My preoccupation with change management can be traced back to when I realized that success on HR Technology initiatives was perhaps more a function of the organization being “ready, willing and able” to change (in the form of leveraging new technology) than anything else, including the virtues of any particular system. Now before some folks in the vendor community or others fascinated by shiny objects yell “blasphemy”, let’s remember that:
Any HCM system (aka HRMS) that‘s been successfully deployed in hundreds of similar organizations likely provides at least 80% of the major process-enablement capabilities a typical customer needs, plus many innovative people management features as well.
It’s unlikely that any HCM system will 100% match a buying organization’s business requirements, let alone their future vision around managing talent for competitive advantage.
Much of the gap between 80% and 100% can often be addressed through a combination of configuration tools, influencing the vendor to address in an upcoming release or product update (more frequent updates with cloud delivery) or inconsequential process workarounds.
Successful HRMS implementations are more linked to factors outside the chosen technology, and the #1 factor is (internal) customer-centric change management.
It took me some time to have the above epiphany partially because senior management and project sponsors at my first few employers generally assessed project success based on the system being delivered on-time, on-budget and stable. End-user adoption and business case realization were rarely on the project charter in those years. You could say this was fairly helpful to my HR Tech career at the time, but not so helpful to those particular organizations as a whole.
As a result of inadequate attention to change management in the first few rollouts, very few folks outside the HR Department used the system at these companies, and worse, most line managers maintained their own spreadsheet with HR data and related update processes. They simply trusted their own, personally crafted low-tech data repositories more. These dynamics can cost companies millions annually. (Post a comment below if you’d like to see the math!) What was missing? All future end-users needed to be “ready, willing, and able” – a framework used by many change management experts.
“Ready” suggests the impacts of the change are understood, and sources of resistance and associated mitigation steps identified. “Willing” relates to the case for change being widely syndicated, tailored to stakeholders as needed, and reinforced through communications programs and executive support. Finally, “able” suggests that relevant skills, competencies, performance measures and even corporate culture aspects are being put in place to execute and sustain the change.
Ready-Willing-Able: A Success Story
In one of my later HR Tech involvements, we went beyond understanding process automation requirements and spent considerable time with line managers discussing people management (not process management) issues that kept them up at night, how real-time access to high-value data would help them, etc. This time, we put “empathy for the customer experience” first. We also worked to overcome (beginning with acknowledging!) some long-standing disappointments with HR on the part of many consumers of HR solutions, services and programs. This was Design Thinking before the term was widely used, although empathy had been around for eons.
The team also figured out creative ways to give end-users (mostly line managers in this instance) a sense of control and ownership over the system and its data. One example involved hitting a “challenge button” about any data that line managers suspected of being incorrect. That opened a dialogue box for comments and auto-generated an email to an appropriate HR administrator requesting research and resolution. Quick turnaround was ensured through an associated SLA (service level agreement) process.
The “black hole” of trying to resolve data issues with HR disappeared!
That prestigious bank’s Chairman came into my office for the first time ever to congratulate our team on the crowning achievement for the HR Department, not just that year, but any year in his memory. He heard that people outside HR were using the system, and regularly.
Combating Employee Disengagement from all the Change
Multiple generations at work with different personal drivers, automation changing the nature of work, achieving more with less, and the frequency with which businesses tweak their operating models or totally re-invent themselves are dynamics that won’t be changing anytime soon. These dynamics can lead to employee disengagement even without adding new “HR / People Systems” to have to learn and use. And disengagement can bring down even the best run companies. Investing in employees in ways that resonate certainly helps with the employee disengagement challenge; but empathetic change management is absolutely essential when the change is represented by something very tangible, like a new system.
Bottom Line: When end-users genuinely feel their work lives and perspectives are taken into full account, due to proactive change management, the prospects of broad HCM system adoption and even a stellar ROI are significantly higher.
Much as I’d like to, I can’t foresee the actual future of the U.S. Affordable Care Act (ACA) or healthcare policies under President-elect Donald Trump… anymore than anyone could predict the true outcome of the recent U.S. presidential election. What I do foresee, however, is the increased need for partnerships to focus on what the ACA is designed to accomplish (regardless of its existence) – affordable, accessible, quality health care.
Getting to the heart of the problem –the cost.
