most complexity to an HRIT implementation, and we suggest how you can reduce complexity in your implementation, thereby increasing your chance of success.
At the end of the article, you will find a tool that may help you conduct your own complexity analysis to assess how much your HRIT implementation is at risk of being delayed.
HRIT is the data backbone of your organisation
To understand why HRIT implementations can be complex, we need to understand the role of HRIT in the modern organisation.
Firstly, the HR system structures your organisational and personal data across the organisation. It typically depends on or is closely related to your company structures (cost centres), which are often owned by the finance function, and it relies on your location structure, also often owned by finance.
The HR system is also the source of all your personnel data, and many functions would like to subscribe to this data – if they do not already do so. The Identity Access Management system – often owned by IT – governs access to your other IT systems and physical buildings, and to safeguard high security standards, IT would typically like to sign up for your data so they can adjust access immediately when employees are hired or leave. Similarly, payroll has a high interest in your people data so they know when people go on leave, leave the organisation or have a pay change.
Your HRIT system is thus the centre of a spider’s web of data exchange in your organisation, and changing it may shake the entire web and may lead to derived changes in functions far away from HR.
Secondly, modern HRIT systems are process-based, and they thus structure all your personnel processes and ensure that everything is done in the right order and approved by the right instances. Implementing a new system means changing your people processes to a smaller or larger extent. Every manager and employee may be impacted by this change, not to mention all the HR and payroll staff who will need to align on new ways of working.
Seeing HRIT in that light makes it clear that it is not an implementation that can be managed by HR or IT alone. It involves and will impact the entire organisation, which is never “just an easy task”.
Factors that increase complexity in your HRIT implementation
Once you have recognised the importance of your HRIT implementation and the many stakeholders you will need to onboard in the project, there are several contextual challenges that will increase the complexity of the project even further. In the below, we will outline them one by one and discuss how to reduce complexity.
1. The organisational challenge
a. How many countries and business units do you cover?
b. How decentralised is your organisation in terms of governance and decision power?
2. The process challenge
a. How mature is your HR department when it comes to standardising processes?
b. How many processes do you have in scope?
3. The integration challenge
a. How many integrations do you need to replace or want to build?
b. How complex is your current IT landscape?
4. The data challenge
a. How mature is your organisation in terms of data governance and taxonomy across functions?
b. How many source systems are you replacing?
c. How easily accessible is your data?
d. How big is the difference between your current data model and your future data model?
5. The cultural challenge – especially if you implement self-service
a. Is your culture ready to allow the data transparency that comes with self-service?
b. Is your culture ready to enable true self-service for employees and managers?
c. How much ownership of the team do the managers demonstrate, and how much do the employees take ownership of their career and learning?
The organisational challenge
When it comes to the organisational challenge, the rule of thumb is that the more countries and business units you have in scope for your implementation, the more complexity you will have to deal with. This will increase the number of local requirements and standards that you need to consider when you design your processes and set up the system. What can add further layers of complexity is the level of decentralisation. The more decentralised the decision power is in your organisation, the more complexity you add. If you do not have a good structure for how to align things across countries and business units, you may end up with a project that spends most of the energy on making different organisational units align.
How can you reduce complexity related to organisational challenges, then? You typically do not hold the power to reorganise or make major changes across business units, so what can you do?
First, you can look at your scope: do you need to include all countries and business units in one go, or can you do it step by step so that you have less variance to deal with?
Secondly, you should look at your governance structure from the very beginning. If you can establish a governance body or another kind of alignment structure, which will ensure that the HRIT implementation project will have one place to go for answers to how to build, what to prioritise across countries and BUs and solving dilemmas that impact more parties, you will have a very good point of departure for your implementation.
The below illustration shows the difference in communication and stakeholder management efforts for the HRIT project in an organisation with centralised versus non-centralised decision power.
The organisational challenge – example of strong centralised decision power
The organisational challenge – example of weak centralised decision power
The process challenge
When it comes to the process challenge, most modern HRIT systems come as software as a service. This means that the system provides some standard processes that you will be able to configure to fit your needs to a smaller or larger extent. One of the main benefits of this is reduced maintenance and increased automation. To reap the benefits, it is important to align business processes to the largest possible extent and obtain scalability. If you do not, you might as well have purchased one system per country or business unit instead of one shared solution.
The rule of thumb regarding process complexity is: if you have never previously aligned processes across the business, and all your countries, business units or employees perform their tasks in different ways, or if you have many processes in scope, the more complexity you will have to manage.
The first and easiest task is to break down your project into a minimum of processes to include in the first release. This will allow you to focus on these few processes and launch the first new ways of working at an early stage, thereby starting the change journey and the benefits realisation early. You can then add more and more processes on top. This will make it easier for you to manage your timeline, and your users will experience a smoother change curve.
