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Net Gains to HR Technology

Getting rid of paperwork was only the first wave of HR software. Internet domination will be HR's next conquest.

April 1, 2000
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Only a few years ago, Cari Willis was thrilled to have employees update their personal information online. The idea of automating a cumbersome and time-consuming process seemed like a breakthrough that could help revolutionize the HR department. And in many respects it did. "It was one of the first steps toward becoming an electronic human resources department and a better-run company," says the manager of HR e-business solutions at IBM.

But one year's headline is another year's old news. No longer is it good enough to provide employee self-service. In order to meet the needs of more than 140,000 active employees and 116,000 U.S. retirees, IBM's human resources department has migrated almost entirely to electronic tools. Benefits enrollment, retirement planning, succession planning, e-recruiting, online learning, competency management, and more have gone the "e" route. In addition, HR is now working to seamlessly link HR data to payroll.

"We have applied the vision and road map for IBM to the human resources department," says Willis. "There is a tremendous value proposition in conducting transactions and business online. The goal is to become totally e-HR so that we can create greater value for everyone involved." Already, human resources has slashed costs, shredded paperwork, and improved its ability to manage data efficiently. In fact, in today's emerging digital economy, HR is quickly becoming a hub for corporate systems and data.

It's no trivial matter. According to Forrester Research, business-to-business transactions could top $2.7 trillion by 2004. It's a tectonic shift that's allowing some organizations to supercharge revenues, gain millions of new customers, and boost their companies' market capitalization to stratospheric levels. But only with the right architecture in place. And, increasingly, that requires HR data and systems that can support broad organizational initiatives.

That's certainly the goal at IBM. The Riley, North Carolina, office hasn't spared any effort to evolve toward a totally electronic future. Already, 40 percent of all active IBM employees handle their benefits enrollment through their Web browsers. They're able to log on from work or home, click off selections, and navigate through the task within five minutes. "In the past, the process was disjointed and confusing. It wasn't unusual for an employee to need days to figure out what to do," says Willis.

For the company's HR department, the paper-intensive process created its own set of nightmares. Human resources found itself sinking under the weight of various booklets and forms. Managing printing, mailing, and processing proved time-consuming and expensive. And the number of calls from perplexed employees had become overwhelming. Although call center reps are handling the same call volume as before, they're fielding fewer inquiries, says Willis. "Today, they're able to provide aid to those who need it the most."

Analyze any of IBM's other e-HR initiatives and the story is much the same. Big Blue is steadily transforming processes internally and beyond. (For more about IBM's Optimas Award-winning program, see "Out of the Red, Into the Blue," in the March 2000 issue of Workforce.) Willis notes that IBM has more than 500 data elements related to each employee. Although HR maintains a proprietary database that holds all employee records, other departments use the data for an array of purposes -- from handling travel and expense reimbursement in finance to managing procurement approvals in the purchasing department. In every case, the data is routed electronically throughout the enterprise.

According to David Link, vice president of The E-workplace Initiative at the Baltimore-based Hunter Group, a well-designed enterprise resource planning (ERP) program or human resource management system (HRMS) is at the center of such efficiency. Increasingly, this central repository for data serves as a traffic cop for routing data, forms, and approvals to the appropriate person or department -- usually with sophisticated workflow. "Though e-business within human resources is still in the early stages," he says, "more and more employers are saying, 'I need to get extended value out of the ERP.'"

Establish new boundaries.
Yet if an enterprise resource planning system is the brain of today's organization, then the Web is the heart. It pumps data to all corners of a company, and beyond to the supply chain. It can cull disparate data from diverse systems and present it in new and valuable ways -- via online reports or portals that serve as a window into information, knowledge, and key metrics. Equally important, the Internet can tie together seemingly unrelated systems to ratchet up the value proposition.

For example, an e-procurement system might use HR data to establish rules about authorizations and approvals. An operations system might access HR data to tweak staffing levels or help a company plan an expansion more effectively. It might also play a central role in designing more efficient production or sales methods.

This brave new world requires a different HR department than in times past. According to Thomas B. Hickey, a vice president for META Group Consulting, based in Westboro, Massachusetts, the walls between enterprise systems are crumbling. That's making it necessary for human resources departments to understand the business side of IT, including the analysis and planning process.

Explains Hickey: "HR must ask itself, 'Which systems offer the greatest payback and value, both within HR and for the organization? Which technologies and tools best integrate with other systems?' It's essential to understand how the various pieces of the enterprise puzzle fit together."

It's also essential to look outside the four walls of the corporation for opportunities. Employees can view electronic check stubs or their 401(k)s from PCs at home or work, even though the data might reside thousands of miles away on another company's computers. The emergence of application service providers (ASPs) has also opened doors to new tools and capabilities, particularly for smaller firms that don't have an IT department or cash to plunk down on expensive software. ASPs let HR departments rent software -- ERP packages, time and attendance applications, benefits systems, and more -- to run a department or even an entire organization.

