I’ve been thinking a lot lately about both business and applications integration. You may have read my modest rant on the bastardization of the term integration as used to describe how applications are connected. You also may have seen my videocast comments on the reasons why I think that your HRMS and core talent management applications (so performance, staffing, compensation, development, succession etc.) deserve a very high degree of what I mean by integration.
On that same videocast, there was also a good bit of discussion about the inherent connections between core financial applications and your HRMS, but I think there’s a lot more to say on this point, especially given a recent inquiry on same from my colleague Emma Snider. It was Emma’s questions to me in the wake of that videocast that are the immediate impetus for this post, although it’s been on my list for some time.
With respect to our having discussed the connections between financial and HCM applications on the referenced videocast, she asked: “In your opinion is this because HR and finance truly are going to start working together much more, so HR should be concerned with what finance is using in terms of technology, and vice versa? Are the two functions really destined to team up?”
To these good questions, here’s how I responded [with my responses to Emma edited by me here for greater clarity]:
“First, finance and HR are inherently connected in a purely business sense in that (1) the bulk of most organizational costs (which can be 70% to 80% in businesses which are predominantly service-based) are related to their workforce, (2) understanding what it is about HRM that moves the dial on revenues and profitability goes to the heart of measuring and enhancing organizational performance, and (3) there’s no way to manage business outcomes without integrating financial and HR data quickly and cleanly, analyzing that data quickly and cleanly (to include predictive analytics), and then delivering that analysis directly to decision makers at their point of decision-making, i.e. as embedded analytics, at their speed of thought. From a systems perspective, finance and HR share many enterprise level objects — including work unit, work location, person, account, contract, and many more — and place many of the same demands on system architectures, from the needs for widespread user access and effective-dating done systemically with full retroactive processing to the need for managing geographically-based regulatory requirements via powerful inheritance capabilities across and within SaaS tenants. So, on both a business and systems basis, there’s a natural affinity between these two domains which argues persuasively, especially at a time of embedded analytics, for them to be integrated (as I define that term) in a systems sense and working well together in a business sense.
There’s a lot more to be said on this subject, but I hope this gives you a sense of where my head’s at when it comes to making the business case for considerable “Blooming” integration across financials and your HRMS — and I can’t wait for the comments to fly.
[…] I’ve written previously about my strong commitment to precise and consistent definitions of terms used in our discussions of enterprise software and, especially, of HRM software. And once you’re committed to a precise and consistent definition of integration, it’s possible to determine which other business processes have sufficient numbers, depths and complexities of connections to core HRM to benefit mightily from having a deep integration with your core HRM software. Must payroll tax filing be deeply integrated (by my definition of integrated)? Valuable, but not essential. Background checking? Nope. Fixed asset accounting? Another nope. But basic financial and cost accounting? A definite yes. […]
Naomi, very relevant post, and while I agree with Tim’s comment on taking this farther than just financials and HCM, I’m also of the opinion that bridging this gap will yield meaningful results. Our efforts here at Whodini are to provide a contextual layer for this to happen in an organization. The context that we deliver is derived from the day to day engagement, as evidenced by their conversations, of employees across an organization. By delivering this as a service, with a set of workforce analytics API’s, we hope to provide a useful bridge that connects Who is talking about What, to What Extent, through Time, to enhance decision making on many fronts.
Jim, many thanks for taking the time to bring your firm’s capabilities to my attention and to reinforce the many potential connect points across the domains of HRM and Financial Management. I’ve got some homework to do at your Web site, but you may also want to send me a briefing package to naomibloom@mindspring.com, just whatever you use with the more discerning influencers with whom you communicate.
An excellent article, Naomi. You definitely have it right about the inherent connection between finance and HR, and the need to address that with the right technology. In fact, we’ve been saying it for years! Treating the workforce as an investment and producing analytics from both HR and finance data for evidence-based decision making is vital to healthy business strategy.
There’s an article on our blog about Joining HR and Finance Strategically that you may be interested in: http://blog.eestrategy.com/2014/01/16/joining-hr-and-finance-strategically/
Thank you so much for your feedback and for calling our attention to your recent blog post.
Why stop at just HCM + Finance ?? That only handles the flow of money related to payroll, taxes and benefits. We should also be “integrating” with our existing ERP + CRM modules. These integrations will bring more needed focus to the flow of people through our factories, distribution centers, sales offices and customer service call centers. As an HCM industry, we need to either “Think Big or Go Home”. We need unified HCM, FMS, ERP & CRM !!
Many thanks for joining the conversation. There are many more connections between Financials and HCM, especially for more knowledge-based rather than asset-based industries. Provisioning that workforce with everything from office space and mobility devices to cellular contracts and travel arrangements really adds up, so we’re talking about much more than payroll/taxes/benefits. That said, you’re making an important point about the many connections between specific HCM objects and their counterparts across the entire spectrum of enterprise applications. At a minimum, when done well, the HCM object model and its implementation can drive every aspect of applications security, at least for security related to workforce members, so applicants, employees, contingent workers, relevant dependents, and the list goes on. Go up a level, and the person object model, which isn’t necessarily housed solely in HCM when it comes to persons, like customers, who aren’t related to the workforce directly, can still be reused to a large extent. So yes, there’s definitely more to be considered here, but I hope you’ll forgive me for limiting the immediate discussion to something I could cover in a single post.