With HR transitioning to the cloud, coming of the robotic age, the buzz around “big data” and “predictive analytics,” is diverging focus of the HR professionals to become strategic business partners of an enterprise.
In an exclusive interview with Hiroki Itakura, Vice President of APAC Sales and Marketing at Works Applications, we seek to understand how automation trends and latest HR technology tools have revolutionised HR workings to create conducive environment for professionals to thrive.
What are the challenges to adopting HR software and embracing HR technology in APJC markets?
Although not as advanced as the US, Japan is the most mature market in Asia. Enterprise software, including HR, started to emerge almost 25 years ago in Japan, mainly because Japanese companies were trying to catch up with the West by transitioning from paper systems for their operations.
Due to population shrinkage and increasing global competition, Japanese companies need to urgently execute talent management strategies to utilize their limited resources more efficiently.
For example, one of the shifts recently observed is that, more Japanese companies are embracing new women friendly HR policies and hiring more non-Japanese employees. As a result, we are seeing large demand for a consolidated HR database to practice effective global talent management, especially among large global Japanese corporations.
All of our clients will be migrating to AI WORKS, our new enterprise productivity software platform, by the end of 2020. As of now, there are couple of beta users and a number of clients are scheduled to go live in 2017.
The Chinese market is roughly about 10 years behind the Japanese market. The bigger picture to be aware of is that the average wages have been increasing by at least 9% yearly for the past 5 years, according to tradingeconomics.com, while talent retention rates remain quite high.
In fact, average turnover rate in 2013 was 14.3% according to the Human Capital Intelligence Report for 2013 by Aon Hewitt. Also, given that permanent employment is mandatory when renewing certain contracts, companies are more cautious in hiring, especially since talent acquisition costs have increased along with wages.
As of now, most companies in China still use paper or multiple HR systems to meet their day-to-day HR operational needs. Since the local market has been getting increasingly competitive for Chinese companies, with local industries maturing due to rapid economic growth, we are observing gradual demand for strategic talent management to stay ahead of the game. This in turn transcends into higher demand for complete HCM software.
Although the China market is still maturing, we anticipate needs to be shifting rapidly towards those we observe in Japan and the US in the next 5 to 10 years. Furthermore, this would create an exciting opportunity for WAP and we will be able to utilize the knowhow accumulated in the US, Japan, and China supporting corporations locally and globally.
Each country in the region has its unique market situation. For example, in Singapore, the Infocomm Development Authority of Singapore (IDA) has released the Productivity and Innovation Credit Scheme (PIC) which provides organizations’ incentives such as tax deduction/allowances, cash payouts, and cash bonuses upon purchasing enterprise software.
For the HR technology sector, this movement has been driving more clients to consider adoption of new SaaS solutions such as AI WORKS.. We have been receiving much positive traction for our new product, AI WORKS, and anticipate the demand to grow as Singapore strives to exceed other developed markets such as the USA.
With the establishment of ASEAN Economic Community (AEC), countries such as Thailand have been shifting their role from a major manufacturing base into an ASEAN regional manufacturing headquarters.
Part of labour-intensive production has transferred from Thailand to neighbouring countries with lower wages. What this means for companies in Thailand is that, overdependence on individuals for HR operations and tasks conducted on paper is transforming toHR operations now becoming standardized and systemized to seek efficiency in its new role. .
Works Applications has already been supporting Japanese corporations in Thailand for a number of years. We are thrilled to support Thai corporations maturing into this new role with AI WORKS.
According to the ‘2014 HR Service Delivery and Technology Survey’ by Towers Watson, 85% of Indian organizations have or plan to have an HR portal, and 83% of them plan to implement this in the cloud. Moreover, many talent management operations are still conducted manually in India.
Works Applications established its Indian office first, as one of the global development bases in 2015. Our India office plans to grow to close to 2000 employees this year.
From 2017, we plan to start offering our products to local companies, starting with Japanese corporations. This would mean more hiring in the region including development of sales and customer support unit.
Since the market showcases a positive outlook for implementing HR technologies including cloud adoption, we anticipate a steep growth in the Indian market.
How would you differentiate solutions from Works to provide value for money proposition for businesses over your close competition namely: Oracle and SAP?
We differentiate ourselves by delivering products with a better approach. Works Applications began some 20 years ago filling a need that our competitors SAP and Oracle could not do, way back then. In the late 90s, SAP and Oracle were the major ERP vendors at the time, and they made a strategic decision to not invest to meet the unique requirements of Japanese companies.
Japanese companies at the time had to invest extensively in customizing software. Works Applications filled in this gap and grew as the first software vendor to provide a full scope packaged solution, starting from HR. We now have more than 50% market share in the HR sector in Japan, and is the market leader.
