10 Key Ideas for 2016

Topics: HRExaminer, John Sumser, by John Sumser

photo of winter road with snow capped mountains in HRExaminer.com Article by John Sumser 10 Key Ideas for 2016 photo credit Jon Ottosson cc0

As the 21st century opens, HR departments are dealing with a new reality. Here are the 10 ideas you need to understand.

In 2015, we launched Key Interval Research. This is the introduction to our first piece of research, the Ideal Vendor Relationship.


As the 21st century opens, HR departments are dealing with a new reality. In order to accomplish their missions, they have to engage in a complex web of relationships. Using a combination of insourcing and outsourcing is the only way to get the actual work done.

That means that from one perspective the HR Department increasingly looks like a purchasing operation with a specific set of subject matter expertise. No HR Department will ever hang on to methods and practices that can be better executed elsewhere for less. So, HR is getting increasingly good at managing vendors and other relationships that cause work to be done by people who are not direct members of the HR Team (Employees).

While this is particularly true in HR Technology (no HR Department is going to spend much time generating its own operational software), it is also the case in the non-technical aspects of the department. Outsourced call centers, benefits support, workforce support, training, recruiting, staffing, assessments and contingent workforce management schemes are all apart of the day to day world of HR. Today’s HR Department manages a range of entities from complex technical vendors to individual contract workers.

The phenomena is hardly the exclusive property of the Human Resources Department. Enterprise management in the 21st century is less and less about managing the insides of an organization. The story that is emerging is one in which the job of the enterprise is to manage the ecosystem of entities that make up its supply chain, workforce, prospective workforce, customers, investors and community.

In each case, the relationships vary widely at the structural level of things. Disparate relationship forms range from direct employees and vendors to crowdsourced contingent workers that replace a department. Outsourcing can be done through a specialised vendor or as a crowdsourced activity through a bulk provider of contractors. The ultimate alignment of these complex interests results in growth, profitability and sustainability.

The HR professional associations have done little to prepare their members for this reality. It is not a far off future. Today’s work world requires that HR Departments accomplish their work through the agency of other individuals and groups. It is particularly the case in HRTechnology.

Each relationship requires that the Department make a decision about how and whether to optimize. In some cases, a passive relationship that simply trusts results is useful. In others, a heavy investment of time and energy is required to build and maintain strategic advantage.

The results are useful and transferrable to the non-technical segment of HR’s work. The art and science of managing non-employee entities (suppliers, contingent workers, on-demand workforces) might vary in complexity between technical and non-technical environments. We doubt that the variance is substantial enough to make it a separate issue.

Here are the 10 ideas you need to understand:.

  1. The Software LifeCycle Drives Relationships
    Software is over 50 years old. Our proprietary model of the Software LifeCycle has eight elements. They are the outline for our examination the relationship between a vendor and a practitioner organization. We use the model to examine work styles and behavior as it applies to each element. HR Departments are sophisticated in the ways that they manage the differing elements of the Software LifeCycle.
  2. We Are Already In The HR SaaS Economy
    Software as a Service (SaaS) is the predominant model for HR software delivery. While there is a profound debate about whether SaaS is one thing or another, the commercial aspects of the SaaS world are already installed. 87% of software contracts are written for a three-year period or less. Some 60% of responding companies have terminated an HRTech vendor for cause. The SaaS world, which favors performance over an old boy network, is a new and permanent fixture.
  3. The Administrative Layer Produces Significant Value
    Vendor and practitioner organizations intersect at each of the eight elements of the Software LifeCycle. Relationship continuity and value emerge from the Administrative layer more consistently than the others. This is somewhat counterintuitive. Most vendors make some for of claim about reducing the amount of Admin. Hyper-optimized, high performing relationships involve a kind of blending between the management teams of both organizations.
  4. Well Executed Vendor-Practitioner Relationships Can Produce Better Results Than Either Party Could By Themselves
    A tiny fraction of vendor-practitioner relationships produce extraordinary levels of excellence and return. The practitioners who know how to use these models are setting standards for the next generation of management.
  5. The HRTech Vendor-Practitioner Relationship is in Great Shape
    Throughout the research, we were surprised, repeatedly, by the health of the vendor-practitioner relationship. Only a small fraction of practitioners are dissatisfied with their HRTech tools.
  6. Communications is the Key to Successful Long Term Vendor-Practitioner Relationships
    In a variety of questions across the Software LifeCycle, the emphasize the power of clear relationships. While we expected to discover acrimony, we found collegial relationships. The time required to get an answer is the best single predictor of relationship health. This is true on both sides.
  7. Practitioners Believe That User Satisfaction Is The Name of The Game
    More than cost, schedule or completion of problem tickets, the practitioner is looking for an outcome that pleases the users of the system. This is opposed to the dynamics that drive valuation of vendor equities. While vendors are anxious to minimize deployment times, value for practitioners comes from the success of individual users.
  8. There are Inconsistencies in the Goals and Realities of the RFP Process
    In theory, the RFP Process levels the playing field and allows the practitioner to purchase by making a solid ‘apples to apples’ comparison. The data suggests that deep vendor involvement is required in the Evaluation process. Few companies have the resources to involve multiple vendors as deeply as required. In other words, the RFP process is usually biased towards a single vendor.
  9. There is a Disconnect Between HR Leadership and Practitioners
    The most glaring example is that 85% of senior management (CHRO, SVP, VP) believe that everyone involved in a contract should understand it. That same group believes that only a small percentage actually understand the contract.
  10. There is a Deep Structural Need for Training and Certification in Vendor/Ecosystem Management
    The business of effectively managing the activities of the various non-employee sources of value appears to have some standards. We were unable to unearth well defined strategies for managing these relationships.

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