At the 2018 SAPPHIRE NOW and ASUG Annual Conference, we had the opportunity to speak with Mikael Lindmark about how the global workforce has been evolving. As the senior vice president for the EMEA region at SAP Fieldglass, Lindmark regularly interacts with multinational customers challenged with managing talent across borders at a time when nearly every industry is facing shortages of workers.

SAP Fieldglass in the Intelligent Enterprise

We know that ASUG members tend to be less familiar with SAP Fieldglass and how it connects with its neighbors SAP SuccessFactors and SAP Ariba. And in our research on the gig economy, we’ve also heard from our members that finding skilled SAP contract workers is a huge challenge that often delays their projects.

We wanted to get Lindmark’s perspective on how the global talent market is changing and how SAP customers can make the contract talent sourcing and management process seamless.

Ann Marie: What should customers be aware of when it comes to sourcing and managing contract talent?

Mikael: When we first started out, business stakeholders sourced talent in a decentralized manner and on the peripheral of their business. Typically the head of procurement and the head of HR were interested. Now, we’re seeing the evolution of outsourcing core business processes. And what is happening is that other applications used in related processes are no longer functioning.

Ann Marie: Could you share a couple of examples of this?

Mikael: SAP has a product called Plant Maintenance used by organizations in asset-intensive industries. Now that maintenance is often outsourced, companies that use this product lose visibility into the process. My Plant Maintenance system spits out work orders. I get an invoice. Yet I’m wondering: Who did the work? Am I comfortable that this person has the right certifications, competencies, or accreditations? We’re hearing this from our customers in utilities and oil and gas who are telling us, “We are quite happy with outsourcing this work, but we would like to get some visibility back.”

Ann Marie: That makes a lot of sense.

Mikael: Another example is some work we’ve been doing with insurance companies that have outsourced their claims-management process. When I’m a customer and I have a problem with my house, business, or whatever I have insured, I call the company up and want to have a conversation about that claim. But that conversation is with an outsourced provider. And then I end up talking to five or six different layers of outsourced providers. As a result, the insurer has lost control of the customer experience, including how long the process takes and how much it costs. If someone had asked me 10 years ago whether Fieldglass would help insurance companies with claims management, I would’ve said no. But now I’m saying “Yeah, it’s actually a really good idea, and we work in this sector.”

Ann Marie: What were some of the original use cases for Fieldglass before it was part of SAP?

Mikael: You had someone who is in the IT organization, buying a lot of external contractors for short-term projects. A lot of our customers were in financial services, telecoms—companies that bought a lot of IT services. As the years went by, we saw a big uptick in engineering skill sets, especially in the extraction and production of oil and gas, as well as at engineering-heavy manufacturing companies. Now we’ve come full circle where we are working with more retail, logistics, and consumer goods companies. We started with the high-end skill sets that were expensive. And now customers are managing across all skills in SAP Fieldglass, everything from the IT contractors to the workers at their manufacturing site or distribution center.

Ann Marie: And what are some of the changes you’re seeing most recently?

Mikael: It’s what I often refer to as the storm inside the storm. We’ve seen customers use SAP Fieldglass to take decentralized hiring processes, then rationalize them and bring them under control. That happened with the traditional consultants and suppliers. But now we’re seeing a new ecosystem of digital providers. Procurement organizations have already gone through that rationalization exercise and are saving a bunch of money with SAP Fieldglass. They have uniform terms and conditions for their suppliers that are already integrated into their ERP systems, SAP Ariba, and SAP SuccessFactors. Now, all of a sudden, these new digital vendors are starting to appear, and their play is, “I have unique talent that you can only buy from me.” The risk is that you return to the uncontrolled world of the business departments buying talent without any procurement control. Our answer to this is to bring these disruptors into the SAP Fieldglass network. Different departments can work with these vendors, but they have to play by their company’s rules.

Ann Marie: How does SAP Fieldglass integrate with other products like SAP SuccessFactors?