There are many people who are upset at having to pay for “other people’s” healthcare costs – which they believe is because of the ACA. And there are many people who are receiving care who didn’t before and wouldn’t otherwise, because of pre-existing conditions or age, for example. And these are often people who when they did get sick, would go straight to an emergency room – an expensive treatment which by the way somehow had its cost passed in some way at some time to, likely, people who today do “not want to pay for other people’s healthcare.” Any way you look at it, costs get spread around.
So let’s look at this issue – cost – from a different angle… how about the angle of reducing or eliminating some of these costs? Reducing the cost of ER visits or readmissions because we can identify and intervene in someone’s pattern of such use or events before they happen because of triggers? Or, increasing the possibilities of people being healthy because of proactive education around nutrition, exercise, and lifestyle?
Partnerships are critical to truly changing the nature and outcome of health care
Just as it “takes a village to raise a child,” it takes a community of partners to create a high quality, lower cost environment for healthy consumers. Those partners include people on the front lines of care everyday—the obvious, like doctors, nurses, pharmacists, social workers – and also professionals who work behind the scenes but have an impact on care and cost – such as billing coordinators, claims processors, and coders. If everyone is thinking about their work, and how changes to the way they work, can impact the healthcare consumer, we have a giant brain trust and energy force working for change.
A significant part of this “back office” for many years in healthcare operations has been the service provider. Business process outsourcing service providers (BPO/BPS) have been engaged mostly in stages – for claims processing, enrollment, billing, utilization review, collections—but few have been involved, truly integrated into the health care operations so that they have insight and impact on the healthcare consumer experience.
It’s time to change the nature of engagement in healthcare business operations, using design thinking, digital technology, and relationships
Now that we are more than 30 years into experience in BPO/BPS, and many healthcare providers and payers have such partnerships, it’s time to step back and look at how to partner more effectively and use digital technology such as robotic process automation, mobility, and analytics tools, along with human centered, creative problem solving like design thinking, to define and address problems with services and solutions that fit – that broker across organizational silos and internal and external partners.
A number of service providers are stepping in to help change the game in this way, and partner to make healthcare business operations more effective, with an eye toward impacting health, medical, and financial outcomes. We hear from service buyers that they are partnering increasingly for resources—to allow local clinicians more time and energy for interactions with healthcare consumers by rethinking what activity can be done remotely, through partners, or even automated.
What are service providers doing to help healthcare providers and payers?
In our recent Population Health and Care Management Blueprint, we take a look at the role of service providers in bringing together talent and technology to broker solutions through BPO and BPaaS engagements. The scope is:
Population Data Management and Analytics: identifying whom to target with what intervention
Consumer Engagement and Interaction: reaching out, engaging healthcare consumers
Utilization Management: processing authorizations, reviews, appeals and grievances
Care Coordination: coordinating care activity
Performance Management and Operational Analytics: program evaluation and assessment, quality and compliance reporting
Here’s a quick look at the service providers that participated actively in this research – each one brings value to a business process services engagement, depending on how you want to partner and what you want to accomplish.
We go into more detail on trends and service provider analysis in the blueprint report, which you will find described here, and you can go so far as to download here.
The bottom line is that regardless of the good, bad, and ugly of the ACA, what it did was drive forward a change towards value-based and consumer-oriented care that was and is needed, not just in the U.S. but globally.
And this kind of value-based health and care system is one that requires effective operations, and effective partnerships—and that’s what gets my vote.
Barbra Sheridan McGann is Chief Research Officer at HfS (see bio). This role encapsulates her passion for research, analysis, and strategy, which has been 20 years in the making. Barbra’s scope of work covers the business process outsourcing and emerging “as a service” market broadly, as well diving into industry and functional areas of Healthcare & Life Sciences, Public Service, and Marketing.
My colleague Mike Cook and I are in the middle of a blueprint on Managed Security Services, and as we talk to client references and review provider information, I’m reminded again about how difficult it is for clients to feel like they’ve really gotten the best possible team for their engagement, based on their investment outlay.
You might be disappointed with the quality of your team, and maybe you think it’s because it isn’t as good as you thought. Maybe they oversold their capabilities or flat-out lied about what they could do. While this is possible, in my experience, it’s more likely that clients confused the provider’s corporate image with the capabilities of the specific delivery and account team on their engagements. A provider’s capabilities are never evenly distributed across the entire company and the reality is that some delivery people are better than others. Plus, providers can often be very crafty with how they allocate their best and brightest to their clients.
