Embedded analytics provide immediate answers to key HR business questions
Hello SAP experts!
HR Analytics is picking up a lot of momentum, and it is easy to see why. In their landmark 2010 study about workforce analytics, researchers from IBM and MIT found that “Top-performing companies are three times more likely to be advanced users of workforce analytics than lower-performing companies. As well, these top-producing companies are two times more likely to cite workforce analytics as their competitive differentiator.”
For HR this means that analytics can really make a difference for companies that execute well on the insights they gain. Analytics represents a once-in-a-generation opportunity for HR to get into the driver’s seat, or recognition at the board table, where it can become a strategic business enabler, answering major business questions for both line managers and senior management.
In this blog I want to share what we at SAP have recently delivered to enable better execution through HR analytics, so that companies can get to the task of improving performance immediately.
At SAP we focus on embedding HR Analytics inside our software portfolio, so that the HR end user can get immediate answers to business questions, and make better informed decisions. I will focus on the release of embedded analytics in Enhancement Pack 5 (EHP5).
Enhancement pack 5 (EHP5)
In EHP5, analytical capabilities have been improved in two main areas: embedding analytics inside business transactions for Enterprise Compensation Management (ECM), and delivering new data models and visualizations for analytical reporting in HR.
ECM: Analytics inside business transactions
Let’s focus on the analytics inside business transactions first. Building upon the embedded analytics that were provided in EHP4 for the Talent Management area (e.g., Talent Profile, Predefined Performance Management, and the Talent Assessment), ECM was enhanced with new analytics designed to support the vision that we at SAP have on Enterprise Compensation Management: compensation is one mechanism available to companies looking to attract and in particular retain the best people. Talent management processes include compensation management because it is the crucial link to other talent management topics, in particular, performance. As there is no denying that companies with effective compensation strategies tend to have lower attrition, the performance link should be regarded at least as important as the links to benefits and payroll.
ECM enables companies and their managers to make decisions related to a number of compensation elements, typically salary, performance-related bonuses, and long-term incentives (i.e. stock option programs). This means that insight and linkage between compensation information and other talent management related processes is essential for a good enterprise compensation management.
In order to make good decisions, the line managers need to have this kind of insight from two perspectives: clear overview of the individual employee and about the team as a whole.
Before the compensation cycle starts, the manager needs good insight into talent management related metrics, such as performance of employees; and compensation management related metrics, such as the compa ratio (a measure of how the employee is rewarded in comparison with others in the same job category), and the compensation history for the employee. All these metrics are shown in the compensation profile, as shown below in Figure 1:
Figure 1: Compensation profile
Figure 1 depicts a compensation profile, providing the manager with a complete overview of the employee. Within this compensation profile display there is a link into the Talent Details, which provides the manager with insight into the potential, skills and also into risks and opportunities for the upcoming compensation cycle.
As a preparation for the annual compensation cycle the manager needs to evaluate these metrics for each individual employee, and make a comparison to the whole team. To obtain a team level overview the manager now has access to team level overviews. With this information readily available, the manager can evaluate, assess and make decisions on how compensation should be distributed among the team, which enables the line manager to make informed decisions that support a pay for performance strategy. These decisions include an assessment of risks of employees that might leave due to underpayment (e.g. compensation in relation to the job guidelines), and opportunities for those employees that perform best. Figure 2 displays an example of this team overview:
Figure 2: Compensation team view
These are just two examples of the new analytics that are embedded inside ECM and combine talent management processes with enterprise compensation management. As part of the design for ECM we have been focusing on making this insight actionable, meaning that the line manager can make direct changes from the graphs or the table below the graphs. Actionable insight also makes data entry as efficient as possible, and avoids redundant or time consuming activities. More information on the EHP5 release for ECM can be found on the SAP website or on SCN.
The second major delivery in EHP5 was around analytical reporting for HR. By analytical reporting we mean complex reporting that is typically performed based on large volumes of data in a Business Warehouse.
The delivery in EHP5 focused on the needs of Talent and Learning administrators in their talent management processes. Until EHP5, little content was delivered that would enable fact-based decisions about talent management practices. EHP5 bridged the content gap by providing an integration of talent management processes into core HR processes. This means that customers that have deployed EHP5 and switched on the business function for HR Analytics (HCM_Analytics_1) now have greater transparency into their talent availability and distribution. They can now better monitor workforce movement and demographics, and consequently understand better how performance impacts compensation.
