Asia-Pacific firms upping investment in HR tech

They are doing so to seek greater efficiencies, improve processes and raise skill levels within the HR function, according to an annual survey by Towers Watson, a global professional-services company.

The survey found that one in three companies planned 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.

Improving line managers’ people-management capabilities was cited as the top priority for HR departments in the region during the past 18 months, during which adoption rates for manager self-service tools grew significantly.

The “2014 HR Service Delivery and Technology Survey”, a global study of 1,048 companies – including 523 based in the Asia-Pacific region – found that one in three respondents (33 per cent) planned to spend more on HR technology in the coming year compared with the previous year. 

This includes 23 per cent of companies that plan to increase spending by as much as 20 per cent, while 10 per cent of companies plan to increase HR technology investment by more than 20 per cent.

Only 15 per cent of companies plan to spend less on HR technology in the coming year.

“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, Asia-Pacific regional practice leader for HR service delivery at Towers Watson.

“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. Companies that are intentional about how they engage with their managers and employees through HR technology and HR portals acknowledge it as an effective way to meet their intended objectives,” he said.

Adoption rates in Asia and the Pacific for manager self-service – which typically includes such work as performance reviews and leave approvals – climbed to 47 per cent from 35 per cent last year, still lagging Europe (53 per cent) and North America (71 per cent), but clearly showing signs of convergence with elsewhere in the world. 

In that context, usage of SaaS is on the rise, the survey found.

Alongside manager self-service, 78 per cent of Asia-Pacific organisations 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 the Asia-Pacific region, the main providers of SaaS are SAP (including SuccessFactors), followed by Oracle (including HCM Cloud) and Workday.

 

Higher cloud adoption 

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 survey results are in line with what we regularly hear from CEOs – that is, how can HR processes be made more efficient?” said Pichpajee Saichuae, managing director of Towers Watson Thailand. “Top executives are looking to develop strong HR functions that are focused and accountable, and produce measurable results. Technology is a key factor in transforming HR as it enables the processes to become more user-friendly, allows for increased mobility, and boosts productivity. 

“As smart devices become an essential part of daily business life in Thailand, the opportunity exists for businesses to integrate easy-to-use and effective HR technology into their operations,” she added.

For those companies in Asia and the Pacific planning to change their HR structure, more than half (54 per cent) are seeking greater efficiencies, while just under half (45 per cent) cite quality improvements as the rationale for change, the survey found. 

More than a third of respondents (37 per cent) cited a change of business strategy as the reason. 

However, the survey found that in the Asia-Pacific region, 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 per cent) than elsewhere in the world (9 per cent) are looking to decentralise their HR function, devolving to separate business units or geographies. 

This points to significant opportunities for companies in the region to invest in HR shared services or optimise existing service delivery model to gain an edge over competition.

“The survey found that one in 10 Asia-Pacific organisations don’t have any standardised payroll sourcing strategy across locations – instead allowing each location to determine their own strategy,” Lo said. 

“That means about 10 per cent of the companies surveyed are missing out on opportunities to realise operational efficiencies and effectiveness … small details perhaps, but they do matter in the increasingly competitive business environment we all operate in,” he added.