Mikael: We always integrated with HR systems, whether they were from SAP or other companies. Since we became part of SAP, we have built deeper integrations that are more meaningful. We did integrations into learning management systems because external workers might also need compliance training or other types of training and our customers need to track that in SAP SuccessFactors. If I want the external workers to collaborate with the rest of the team, they can use SAP Jam.

Ann Marie: What kinds of benefits can customers see from those integrations?

Mikael: Customers often do headcount planning. And they go through an exercise where they look at how much budget do I have, how much product do I plan to sell this year, and how much headcount do I need. Then, how much headcount is permanent and how much is from the outside? From an HR perspective, I have the opportunity and visibility now to pool my talent. We are seeing more scenarios where customers are saying, “I have a project, and I need to pull the right talent. I don’t care if it’s from our employees or external workers.”

Ann Marie: So, SAP Fieldglass is becoming a tool for sourcing talent within your own full-time employees?

Mikael: I think that’s something we will see more and more. If I want to provide internal mobility to my employees instead of going to the external market, I can look for competent people who want to try new roles. For example, I have an HR stakeholder at one of our clients who told me, “I want to do the gig economy, but with my employees.”

Ann Marie: How about integrations with SAP Ariba?

Mikael: This sounds crazy in 2018, but what happens when these temporary workers turn up is that they are producing a paper-based time sheet. Then there will be a paper-based invoice attached to that, which gets sent to the customer each week for each person. It’s just a mess from an invoice reconciliation perspective. When I get the invoices, how do I know which PO they corresponded to? I can’t reconcile this, so I often end up not paying it. And then every week there are more time sheets and more invoices, which leads to a mountain of unresolved debt. When you put SAP Fieldglass in place, that goes away because I can feed this information directly into SAP Ariba, or any other procurement system for that matter.

Ann Marie: You’ve explained how SAP Fieldglass helps make temporary workforces visible and consistent across an organization, no matter how large. Does it also help global companies comply with regulations in different countries?

Mikael: SAP SuccessFactors has job families within it. Now that it's integrated with SAP Fieldglass, you can see job families for both internal and external workers. That’s really helped with pay parity rules in Europe, where employees and outside workers need to have the same pay and benefits. By having those job families tied to each other, I can say that this role corresponds to this one, which is quite powerful.

Ann Marie: Right. If you have no system across your global locations, there’s no way to track your workforce, train them, or manage these costs effectively.

Mikael: We have spent 15 years figuring out what this needs to look like in France, what this needs to look like in Germany, what it needs to look like in Nepal, Brazil—you name a country. What we often see is someone starting out with a system in the U.S., but there are large regions that aren’t covered. As an organization, you don’t want to add multiple systems to fill in these white spaces and then end up having to aggregate them later.

Ann Marie: What trends are you seeing in the contract talent industry? And how do you expect them to change in the next couple of years?

Mikael: I get quite frustrated when people talk about the gig economy and talk about the low-paid workers who are in ride-sharing services or pick up your food and cycle it to you. That, to me, is the underbelly of the gig economy. A better example is in the oil and gas industry. If you are an engineer and have the right skills for the oil and gas business, you are not going to accept permanent employment. You are going to work as a gig worker with firms that specialize in placing you with the oil majors. You’ll work for six months in the North Sea, you’ll go to Australia for nine months, you’ll go to Azerbaijan for seven months, and you’ll get paid a ton of money. And now these firms are attracting gig workers because they provide travel services, visas, work permits, banking services, and more to make it easy for them. Another example is in the automotive industry. Not all of the people designing new vehicles are employees, especially as the needs are changing from mechanical engineers to electronic engineers. In some cases, the only way to get these skills is to buy them from the outside.

Ann Marie: Yes, we’ve been doing research on the SAP gig economy, and we’ve found a stat that predicts that more freelancers will exist than full-time workers in the U.S. within the next ten years. How can you use SAP Fieldglass to get access to this highly valued talent?

