Lufthansa goes back to the drawing board with HR IT project

Aviation group Lufthansa has restarted a project to replace more than 50 out-of-date human resources (HR) IT systems with a cloud-based service, after several failed efforts.

Lufthansa Group, which employs more than 130,000 people worldwide, says it has learned lessons from earlier attempts to introduce cloud-based HR technology.

The company, which had a turnover of €36bn in 2017, has grown through mergers and acquisitions, leaving it with a range of HR systems that have proved difficult to link together.

Lufthansa made its first attempt to update its HR IT systems in late 2014, when it chose to roll out a company-wide performance management system for business leaders and administrative staff.

It opted to roll out talent management software supplied by SAP SuccessFactors to 10,000 employees across the group.

But the project ran into unexpected difficulties. Each company in the group had configured their HR data in a different way, which made it tough to link employees HR data into the talent management software.

“Our data for the top level of management was clean, but as we moved to lower-level managers, the data was less standardised and more complex,” says Lufthansa senior manager of corporate HR strategy and project lead for HR digitisation Julian Simée.

That led to a huge scaling down of the project, from 10,000 people to just 200 people in the senior leadership team.

There were some misunderstandings between Lufthansa and SAP about the feasibility of the project, reveals Simée.

“The issue was that SAP seemed to have very clear HR data internally, so it was easy to say start anywhere and go anywhere” he says. “Our data was not. We needed to start with a central database.”

In 2015, Lufthansa decided to centralise its HR data in a company-wide HR system before attempting to roll out further HR software.

The firm was already using SAP’s HR systems on its in-house computers. It calculated that using the same technology supplier would make it easier to transfer its HR data into SuccessFactors’ cloud service.

“We wanted to ensure that we could move our current on-premise data, in not too complex ways, into a cloud system which had similar logic,” says Simée.

SAP SuccessFactors was a handful of HR software products that had the scale to manage more than 130,000 employees. And Simée says that because SAP kept employees’ data in Germany, Lufthansa’s works council was reassured that the technology would safeguarded the privacy of employees data.

The company put together a series of project plans and roadmaps to plot where to deploy the technology first.

It undertook two pilot projects, at its LSG group catering division head-quartered in Germany, and at a service centre in Poland – both chosen because their HR data was a close match to the format used by SuccessFactors in the US.

In 2016, Lufthansa began to roll out SAP’s core HR technology database, Employee Central, across the group.

The project ran into difficulties when Lufthansa tried to adapt Employee Central to match the HR processes used by each part of the business, rather than use its standard work processes.

In an interview at Unleash, a conference for HR and IT specialists, Simee said: “Instead of just thinking in a digital way, and thinking about software as a service, we wanted Employee Central to copy our existing HR system. We realised that was not going to happen.”

The Lufthansa and SAP teams each assumed that the fault lay with the other team, before agreeing that it made sense to restart the project with new teams.

“We are a company that relies on technology, and with these mishaps we learned and got the experience for future starts,” Simée tells Computer Weekly. “We were trying to mirror our on-premise systems on to SuccessFactors, and that did not work.”

Rerouting

This time, Lufthansa worked hard to simplify its HR processes and to identify the most critical HR software to roll out.

“Company-wide, we were minimising complexity to the absolute maximum, reducing all the special features that might be relevant to one or two employees but which did not support the company,” says Simée.

The HR team identified the key processes that employees require throughout their time in the company.

It's important to be clear about what you want from HR technology before you buy it
Julian Simée, Lufthansa

“We noticed there are a few processes besides administrative tasks that always touch the employee: learning and development, compensation, performance reviews and changing jobs,” says Simée.

Lufthansa began redeploying Employee Central across the company in the first quarter of 2017.

It used a core team of around 10 HR IT specialists to manage its project. They worked with HR IT specialists in other companies in the group and an implementation partner.

Lufthansa is deploying Employee Central across each location – but while some companies in the group are using the service as to manage their HR, others are still using older HR systems.

Business case

Lufthansa is still paying to maintain on-premise HR IT systems, so it does not expect to make any savings from moving to the cloud for a few years.

But the project will free up both employees’ and the HR team’s time from administrative tasks, to allow for more productive and creative work.

“We hope to see an increase in productivity because instead of taking 10 minutes to update your address, it takes 15 seconds because you only have to type it in once,” says Simée. “The goal is to end our on-premise software as soon as possible.”

Hard landing

According to Simée, Lufthansa has learned some important lessons from false starts on the project. Like other large companies, Lufthansa Group was used to customising software to suit the way it liked to work.

But while cloud services such as Employee Central allow some customisation, they do not, as Simée puts it, “allow you to do everything your own way”.

“We learned it is definitely important to have you HR processes as standardised as possible throughout the company, before you jump in on technology,” he says. “It's important to be clear about what you want from HR technology before you buy it. That means considering all the HR software that will be needed to manage employees during their time at the company.

“You can’t think of learning by itself or talent management by itself – it is all interconnected.”

Simée advises other people embarking on projects to move their HR data into a cloud service to allow time in the project timetable for unexpected problems.

“The key is to plan for more time than you would need,” he says. “Assume it is going to be more complex than you thought.”

With hindsight, Simée says Lufthansa would have been better off putting effort into cleaning and standardising its HR data, as that would have been more useful than spending time resources rolling out talent management software for 200 people in the leadership team.

“I am not sure our users saw a vast benefit in us cumbersomely implementing a talent management module for our leadership versus having our core data cleaned up and having clean HR data,” he says.

Although SAP had managed to move its own HR data from on-premise IT systems into the cloud, it had done so using data that was already clean.

“SAP had clean data and it was easier for them to move into the cloud. We did not have clean data,” says Simée.

Next steps

Lufthansa now plans to focus on making the HR interface as easy as possible for employees to use. That includes developing ‘robotic software’ that can automate as many of the background processes as possible.

It tested the software in November 2017 on payroll and travel expenses – automating repetitive tasks, including data entry and document scanning.

Another project tested the ability of smaller software applications, such as learning content software, to link into Employee Central’s software using SAP’s application programming interfaces.

One of Lufthansa’s priorities is making the HR system available to employees on mobile devices so, for example, they can make holiday requests from their mobile phones.

The first step for Lufthansa will be complete the roll out of Employee Central, before rolling out further HR modules.

“We are not going to do a full-blown roll-out, everything in one go,” says Simée.“We want to reduce the risk of employees having a bad experience that will put them off using the technology.”

If the technology is difficult to use, employees will call HR and ask them to do the work, warns Simée. “You end up spending a lot of money on people technology but find people don’t use it,” he says.

Julian Simée was a speaker at the at the Unleash Conference & Expo on the Future of Work and Technology in London. ............................... ............................... ............................... ............................... ...............................

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