Cost savings from implementing shared services across its organization has enabled Royal Bank of Canada (RBC) to fund its human resources (HR) and information management operations. We’ve got [key analytics] now at a total organizational level across North America…Chris Herrndorf >Text
Speaking on day two of SAP’s Sapphire user conference in Orlando, Fla., an RBC executive told attendees how the bank successfully adopted a shared services approach.
This model, he said, helped RBC to provide more than 70,000 employees in three different lines of business across North America with a single, common IT backbone to support their HR systems.
Chris Herrndorf, RBC’s director of HR services, said the strategy was to give employees and managers self-service and analytic capabilities, improve the speed and accuracy of transaction processing while driving down costs, and better harness their HR data.
On the infrastructure side, RBC implemented SAP HR and SAP Business Warehouse – modules within Waldorf, Germany-based SAP AG’s enterprise resource planning suite – SAP R/3.
Herrndorf said R/3 has proved itself capable of handing multiple businesses and multiple jurisdictions, and has proven scaleable as RBC’s business expanded.
“We were attracted to Business Warehouse because it enhances our ability to manage our human capital,” said Herrndorf. “The fact that it [interacts] completely with SAP HR really lowers our cost of ownership.”
The recent challenge for Herrndorf’s group came with RBC’s aggressive expansion into the U.S. Three major acquisitions brought 13,000 new employees to RBC. Each company had disparate systems and was migrated to RBC’s shared services platform and SAP infrastructure. Herrndorf said shared services reduced HR and IT costs by 50 per cent, so essentially those savings funded the infrastructure investments.
Herrndorf said a clear vision and strategy were key to the implementation’s success. RBC, he said, adopted a “business case” approach. This included demonstrating cost savings, spending lot of time on project management and governance, hiring a seasoned project manager, getting strong executive sponsorship, and forging a tight partnership between HR operations and IT.
“We also sponsored a continual improvement mindset and there’s no question in my mind it became easier as we did subsequent implementations, because we applied leanings from the earlier ones.”
With shared services and the SAP platform in place, Herrndorf said RBC’s focus is now on building new applications and tools to leverage the Business Warehouse.
An e-learning management tool that replaced four legacy systems was rolled-out in January and is expected to save US$4 million annually. Also introduced in January was “Total Rewards,” an online self-service application to give employees a real-time view of their pay and benefits. Both take advantage of RBC’s SAP infrastructure.
“We’ve got [key analytics] now at a total organizational level across North America, and we’re now drilling down into employee segments, and certain geographies and businesses we believe will really help those businesses,” said Herrndorf.
Elsewhere at Sapphire Wednesday, SAP AG CEO Henning Kagermann used his keynote to make a case for a transition away from transaction-driven software to technology powered by Web services.
By 2010, SAP aims to completely move its more than 32,000 customers from its R/3 enterprise resource planning software to its Web service-based Enterprise Services Architecture (ESA), enabled by the NetWeaver integration middleware.
ESA, in a nutshell, lets companies reuse application functions and build new applications on top of existing ones without, as in the past, having to replace them.
Next year, the company plans to launch mySAP ERP 2007 with full ESA capabilities, Kagermann said. Also coming next year will be a new version of NetWeaver, which is to evolve into the company’s new Business Process Platform.
— With files from IDG News Service