A while back, I was at an event, and chatting with several vendor executives. A vendor management person from a buyer client that we all knew came over and started chatting. He looked at the company names on everyone’s badges and mentioned that his company worked with every provider represented there. Then, company-by-company, he pointed at each one and said things like “Yup, we hate you guys. We’re suing you. Your team is terrible. You never give us good people.” That broke up the circle quickly as everyone made excuses to move to other conversations!
And afterwards, two things that stuck with me: the first was that buyer getting up as a speaker at the event to talk about creating shared value and better relationships with suppliers (I kid you not!) The second was one of the providers sharing with me privately his frustration with that particular buyer, saying “he wants the “A” team, but he’s paying for the “C” team. And even still, all he talks about is cutting our rates in the next negotiation. Why would I invest in a client like that?”
This story highlights several reasons that a company many not get the “A” team from a supplier that have nothing to do with the supplier at all:
1. You aren’t mature enough. Providers can tell what your internal team is capable of – both for execution and understanding. A supplier won’t give you “A” level resources if they think you can’t appreciate the value. Now, of course, the question is “if you can’t tell the difference, how do you know it’s not the ‘A’ team?” And the answer is, you probably can’t put your finger on it but you’re vaguely unhappy and realize things aren’t progressing the way you want even if you don’t know why. Smarter clients get smarter teams.
What to do about it: This one starts with increasing your own expertise first so you can ask better questions, understand the answers better, and make your own suggestions of how to remediate so you can have productive discussions with the provider. When the provider sees that you know what you’re doing, they’ll give you better resources. In the story above, you wonder why the company was suing a provider – that’s the kind of thing that happens when you didn’t scope properly or weren’t smart enough to ask for the right things.
2. You’re cheap. I hear this one a lot. As a client, you’re complaining that you got the “B” team. But when you look at your rate card, you’re getting “C” team pricing. You may even have gotten the “C” team instead of the “B” team. This is exactly what frustrated the provider executive in the story – he was delivering better resources than the client paid for and yet the client wasn’t grateful, instead the client only complained that the resources weren’t good enough!
What to do about it: If you pay for the “C” team and got the “B” team, be happy. You’re doing better than most others in your situation. If you’re paying for the “C” team and actually have the “C” team, then you need to have a discussion internally about what your goals are. Maybe you’re actually ok with the service you’re getting and the complaints are just water cooler venting. If you’re actually having a delivery problem, then you need to look at increasing what you’re paying or changing the delivery model. You can change a delivery model by seeking to automate some part of the engagement and paying a little more for the resources you’re keeping.
3. You’re a bad client. Maybe you complain about things that aren’t actually wrong. Maybe you blame the provider for problems that really resulted from your internal team. Maybe you constantly want things that aren’t in the contract and get mad when you don’t get them. There are lots of variations on this theme. Here’s the thing: no one wants get abused as work, and top talent doesn’t have to put up with bad behavior. They’ll get switched to better clients. Or, worse, you HAD the “A” team and you beat them down until they’ve devolved into “C” quality work. While I don’t know the inner workings of the buyer’s organization, I can tell you that in this conference setting where provider normally love the chance to socialize with their buyer clients, providers avoided this person at all costs. That speaks to the poor relationships this person built.
What to do about it:Of course, if there are legitimate problems with the provider’s work, address it. But if the problem is really your team, then fix your internal situation. You can train your team to address challenges differently, swap your internal provider liaison or even fire staff that are creating a bad environment. You definitely need to get realistic about your expectations of the engagement. Then let these internal changes get demonstrated to the provider staff to show them you’re no longer the client from hell.
4. You’re not important. Sometimes you can be a great client from all sides – you pay well, you’re a pleasure to work with, and you have interesting work. But maybe you aren’t a big client, or you’re not a brand name, or you in fact have a weak brand (the “loser in your industry?) The provider is likely putting top talent onto clients that spend a lot of money or that have brands that with star power or they use as client references. In the story above, the client was important in its industry but had a reputation as a bad place to work, so there wasn’t the “star power” that often comes from a well-known brand.
What to do about it: This one’s trickier than the rest, because the only way to really fix it with your existing provider is to spend more money until you’re a bigger and more important client. Sometimes you can fix it by being willing to be a reference client, tell your account team if they fix the talent situation, you’ll agree to be a reference for future prospect or analyst calls. However, if you’re willing to go through a transition, you can solve this one by switching providers. You can look for a smaller provider so you can become a “bigger fish in a smaller pond” or a player who specializes in your industry so your brand becomes more important to that provider.
