Are Finance and Human Resources “just” supporting functions? Definitely not. Now more than ever, each has a significant impact on the strategy and the operations of a company.
It has been quite a while since we have used the words “back-office” and “front-office.” However, that historical definition – front-office being the customer-facing activities of marketing, sales and service; and back-office being supporting, non-customer-facing activities, such as finance, HR and manufacturing – subconsciously may still influence us to underestimate the potential for the “back-office” to provide insights that help a company thrive.
When we look at Finance and HR, we often first reference integration points between the two, such as the use of common employee information including the employee master and cost center assignments; salary and expense reimbursements; and the financial impact of employee benefits. And we don’t always think about the fact that these master data points are also relevant for both sales and operations.
And as you can see in the image below, there are many other areas in which HR has a financial impact, beyond looking at current actual payment transactions. These areas include simulations and cost planning for resources in cost centers, projects, and operations; budgeting in the context of talent development; and skills assessments and the cost of including a contingent workforce, that allow a company to plan for strategic initiatives in the short-, mid- and long-term.
Let’s look at a strategic example scenario, in which HR and Finance are closely involved in helping a company determine whether they have the appropriate resources to accept a lucrative new project.
Let’s expand the video with additional concrete examples.
Imagine that your company has the opportunity to take on a new project. Maybe, as in the video, you are a manufacturing company who needs design engineers with specialized CAD computer skills to design a new product to break into a new market. Or you are a professional services company that has the opportunity to take on a new software consulting project, but since it is for a client that has a government services division, all project resources require a clearance to view classified information. Or you are in the fashion industry, and need creative resources to design a fresh, new look for your customers.
In each of these scenarios, there are specific skills that are required. So you need to ask yourself:
- Do your current resources have the right skills?
- If they do have the right skills, are they available?
- If they are not available, can they be moved to the new project? What would be the impact be, from not only a cost perspective, but also the timeline and profitability impact to their current projects?
- If your resources do not have the right skills, can they be trained? Is the training internal or external? And how long would the training last – and at what cost?
- Can you use a contingent workforce, such as consultants, to supplement your resource needs? And how long is such a strategy sustainable?
- Is the new project secure enough to allow you to hire new permanent resources?
The solutions that will help you with this analysis include:
- SAP S/4 HANA Finance
- SAP S/4HANA Human Resources, including SAP SuccessFactors and SAP Fieldglass
- SAP BusinessObjects Cloud for planning and analytics
With the analytics capabilities and the core data at hand, you can assess the current roster of your employees’ skills, from data scientist specialist skills to project management. In addition to these concrete asks, your projects will also benefit from soft skills, such as specific industry expertise; knowledge of the local language, culture and business practices when expanding into a new region; and experience in defining new business models and change management practices.
Once you have identified possible scenarios and required resources, you can use what-if simulations to run a cost simulation of each and every scenario, from re-allocating and training employees to using consulting resources to hiring new full-time resources. In addition, you can use predictive analysis to assess the profitability of the company – not just an individual projects – depending on the optimal mix of such resources, the potential revenue of the new project, and any effect to current projects if resources are moved.
Ultimately, you can project the optimal mix: this may include internal resources which may require training; temporary consulting resources; and long-term hires. Your workforce experiences a higher job satisfaction by gaining new skills and working on a cutting edge project. And with the profitability analysis at hand, you can confidently make a decision on taking on the new project.
Your particular scenario may not require a government clearance. Or a fresh new fashion designer. Or new programming skills. Regardless of the type of workforce and profitability analysis you require, SAP S/4HANA provides sophisticated, business user-friendly tools to enable you to optimize your human and financial resources.
In such scenarios, both Finance and HR can work together. Finance can use the what-if capabilities in SAP S/4HANA Finance to simulate costs associated with multiple scenarios, from training to external resources; the financial impact on current projects and their deadlines; and the expected revenues of the new project, to ascertain its profitability. With SAP S/4HANA Human Resources, HR can assess the skill level of current employees and potential consultants and new hires, the fit-gap analysis, and available in-house and external training.
Together, Finance and HR can then make a recommendation about the most strategic, profitable and sustainable path forward for the company. Working better, together.
For more information about our solutions that support the integrated scenarios of Finance and HR working better together, please visit: