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Achieving Greater Intranet Efficiency

September 1, 1998
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Nobody ever said the information revolution was going to be easy, but for the 55,000 employees of MCI Corp., it's getting a whole lot easier every day.

Thanks to one of the most sophisticated and complex intranets yet devised, workers are redefining the way they act and interact. They're watching the nature of work change before their very eyes, and learning that data, information and knowledge create the fuel that drives modern enterprise.

While most companies are groping to load online directories and handbooks onto their intranets -- and perhaps dabbling in the earliest stages of employee self-service -- Washington, D.C.-based MCI is taking employee self-service and collaborative work to a higher level. The company's online offering, known as The Source, provides employees with more than 1,400 pages of interactive services. At the click of a mouse, it's possible to up-date, share and exchange information in ways that would have seemed impossible only a few years ago.

Employees can venture online to reallocate investments in their 401(k) accounts, fill out electronic W-4 forms, and view an electronic pay stub a week before they're paid. They can view streaming video of managers providing briefings, check best practices within the company, and sign up for distance-learning courses directly from their desktops. Using an intranet, managers can know at any given moment where an employee stands in terms of skills and training. "It allows managers to lay out a career path for their employees," says Don Warner, senior manager of MCI's Career Enhancement University.

MCI's system represents the future of intranets. As more and more companies venture onto the Web, they're discovering that the greatest gains come from a highly networked organization that can swap data and trade knowledge. Tasks that once required layers of approvals and piles of paperwork are being automated, if not eliminated. And unlike the first generation of intranets that managed information and exchanged data in a linear way, these next-generation intranets are busting apart hierarchies and letting companies organize around clusters of information and expertise. Whether a worker is located in the finance department or HR department is less important than the information and knowledge they have -- and can share.

"Until recently, the center of gravity for intranets has been information sharing through publishing," says Mike Gotta, program director of Work Group Computing Strategies for Meta Group, a Stamford, Connecticut-based market research firm. The publishing model enables companies to post employee directories and handbooks online, and in some cases, has offered a return on investment as great as 40 percent.

While this form of sharing has brought substantial gains, it's now giving way to an intranet that relies on advanced workflow. In other words, data, information and knowledge are automatically routed through the company to the appropriate person, as they're needed. In many instances, sharing this way allows the organization to "push decision making out past the business unit. Companies are only beginning to understand how to use a Web site as an overall platform to influence and impact business outcomes," Gotta explains.

Indeed, the challenges of developing a more efficient intra-net are enormous. But this next-generation intranet promises to establish a new baseline for technology and interaction. It also promises to put human resources at the center of the process. It's up to the HR department, HRIS and others to combine the tools and unleash the full power of the technology. Moreover, the remarkable capabilities of this technology can only be fully exploited with changes in organizational behavior, and with appropriate compensation and rewards, including bonuses for contributing information that others use. When HR has a hand in the design and implementation of these systems, a new era of strategic partnership will take shape.

Advanced intranets take business intelligence to a higher level.
These new intranets are putting data in the hands of whomever needs it, the instant they need it, and ultimately "helping managers make more intelligent and timely decisions," states Lisa Rowley, an HR systems marketing director at Oracle Corp., a database and HRMS provider headquartered in Redwood Shores, California.

And the list of applications is growing by the day. It's now possible to handle performance reviews, time and attendance, organization charts, best practices, procurement, payroll, recruiting, benefits enrollment and distance learning online. With more sophisticated hardware and software to oversee the process, the return on investment can be astounding. In some cases, Web-based transactions are cutting costs by 80 percent or more. A study conducted by Internet Commerce Services Corp., a Nashua, New Hampshire, consulting firm, found that a typical phone transaction, which costs about $9 through a call center, can be completed through the Web for $1.60.

But the issue isn't only about money. "Companies are leveraging their knowledge and capabilities. There's a clear organizational evolution going on," says Doug Francone, a manager of self-service solutions at AG Consulting based in San Francisco. He and other experts believe that the traditional demarcation between HR data and that of other departments is blurring quickly. He adds, "Managers need to solve business problems and they don't care where the data comes from. The Web creates new opportunities by re-engineering the way people think and work."