The Bottom Line: You’ll only be satisfied with your service providers when you deal with your own responsibilities to the engagement.
Get more realistic with your expectations based on the factors above and decide what’s good enough for your needs. Hold the supplier’s feet to the fire, but do the same to your own team. Addressing these internal issues will give you more value from your existing deals and also position you better for future work with your key suppliers.
There’s no two ways about it. I’m excited to be on the cutting edge of a Design Thinking-led services engagement in healthcare to address patient experience. Thank you to Lawrence General Hospital (LGH) and Sutherland Global Services for inviting me through the door and into this initiative…. and especially for agreeing to let me blog about it! We are constantly looking for where companies are “taking a detour with design thinking” and finding results to share. This time, we’re bringing you along on the journey.
We’ll start with a workshop led by Sutherland Labs, and follow their version of this human-centered, iterative innovation methodology over the next few months. The goal is to re-think the patient experience at LGH, and I’ll be sharing the progress here in my blog as we go. After months of researching, interviewing, and writing about Design Thinking and the value it can bring to a services engagement, I will be able to give you an inside look as well. If you have done this before, you can compare it to your own experience and perhaps find some new ideas; and if you haven’t, here’s a way to get some further exposure to a work in progress
Design Thinking can play a strategic role in helping healthcare organizations to better service the consumer as the patient, member, caregiver, clinician, etc… and rethink operating (and business!) models.
We believe design thinking can help bring about a more healthcare consumer focused type of engagement, which is so needed in health care today. With the latest news burning the wires that in the U.S., premiums are going up yet again, healthcare consumers are just going to get more discerning about how and what services they are receiving for their money. Value – always defined by the beholder – is changing for healthcare consumers. Being aware of that, and aligning the organization –front, middle, and back office – is simply becoming an imperative to the future health and success of healthcare providers, period. And service providers can play a role in doing so.
Despite the potential, and early success stories in and outside of the industry to date, the use of Design Thinking in healthcare for impacting business outcomes through operations is fairly nascent, as seen in Exhibit 1 from our recent Intelligent Operations Study, which included 45 Healthcare Operations Services Buyers. Only 23% of the respondents say they are using Design Thinking today, so we see LGH and Sutherland as pioneers here. For those of you who have not yet jumped into the waters, you can also find some ideas on how to get started in my recent interview with Charlotte Bui, Global Lead of Design Thinking at SAP… and stay with us here as this story with Lawrence General Hospital and Sutherland Global Services develops.
The LGH and Sutherland partnership to put patient experience at the center of reimagining the hospital business operations – the use of Design Thinking – exemplifies one of the 8 Ideals that HfS Research considers critical in the move to more “intelligent business operations.” As it is also one of the least mature of the Ideals in this services industry, they are breaking some new ground here.
Exhibit 1: The Maturity of Design Thinking in Helping Achieve “Intelligent Operations” in Healthcare Organizations
At the same time, fellow HfS analyst Hema Santosh, and I will be launching an update to the Design Thinking for the As-a-Service Economy Blueprint we published with Phil Fersht in early 2016. We expect to hear more about how service providers are using Design Thinking and incorporating innovation into their engagements, to be more forward thinking and investing in the long-term value of outsourcing services partnerships.
If you have a story to share, questions to ask, or challenges to pose, please fee free to post them here, or contact me at [email protected]. And, stay tuned…
Cognitive computing generally refers to having a system mimic the way people think, learn, solve problems or perform certain tasks. In HCM systems specifically, the system leverages what it knows about us — including our job, social network, and interests – to yield solid benefits in areas such as social recruiting and social learning.
We are also seeing take-up of some newer entrants into using NLP (natural language processing) in the form of chatbots and intelligent agents. Examples highlighted in my recent POV “Intelligent Automation in HR Services and Solutions” included an employee having a conversation with the system about an error on their timesheet that the system had the wherewithal to resolve … or the HR technology platform proactively pre-filling a timesheet based on items in the person’s calendar and previous timesheets.
So far, generally no controversy surrounding these type of cognitive capabilities … efficiency gains and better customer service without any apparent downside. But what if a near-future incremental step in the cognitive HR tech journey goes something like this:
Employee: Hi there, kindly initiate a PTO time off request for me for this Thursday and Friday after confirming that I still have the 2 PTO days to use.
HR System: I can certainly do that sir, but are you sure you want to take 2 days off this week given you have a major project deadline next Monday, the project seems behind schedule, and as you know, you were late on your last major project deliverable?
