Finance and HR departments, bucking the “you’re from Mars, we’re from Venus” conventional wisdom, were the first back-office functions to align some of their processes in an attempt to improve and speed decision-making. But now the numbers people and people-people are going a step further, with 35% of companies planning to create a shared finance and HR function within a year, according to a recent survey conducted by MIT Technology Review and commissioned by Oracle.
Among the benefits cited by the 700 finance, HR, and IT pros surveyed: Improve the way data is shared across different departments (37%), mitigate IT staff or skills shortages required to run existing finance and HR systems (38%), and improve productivity and performance (42%). Some 80% of the finance department respondents to the global survey said the shared structure will improve the relationships between the two functions either “significantly” or “somewhat,” while 71% of HR respondents foresee such improvement.
Oracle is reaping the benefits of HR and finance integration every day, says Ivgen Guner, senior vice president of global business finance, and not just preaching the value of unifying such functions as a way of selling its integrated cloud ERP (enterprise resource planning) and HCM (human capital management) applications.
Guner calls attention to three main integration points between HR and finance functions—data, process, and organizational—and offers simple examples of each kind to illustrate:
To determine the productivity of Oracle ERP Cloud sales reps in, say, the Latin American region, Oracle can pull the relevant headcount data from its Oracle HCM Cloud application and combine it with the relevant sales or booking data from its Oracle cloud finance application. The sales leaders can then dive into the full cost structure—salaries, commissions, travel, and entertainment expenses—to get an even better handle on productivity, Guner says.
The more integrated the two applications and departmental functions are, she says, the easier and faster it is for sales executives to make hiring, promotion, reassignment, performance-improvement, and other decisions based on that information.
What makes this finance-HR integration so seamless is a common set of metadata for the two sets of supporting cloud applications, so that information is rendered consistently. The data doesn’t have to be massaged or translated.
“When one of my folks submits a travel expense through that finance application, that person’s HR data is already embedded in that particular request, in that approvals workflow,” Guner explains. “When I approve that particular expense, it actually gets posted into my financials database. That approval flow has that person’s credentials, it has his/her cost center, and it shows me details of the expense as well as the justification, so that I can see the entire process.”
At the end of the month (or any time during the month if needed), Guner can then pull from the system a report on her entire finance organization’s T&E, and she can drill down by individual, team, role, or other HR category.
“It’s marrying the financial data to the HR hierarchy,” she says. “I can see all the way down to how much a person spent on different kinds of travel, whether it’s airfare, rental cars, hotels, etc. And I can look at the trends by quarter, by month, whatever my heart desires. If I did not have the visibility into the data within the HR system, I wouldn’t be able to do what I need to do.”
Hiring, promotions, purchasing, and other processes work exactly the same way, Guner says.
In all, Oracle has identified 34 common “touch points” between finance and HR department applications, processes, and policies. These are distinct areas—from budget approval to supplier invoicing to project management—for which tight finance-HR integration accelerates decision-making and eliminates cumbersome manual work.
Beyond the system, data, and process alignment, meaningful finance-HR integration starts at an organizational level.
Guner includes two colleagues from Oracle’s HR organization in every one of her weekly senior finance staff meetings: an HR rep who handles everything from hiring to promotions to performance issues; and a talent development specialist who focuses on training and career development.
“If they don’t understand what we do in the finance organization, if they don’t understand how the business works, if they don’t understand the bigger picture, the company strategy, organization needs, and alignment to the strategy, they’re not going to be successful in their own roles and they’re not going to be helpful to me either,” she says.
Guner says her HR rep talks with each of her 15 direct reports regularly, so the rep “knows what’s going on out there in the field before it even comes to my attention.” Likewise, the finance organization’s talent development partner “knows exactly where the pain points are and what we need to do before I even ask a question,” she says.
Guner also meets and talks frequently with company recruiters, forming a partnership that’s very similar to the ones with the other HR functions dedicated to her organization.
“So they’re part of my organization,” Guner says. “They’re advising me. It’s actually more than advising: They make it happen for me and my group.”
Rob Preston is editorial director in Oracle’s Content Central organization.