WAP’s next generation enterprise productivity system, AI WORKS, is the first enterprise software that aims to improve user productivity by automating repetitive routine tasks and integrating productivity tools such as spreadsheets, email, chat, and drive into enterprise systems. This is the first in the industry. According to WAP research, close to 40%of your time is wasted because of repetitive tasks or manual input.
Imagine AI WORKS as a personal assistant that can help handle repetitive, mundane tasks such that employees can utilize their time strategically and creatively As a result, organizations can drastically improve their efficiency and productivity because of higher individual performance.
Unique Business Model
Unlike our competitors, our cost structure is completely predictable. All costs associated with implementation and future configurations are included within annual maintenance fee.
While the industry norm supports utilising third party consulting firms or service providers, Works Applications provides everything from product development, sales, consulting, and after support in-house.
Clients receive better and faster support since there is no communication time lag. As a result, 99% of our customers have been our continued patrons since founding.
Hiroki Itakura, Vice President of APAC Sales and Marketing at Works Applications
With HR transitioning to the cloud and “big data” making buzz rounds in every industry and particularly HR, what are your HR tech predictions for the APJC markets in 2016-2020?
We are observing a different maturity level in each market. This in turn is likely to impact implementation of big data analytics as well as cloud migration in each market.
Japan has the best infrastructure for cloud migration in Asia, according to Asia Cloud Computing Research in 2014.We have found that Japanese companies are more prone to cloud migration compare to other Asian nations.
Migration of more than 8000 client companies from WAP’s on-premise software onto AI WORKS by 2020 means more than 50% of major global Japanese corporations’ HR operations will be on the cloud by 2020.
Japan’s urgent need to retain its productivity from its projected decrease of population has been spurring more interest towards artificial intelligence in recent years.
From the above points, we anticipate that the ground will be ready for Japanese companies to practice big data analytics by 2020.
Cloud Infrastructure is still under construction in China. Chinese companies are less receptive to public cloud migration due to fear of information leakage to competitors. In fact, many start ups have chosen to migrate to the private cloud after growing their operation first on the less expensive public cloud.
Unless there are change in views about information security on the cloud, pushed by consumer technology’s adoption of public cloud, as it happens in other mature markets such as Japan and the US, we anticipate that the above trends might create different dynamics of big data analytics of HR in China.
The Chinese market will have fewer organizations, and less sample data, to compare their talent management tactics. However, it may not be a significant issue due to its population and large organizational size.
A prerequisite for big data analytics is the adoption of complete HCM solutions. We are seeing increasing demand in ASEAN countries for complete HCM. However, we anticipate the speed of adoption to be different in each country. Singapore is likely to be ahead of the race and able to start practicing big data analytics fastest, as it manages its high turnover rate talent pool.
This is because of strong governmental tax incentives and the collaborative relationship between the government and companies. We anticipate the speed of adoption will be slower in other emerging nations in the region, partly because of less reliable public infrastructure.
What this means is that, while Singapore might exceed the West and become a leader in big data analytics for talent management, other ASEAN nations might be just getting ready.
Many HR operations in Indian organizations are still operated manually or on paper. Additionally, India is ranked #13 among Asian countries in terms of cloud readiness.
Digitization of HR operations and migrating to the cloud will be the key for Indian organizations to take advantage of big data analytics in HR. While some Indian organizations might be able to start practicing HR big data analytics by 2020, it is too early to tell whether this will be widely practiced across the country.
Why does HR need artificial intelligence? How can artificial intelligence as a tool, with AI works as a platform, speed up recruitment and streamline hiring processes for recruitment managers?
As retention becomes a pressing issue due to rapid turnover, finding and training the right talent quickly is critical for companies to maintain growth. Bringing in smart systems such as AI WORKS does not mean jobs will be taken away from people.
Rather, like a personal assistant, AI WORKS will learn to understand which information is critical for HR managers and executives to make decisions and present the necessary information, while eliminating administrative tasks in the process.
Since AI WORKS is the first enterprise software with productivity tools such as chat, drive, spreadsheets, built in, it can learn and log all of the operational data of hiring managers, and therefore suggest information more accurately compared to conventional systems.
Team at Works Applications
For example, recruiting managers will be able to identify the right specific experience and skills for a particular job by discovering what top performers have in common for those two categories. Then, AI WORKS will help the managers identify job candidates by looking into data platforms like LinkedIn, applicant resumes, internal employee database, etc.
Once the candidates are identified, their information will be presented to the recruitment managers, to decide on the candidate to be contacted for interview, via email or phone. If via email, AI WORKS will present email drafts based on those created from the past for the same position, and seek permission from the managers before sending out emails.