Can we say C-R-E-E-P-Y?
The norms regarding leveraging these capabilities in the HR/HCM realm will likely not be established anytime soon. We probably need a few high-profile lawsuits to be the catalyst, followed by consultants developing practices as quickly as they did for Y2K. In the absence of this, it’s reasonable to assume companies will start to get feedback from employees and job candidates that they were put off by the intrusive nature of their HR system interaction.
Until such time, here are four cognitive capabilities in HCM that go beyond (or way beyond) intelligent HR agents and chatbots. Some may still become standard HR systems capabilities and practices in the months or years ahead. For the time being, this is arguably a matter of weighing business benefits (ranging from efficiency gains to improving employee satisfaction/engagement) against potential liabilities that could include a total distrust of using the HR system — for anything!
Upon “clocking out” late one evening, the system notices that excessive hours have been worked by that employee in the last 2 weeks, and auto-emails the person’s supervisor a suggested communication advising the employee that … “the company values work-life balance, and they may want to consider getting back to a more normal schedule.”
The system recommends internal or external training courses to look into, or even a personal development coach, based on formal or informal feedback received (the latter from corporate social collaboration tools).
The system alerts a business unit head that a certain employee has initiated the processing of a leave of absence or early retirement, and identifies key “institutional knowledge” they possess (again based on formal or informal feedback) that should be transferred to other colleagues at the earliest.
A personalized, auto-generated on-boarding communication from soon-to-be team members who let the new employee know they have some things in common … e.g., school attended or outside interests or reside in same part of the city or birthday … and also expresses how excited they are to have them as a team member. (Of course, in this example, the “sender” would receive it first and have a chance to modify.)
Bottom Line: Cognitive capabilities within HCM systems will keep pushing the envelope, perhaps until lawsuits, governance issues or perceived creepiness get in the way.
Security’s a hotbed of complexity – many different kinds of threats, technology that’s evolving all the time, and businesses can’t keep up. Changing standards and incredibly complicated threats make most non-technical buyers either throw the problem over the wall to their technology team (and miss out on the value of a business-led security approach) or their eyes glaze over at the mere mention of security and never really give it the attention it requires.
And what’s worse is that this complexity isn’t getting better, it’s getting worse. That’s why we all need to get over our apprehension, fear, boredom, and whatever else is keeping us from really understanding what we need to do in security. The best way to do that is to keep a business-value focus on it, making sure we learn what we need without digging too deep into the weeds and getting frustrated?
Bridge the divide between the highly complex and the need-to-know by focusing on three core, interrelated areas:
Digital trust: Your ability to succeed in the digital environment requires that your trading partners (customers, suppliers, external stakeholders) trust you to be ethical, legally operating, and practicing up to date security procedures to protect their data and IP. If others start to doubt your ability to secure your own data or theirs, you are dead as a business. It’s pretty simple as a concept and amazingly complex when executing.
OneOffice: Digitization and the renewed rise of customer-centricity mean that the wall between back office and front office has collapsed – everyone in a company is customer facing in this age where customers have significant visibility into our internal operations. That means your security policies, procedures, and risk approaches need to be brought up from the basement and shared across your entire organization.
Shared responsibility: Security isn’t just something you worry about within your four walls anymore. As data and IP get shared across trading partners, the need for a shared view on securing digital assets becomes critical. Everyone in a trading network owes the other members a secure environment, so sharing accountability for security will become the new normal.
We started our security resolution early by publishing new research that defines the eight prerequisites of digital trust, including data integrity, business alignment, and device security, among others. And then we’ll be building on that by publishing our findings on how well service providers can help clients with managed security services for digital trust in February 2017.
Don’t be intimidated by security challenges, put them in the context of your business and make progress toward digital trust. Here’s to a secure, business-focused 2017!
The range of information managed in HCM Systems is quite impressive, and in most leading platforms, encompasses data relating to the 3 legs of the proverbial (HR data) bar stool: Administrative, Transactional and Strategic data. Administrative covers what’s needed for policy and regulatory compliance and core HR process support (on-boarding, payroll and benefits admin, etc.). Transactional covers the events in an employee life cycle (changes to job, organization, supervisor, compensation, etc.) or personal life event updates that impact employee benefits for example.
Strategic data covers … hmmm … maybe just see Administrative and Transactional.