The data models to answer these business questions are provided in SAP NetWeaver Business Warehouse (BW). Over 14 new queries were delivered, based on new so-called multiproviders, to immediately support the talent management processes that are executed in SAP Talent Management. Analytical content is provided the following talent management areas:
– Monitoring of Succession Planning Process
– Utilization of Talents
– Monitoring of Talents in the Organization
– Skills & Competencies
– Training Activities of Talents
– Compensation Plans of Talents
– Risks & Strength of the Organization
Important business questions are addressed include: Do we invest in the right employees? Do these employees have significantly better performance and potential scores? Are we developing them enough to become tomorrow’s leaders? Do they rotate jobs to get a better understanding of our business? What is the payment structure for these talents? Is this all good enough, or are we at risk of losing our high potentials? And if these high potentials leave, who fills that gap?
To execute these reports directly from the central workspace of the HR experts, new functionality is delivered to embed these reports in the Lauchpad for the Talent Management Specialist and the Training Administrator roles. Both can begin their analysis directly from within their SAP portal to find answers to the business questions they encounter, and have immediate input for their own work processes. The Launchpad can be customized according to the business process and specific needs for the user.
As part of the new analytics strategy, not only were data models delivered, but also new visualization content. Ten pre-configured dashboards provide the Talent Management Specialist and Training Administrator with direct insight into the work processes they manage, allowing them to support management with up to date advice. The new dashboards are designed to be easy to consume for the business user who occasionally works with analytics, such as these two described roles. Navigation for these dashboards is intuitive, which better provide answers to the standard business questions. More complex questions or ad-hoc queries can be handled by the HR analyst user who is comfortable working in BW.
Figure 3 provides an example of these dashboards:
Figure 3: Succession planning monitor
The succession planning monitor in Figure 3 provides an overview of successor bench strength and general succession planning for all key positions. New functionality also allow the Talent Administrator to jump from a dashboard into the underlying query to slice and dice through business information, and from the query open up a talent profile directly. This is precisely the kind of power that enables the business user to put insight to action, as users can move quickly from the general to the specific.
A business example illustrates these new capabilities well: an HR business partner has a discussion with senior management about the succession of one of the key positions. The HR business partner can show that the bench strength is low for this key position with information available directly from the dashboard. One of the senior managers points out an area in the business where a possible successor can be identified. The HR business partner explores this area during the meeting, based on the information that was provided, and immediately pulls up an interesting talent profile to discuss for succession.
Figure 4 is another example of a dashboard that is provided for the Learning Administrator.
Figure 4: Learning Activities dashboard
The Learning Activities dashboard provides an overview of the courses attended and not attended, as well as the bookings and booking cost for employees in the organization. In addition there is a training analysis that provides detailed insight into Learning Management processes within the selected part of the organization. This analysis of training and training cost allows Training administrators to assess the efficiency of training offerings are and whether course content is in line with the strategic direction of the organization.
If there is a good process fit, the Learning Activities dashboards can be used directly by all customers that have EHP5 implemented. If customers have additional requirements, these dashboards can be enhanced according to customer needs. In order to provide these dashboards to the business user there is an additional license fee required for the underlying BusinessObjects Dashboards (a.k.a Xcelsius) product.
For more information on this EHP5 delivery, please check this link for more details: http://scn.sap.com/docs/DOC-4919
Executive HR Reporting rapid-deployment solution
So far the Talent Management and the Learning Administrator have been discussed, but only SAP Talent Management processes have been covered. To provide the complete picture of out-of-the-box dashboarding functionality and pre-configured content offered by SAP for the HR space, I will also briefly touch upon the latest innovation.
Customers who want to get started with HR Analytics for a broader internal audience and with more advanced visualizations can now benefit from a new solution targeted at executives and HR business partners. This solution is called SAP Executive HR Reporting rapid-deployment solution, which visualizes over 40 HR KPI’s in one cockpit solution that covers all HR modules.
The SAP Executive HR Reporting rapid-deployment solution provides an executive with a single point of truth, where he or she can rely on this personal cockpit to visualize important metrics, explore and analyze underlying data, and react based on alarming trends. With embedded collaboration functionality, the executive and the HR business partner can stay on top of trends and make immediate fact based decisions based on trusted HR data.
As a rapid-deployment solution, SAP Executive HR Reporting ships as a package containing all the licenses; the dashboards and implementation guides; test scripts and end user training; and an 8 week implementation service to get this solution running. More information can be found on: https://service.sap.com/rds-hr-rep or check my blog on: http://scn.sap.com/community/erp/hcm/blog/2012/07/31/new-predefined-hr-analytics-for-executives-and-hr-business-partners
I hope that this blog has provided a good impression of what has been delivered in EHP5 in the SAP HR Analytics space for different business users. As mentioned, there is a big focus on delivering pre-defined content, and to present this content in a way that it is actionable immediately. In a follow up blog I will elaborate further on the delivery in EHP6 and HR Renewal 1.0 for the HR Reporting and Analytics space.
Solution Owner HR Planning and Analytics