In summer 2008, global technology and engineering conglomerate Siemens announced plans to cut 17,000 jobs, roughly 4% of its total workforce. The company’s rationale was that it needed to become a leaner, more efficient organisation in order to prepare for the global recession that was then looming.
To make sure it became more efficient, not less effective, as a result of these jobs cuts, Siemens decided that it needed to align its human resources operations with the strategic objectives of the business. “It was about having the right people for the right job,” recalls Marion Horstmann, corporate vice president of HR, “and linking employment strategy with global business strategy.”
Siemens decided that the best way to achieve this was to standardise all of its global recruitment and personal development processes onto a single system. This was no mean feat, as even after huge cutbacks Siemens still employed more than 400,000 people distributed across 190 countries. “We saw strong globalisation in our business, which enforced the need for a common backbone,” explains Siemens group CIO Dr Norbert Kleinjohann.
Dr Kleinjohann decided that building the solution itself would be time-consuming and would offer Siemens “no great differentiation”, so the company began scouring the supplier landscape. He says Siemens examined approximately 50 HR solutions from nearly 30 vendors during the procurement process.
As it considered its options, Siemens developed a preference for software-as-a- service solutions, as it realised that the scale of infrastructure required to provide these tools to the entire workforce would have taken a long time to build. “With SaaS, you can really accelerate the deployments,” Dr Kleinjohann says. “Compared with [internal] development, you can save time tremendously as you do not need to build and scale.”
Siemens chose SuccessFactors, a US SaaS vendor that describes its tools as ‘business execution’. A hybrid of human capital management and project management applications, SuccessFactors software is designed to help organisations monitor the performance of employees, and relate their personal work objectives to the strategic aims of the business.
The application compiles employee data including compensation, productivity and professional development metrics in graphical dashboards. This allows managers, and the employees themselves, to see how well they are achieving their own goals, and how well those goals are serving the needs of the organisation.
Kleinjohann says that the decision to go with SuccessFactors, whose annual revenue is 1/500th that of Siemens, was based on both the usability of the product and the speed of deployment. “SuccessFactors offered the best implementation time,” says Dr Kleinjohann, adding that selected parts of the application were up and running for 170,000 employees within six months.
That speed of deployment meant that the project was delivering value much earlier than an on-premise alternative would have done, and it therefore achieved its return on investment sooner too. Since then, additional SuccessFactors applications deployed to all 400,000 Siemens employees enable activities including target setting, performance management, compensation management and recruitment management.
The SuccessFactors deployment, referred to internally as 4Success, has drastically changed Siemens’ attitude to recruitment, says HR manager Horstmann.
In light of the improved economic climate, the company is finding it harder to unearth talent externally due to stiffer competition among rival employers. But by actively monitoring each worker’s personal development, Siemens now finds that it can source talent from within the organisation environment more often. “There are some highly specialised competencies that you can’t find on the labour market, so you have to develop them internally,” Horstmann remarks.
Employee data is now transparently shared across the entire organisation in a standardised format, meaning that internal candidates across all global locations can be compared like-for-like, and key skills identified. “We can now run reports on a global basis, which we couldn’t do before because we never had that type of transparency,” CIO Dr Kleinjohann elaborates.
The 4Success format also extends to Siemens’ external job application engine, so that external candidates can be compared against internal employees more effectively. Dr Kleinjohann claims that the 4Success application currently receives between 40,000 and 50,000 log- ins each day
The SuccessFactors deployment has not been without its drawbacks though, says the Siemens CIO, who believes that the vendor’s business execution software “needs better enterprise functionality”, although he declines to specify which features the application lacks. “Some of it will come in time,” he believes.
SuccessFactors claims that the Siemens deployment is the largest cloud computing project on Earth. Fittingly, Siemens’ CIO says the success of the deployment has convinced him of the merits of the cloud in such a large, geographically distributed organisation as Siemens.
Based on his company’s success, he expects the cloud as an IT delivery model to be a popular one with other enterprise organisations over the long term. “I believe that cloud computing will change IT sooner than we expect,” he concludes.