Explore the HRIT Cost Savings Possible with a Consumption-Based MSP Partner
Intro: Welcome to the Speridian Advantage Podcast from Speridian Technologies where we share ideas based on our proven track record of solving our clients most pressing business problems through technology-fueled innovation. This podcast is sponsored by SAP.
Karen Franse: Hello and welcome to this Speridian Advantage Podcast. I’m your host, Karen Franse. And my guest is Gregory J. Turner, SAP SuccessFactors Practice Lead for Speridian Technologies. Greg, welcome to the podcast.
Gregory J. Turner: Thanks, Karen. Happy to be here.
Karen Franse: Greg, since this is the Speridian Advantage Podcast, before we get started, I was wondering if you could give our listeners a quick explanation of just what’s Speridian Advantage for SAP SuccessFactors is all about.
Gregory J. Turner: Certainly. I’d be honored to and happy to. Speridian Advantage for SAP SuccessFactors is a 24×7 managed service offering that provides human resources organizations that have already implemented SAP SuccessFactors with a predictable and very cost-efficient way to maximize their deployment. What makes our offering unique is our very popular consumption-based pricing model that allows us to support a sophisticated and robust human capital management solution like SAP SuccessFactors at a surprisingly affordable, per-seat, fixed monthly price regardless of the level of complexity involved in the request.
Karen Franse: Thanks Greg. And that’s a perfect segue into our segment today where we will really examine whether a customer can actually save money by partnering with a managed service provider like Speridian versus managing their SuccessFactors implementation with their own in-house staff.
Gregory J. Turner: That’s right, Karen. But, really, a better question might be, how much money can they save? There are a lot of factors that go into that.
Karen Franse: Well, it sounds like it might be a math problem. I hope our listeners have a calculator handy. Where do we start?
Gregory J. Turner: Well, let’s break it down. First, we have to examine what a typical organization spends to support their human resources department’s human capital management solution and an important question, since personnel are the biggest factor in the total cost of operations. For round numbers, let’s say our sample organization has a thousand employees. According to the American Institute of Human Resources Academy, most businesses average 1 to 1.2 human resource staff members for every 100 employees. So, in our sample company, that would mean 10 to 12 full-time equivalent HR people on staff. Larger companies may be more efficient and employ fewer staff members. While smaller companies may have an FTE ratio as high as 2.57.
Gregory J. Turner: But for our more typical example, let’s say we have 10 to 12. And those people can range from the chief people officer, to a VP in charge of HR, to administrative assistants, to talent acquisition and recruiters. It’s the entire HR department. Every day, those 10 to 12 people are using a variety of tools and systems to manage their HR responsibilities, including a benefit system, some sort of payroll system, maybe ATP or paychecks and other solutions to help with talent searches and applicant tracking, all of which interface or are part of the SAP SuccessFactors’ suite. As a result, someone must support and maintain those systems from both an operational and an IT perspective. And operational, I mean human resource operation perspective.
Karen Franse: Okay, that makes sense. So, how many people does it actually take to maintain those systems?
Gregory J. Turner: Before we can answer that, we have to determine how many IT people are on staff for the whole organization. Then, we can estimate how many of those are dedicated to supporting the HR functions. According to industry data, the ratio of IT people to employees in companies that have 500 to a thousand employees is 1:25, which means in our sample company with a thousand employees, there are probably about 40 IT people in all.
Gregory J. Turner: When you look at a typical organization, there are usually four main functions in every business – sales and marketing, finance and accounting, operations – which is the bulk, the engine of the company, which may include things like manufacturing, distribution, or professional services – and, of course, employee management. That means HR is one of the four major departments to be supported. While there will be clearly variance in some organizations, this gives us a way to fairly compare the distribution of resources.
Gregory J. Turner: In our example company, this would mean about one-quarter or 10 FTEs are most likely to support the people who are solely dedicated to the HR function. Remember, it’s not 10 IT people supporting 10 HR or 10 to 12 HR staff, but it’s 10 FTE supporting the IT functions of the entire employee population, all 1000 employees.
Karen Franse: Okay, okay. So, what you’re saying then is that combining the 10 to 12 full-time equivalent people who support HR operations, as well as the 10 full-time equivalent IT people supporting HR functions, there are about 22 full-time equivalent people supporting HR and its systems in all. Is that correct?
Gregory J. Turner: That’s right. That is correct. Now, we have to determine how much those people earn to see how much the company is actually spending on per-employee basis. And according to salaryexplorer.com, these employees can earn an average of a $100,000 per person including benefits, like healthcare, 401(k) matching programs and disability insurance. It means our sample company is spending an estimated $2.2 million per year to support its HR organization and its HR systems.
Karen Franse: So, you think there’s a better way, a way that these companies can save money here?
Gregory J. Turner: I do. Beyond our deep knowledge of both the SuccessFactors technology and the human capital management human experience in industry solutions at Speridian, one of our chief differentiators is our consumption-based per-employee pricing model. We view this as a competitive advantage for our customers. So, I wanted to really see what our sample company was spending per employee on HR support cost to better quantify the value we offer.
Karen Franse: Okay, Greg, walk me through that.
Gregory J. Turner: We know our sample company is spending $2.2 million per year, and we estimated this company has a thousand employees. So, that means on a monthly basis, it’s costing our sample company $183 dollars per month per employee to support its HR department and that department’s IT systems, most of which are probably connected to the SAP SuccessFactors’ platform.
Karen Franse: Right, but not all of those 22 full-time equivalent people are IT people, correct?
Gregory J. Turner: That’s correct. So if we want to know the actual IT cost, we can estimate that about half of those 22 people, 10 to 11, are IT support people, and we can effectively have that $183 per month and call it $91 per month per employee to support our sample company’s HR IT systems alone.
