Seeking greater efficiencies within the human resource function, Asia Pacific companies intend to increase investment in HR technology, HR portals and software-as-a-service (SaaS) systems, via cloud and mobile applications, during the next few years.
The 2014 HR Service Delivery and Technology Survey, a global survey of 1,048 companies, including 523 based in Asia Pacific, found that one in three respondents (33%) plan to spend more on HR technology in the coming year compared with the previous year.
This includes 23% of companies that plan to increase spending by as much as 20%, while 10% of companies plan to increase HR technology investment by more than 20%. Only 15% of companies plan to spend less on HR technology in the coming year.
Seventy-eight percent of Asia Pacific organizations that have determined what type of solution they will adopt are considering SaaS to replace their current HR management system, with better functionality cited as their main expected benefit.
In Asia Pacific, the main providers of SaaS are SAP (including SuccessFactors), followed by Oracle (including HCM Cloud) and Workday.
Increased adoption of cloud technology is noteworthy among the companies surveyed, particularly those in markets where the government has taken a more proactive approach to the development of cloud, such as in Japan, New Zealand, Australia, Singapore and Hong Kong.
“The findings show similar change drivers as last year, namely the need to improve HR efficiency and effectiveness. This is compounded change given considerable progress already made over the past year,” said Jonathan Lo, Regional Practice Leader - HR Service Delivery Asia Pacific, Towers Watson.
Lo notes that companies are seeing the value that smartphone and other consumer-grade technology brings to HR, with an increased appetite to make strategic investments that can adapt and grow with the business over time.
Plans to change HR structure
The survey also found that one in three companies plan to change their HR structure in an effort to improve both efficiency and quality, reflecting an ongoing drive to get more value out of the function.
For those companies in Asia Pacific planning to change their HR structure, more than half (54%) are seeking greater efficiencies, while just under half (45%) cite quality improvements as the rationale for change, the survey shows. More than a third of respondents (37%) cited a change of business strategy as the reason.
However, the survey finds that in Asia Pacific only one in five companies will be expanding the scope of their HR shared services during 2014 and 2015, well below companies globally where one third will expand in this area.
Noteworthy too is that more Asia Pacific companies (14%) than elsewhere in the world (9%) are looking to decentralize their HR function, devolve to separate business units or geographies. It points to significant opportunities for companies in the region to invest in HR shared services or optimize existing service delivery model to gain an edge over competition.
“The survey found that one-in-ten Asia Pacific organizations don't have any standardized payroll sourcing strategy across locations – instead allowing each location to determine their own strategy,” said Lo. “That means about 10% of the companies surveyed are missing out on opportunities to realize operational efficiencies and effectiveness… small details perhaps, but they do matter in the increasingly competitive business environment we all operate in.”
Paper-based HR functions
In Asia Pacific, internal and external recruiting, onboarding, compensation, career development, workforce planning and succession planning remain manual or paper-based for around half the companies surveyed.
“It also appears that companies are splitting their dollar investments between core HR systems, such as talent management and payroll, next-generation technology including HR data and analytics, and integrated talent management systems,” said Lo.
The survey shows very positive sentiment: 75% of organizations in the region currently have or will have an HR portal – 76% see it as an effective way to meet their objectives.”
The survey also found a continued increase in the use of SaaS systems for core HR and talent management technologies, further adoption of mobile technologies and utilization of HR portals. Nearly half of the respondents (46%) reported using mobile technologies for HR transactions, an increase from 36% in 2013.
The survey noted that there is room for much growth, as only 10% are using mobile access for a majority of HR transactions.
Meanwhile, 60% of employers have an HR portal in place, up from 53% in 2013. Another 20% are in the process of developing a portal. Additionally, the adoption of SaaS increased again this year, with 40% of respondents saying they are considering SaaS as their only solution.
Key HR initiatives
Worldwide, for the second consecutive year, respondents identified streamlining their business processes as their key HR initiative.
More than half (55%) of respondents said they reengineered key HR processes over the past 18 months, while roughly half (49%) improved line managers’ people management capabilities.
About one-third (36%) implemented manager and employee self-service initiatives, while 31% refocused the role of their HR business partners.
“Organizations are narrowing their focus on HR initiatives as they seek to strike a balance among people, process and technology priorities. We attribute this shift to high-impact HR investments, such as streamlining business processes and implementing manager self-service, to a commitment towards running the HR function more like a business,” said Lo.