Mikael: Many of these gig workers are gravitating to the new digital partners that I referred to earlier. This talent will come into SAP Fieldglass through one of the relationships that we facilitated. That’s why we’re seeing many of the largest staffing firms in the world investing a lot of money in transforming themselves from a bricks-and-mortar delivery model to a technology-enabled delivery model. The digital partners can act with speed and precision. If I create the requisition in SAP Fieldglass and send that out to a traditional staffing firm or a staffing supply chain, it will typically take three days, four days, five days to get you a group of candidates. If I submit it to a digital partner, in 30 seconds that machine learning algorithm will send you the top three candidates.

Ann Marie: What are some of the pain points that SAP Fieldglass can relieve for companies that use it?

Mikael: This is a difficult buying process. Customers have little or no visibility into it. When we meet a new customer and ask, “Can you show us what your current process looks like?” We will typically see a process diagram that has ten, fifteen, twenty different systems, none of which have been designed to address the specific needs of managing external talent. It’s messy, manual, and at risk for errors. With us, you can have visibility into your costs and you can start enforcing the same rates and terms and conditions on your suppliers—all from an HR perspective. Customers are often able to retire a lot of systems because they don’t need them anymore.

There can be big benefits on the financial side, which is why our biggest supporter is often the CFO. For example, if you have negotiated an agreement with a consultant and you want to enforce these conditions across every project, you can now include them automatically into the statements of work in SAP Fieldglass. And that information can flow back into SAP Ariba so you can say, “This year I had 347 projects with Consultant A, and here’s the amount of money I spent across all of them.”

Ann Marie: That’s something a CFO would love. How does SAP Fieldglass fit within SAP’s concept of the intelligent enterprise?

Mikael: We have started to adopt some of the emerging technologies available from SAP Leonardo. Our first example was a product called Live Insights. We had aggregated data from customers across the world, but we couldn’t deliver this except through a consulting engagement that took two months to define the job roles and identify the cost of living in the cities where the workers lived. Today, I can do this in near real time because the machine learning algorithm that came from SAP Leonardo helps us normalize this data on the fly. I can show you today what you should be paying for certain skill sets in San Francisco and what they would cost in Chicago, London, or Frankfurt. Another example is the resume-matching capability that’s also available in SAP SuccessFactors. We love this because it can help us do things that we were never able to do before.

Ann Marie: That will definitely help, as there’s a war for talent, especially rare and specialized talent.

Mikael: Yes, there is. There are areas where there will be quite substantial talent shortages. Automotive companies are now moving to build electric vehicles. Again, this requires new skill sets. Where do we find them? I’m guessing now that oil prices are going up and oil companies are doing more exploration projects, we’re going to see a massive engineering skills shortage. And other industries are going to struggle because they can’t compete and pay $1,800-a-day rates for engineers.

Ann Marie: Demographics are a big issue, too. I think something like 10,000 baby boomers are retiring in the U.S. each day. That’s going to leave companies with missing skill sets.

Mikael: I didn’t graduate from university thinking I would work 30 years for the same company and get a gold watch at the end. But there was a certain idea about employment then that has radically changed. A friend of mine who’s the CEO for a law firm has a son who graduated with an engineering degree from MIT. He called his dad and said, “Dad, my friends at MIT are telling me that I made the wrong choice. I took permanent employment with a big manufacturer, and they said that’s just because I’m not good enough to work on a contract.” And there you have it. I never would have thought that discussion was possible.

Ann Marie: It’s remarkable how much the work world has changed, even in just a few years. Thank you so much for sharing your perspective with us, Mikael.

SAP Fieldglass helps manage your SAP talent, but how do you find these individuals? Check out ASUG Talent Hub to source the best SAP contract talent for your projects. Join us in October in Toronto for the ASUG Experience in Human Resources & Payroll to learn from other practitioners and innovators.