Karen Franse: Our listeners can’t see you, so they don’t know this, but you have a big smile on your face right now. Why is that?
Gregory J. Turner: Because Speridian can definitely save money for an organization like our sample company. Our per-employee costs for the Speridian Advantage is in the $40-or-less range, less than half of the HR IT system support costs. Our sample company paid, which means our sample company can save $51 per month per employee. That would work out to about $612,000 per year simply by partnering with Speridian to support its SAP SuccessFactors’ platform. Since nearly every IT function in the HR department is either directly or indirectly tied to the SAP SuccessFactors’ platform, Speridian will actually be supporting the majority of those functions as well. Whether that means a user has trouble creating an SAP SuccessFactors dashboard or has an email or desktop phone issue, we can support it all.
Karen Franse: Okay. So, let’s really drill down into these numbers now.
Gregory J. Turner: Sure. By replacing a $91-per-month, per-person cost with $40, cutting just the IT cost alone more than half, the total cost of HR operations is now also lowered from $183 to $132 per month, a $51-per-month employee savings in both instances. And since Speridian can easily perform 60% to 70% of the total cost of supporting HR functions, which is almost entirely IT-related, at significantly less than one-third of the total cost of the HR operations, that means our sample company could expand its total workforce by nearly 40% before it’s HR support costs would equal what it was paying before partnering with Speridian.
Karen Franse: Well, that’s pretty impressive.
Gregory J. Turner: It is. And I’m not saying that because I work here. I’m saying that it’s someone who’s been in this industry a long time and truly understand that these numbers are real. Think about that again. By partnering with Speridian, our sample company can reduce the cost of supporting the IT function in HR by more than half. Another way to look at it is that Speridian can perform the majority of the functions that support the HR operations at significantly less than a third of the cost they are paying today for those same functions. And when you look at that on a larger scale, because we offer a per-employee fixed cost consumption model, that means that the company can actually grow by nearly 40% before they even equal what they were paying before partnering with us.
Karen Franse: How can you provide those services for so much less than companies can do it for themselves in-house?
Gregory J. Turner: Best answer is the theory of economics and economies of scale. That, it’s all we do. We provide IT support to our customers. And in the SAP SuccessFactors realm, we are specialists at it. So, we do it again and again for many customers worldwide. That gives us an advantage in terms of having the incredible knowledge base to draw from. We have lessons learned. We have the understanding of the gotchas. We have best practices that have been created in support of SAP SuccessFactors and HR organizations.
Gregory J. Turner: Not only do we have the best world-class experts with the highest possible level of certifications and hundreds of person years of experience with human capital management and human experience management solutions, but there isn’t much we haven’t encountered before. So, we can help our clients increase the return on investment while decreasing their support costs by providing one of the most robust and cost-effective support solutions in the industry. And I’d like to also add that we do it with guarantees. So, 24×7 with guaranteed service levels providing you a low-cost, consumption-based, fixed price model, that’s a Speridian Advantage.
Karen Franse: Beyond the obvious cost savings that we’ve just discussed, what’s the number one thing Speridian can really provide for its HR clients?
Gregory J. Turner: Peace of mind. When you partner with an experienced firm like Speridian, the smooth day-to-day operation of the SuccessFactors’ environment is clearly important, but risk avoidance becomes the icing on the cake. Here’s a perfect example. The IRS estimates that over 90% of the companies are out of COBRA compliance today. And if you’re one of them, there are real fees and fines associated with that.
Gregory J. Turner: Here’s another quick math example, Karen. Well, imagine you have a 10% reduction in your workforce, which a number of companies have unfortunately experienced as a result of COVID-19 setbacks. If you did not set up your COBRA system correctly, you could face significant fines. And those fines, in some cases, are $100 per employee per day. Again, if you had a reduction in force, where our sample organization of a thousand employees reduced by 10% so we reduced 100 employees, then that mistake would be affected 100 times. And if it takes you 30 days to discover and rectify that mistake, that single incident could cost your firm $300,000 in just one month’s time.
Gregory J. Turner: Avoiding this kind of risk is the multiplier that makes working with an experienced managed services partner like Speridian an absolute must, particularly when we can provide an all-encompassing, consumption-based pricing model that delivers the IT support, the SAP SuccessFactors expertise at less than half your current cost and provides a total support services at significantly less than one-third of the cost you’re paying now. I can’t think of a better example of the Speridian advantage.
Karen Franse: Well said, Greg. Is there anything I have not asked you that you’d like to add?
Gregory J. Turner: I really want to emphasize the fact that it’s really straightforward for us to engage with our clients. We have a free assessment, and we can also provide our service at no cost, no obligation to them for one month for free. And so, it really is peace of mind and without worry.
Karen Franse: I think that’s good information for our listeners to have. Okay. Thanks for talking with us about this today. I know we ran through a lot of numbers pretty fast. Is there some place where our listeners can find this information all written down?
Gregory J. Turner: Absolutely. They can find it at our Speridian website, which is speridian.com. Check for the article called How to Cut Your SAP SuccessFactors’ Support Costs by More Than Half.
Karen Franse: Thank you, Greg, for spending the time to go through all of this with us. I think this is very valuable information for our listeners. And I think they’re really going to appreciate having this all written down in a blog where they can go back and look at it again.
Gregory J. Turner: Thank you, Karen. Appreciate the time and appreciate the listeners.
Outro: We hope you enjoyed this episode of the Speridian Advantage Podcast. For more information about the solutions we have discussed or to become a guest on an upcoming podcast, please contact us at firstname.lastname@example.org.