Is this HR heresy? Is it a yearning for the simpler days of Personnel Management when key business strategy decisions often excluded HR executives, HR/HCM systems largely weren’t used outside HR Departments, and Talent Management was a term reserved for Hollywood? No, it’s only a lead-in to a question I’ve asked myself over the years, namely: Are we missing something when we point to data tracked on HCM systems like performance ratings, compensation and job progressions, training courses taken or competencies displayed and say this allows us to be very strategic in managing human capital?
Yes we are probably missing something. It seems the data we track in these technology assets, while broadly useful, might sometimes be obscuring the real mission at-hand: The need to manage and provide ready access to WHATEVER people data enables a highly engaged and productive workforce, and the proactive management of business risks and opportunities … thereby creating and enhancing sources of business value and competitive advantage.
So What Needs to Change?
For one thing, let’s not forget the aforementioned mission at-hand. Let’s also not forget that employee engagement, retention, productivity – and business innovation and agility – are all HCM-related themes but they are NOT HR processes with routinely defined steps that can be system-tracked or enabled. Perhaps just as important, these themes rarely have a single process owner with a budget (for enterprise software) that solution vendors can sell to. The main implication of this is that while HR Tech circles continue to espouse moving away from being too process-centric, and being more ‘desired business outcomes’ centric in our systems design and usage, the HR/HR Tech disciplines can perhaps be faster on the actual uptake of this.
3 Examples of (Non Process-Centric) HR Data Worth Tracking
Employee Value Indicators … present a broader picture of the employee’s value to the organization, far beyond performance ratings or competencies. These dimensions or data points might relate to referring candidates who became top employees, serving as a mentor to new employees, suggesting ideas that led to new revenue sources or operating efficiencies, or forwarding personal contacts that were great sales leads and became customers.
And speaking of competencies, how about Latent Competencies … those that employees possess that might be invisible to the organization, and therefore not leveraged, because they are not relevant to an employee’s current job function. These would be pretty handy when a major shift in business strategy is considered which has implications in terms of re-tooling the workforce. Also Competency Value Trajectory (or “CVT”) would be a simple way to note on the system which competencies are becoming more important to the organization due to impending business undertakings.
And finally, one that arguably qualifies as not seeing the forest through the trees, all the valuable data that could be tracked around Career Goals … including how an employee’s goals change over time, progress toward achieving them, and what the organization has done to support them. This way of driving employee engagement could fly by the positive impact of employee surveys or various (non-sustaining) forms of employee recognition for 2 reasons: Employees perceive their needs/interests as being important to their employer; and management decisions about leveraging their people better align with those needs/interests.
Bottom Line: HR Tech’ers should not forget about the virtually limitless potential of these platforms to house strategic, and often non-process centric data
A focus group I conducted a few years ago with a dozen CHRO’s addressed where HR Technology was — or wasn’t — making a difference in their organizations. The consensus was that managing the potential fallout from downsizings, or the people aspects of M+A’s were areas where HR Technology was not playing a major role … both obviously more about potentially game-changing events than defined HR processes.
As HCM system configurability and extensibility capabilities have achieved new heights in recent years, addressing these perceived (historical) system shortcomings have perhaps become a matter of customers doing a better job of defining decision support needs and related data capture processes, and simply leveraging their HR Technology assets better in general.
As we dived deep into procurement for the Procurement As-a-Service 2016 Blueprint, we had a lot of almost philosophical conversations about the future of procurement. About the fun stuff, not the procurement grunt work like invoice processing, PO matching, accounts payable. No, about cognitive procurement, predictive analytics, procurement being completely automated and invisible.
Amara’s Law concluded about the future and our estimations thereof: We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. Bill Gates famously paraphrased: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”
So, here are our overestimations and underestimations for procurement in two and ten years’ time:
Overestimations … within two years: * Service providers successfully scale the knowledge of their scarce category experts with brilliant cognitive solutions. * P2P platforms completely automate away manual transactional procurement. * Suppliers are completely digitized on what we used to call Supplier Networks or Business Networks and now know as collaboration platforms. * Service providers have adopted on-demand As-a-Service to the extreme – they don’t talk about multi-year contracts or total contract value anymore – just about number of subscribers, active users, churn, annual and monthly recurring revenue (ARR / MRR) growth. * Amazon takes over the B2B Marketplace (if in Asia – Alibaba). Amazon Business is the de facto marketplace in B2B. * If you’re looking for the Procurement department, follow the signs: Brokers of Capability. * Competition from outside outsourcing or procurement disrupts outsourcing of specific categories – like DHL in logistics. * With Blockchain cemented into the core processes, we also pay in Bitcoin.
