There has probably been more written about HR and the Cloud in the past 12 months than in the last 12 years (an exaggeration I know). The dedicated columns of ink on print and text to the world-wide-web around system architectures, in-memory computing, mobility and the emergence of the cloud specifically in the realm of HCM solutions is quite remarkable.
Don’t get me wrong, all this enthusiasm is terrific for the HR community and well overdue. The "War for Talent" issue seems to have been with us for an entire generation. Having sold HRO services for many years, I cannot help but think that at times we have missed the point. My humble opinion is that we need to invest more time in trying to help organisations Run Better. Technology on its own will not do this. It comes down to people and process.
I was fortunate enough to have stumbled upon a terrific paper written by McKinsey who had a dedicated piece on Indonesia entitled “The Archipelago Economy: Unleashing Indonesia’s Potential.” This study put the HR challenge into perspective for me. Whilst most are focusing on the BRIC economies, South East Asia has Tiger economies that have been growing consistently in economic terms with very little fuss.
Indonesia specifically is booming. The tables make for interesting reading. The numbers are both exciting and concerning at the same time. Think about the pressure this type of progress brings to the already brittle infrastructure. I couldn’t imagine more cars being allowed on the streets of Jakarta than they already have. If Indonesia continues to grow at their constant 5%-7%, the impact on businesses both up & downstream is going to be HUGE. If this pace of growth continues one wonders what impact that will have on all the support services (healthcare, schools etc) and their talent challenges.
Think about this for a moment, there are going to be an additional 40 million people in the consuming class. This works out to approximately 8x of the population of Singapore. Sounds great for services and product companies but the impact could potentially stunt businesses. The Indonesian challenge isn’t going to merely be about economic prosperity but more around the ability of businesses being able to execute against their strategies. Execution will be more critical than ever.
Here two factors come into play; the concept of productivity and labor pool.
Exhibits E1 (left) and E5 (right): Labor productivity estimates and workforce composition forecasts for Indonesia
Exhibit E5 couldn’t articulate the conundrum any better. In simple terms, the education system is churning out candidates in areas where the demand is declining. The reality of the problem today is so well depicted in Exhibit E1. For a number of years, the lack of supply of talent has forced organizations to look at productivity measures to keep them humming along. This is a great advertisement for technology and HR but this is unsustainable especially where HR practices are weak or non-existent. Ultimately for growth to be sustainable, relevant talent needs to be ingested into the economy.
We have a really robust SEA HR business across our portfolio (on-Premise & on-Demand). I can confirm that the two most vigorous conversations I have regularly are around Workforce Planning & Analytics and Recruiting. The intent of my very first post is not to suggest that technology is not important but to reinforce the message that technology without a business context or problem is simply a wasted opportunity.
In Indonesia, in a land of plenty, the time has come to realign corporate spend into areas that do not merely tick a functional box but solves a very real the business problem. Bank Mandiri in Indonesia did just this when it bought a range of applications from SuccessFactors. They had an ageing workforce and needed to integrate employees from their 4 different banks aligned. Their transformational journey began with compensation management then to include performance & goals together with learning and more recently Workforce Planning & Analytics.
If I were a betting man, I would predict a boom for Workforce Planning & Analytics, the (re)emergence of corporate academies and greater demand for Performance & Goals applications in 2013.
Raj Sundarason
VP HCM Solutions
SAP Asia Pacific & Japan
Follow me on Twitter: @RSundarason
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