Based on candidates’ responses and the recruitment manager’s schedule, AI WORKS will then suggest ideal timeframe for interview sessions. As AI WORKS accumulates more data over time, the information it suggests becomes more refined and accurate, continuously improving hiring managers’ efficiency.
In the age of Human vs. Robots, do you think usage of machine-learning technologies such as those implied by AI works would make organisations do away with need for human skills and talent on job?
The goal for AI WORKS is not to take jobs away from people. But rather to create time for employees to do more productive and creative work that would lead to higher organizational performance. For example, administrative routine work such as manual input, making spreadsheets, document formatting, and setting up meetings will be substituted by AI WORKS.
In that sense, yes, there will be less demand for administrative jobs. Since, we believe that machines are better at administrative jobs and humans are designed to create. Naturally, HR jobs that require creativity, such as figuring out requirements for new jobs will still remain.
The hiring manager will have to understand the growth strategy of the organization, hold discussion with departmental managers, and come up with requirements for new jobs such as skill sets, experiences, and personalities.
Machines cannot acquire such information. HR managers can also utilize their time more effectively to solve some of the important questions.
For example, questions that define the kind of organisational culture you would like to co-create, how to communicate more efficiently with different departments and co-workers in varying degree of positions to generate better results, how to make every employee feel emotionally connected to the organizational goals, etc.
Workplace culture at Works Applications
Emerging predictive analytic trends in HR is taking the industry by storm and professional organisations are hopping in to this global paradigm shift. How can predictive analytics and intelligence help HR personnel to streamline day-to-day operations and manage large talent pool effectively?
In our opinion, filling new positions and forecasting candidates likely to resign are some of the most important aspects of HR’s job. Defining requirements for new positions for company’s growth needs creativity and awareness of internal strategy as well as communication.
However, AI WORKS can play a role to fill positions that are likely to be vacated in the near future. It can help identify common factors such as experience, skill sets, and past evaluations of resigned employees and potential candidates who are likely to resign to help HR personnel and managers prepare in advance.
What we mean by preparation refers to two different tasks: one is to train potential successors in advance by primarily identifying the candidates that meet criteria for the positions, and another is to identify potential candidates through social platforms and job applicants for the position.
When it comes to attuning the software predictions to challenges presented by law and taxation policies across different geographies it is not easy. Do software solutions from Works prove to be a comprehensive HR tool for professionals with easy adaptability to new systems and market considerations for efficient HR management?
Since many of our clients have operations outside of Japan, we have been accumulating operational knowhow that meet compliance requirements across different regions (we currently support compliance in more than 37 countries).
Since not all of the legal changes are published immediately, we also collaborate with local law firms to stay connected with the latest compliance requirement in each region.
Another aspect to be aware of is that, before we transitioned into a SaaS product, our product has been accumulating functional needs from all industries over the past 20 years. Furthermore, we provide everything in-house and have direct interactions with clients.
As regards adaptability, our business model allows clients to do system configurations, based on compliance or internal organizational needs such as acquisition or organizational restructuring. Therefore HR managers and executives find our solution adaptive and cost efficient for their businesses.
How does HR technology help combat attrition and manage multigenerational workforce demands/expectations in APJC and now, the recently added US market?
When it comes to managing a multigenerational workforce, AI WORKS can help recognize patterns based on different generations.
For example, on implementation of AI WORKS you can check if, one generation might show higher productivity with certain evaluation systems compared to other generations, in which case HR managers can then create minor segments within the evaluation systems that are most suitable to each generation.
An important point to bear in mind is that the role of HR technology is to assist HR professionals and organizations to effectively execute HR policies. The hard questions still need to be answered by HR professionals themselves. AI WORKS will help create more time for HR professionals to tackle these problems by freeing them from administrative tasks.
Styles of working have revolutionised and so is the workplace culture with employee-friendly HR policies in place, how do you think HR tech from Works can support this workplace evolution in the recent times?
The trend of employee-friendly HR policies really stems from companies wanting to retain top talent. We believe that gaining clear insight into employees’ perspectives about their organization is the first step towards setting up employee-friendly HR policies. AI WORKS can help achieve this.
Since AI WORKS is deeply integrated into day-to-day operations by offering productivity tools such as chat, email, and spreadsheets, it has the capacity to help HR professionals gain more insights into employees’ sense of belonging.
One of the biggest advantages of AI WORKS is that it is based on enterprise systems with deep operational knowhow that has been accumulated across all industries from 8,000 clients over the past 20 years in a direct business model, without third party interference.
At this point, most of the implementations are done without any additional functional development since our HR systems can handle complexity. Such rich functionality coupled with predictive pricing model makes our systems extremely adaptive to changes in HR policies.
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