The tides are shifting on the age-old question for Human Capital Management (HCM): Enterprise Resource Planning (ERP) Suite versus Best-of-Breed (BOB). The 1980’s movement toward a single vendor, single platform ERP system is altering its course toward modern, agile, single function, fully integrated systems. This change is being enabled with the growth of Web 2.0 – the method of software and service delivery via the Internet that is now penetrating all aspects of our work and personal lives.

In their article “Unbundling the Corporation” McKinsey consultants John Hagel and Marc Singer contend that “the forces that fractured the computer industry are bearing down on all industries. In the face of changing interaction costs and the new economics of electronic networks, companies must ask themselves the most basic of all questions: what business are we in?” The movement to outsource non-core functions to reduce ongoing costs and allow the company to focus on their core competencies is being made easier with the drastic cost reductions in communications and technology. Just look at the prices of cell phones and, in particular, netbooks, which now can do more than many desktops!

Because systems integration and human collaboration across space and time have never been easier or cheaper, it is now often more cost-effective to communicate across organizations than within one. Hence, we are seeing the unbundling of the modern organization into separate and discreet functions – either outsourced, offshored or split off into shared services centers – so that each function can focus on what they do best. Hagel and Singer maintain that “activities that companies have always believed to be central to their business will suddenly be offered by new, specialized competitors that can undertake those activities better, faster, and more efficiently.”

This shift is causing the modern organization to un-bundle and then re-bundle their activities and infrastructure into more agile, nimble structures that can change and scale up or down as business needs dictate. So what does all this means for the modern HR organization and for HR technology? HR has long been an organization that has worked across boundaries, and functions such as benefits and payroll have long been outsourced to third-parties. Yet, the un-bundling of HCM will have a much farther reaching impact. Beyond benefits, payroll, and call centers, we are seeing the un-bundling of HR services from RPO (recruitment process outsourcing) to off-boarding and the un-bundling of HR technology from licensed enterprise resource planning (ERP) software to subscription-based software-as-a-service (SaaS).

Adapting from Hagel and Singer’s model to HCM, the modern HR organization needs to focus on three key areas: employee relations, service delivery, and infrastructure and tools (see graphic below). These areas rarely match the company’s formal organizational structure, and each has different goals, different economies, and different competition and cultural underpinnings. HR business processes are typically cross-functional, stretching both horizontally and vertically across the organization; as they cross these different areas of the organization, the goals and expected results inevitably conflict. “Scope, speed, and scale can’t be optimized simultaneously; trade-offs must be made,” according to Hagel and Singer. Thus, it is by un-bundling HR and building dedicated teams to focus on specific areas – either within or outside the organization – that we can achieve the best results. Allow your recruiting partner to battle for the best talent, demand your benefits provider to provide the best-in-class, most flexible programs, and ensure your technology infrastructure is standardized, variable cost, and high scalability.

Jeitosa has just completed the preliminary analysis of Global Readiness Survey results. Some of the key findings include:

• Survey participants were asked what top three challenges they encountered in going global in the HR/HRIT function. The majority of respondents indicated cultural differences (53%) as the top external challenge they faced, followed by compliance with data privacy regulations (42%).

The good news is that there are solutions available for these challenges: leadership development, cultural awareness training, change management programs, and global communication plans can help individuals understand and appreciate cultural differences and provide tools and techniques for improving cross-cultural collaboration. Formalized strategies for dealing with data privacy challenges, particularly in dealing with the European Data Privacy Directive, can be developed and include approaches such as Safe Harbor, Model Contracts, and Corporate Binding Rules.

• The top internal challenges companies are facing in going global fall into two major categories: lack of technology and systems to support global initiatives (51%) and lack of experienced and culturally adept resources to work effectively in a global environment – both a lack of global leadership (47%) and a lack of sufficient other global resources (45%). Going global is a relatively new initiative for many companies, so it is not surprising that many would still be immature in these areas.

Solutions to these challenges are readily available, but organizations need to step up and realize that building a global infrastructure with global systems and global people takes effort, resources, budget, and time. More and more vendors are globalizing their product and service offerings making it now possible to source a global solution for HR systems. With the increased mobility and globalization of the workforce, it is also now possible to find experienced resources who understand first-hand the issues and challenges in designing and deploying a global solution.

• Working globally, companies are also experiencing some successes. By far, the greatest success they are finding is in developing and appreciating global diversity (68%). While this is a challenge for some, it is also a success for others. Generally, the more familiar one culture is with another, the greater the understanding and acceptance of the differences that exist.

You can download a copy of the preliminary research report by clicking here. The participate in the survey and receive a free, personalized copy of the full report, benchmarking your organization to others who have taken the survey, please click here.

In one of my previous posts*, I talked about the emerging Collaborative Transnational Organization as the organization of the future. To help you get started with building such an organization, I offer the six C’s of collaboration: competency, capacity, connection, convergence, culture, and collective.

Competency

The first step is to assess, understand, and then build the necessary skills and competencies for working effectively in the collaborative, transnational age. Some of the most obvious skills and competencies needed include agility, adaptability, business acumen, technical savvy, customer focus, teamwork, and a global mindset. The HR/HRIT professional also needs to develop competencies around Service-Oriented Architecture (SOA), Web Services, Software-as-a-Service, collaboration and publishing tools (e.g., wikis, blogs), and social networking software (e.g., Facebook, Linked-In).

Capacity

Second, we need to build organizational and human resource capacity by making effective use of alternative delivery models, such as shared services, outsourcing, offshoring, and on-demand infrastructures. For HR and HRIT we need to have a global enterprise architecture built on a flexible SOA platform to provide a solid technology foundation that supports the delivery of both centralized and decentralized services, both onsite (physical) and remote (virtual) services, based on business needs and organizational competency and capacity.

Connection

Third, we need to provide an infrastructure that connects individuals across the organization in an ever more mobile, global, virtual, digitized world: voice-over-internet-protocol (VOIP), social networking software, and new modes of communication, such as wikis, blogs, and RSS feeds. For HR and HRIT this means embracing and integrating connectivity in the way we provide services, such as with dynamic workflows, automated approvals, real-time calendaring, online documentation, just-in-time training, ongoing assessments – services that cross organizational, geographic, and system boundaries.

Convergence

Fourth, we must manage the convergence in the workplace of myriad, disparate technologies from telephones to computers to handheld devices. Free, open technologies, such as Skype and Facebook, allow organizations to easily operate across borders without having to build costly centralized infrastructures. Mashups – a lightweight method for integrating web applications – provide a seamless user experience, allowing us to link and deliver services globally or locally, centralized or decentralized, depending on business needs.

Culture

We need to promote a culture of openness, transparency, sharing, trust, accountability, and respect for global diversity. The HR/HRIT professional must understand the global regulatory environment and the differences in business practices in cultures around the world in order to put in place a global governance framework – one that meets both corporate and local business needs and that holds individual business units accountable for local regulatory compliance along with global organizational performance.

Collective

Finally, we must hold every worker individually accountable for the collective success of the organization by developing metrics that connect local activities to global success. This can happen only by first “thinking locally” and then “acting globally” and implementing organizational metrics that focus each individual on their role in the collective performance and success of the global organization. Accountability at the local individual level is the source of success at the global enterprise level.

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*The full text for this article can be found in the current issue of the IHRIM.link magazine.