Location means less and less.
To be sure, in today's e-business-oriented world, it's also irrelevant who oversees a process and where the computers reside. The key consideration is, who can manage a task most efficiently? That has led to new tools, such as Web-based trading exchanges, that are quietly redefining the way buyers and sellers come together. Many of these tools simply weren't possible in a brick-and-mortar economy.

One such hub, TrainingNet, is a good example of how an e-marketplace can transform business-to-business transactions. TrainingNet aggregates various types of instruction -- classroom, on-site, online, books, videos, and CD-ROMs -- from over 1,200 providers. When clients, which include the likes of Harvard University, Lockheed Martin, Harley-Davidson, and Scientific-Atlanta, log on to the Web site they can select courses through TrainingNet's e-commerce marketplace. Later, it's possible to import data into a time-management system or ERP application. "It is a powerful way to access professional training opportunities ... without adding complexity," boasts Dave Egan, TrainingNet's vice president of provider relations.

Genzyme Corp, a Cambridge, Massachusetts, biotechnology firm, turned to the system in 1999 to boost its e-HR capabilities. Previously, the company had operated its own training program, but that had proved costly and inefficient, explains Russell Campanello, senior vice president of HR. For one thing, employees from 20 Genzyme offices around the country had to fly into headquarters every time they needed instruction. For another, administering the program had become a headache. "In the past, the courses consisted only of what HR considered useful," he says.

Using TrainingNet, the firm's 3,500 employees can now locate courses close to home. When an employee logs on to Genzyme's intranet site, he or she can search through more than 150,000 course offerings that the biotech firm has screened and approved.

But what sold Campanello and other company executives on the concept was the ability to dynamically adjust offerings in response to competency needs and actual demand. HR can view reports and plug data from TrainingNet into its PeopleSoft system for deeper analysis. It also can monitor how employees click through the site.

Developing such capabilities in-house would have been out of the question, says Campanello. "It would have been impossible to assemble the vendors or create all the courses." But even a scaled-down homegrown training program would have met formidable barriers. "Getting the attention of IT to build a training intranet would have been impossible," he states.

Nevertheless, the online education and training program is only one part of Genzyme's ambitious electronic business strategy. Other e-HR programs include recruiting, retirement planning, health-care administration, and managing various policies and directories. Genzyme has also linked its HR data to payroll, security, and supply-chain management projects.

Take it a step at a time.
Larry Dunivan, vice president of HR systems at Lawson Software, believes that the revolution has only begun. "Dramatic changes are afoot in the way HR users interact with each other and the external buying community, thanks to the evolution of e-business."

A good case in point, he says, is online recruiting. Not only is it possible to post a requisition to a system and have it go out to job boards such as Monster.com or HotJobs, but it's also relatively easy to tie in ancillary activities such as real-time background checks, credit checks, and reference checks -- all without human intervention. "The HR system itself becomes a portal for related services."

Yet achieving outstanding results through e-business is anything but a slam-dunk. Link says that any HR department considering an e-business initiative must thoroughly understand the new economy. "In reality, e-HR touches every corner of a business. And it requires new tools, such as portals, to consolidate, manage, and deliver information efficiently. Ultimately, human resources must be aware of the dynamics of e-business in the marketplace." That means viewing and analyzing Web sites of dot-com companies on a regular basis, and even thinking like a dot-com company.

Genzyme's Campanello couldn't agree more. He now focuses on thinking and reacting like an Internet start-up. "There's no way to get e-HR systems operating at 100 percent efficiency right out of the gate," he says. "The goal should be to hit 70 percent and improve things incrementally as you learn."

Campanello also recognizes the importance of marketing -- something that has made the Amazons and Ebays of the world household names in only a few short years. "E-business can succeed within an organization only if there's a way to migrate customers from paper to computers," he says. "People have to see value in what you're offering them and have a reason to change the way they do things."

More often than not, this new era of e-HR also requires cooperation and effort from all the various departments, and the support of senior management. It means creating task forces and implementation teams, as well as gleaning the expertise of outside consultants. And it requires an understanding of security and design issues. In the end, fitting everything together is not as simple as buying and installing best-of-breed programs. Detailed analysis and a thorough understanding of IT and strategic business issues are essential. "The Internet has raised the bar in terms of functionality and capabilities," says Hickey.

Despite the many challenges, companies like IBM and Genzyme are proving that e-HR can redefine processes and elevate performance. It also can help transform technology into an asset that boosts the importance and value of human resources. Says Link: "Many HR departments have automated a few specific processes. The real gains will come over the next few years, as organizations evolve to a totally electronic workplace."

Workforce, April 2000, Vol. 79, No. 4, pp. 44-48.

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