Sunday, March 27, 2005

Aon's self serving press release and ROI

I promise I will do a post on ROI in the near future. This is a bit of a rant about consutling company studies that are publisehd in trade magazines that are clearly not an attempt at objectivity. Aon is normally seen as an HR consulting company with an HRO arm. Their VP of HRO wrote a bit for Business Insurance Magazine about hour HRO enables companies ot optimize the workforce while reducing costs. First of all, I love the questionable cost commentary, and second, the rest is so completely obvious that it's not worth saying again.

1) ROI on full HRO is nowhere near cost effective in most cases. OK, if a company is fully replacing their call center, call center technology, getting rid of 30 systems that they had to have full integration for in order to make the call center work, and outsourcing payroll production, benefit administration, etc... then maybe HRO works. However, most HRO clients are not doing that. They are seeking a higher level of service for their employee base, offloading a much smaller portion of activities (they never had full call centers with adequate technology in the first place) and doing it at a much higher cost. However, they have decided that the higher cost is justifiable in order to get better service and increase the satisfaction of their human capital, and this is OK. The better service, metrics and insight into the workforce very well might be enough to pay the money for.

2) Don't we all aready know that offloading a few administrative activities allow us all to focus more on strategy? This is the same old outsourcing mantra that we're all getting a bit sick of. It's nothing new and we all know it. The thing is, there may not be any other MAJOR value proposition for outsourcing.