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HR transformation demand is booming, according to new report

HR transformation demand is booming, according to new report

Results from the fourth annual ADP HR Transformation Report (published today, 27 November 2007 in partnership with HROA Europe) reveal that the global appetite for HR transformation is stronger than ever, with 85 per cent of companies surveyed currently engaged in some form of HR transformation.

The Report found that globalisation is behind a large part of the existing growth. This trend looks set to continue, with 48% of respondents saying they plan to globalise the HR function at some level with one fifth of those planning to globalise all HR processes. A further 80% anticipate globalising some of their HR processes. Correspondingly, as the HRO market has matured, buyers and practitioners say they feel better prepared to manage these changes.

Evidence of maturity
Further evidence of maturity and confidence is reflected in the fact that 47% plan to globalise administrative or back office processes. Equally, 52% of companies now meet or beat their original time-to-transform expectations, and only 10% miss their goal by more than one year (compared to 28% in 2006).
The Report’s findings also show that the issue of cost management has now become the dominant reason for companies to undertake HR transformation programmes. European respondents made it their primary objective for 2007, with US respondents placing it second, behind the need to free internal staff to focus on strategic issues.

The ADP/HROA Europe 2007 HR Transformation Report surveyed a total of 171 respondents representing a broad cross-section of global organisations and industries. Half of all respondents are headquartered in Europe, another 34 per cent in North America and 11 per cent in the Asia Pacific region. The remainder is based in the Middle East (4 per cent), Africa and South America (1 per cent).  The majority are high revenue organisations. A total of 60 per cent have annual revenues in excess of US$1B.

The 2007 results demonstrate that, when it comes to transformation approaches, companies are also utilising a wide variety of strategies. 41 per cent of companies are taking a hybrid approach; while 25 per cent have chosen internal reengineering and another 25 per cent have opted to focus on shared services.

The remaining 10 per cent are predominantly transforming through outsourcing where market demand remains strong. Levels of outsourcing are expected to double in the next two years, with the most likely areas being HRIS, payroll, training and development plus expatriate and relocation administration. Outsourcing budgets are also expected to grow, with 58 per cent of respondents anticipating an increase.

Barriers still remain
However several barriers to successful HR transformation remain. The limited skills of existing staff continue to trouble many organisations as the number one hurdle to effective HR transformation (cited by 42 per cent). This has been the single most common obstruction to transformation since the ADP report was launched four years ago.

One third of respondents also report that they do not engage any outside resources to aid their HR transformation efforts, despite 75 per cent acknowledging that the services they need are available in the marketplace. They also accept that the resulting transformation complexity can lead to them miss cost savings targets and deadlines.

In his introductory analysis of the HR Transformation Report, Marc Bruzzo, Vice President ADP Employer Services Europe, comments, “There’s good news in that HR transformation is hot and getting hotter. With 85% of companies engaged in some stage of HR transformation, its importance is increasingly evident. But that’s not all. Indicators from the survey show us that the HR community has gained knowledge and better mastery of change. Statistics also demonstrate that significant cost savings have been generated by HR transformation.

“It is my sense that both users and providers are moving forward to create new ways to extract the benefits from HR transformation. You can be sure that this point will be carefully examined in the future.”

Click here to download a copy of the report free of charge

For further information visit www.hroaeurope.com.