Aviation group Lufthansa is rolling out a project to replace more than 50 out-of-date human resources (HR) IT systems with a cloud-based service.
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Lufthansa Group, which employs more than 130,000 people worldwide, says it has learned lessons from previous attempts to introduce cloud-based HR technology, which proved more complex than expected.
The company, which had a turnover of €36bn in 2017, has grown through mergers and acquisitions, leaving it with a range of HR systems that have proved difficult to link together.
Lufthansa made its first attempt to update its HR IT systems in late 2014, when it chose to roll out a company-wide performance management system for business leaders and administrative staff.
But the project ran into unexpected difficulties. Each company in the group had configured their HR data in a different way, which made it tough to link employees’ HR data into the talent management software.
“Our data for the top level of management was clean, but as we moved to lower-level managers, the data was less standardised and more complex,” says Julian Simée, Lufthansa senior manager of corporate HR strategy and project lead for HR digitisation.
That led to a huge scaling down of the project, from 10,000 people to just 200 in the senior leadership team.
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“The issue was that SAP seemed to have very clear HR data internally, so it was easy to say start anywhere and go anywhere,” he says. “Our data was not. We needed to start with a central database.”
In 2015, Lufthansa decided to centralise its HR data in a company-wide HR system before attempting to roll out further HR software.
The firm was already using SAP’s HR systems on its in-house computers. It calculated that using the same technology supplier would make it easier to transfer its HR data into SuccessFactors’ cloud service.
“We wanted to ensure we could move our current on-premise data, in not too complex ways, into a cloud system that had similar logic,” says Simée.
SAP SuccessFactors was a handful of HR software products that had the scale to manage more than 130,000 employees. And Simée says that because SAP kept employees’ data in Germany, Lufthansa’s works council was reassured that the technology would safeguard the privacy of employees’ data.
The company put together a series of project plans and roadmaps to plot where to deploy the technology first.
Two pilot projects
It undertook two pilot projects, at its LSG group catering division headquartered in Germany, and at a service centre in Poland – both chosen because their HR data was a close match to the format used by SuccessFactors in the US.
In 2016, Lufthansa began to roll out SAP’s core HR technology database, Employee Central, across the group.
It tried to adapt Employee Central to match the HR processes used by each part of the business, rather than use its standard work processes – a decision that increased the complexity of the project.
“Instead of just thinking in a digital way, and thinking about software as a service, we wanted Employee Central to copy our existing HR system. We realised that was not going to happen,” said Simée in an interview at Unleash, a conference for HR and IT specialists.
The Lufthansa and SAP teams initially assumed that the fault lay with the other team, before agreeing that it made sense to restart the project with new teams.
“We are a company that relies on technology, and with these mishaps, we learned and got the experience for future starts,” Simée tells Computer Weekly. “We were trying to mirror our on-premise systems on to SuccessFactors, and that didn’t work.”
This time, Lufthansa worked hard to simplify its HR processes and to identify the most critical HR software to roll out.
“Company-wide, we were minimising complexity, reducing all the special features that might be relevant to one or two employees but which did not support the company,” says Simée.
The HR team identified the key processes that employees require throughout their time in the company.
Julian Simée, Lufthansa
“We noticed there are a few processes besides administrative tasks that always touch the employee: learning and development, compensation, performance reviews and changing jobs,” says Simée.
Lufthansa began redeploying Employee Central across the company in the first quarter of 2017.
It used a core team of about 10 HR IT specialists to manage the project. They worked with HR IT specialists in other companies in the group and an implementation partner.
Lufthansa is deploying Employee Central across each location – but while some companies in the group are using the service to manage their HR, others are still using older HR systems.
The organisation is still paying to maintain on-premise HR IT systems, so it does not expect to make any savings from moving to the cloud for a few years.
However, the project will free up both employees’ and the HR team’s time from administrative tasks, to allow for more productive and creative work.
“We hope to see an increase in productivity because instead of taking 10 minutes to update your address, it takes 15 seconds because you only have to type it in once,” says Simée. “The goal is to end our on-premise software as soon as possible.”
According to Simée, Lufthansa has learned some important lessons from false starts on the project. Like other big companies, Lufthansa Group was used to customising software to suit the way it liked to work.
But while cloud services such as Employee Central allow some customisation, they do not, as Simée puts it, “allow you to do everything your own way”.
“We learned it is definitely important to have your HR processes as standardised as possible throughout the company, before you jump in on technology,” he says. “It’s important to be clear about what you want from HR technology before you buy it. That means considering all the HR software that will be needed to manage employees during their time at the company.
“You can’t think of learning by itself or talent management by itself – it is all interconnected.”
Simée advises other people embarking on projects to move their HR data into a cloud service to allow time for unexpected problems.
“The key is to plan for more time than you would need,” he says. “Assume it is going to be more complex than you thought.”
Why HR IT projects often run into turbulence
David Wilson, industry analyst and CEO of Fosway Group, says Lufthansa’s experience is relatively common.
With two-thirds of companies in Europe having decentralised HR systems, he says: “Migrating to a common platform is a significant challenge as processes, data models and operating practices vary significantly.”
It can be tempting for companies to believe that customising cloud-based HR systems – as Lufthansa initially tried to do – offers a strategic advantage, says Wilson.
“But experience over time shows it is an addictive habit with limited recurring benefits and the graveyard of innovation,” he says.
Businesses move their HR systems to the cloud for a wide range of reasons, but ultimately the real benefit is that it offers companies the ability to continually innovate.
“Innovation is not a one-off process, it is a continuous state of being – and that’s almost impossible to deliver in an on-premise scenario,” says Wilson.
With hindsight, Simée says Lufthansa would have been better off putting effort into cleaning and standardising its HR data, because that would have been more useful than spending time and resources rolling out talent management software for 200 people in the leadership team.
“I am not sure our users saw a vast benefit in us cumbersomely implementing a talent management module for our leadership versus having our core data cleaned up and having clean HR data,” he says.
Although SAP has managed to move its own HR data from on-premise IT systems into the cloud, it had done so using data that was already clean. “SAP had clean data and it was easier for them to move into the cloud,” says Simée. “We did not have clean data.”
Lufthansa now plans to focus on making the HR interface as easy as possible for employees to use. That includes developing “robotic software” that can automate as many of the background processes as possible.
It tested the software in November 2017 on payroll and travel expenses – automating repetitive tasks, including data entry and document scanning.
Another project tested the ability of smaller software applications, such as learning content software, to link into Employee Central’s software using SAP’s APIs.
One of Lufthansa’s priorities is making the HR system available to employees on mobile devices, so, for example, they can make holiday requests from their mobile phones.
The first step for Lufthansa will be complete the roll-out of Employee Central, before rolling out further HR modules.
“We are not going to do a full-blown roll-out, everything in one go,” says Simée. “We want to reduce the risk of employees having a bad experience that will put them off using the technology.”
If the technology is difficult to use, employees will call HR and ask them to do the work, he warns. “You end up spending a lot of money on people technology, but find people don’t use it.”
Julian Simée was a speaker at the Unleash Conference & Expo on the Future of Work and Technology in London. ............................. ............................... ............................... ............................... ...............................