Microsoft Updates Human Resources System

Microsoft’s core Human Resources system was aging and needed to be replaced.

Thanks to its limitations, when a company employee transferred to a new job in a different country or region, it could seem like they were starting over.

“When employees moved country to country within the company, behind the scenes our HR operations teams had to manually move them to a different country code,” says Sruthi Annamaneni, a partner director of software engineering on the Microsoft Digital team deploying the company’s new HR system.

It was a matter of bringing the company’s HR data together in one place.

One of the reasons we’re rebuilding Microsoft’s Human Resources core is so we can unify the experience our employees have with us. We want it to feel like it’s the same Microsoft no matter which country or region someone works in.

—Sruthi Annamaneni, partner director of software engineering, Microsoft Digital

“It was about aggregating and having a single place to master all employee data across 109 countries,” Annamaneni says. “This would enable us to have a single global policy for all of Microsoft and to have all of our country-specific local policies implemented in one place. Reducing and improving error-prone, high-touch manual processes would help us keep our core HR systems running smoothly while improving our ability to support employees across the globe.”

For those reasons, Microsoft Digital—the organization that powers, protects, and transforms the company—has been upgrading Microsoft’s core Human Resources systems.

“One of the reasons we’re rebuilding Microsoft’s Human Resources core is so we can unify the experience our employees have with us,” Annamaneni says. “We want it to feel like it’s the same Microsoft no matter which country or region someone works in.”

Microsoft is wrapping up a multiyear effort to move its core Human Resources systems to SAP SuccessFactors. The makeover of Microsoft’s Human Resources core is largely complete with a last handful of external staff and newly acquired employees being upgraded this winter.

When we stood up our instance on Azure, that was a big, big milestone for us and for them. We’re a frontline user of their product in our cloud.

—Kerry Olin, Microsoft corporate vice president of Human Resources Services

“Our legacy system was not scaling to our global requirements and aspirations for a consistent employee experience,” says Kerry Olin, Microsoft’s corporate vice president of Human Resources Services. “We needed a more modern, flexible, and capable core HR system.”

Olin says the company reviewed many HR systems—it even considered working with Microsoft Digital to build an in-house system. In the end, the team decided to go with SAP SuccessFactors because it would play a foundational role in Microsoft’s bid to transform its vast array of secondary HR systems; like improving mobility, supporting new acquisitions, or transforming payroll. It also helped that the cloud-based SAP SuccessFactors Human Experience Management (HXM) Suite runs on Microsoft Azure. SAP has a longstanding partnership with Microsoft as a preferred cloud provider.

Microsoft is one of first large on-premises enterprises to move its HR systems to Microsoft Azure, a migration that is paving the way for other SAP SuccessFactors customers (and SAP SuccessFactors itself) to transition to the same cloud platform.

“When we stood up our instance on Azure, that was a big, big milestone for us and for them,” Olin says. “We’re a frontline user of their product in our cloud.”

Getting Microsoft’s Human Resources core to nearly-finished status hasn’t been easy—with HR systems in 109 countries and regions, the company’s core system is massive and complex. Until this overhaul, the HR data management approach varied considerably around the world, making it feel like the company had a separate HR system in every country and location. “This project was a great example of how people, process, and technology have to transform together to successfully land a big transformation in any enterprise,” Annamaneni says.

While such complexity challenges force most companies of Microsoft’s size to start over when they upgrade their HR systems, Microsoft rejected that tradition in favor of keeping the lights on as they went about the four-year upgrade.

We didn’t want to disrupt anyone. We didn’t want to have our team or our employees have to learn an entirely new system.

—Rajamma Krishnamurthy, principal program manager, Human Resources Foundational Services team, Microsoft Digital

“This is like completely rebuilding a train while the train is running,” Annamaneni says. “First you change the wheels, then you swap out the engine, and you keep going until everything is new and updated—it’s not easy. There are a zillion things that can go wrong.”

Why not start fresh like everyone else?

Because they wanted to minimize the impact on its 225,000 employees and external partners, and importantly, on the hundreds of HR professionals who work in the system to sustain business continuity on a daily basis.

“We didn’t want to disrupt anyone,” says Rajamma Krishnamurthy, a principal program manager for the Human Resources Foundational Services team in Microsoft Digital. “We didn’t want to have our team or our employees have to learn an entirely new system.”

First, Microsoft flipped the switch on in Canada, Norway, and Sweden.

“Many things went well, and a lot of things didn’t go well,” Krishnamurthy says. “We learned a lot, and we took what we learned to build a template that we used for the rest of the roll out.”

Next came India, which was the most complex country besides the US.

“The idea was the path to the United States was through India,” she says. “We had our governance ready—we knew where things could go wrong, we knew which stakeholders we would have to help get through it.”

India went well, which opened the door to tackle the US, which began in February 2020.

Krishnamurthy and Kalimuthu pose for photos joined together in a photo collage. — Rajamma Krishnamurthy and Suresh Kalimuthu are part of the team that transformed Microsoft’s core Human Resources system. (Photos by Rajamma Krishnamurthy and Suresh Kalimuthu)

“The United States was the biggest, scariest for us,” Krishnamurthy says. “We had a lot of people using the system who were not managers—we had a large admin population who used it every day. They had strong needs and desires on how the system should work.”