Underestimations, or what we’ll see (!) in 10 years: * Algorithms will decide the preferred supplier du jour. * Algorithms will determine what, how, where and when to buy, show you options and recommendations. * No one touches an invoice or a purchase order. Blockchain and smart contracts take care of transactions. * Some categories disappear (probably office supplies – as we go paperless, you can bring your own pen or pencil (BYOP). * Connected assets (IoT) in value chains will tell algorithms what to buy and when. * No need for approvals, the algorithm got it. * Predictive analytics decide what you need – the system knows our needs better than we do. * When I want to buy something algorithms, and analytics didn’t figure out already, I just tell Alexa to get it for me. * Stuff will unexpectedly appear on your desk or doorstep. * Fedex and UPS will help return stuff you, after all, didn’t need….by a drone or an Uber.
Bottom Line: The future is already here – it’s just not evenly distributed yet To end with the famous quote from William Gibson. All the forces impacting procurement and driving our overestimations and underestimations are here today. Some very nascent and aspirational – cognitive procurement, IoT, Blockchain, true predictive analytics. Others have been embraced by the market and broadly implemented into procurement and Procurement As-a-Service offerings – procurement platforms, supplier networks, intelligent automation. Ask yourself; will you be on the overestimated or the underestimated side of this transformation? Figure out what the future looks like for your procurement function and start preparing now or risk becoming obsolete.
How do you change a workforce and shift performance management from status reporting and check-ins to an outcome-based approach?
With Pokemon Go! hot news in the press and, frankly, in my house, this summer, I was reminded of an example of gamification used effectively for performance improvement, financial impact, and employee development and engagement at a US healthcare system.
The director of revenue management and patient financial services brought in gamification, along with training and outcome-based performance management, as part of a change and quality management program. Along with an increase in AR staff productivity and engagement, the impact on the business included an increase in payments, a decrease in net days in accounts receivable, and a decrease in denial turnaround time.
Mission: Quality Control
This healthcare provider has a centralized business office that manages the revenue cycle for a group of medical facilities. Within this office, the director launched a mission to certify every one of the over 80 staff coders, having learned that the ability to resolve a claim on the phone with payer is 40% more efficient than if the staffer is not certified. While he hired a coding instructor, he also realized that to really have an impact, the team of coders needed to take ownership and be engaged, to want to learn—so why not inject some competition and a little fun? To make the program less of an “attack,” and more of an incentive, the director worked with HR and marketing to build a program around it—with logo, t-shirts…and a game, one that has helped to drive higher quality and revenue impact among all ages of staff.
This is a great example of up-skilling to generate higher quality results…and also add an element of “competitive and spirited but team oriented fun” into the work environment.
“You can’t learn if there is no proper feedback on a consistent basis,” shared the director. “Accountability through transparency into progress and issues as well as communications is key.” So he found a tool that would generate progress reports on a recurring basis, without being overwhelming: UpdateZen. is a mobile-based program management app that allows team members to share relevant and timely updates in 240 characters or less. This way, the management team can stay on top of a project based on the targeted milestones and deliverables, and not on “what did I do today” updates.
In addition, they set up a scoreboard so that every Monday, employees see which of their assignments are on track, what’s outstanding or delayed, etc. There are online rewards and visible “stars” for exceeding expectations, a leaderboard to show rankings, and call outs for “Top Producer,” for example. The scoreboard also reflects measures for productivity and quality, with flags for where there are suggestions for corrective actions or training.
In the scoreboard, the performance measurements are grouped by outcome. That’s because another element of the program for this operations team is to tie performance to revenue-generating outcomes. As such, there is a revenue indicator associated with each group of assignments. Employees and the management team can see how the work they are doing impacts business results. Of course, there was work “behind the scenes” to tie the work to the business outcomes, and that’s where an analytics professional played a key role.
Powered by performance analytics
The team that defined and implemented the outcome-based performance management with gamification engagement scorecards included an analytics expert from the patient financial services department, and HR and marketing professionals. The effort included identifying performance metrics mapped to business outcomes, defining workflow, performance management and HR coaching. During this time, the staff was also kept up to speed and involved in the effort so that by the time the program went live, there were no big surprises. Along the way, there were people who realized that the new way of working was not for them, and some moved to new roles or left—and those who did shared that they at least appreciated the feedback and interaction the approach created.
