Monday, March 09, 2009

Service-Orientation and Bureaucracy

A lot of business services are difficult to value. Take HR for example.

During an economic crisis, HR performs some pretty unpopular services. On the one hand, they may be the bearer of bad news to the redundant employee. On the other hand, they may restrict the authority of the line manager to dismiss employees without following the proper procedure. Does HR bureaucracy get in your way? asks Michael D Haberman. Newest despised role, suggests Dana Gardner,
they are in no-win situation given economic climate.

However, the unpopularity of HR is nothing new. I fished out an old article called Taking on the Last Bureaucracy (Fortune Magazine, January 1996) and showed it to a few people, including Annrai O'Toole.

As ESB afficionados may recall, Annrai was the boss of Cape Clear Software, which was acquired by SaaS company Workday last year. Workday offers HR-as-a-Service plus
Payroll, Worker Spend Management, Financials: ERP-as-a-Service, with a strong focus on human capital management.

Annrai agreed that the article was (sadly) still relevant, and made three further points

  • HR must be strategic (not paper pushing) ...
  • performance measurement must be automated and linked to business performance, not just subjective objectives - better BI (on hard business metrics) is the way to go.
  • HR tooling must breakdown the barrier between the workers it serves and the environment they work in
Okay, let's suppose that most of the paper-pushing can be delegated to automated services (whether inhouse or SaaS). And let's suppose that performance measurement and policy compliance can be automated and made available for business intelligence services. And let's suppose that we have a decent set of communication and social networking tools.

But what is the business model for HR? What value does HR provide at the business level, and how can we design a portfolio of services to maintain and enhance this business value? If HR is strategic, does this mean that each enterprise has different requirements for HR services?

Bureaucracies are relatively easy to automate, if that's what you want to do. You can make a bureaucracy faster and more efficient, and you can move a lot of clerical processing onto an online self-service portal. But making a system more efficient doesn't necessarily make it more effective. So good design requires system thinking at the business level, before you dive into computer systems architectures, service-oriented or otherwise.

Maybe I'm being old-fashioned, but I can't see that it makes much sense to invest in an SOA or SaaS project to reduce the headcount of the HR department by (say) 25% if you still don't have much idea what value the remaining 75% are going to provide, and how you are going to make them more effective.

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