In a sense, the Web is able to create a greater sum than individual pieces of HR software. John Monson, president and CEO of San Mateo, California-based HRMS vendor Austin Hayne, notes that many corporations have a different set of standards and processes attached to various tasks, such as performance management, training and development, and recruiting. This lack of standardization means that workers must spend time transferring data from one application to another. Instead of shuffling paper, they wind up shuttling electronic files and data between systems and constantly tweaking the data to make it fit.

Under such a business model, employee self-service can still produce gains by eliminating work, paper and meetings, but it can't unleash the full potential of the technology. Only by developing a standard set of rules that cut across all technologies and tasks can the information gain value and become useful in a more strategic way. Suddenly, data for recruiting, benefits, personnel records, training and more seamlessly blend together. For example, when an employee leaves a company, the system automatically generates a job requisition. After approval from a manager, the listing appears on the corporate intranet. Employees submit applications electronically, and HR can compile resumes using Web-enabled applicant tracking software. Once the employee is transferred (or hired from the outside), the system prompts the worker to input data from the HRMS. It can also ensure that the employee is issued the appropriate equipment and supplies. Ultimately, "You reduce administrative inefficiencies as information is passed through the organization. You enable things like workflow and process automation to drive gains," says Monson.

Although the typical organization is struggling to evolve from an intranet-based publishing model to a process model, the writing is already on the wall -- or at least on the Web browser -- and vendors are more than eager to provide the high-tech ammunition to make it all possible. For example, recruiting solutions provider Restrac of Lexington, Massachusetts, now offers WebHire Network, which automates almost every aspect of the recruiting and hiring process, including candidate searching and management, hiring functions, success measurement and consolidated billing -- all from a single desktop interface. Austin Hayne also offers a powerful solution for managing performance appraisals online. Its Employee Builder software provides tools to track performance objectives, organize employees and documents, provide ratings and weightings and offer career coaching. The system is designed to link to core HRMS software from Peoplesoft, SAP and Lotus so that a manager can sit at a PC and view how an employee, or group of employees, rates in terms of education, training, compensation and more. Customized screens show only the appropriate data and guide the manager through the appraisal process.

MCI dials up greater gains.
Some companies, like MCI, have begun to recognize the power that is embedded in such systems. They're redefining the rules for human resources, and ushering in a new era of competitive gain. For instance, an employee can log on to MCI's intranet and register for a training course. His or her manager is notified instantly, and the system sends an immediate confirmation back to the employee. This is accomplished with no paperwork, no forms and no lengthy approvals.

More than 55 percent of MCI employees can also learn directly through the intranet, using either virtual coursework -- computer-based training, complete with audio, video and online exams -- or a virtual classroom, where instructors and students assemble to exchange ideas, information and knowledge in real time. This technology alone has cut $917 per person for each day of travel to the company's Dallas training facility. The total savings from travel, facility and labor costs has exceeded $2.8 million since October 1997. As of the end of June, more than 3,800 students had completed online training courses.

Yet, as significant as the distance-learning capability is, the real gain comes from being able to access and track data about employees' skills. "Managers can view transcripts and understand the needs of their employees far better than trying to decipher information from dozens of file folders," says Warner. A manager can see the qualifications for a particular position, and then glance at a group of employees to see their progress.

But that's not all. The data is coded so that HR can drill into the database and extract relevant information. For example, if the company has an open position, it can conduct a quick internal search for a qualified employee. If that fails to produce a candidate, the system generates a request to recruit outside the organization. While an authorized manager can view such data, the individual's development plan remains private and confidential.

MCI is also realizing gains through several other leading-edge technologies. One of the most successful uses of the intranet has been multicasting presentations and meetings to groups of employees. Task force meetings, legal briefings and financial updates take place online, with video and audio streaming over the network. Like the distance-learning initiative, the multicasting is paying huge dividends. It's saving the company nearly $1.5 million a year, while allowing meetings to convene more quickly and efficiently. Participants no longer need to travel to meeting locations -- they can view the proceedings from their desktops at work or by using a notebook computer on the road.