They used it heavily from Day One.

“We made sure their voices were heard,” she says. “Their work was not disrupted.”

The team commissioned a vendor to build a solution to bulk load employee data changes. It is also using a Microsoft Power Application solution for access management while it works with a third party to build its own solution.

As for the HR specialists and admins using the new system? When issues flared up, Krishnamurthy and team funneled them into rapid response channels in Microsoft Teams, which allowed them to help each other work through it and gave them a place to share best practices.

“We were able to manage a lot of upheaval through these channels,” Krishnamurthy says. “They were a great change management channel.”

And there was a lot of volume. “We had close to 1,000 people using them to get answers on a daily basis,” she says. “It was awesome to see our community help each other like that.”

One of our biggest goals was to provide business agility. We’ve been able to do that in a way that sets us up well for the future.

—Suresh Kalimuthu, principal software engineering manager, Human Resources Foundational Services team, Microsoft Digital

Interestingly, the channels have turned into such a helpful resource that HR teams demanded that they live on past the system upgrade.

“With COVID, we need to continue that longer than we thought,” Krishnamurthy says. “Our exec admin professional community came together in the Teams support channel for the SAP SuccessFactors launch and continues to depend on and leverage each other for support on a wide range of issues.”

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Deploying Microsoft’s Human Resources core

The daunting challenge of deploying Microsoft’s new core HR system fell to Suresh Kalimuthu, a principal software engineering manager on Microsoft Digital’s HR Foundational Services team.

“One of our biggest goals was to provide business agility,” Kalimuthu says. “We’ve been able to do that in a way that sets us up well for the future.”

The technical challenge was tremendous—not only did the company move its HR system to a new platform while also moving to the cloud, it also adopted a new agile engineering method to do all the deployment work.

“We were taking on a lot all at once,” Kalimuthu says. “It has been an interesting, rewarding journey.”

And Krishnamurthy, Kalimuthu’s colleague, says the pressure was on to get it right.

“We have hundreds of stakeholders, finance, benefits, local HR,” Krishnamurthy says. “This is not glamorous. This is the basic running of our company. It takes a lot of effort to bring people along. People needed to understand the value of it.”

One of the big challenges the team had to account for when building the new system was how laws, rules, and systems in each country or region varied.

“We built a system that allows us to make local adjustments that don’t affect the larger system,” Kalimuthu says. “For example, if I want to create a new hire system for Canada, we can make those changes without disrupting anything that we deploy globally.”

Another challenge was the need to build custom solutions where SAP SuccessFactors’ out of the box product stopped short.

“Our HR systems are very complex and matrixed, much more so than most enterprises,” Kalimuthu says. “In several cases, we needed to fill in gaps with our own solutions.”

In those cases, doing so was straightforward. “SAP SuccessFactors has an ability to allow custom integrations and extend their capability,” he says. “We saved big time by leveraging our own technology when we needed it—this gave us a lot of flexibility.”

We solved some of these challenges ourselves, but we did so in partnership with SAP SuccessFactors. They are addressing our concerns—there has been a good give and take, and SAP SuccessFactors and their other customers have benefitted.

—Suresh Kalimuthu, principal software engineering manager, Human Resources Foundational Services team, Microsoft Digital

For example, Microsoft HR wanted to be able to deliver data on hires, promotions, and so on in near real time. “We wanted to make sure the data was readily available within 30 minutes, but it was only available 24 hours later out of the box,” Kalimuthu says. “We built that capability ourselves.”

The Microsoft products the team used include Azure Functions, Azure Keywords, Azure APIs, Azure Storage, Azure Service Bus, Azure Hub, Azure Active Directory, and Azure Encryption.

A big shift was moving all HR data onto one, connected platform. “We realized the value of having one data platform that stretches across all of Microsoft,” Kalimuthu says. “It takes our data from one end point to another.”

The team beefed up other areas as well, including on SOX compliancy, privacy, and security.

“We solved some of these challenges ourselves, but we did so in partnership with SAP SuccessFactors,” Kalimuthu says. “They are addressing our concerns—there has been a good give and take, and SAP SuccessFactors and their other customers have benefitted.”

Now that the team is winding down its upgrade of the core HR system, it is now turning to a future where updates and changes become much easier.

“While we won’t light up all of its new capabilities today or tomorrow, there is functionality in the system which significantly expands and enhances what we can do next,” Olin says. “We have some terrific examples of business value realization from the new core system already—there’s more opportunity ahead.”

Here are some principles you can use to guide you as you consider upgrading your HR core systems:

Standardize how you will approach the upgrade before you start working through your various HR processes.
Focus on completeness and data quality from the start.
Think globally but act locally when it comes to data, privacy, and other requirements.
Recognize that it takes a village when it comes to a project as large as upgrading your core systems—do everything you can to get the village ready and to keep them informed along the way.
There will be multiple moving parts—focus on the critical ones and ensure they do not break when you release the product (for example, make triple sure payroll will work the day after launch).
You will need able and willing partners who both know the product you’re deploying and how to deploy it.
Do not try to boil the ocean—to be successful you will need to break the project into a series of well thought out steps.