When it comes to aligning processes across a business that is not at all aligned, we see no quick way. However, if you can reduce complexity in the stakeholder landscape as outlined above under organisational challenges, you will have a context that supports alignment rather than works against it. And that helps a lot.
Accepting that aligning processes across countries and business units for the first time is not easy. You can benefit from starting your process work early. How to do that is another topic that will not be covered here.
Breaking down your project into smaller bites that can be released one at a time is one way to reduce complexity and start benefits realisation at an early stage.
The integration challenge
When it comes to the integration challenge, the rule of thumb is that the more integrations to other systems or middleware you will have to build or replace, the more complexity you add to your project. In addition to that, the way your current landscape is structured technically may add further complexity.
Many organisations tend to approve business cases on improvements that will help the business directly. A cost for technical clean-up, on the other hand, can be more difficult to sell. Therefore, some projects tend to include IT landscape clean-up or as many integrations as possible in the HRIT project. This will lead to increased benefits from the HRIT implementation and secure funding for the clean-up of the IT landscape. However, it also leads to a significant increase in complexity for the HRIT project, which has enough to do with managing change in the people processes.
So, what can you do in this case? You will need to make your IT department and your organisation accept a step-by-step approach to building and replacing integrations. This may entail later decommissioning of legacy systems with slightly increased costs, but it will advance the day when you can go live with the HRIT system for the first time and thus advance the HR transformation and business improvements in HR, and it will enable you to start benefits realisation sooner.
The landscape challenge – example
The data challenge
When it comes to data, the rule of thumb is that the more legacy systems (Excel and Word documents count as legacy systems in this regard) you are looking to replace, the more complex your project will be. A large amount of source systems typically implies little alignment on data models and taxonomy, which again implies that you will have to engage in the same cross-country/cross-business unit alignment that applies to process alignment.
This means that you will have the same options for reducing data complexity as outlined under processes and integrations: can you break your project into bites replacing one or two legacy systems at a time? Would it make sense to go with some of the data related to the processes you have decided to go for and leave the rest for later?
The cultural challenge
HRIT implementations can become more complex if the introduction of self-service presents a major shift in the mindset of managers and employees. Mindset is a set of beliefs that shape how individuals make sense of the world and themselves. It influences how they think, feel and behave in any given situation. Self-service requires a mindset of ownership: as humans, we tend to take better care of things that we own than things that are owned by someone else or, indeed, by no one. In the HRIT context, this means that when we, as users, feel as if we own data or a process, we are more likely to care about what happens to it. This is often a crucial part of the initial business case: to improve managers’ ability to lead their own teams and to increase the data quality of employee data.
Therefore, the complexity of an HRIT implementation increases in organisations where users feel as if they do not own their data or processes. A typical example would be organisations where processes are largely driven by HR and hence thought of as “HR’s ownership”. Introducing manager self-service in areas such as onboarding may increase the complexity of implementing such functionality simply because it is not in the leader’s mindset to take ownership of scheduling first meetings or ordering equipment for new employees. The other way round, HR may also be reluctant to hand over ownership to managers and employees and ask for approval flows on self-service activities to ensure control. This could undermine manager and employee ownership and complicate user adoption.
Some may argue that user adoption is not a project complexity challenge, but it is. Projects do not succeed with benefits realisation if user adoption is poor. And the project scope will change if the process ends up gathering requirements to adjust the solution to hold off the self-service part and instead configure processes to keep HR in the loop, at least temporarily.
Hence, the rule of thumb is that the more self-service actions are in the hands of HR today, the more complex your project will be.
Conclusion
In general, breaking down the project into small bites that can be released one at a time, be it from a process, data or integration perspective, is a very strong means to reduce complexity and increase your success rate. In that way, you will focus on one manageable thing at a time rather than run with ten things where you easily lose the overview. You avoid that delays in one area will cause delays in the entire project and postpone the launch of all the other things that do work and could be launched. Simultaneously, it comes with the major upside that you can initiate your benefits realisation early in the project while you are still working. This will give your project a feeling of “tailwind” and a constant urge for more, rather than “headwind” with questions about why we have worked for two years on something the business does not understand.
That being said, in our perspective, the area with the most potential to reduce complexity is within the organisational space. Imagine that you succeed in taking alignment on decisions away from your project so you can easily access decision-making when you need it. The amount of stakeholder management to be performed and the amount of time spent on working on alignment before you can progress can be extremely reduced. Playing on stable ground with a clear direction is always easier than playing on a battlefield where local interests dominate.
Quick tool to assess the complexity of your HRIT project and areas where you should look at reducing complexity
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