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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - gradar (Job Evaluation made easy for European SMEs. Unique innovative solution to perform digital job evaluation, compensation analytics and management in an easy, transparent and cost-effective way.)

Teaser

Summary

\"Article 6 of Directive 2006/54/EC prohibits employment discrimination. A proven method of ensuring this objectivity is by means of gender-neutral analytical Job Evaluation method. However, currently in Europe, only 49% of the organisations in the private sector and 3% of SMEs use formal Job Evaluation schemes. Lack of effective HR procedures often results in unstructured wage payment practices and missed opportunities for requirements based career and skill development of employees and often leads to costly (~up till â‚¬1 billion) litigation.
GradarÂ® is a powerful Software as a service (SaaS) platform designed to allow European companies to streamline their human resource tasks such as Job evaluation/grading, competency and talent management and compensation and benefits more efficiently. At the moment, we are the only company worldwide that offers job evaluation as a standalone SaaS product in contrast to others which offer it just along with professionalsâ€™ services, which is a true game changer in the field. Job grading module is fully developed and operational, while the \"\"competency\"\" and â€œcompensation\"\" modules are going to be fully implemented in Phase 2.
This Feasibility Study, undertaken by the QPM from June till October 2019, with funding provided by the European Commission, focuses on the most appropriate ways to deploy GradarÂ® SaaS to meet the unique HR needs of organizations operating in Europe with the following objectives:
â€¢ Technical feasibility studies: Conduct a full technological evaluation of the current HR systems of our 5 selected SME end users with the aim of achieving seamless, secure and consistent platform. User needs and technical requirements shall be derived and listed.
â€¢ Commercial feasibility studies: (1) Validate our commercial strategy with 4 tier subscription-based pricing model in primary target markets; (2) Undertake an impact analysis to understand the cost implications of moving to a new central system; (3) Use our selected implementation partners to help us in the design of protocols and KPIsâ€™ selection in order to carry out validation trials. (4) Finally, we will define a clear strategy for overcoming market barriers.
â€¢ Financial feasibility studies: We will update our Business plan for the next 5 years based on the results from Task 1. Finally, we will evaluate the total investment required and determine the profit forecast for the next 5 years with the aim of achieving revenues of â‚¬30.8M, and R.O.I. of at least 9 times the investment in first 5 years.\"

Work performed

TECHNICAL FEASIBILITY MAIN FINDINGS: To this end, QPM has conducted five executive interviews and two business process workshops with the individual HR leaders from five existing SME end users and obtained data from online survey covering 47 other companies coming from all over Europe. A key survey discovery was that most organizations (more than 60%) use numerous standalone systems to report and gather HR data, whereas 23% of organizations use three or more HR platforms simultaneously, resulting in not streamlined access to information. With data fragmented and residing in multiple, non-integrated or networked systems, most notably in job evaluation and payroll functions, aggregated reports require substantial manual effort to prepare and reconcile. Overall, the majority of the unmet needs that are listed above could be met by a GradarÂ® SaaS system with a common database. What we have also confirmed is that GradarÂ® SaaS can be useful for companies of every size, but we will specifically target SMEs with number of employees between 50-250 (e.g. medium-sized to large SMEs) as our main customers as there the need for professionalised HR processes is the highest. Alternative 3C, the SaaS delivery model, has the lowest total costs and can be implemented in the shortest amount of time, thereby delivering important intangible benefits sooner than other alternatives.

COMMERCIAL FEASIBILITY MAIN FINDINGS:â€¢ Based on all dimensions, QPM will be focusing on SMEs and countries such as BE-NE-LUX, Germany, Spain, Italy as well as Turkey and the UK.
â€¢ We will be further narrowing our targeting scope around job function and company size
â€¢ Switching to a 5-tier pricing model that accounts for purchasing power parity will find a great acceptability by the end users.
â€¢ Based on input from our implementation partners, we created a list of KPIs on first-year returns on investment from GradarÂ® SaaS. In order to ensure market success, QPM will implement the following:
â€¢ Explain customersâ€™ existing (IT) costs and build a strong argument for switching to our cloud-based solution
â€¢ Plans to working more closely with third party vendors to avoid vendor conflicts and help customers with implementation and consulting services, which may involve training or retraining staff

FINANCIAL FEASIBILITY MAIN FINDINGS: An investment amount of 1.9 mil. EUR is needed at the beginning of 2020. For year five (2025), financial planning calculations project a return on equity (ROE) of more than 110 % and a return on sales (ROS) of more than 70 %, furthermore an EBIT (earnings before interest and taxes) of 6.9 mil. EUR, and cash equivalents at the end of the year of almost 14 mil. EUR.
Once the required funding amount of approx. 1.9 mil. EUR is secured, QPM will start immediately further developing the software and system architecture. Upon completion, the software applications and systems need to be tested and validated for quality assurance purposes. Development, testing, and validation activities will take about 1.5 â€“ 2 years.
Once the reliability and cost efficiency have been proven, it should not be too difficult to have GradarÂ® widely adopted in Europe. At only 5% take-up of the new SaaS by all concerned SMEs this could lead to around â‚¬1.1 billion savings and over 2,000 new jobs across the SME sector.

Final results

This study proved that wide adoption of GradarÂ® system is possible. QPM offers an effective, user-friendly, fully transparent and compliant solution to the challenges HR face when evaluating jobs or dealing around competency development and compensation management. As an all-in-one web-based solution, GradarÂ® will fill a critical void in todayâ€™s HR landscape. Especially, when SMEs are involved, since only a few of them can afford relatively expensive legacy Job Evaluation tools and consultants with daily rates of between EUR 1,800 and EUR 4,500, straight-forward and clear SaaS solution offered at a reasonable and transparent annual fee, will help meet and satisfy their needs. The major objective of the Feasibility study was to confirm the success of GradarÂ® from both technical and commercial and financial perspectives.
GradarÂ® is user-friendly for HR and finance staff and at the same time cost-efficient for their organisations. Since there are currently no competitors on the market with an identical product, it is important for GradarÂ® to complete the final development step and perform validation studies to a market-ready standard version, as soon as possible in order to take advantage of this situation. At only 5% take-up of the new SaaS by all concerned SMEs this could lead to around â‚¬1.1 billion savings and over 2,000 new jobs across the SME sector. As soon as this turns out to be successful, QPM will broadly introduce GradarÂ® on the market and start recruiting customers by applying the promotion and distribution strategies mentioned above in the business model section.