The net rewards extend beyond cost savings.
Building greater collective intelligence is the ultimate goal for most organizations, and it's finally becoming possible. "Intranets are providing the opportunity to make the HR department strategic," notes AG Consultings' Francone, but he points out that "strategic" means different things to different organizations. "Many organizations are content to reduce transactional and administrative overhead. They look at the resulting cost savings and are happy with the results. But some organizations are realizing that there's more beyond that horizon. They understand that opportunity isn't measured only in hard, dollar costs."

In fact, so-called "intangibles" can represent the biggest opportunity of all -- boosting productivity and morale. With 45,000 employees worldwide, MetLife has used employee self-service on a legacy mainframe system for more than a decade. Employees of the New York City-based insurance and financial services company could handle HR transactions -- including benefits selection, 401(k) transactions and updating dependent information -- using terminals located throughout the company, saving millions of dollars. Now, the organization is diving headfirst into an intranet. "Electronic workflow, electronic signatures and the automation of tasks offer an opportunity to remove HR from the administrative loop," says Evelyn Franklin, manager of HR Re-engineering.

As part of its project, dubbed hrSPECTRUM, MetLife is radically enhancing its online capabilities. Using Lotus Domino and a Peoplesoft HRMS, the company is building an array of tools that rely on collaborative workflow, including an educational catalog and curriculum maps, recruiting and applicant tracking, open enrollment, beneficiary maintenance, compensation planning and individual development planning. "The ultimate goal is to focus on value-added activities that HR can provide to the organization. We're not only re-engineering HR systems, we're re-engineering the business of human resources," she explains.

Of course, that's easier said than done. "The biggest hurdle for organizations using a knowledge-based intranet is cultural, not technological. It forces people to think and act differently," says Meta Group's Gotta. One of the biggest headaches centers on data ownership; groups of workers must learn to share knowledge, rather than hoard it. For example, if HR data becomes valuable to sales and finance, it also helps operations determine where to build a factory. While the data may pass flawlessly from computer to computer within the network, it often requires specialists in each department to provide analysis and interpretation.

Pulling the plug on the old corporate structure.
When a knowledge-based intranet succeeds, employees often begin to organize themselves around clusters of information and common practices instead of departments and specific tasks. That makes it possible for someone in marketing or finance to tap into the knowledge of a person in HR or sales to solve a problem. It also makes it possible to assemble teams based on needed skills, regardless of their department. In the end, this ransacks the hierarchical structure in favor of a flattened organization that's capable of rapid change. "The idea isn't to have a digital Woodstock where everyone feels good about the latest technology. It's to find ways to make a difference and improve organizational costs and efficiencies," says Gotta.

Managing a next-generation intranet certainly isn't for the squeamish. And it's clearly not the task of IT alone to ensure that everything operates smoothly. MCI, for example, uses just over one hundred IT staff to manage 150 of the company's 550 intranet sites, of which The Source is just one. Various business units handle the rest. In most cases, teams of employees from different departments and divisions sit on committees and task forces, ironing out policies, procedures and more. HR is expected to provide a significant amount of input and expertise, since many of these systems tie into human resources data.

Expensive and impressive technology doesn't guarantee success. The corporate landscape is littered with projects gone awry, and a next-generation intranet can raise the stakes further because of its inherent complexity. As human factors and cultural issues intertwine with technology and processes, the challenges become enormous. When systems don't work properly, millions of dollars can vanish into a technological black hole. The organization may end up automating already inefficient processes.

Despite these challenges, advanced intranets are quietly taking hold. According to Cambridge, Massachusetts-based Forrester Research, 35 percent of HR executives say their companies now offer more than static content on the Web, and 79 percent expect to feature interactive capabilities by 2001 (see chart, page 76). In addition, organizations are learning how to build a single interface for the Internet, their intranets and extranets so that data flows across corporate boundaries. They recognize that achieving results is about creating an easy-to-use interface that employees, managers and senior executives can't resist. When that happens, the results can be astonishing. The entire organization can find itself hitting nothing but Net.

Workforce, September 1998, Vol. 77, No. 9, pp. 72-77.

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