Quality and employee engagement results…with more to come
The program has resulted so far in a reduction in denial turnaround time, with higher quality work. The team continues to add to the usability of the system—increasing the use of automation for work that does not need to be done by people on the team, and continuing to add and change the metrics to ensure a continued focus on quality improvement. While the shift to outcomes-based performance management is still a work in progress, this effort does show how bringing together a team—revenue management, patient services, HR, and marketing – can work together to define and roll-out cultural and process changes to move towards an outcome-based and outcome-driven environment.
Pokemon Go! served a role in getting people of all ages engaged in a fun and spirited competition, but also drove change. It unintentionally became the means by which some people learned new skills (using GPS to get home after biking into “new territory” to catch Pokemon), interact in new ways (in the real and virtual worlds), and inspire new marketing and sales opportunities. It also breaks down something big—change in culture, process, and technology—into something smaller and engaging. Infusing a gamification approach into the business can motivate, inspire, and also align people around a shared or similar goals.
Remember eMarketplaces (also called Supplier Networks)? They were networks of suppliers and buyers where the goal was to make information sharing easier by standardizing and consolidating platforms, products, prices and policies. In many cases, clients got in “free,” but they still had to pay for some integration cost. Suppliers had to pay to be part of each network, and most clients each used different ones, making it expensive and complicated to decide which networks to join.
As a buyer, you could try to insist suppliers join your preferred network, as long as you were a big enough client, or if you were willing to pay the supplier’s connection costs. As a supplier, you had to decide which networks were important to belong to, either because a lot of clients used them, they catered to specific industries, or offered some other unique benefit.
These supplier networks were a great idea, but the practicalities of connecting everyone was a big headache, and very few of these eMarketplaces survived. Many of those that did survive were bolted on to procurement apps. Without a way to make the networks talk to each other and give trading partners, on different networks, a way to work together, eMarketplaces achieved some limited value for customers, but ultimately failed to deliver the game-changing impact they envisioned with these “super networks” that never quite materialized.
In the example above, go back and replace the word “eMarketplace” with “blockchain.” Minus some of details, it’s pretty much the same problem we’re all about to face today, as companies struggle to understand where, why, and how they can get the most value from blockchain implementations.
When we researched blockchain this past summer, we found that almost all POCs and client examples were focused on internal operations – transferring funds across business units in a bank, for example. Yet, the foundation of blockchain is creating exponential value from a collaborative and engaged peer-to-peer network.
Everyone’s experimenting, and there are a lot of technologies and validation/authentication options being used and explored. There are also no standards at the moment, so everything’s getting siloed into one-off projects. Are you starting to see where the eMarketplace experience gets echoed?
Let’s say you’ve chosen the blockchain technology, as well as an authentication approach with which you are happy, that work for your needs. Now you want to expand your execution of blockchain to connect with partners.
Your partners likely made different choices They may have stricter authentication approaches than you use. And each trading partner’s blockchain implementation is different than everyone else’s, so you need to connect to each one using a separate connector, or you choose to get onto their blockchain. And then you have the initial cost of integration, plus compute costs. And blockchain often isn’t efficient with compute power, so connecting to multiple systems is more expensive that way than you might initially think.
And, of course, the market’s so new that we also don’t know how much cement we’re pouring when we build blockchains. We do know, for example, that no transaction or other data in the blockchain can get erased. Once it’s there, it’s there forever. But, what if we decide to switch to another network or technology? We don’t know the costs of switching from one network to another if we have a lot of data sitting in the blockchain.
In our blockchain guide for BFSI, we recommended that you start talking to trading partners, because the real value comes from using blockchains outside the walls of your company. And this issue of linking networks makes that recommendation all the more important.
Bottom-line: Make sure you fully understand the broader network of partners impacted by your blockchain options
Here are some questions to start asking trading partners (and yourself, if you haven’t already):
What validation/authentication approaches are you considering?
Which blockchain technologies do you like and why?
What criteria do you want to use to approve new members to join a network?
Who pays, if someone wants to join the network? What if we want them to join? Will we pay only for integration costs or other longer-term costs like the compute power needed to process blocks?
If you have thoughts on this, or know of companies who are already working on the interoperability problem, tell us. We’re always looking to talk to more people about what’s going on in the space.
Cognitive computing generally refers to having a system mimic the way people think, learn, solve problems or perform certain tasks. In HCM systems specifically, the system leverages what it knows about us — including our job, social network, and interests – to yield solid benefits in areas such as social recruiting and social learning.
