Print this article | Return to Article | Return to CFO.com
A new wave of Web-enabled software helps companies to streamline HR services -- and size up worker skills.
Esther Shein, eCFO
December 15, 2000
You don't have to sell Nancy Crawford on the benefits of Web-enabled human resources software. Last spring, Crawford's employer, semiconductor equipment manufacturer KLA-Tencor Corp., began deploying a set of browser-based tools from Workscape Inc. (www.workscape.com). The software from the Reston, Virginia-based vendor automates basic HR functions, such as new-hire orientation, benefits enrollment, and compensation.
Workscape also gives KLA-Tencor the open platform the company needs to plug in its own e-HR applications. That automating frees up Crawford, director of global human resources systems at the Milpitas, California-based company, to concentrate on big-picture items, things like employee hiring and retention. "Our objective," says Crawford, "was to provide Web-based technology to improve our internal global communications, resulting in increased operational efficiencies and cost savings."
KLA-Tencor is not alone in that pursuit. Lately, HR managers at scores of companies have begun deploying Web-based tools to help remake the human resources function. Such tools are intended to streamline high-volume, low-value processes and, in turn, improve service to workers. Employee self-service applications, for instance, enable workers to file claims electronically, download expense reports, change personal data, and the like.
Getting employees to handle these niggling chores means HR staffers don't have to. In fact, by embracing self-service applications, businesses are finally beginning to get a handle on the paper chase that has all but buried entire HR departments. "There's a paradigm shift," notes Crawford, "from HR workers as paper-pushers to HR workers as consultants and strategic partners with our senior management."
But the deployment of this new breed of Web-enabled HR software — increasingly referred to as enterprise performance management (EPM) systems — goes well beyond the desire to make consultants out of paper-pushers. With today's airtight labor market, many companies simply cannot afford to lose valuable employees. Improving human resources services is one way to keep workers happy and on the job.
EPM systems go beyond shiny, happy people, however. Several packages now on the market feature powerful workforce analytics. These tools help HR managers — and other senior executives — monitor the overall skills, expertise, and effectiveness of employees. That knowledge can come in real handy when planning budgets, training programs, and staffing. Says David Link, vice president of the eWorkplace practice at professional services firm The Hunter Group: "For the first time, HR is put in position to be a strategic, value-adding business partner."
Also for the first time, CFOs appear eager to shell out money on HR initiatives. According to a recently released survey of 342 companies by The Hunter Group, 82 percent of those polled said their businesses would be running Web-based self-service HR software in 2001. Right now, that figure is around 46 percent.
Many companies in the survey indicated they experienced quick payback on EPM system rollouts, with minimal cost overruns. Generally, respondents said they preferred third-party add-on software to deliver HR self-service. A smaller percentage indicated a preference for HR self-service functionality delivered as part of an ERP system.
But not all industry watchers believe ERP software is ideally suited for simplifying human resources functions. Says Maria Schafer, a program director at Meta Group Inc., an information technology research and consulting firm: "Whether you're talking about PeopleSoft or SAP or anyone else, these systems don't do a terrific job of managing or of giving you a bird's eye, at-a-glance view of what the really critical elements are as far as people are concerned."
Certainly, many prominent floggers of business software were late in adding human capital management capabilities to their applications. That tardiness has given lesser-known companies a chance to fill the gap. But in recent months, several ebusiness application specialists — the artists formerly known as ERP vendors — released new versions of their enterprise resource planning software. The updated programs feature beefed-up self-service and workforce analytics capabilities.
SAP AG (www.sap.com/solutions/), for instance, came out with MySAP HR system version 4.6. This latest version of the human resources module from the Walldorf, Germany, software giant includes payroll and benefits capabilities, as well as succession planning. In addition, the toolset enables managers to analyze a workforce and develop a catalog of all skills needed to run a business. "You can also see which skills are needed to make up a job, which skills employees have, and then do a gap analysis to see if you have what you need to be successful," points out Monica Barron, director of marketing for MySAP HR.
PeopleSoft Inc. (www.peoplesoft.com ), the Pleasanton, California-based software vendor, is also delving more heavily into human resources analytics with the latest version of its Workforce Analytics product suite. The suite comprises three separate products: Workforce Scorecard, Workforce Insight, and Workforce Rewards.
Scorecard offers more than 100 different measures of HR effectiveness, while Insight provides an analytical assessment of a workforce, and Rewards simulates various compensation strategies. That tool also does retention planning and risk assessment for various job titles. "A big part of this analytical modeling is that you don't treat all employees the same way," says Norma Penson, product director of Workforce Analytics at PeopleSoft. "Some employees are more critical to the organization than others."
Paperwork Reduction Act
Some are also scattered across the globe. KLA-Tencor, for example, has some 6,000 employees in 19 countries. Crawford says the company completely revamped the home page on its corporate intranet, creating onscreen HR dashboards that can be accessed globally. Overseas employees can click on different dashboards to change addresses, view their stock option and 401(k) plans, and link to brokers to exercise options online.
US-based workers are also able to fill out timesheets electronically — a real paper saver. The employment verification process has been shortened, also using Web-based tools, and HR personnel are responding more quickly to potential candidates. That, claims Crawford, gives the company "an advantage over our competitors."
In October, KLA-Tencor began using a new dashboard that lets end-users change their benefits elections for the following year. All told, Crawford estimates the company will save about $1 million annually using the Workscape toolset. "We're empowering employees and managers so that they have information 24/7," she says. "If they need a report, they're not waiting for HR — no matter where they are globally."
Like KLA-Tencor, officials at Thomson University, the in-house training and development division of B2B vendor Thomson Corp., were searching for a browser-based human resources application. In their case, managers at the Stamford, Connecticut-based Thomson were looking for software that would help senior executives with succession planning.
After examining several packages, Thomson management chose ExecuTrack, a program designed by HRSoft LLC (www.hrsoft.com) of Morristown, New Jersey. Using the software, each of Thomson's 1,000 senior managers can create a Web-based profile that effectively serves as a professional resume. Top-level executives can now view an outline of a manager's background, experience, and education — all in a single location.
Thomson is also building a development portfolio within the tool, which when completed will enable executive-level staff to record more in-depth information about actual work experiences, including special assignments. "As we begin to look for people [to promote] in the organization," notes Ron Frederick, vice president at Thomson University, "we now have a place to go, where we can see this information."
So far, the results have been impressive. Since rolling out ExecuTrack, Thomson has filled a sizable percentage of senior-level jobs internally. "We haven't begun to calculate the savings from not having to hire recruiters, but we know it will be significant," claims Frederick. "The cost of replacing individuals at that level is somewhere around three times their base salary."
Still, Frederick concedes that the online approach to succession planning and hiring does not eliminate the need for face-to-face interviews. Indeed, Meta Group's Schafer warns that software should not be viewed as a panacea for all HR issues. "People processes don't conform readily to historical information-processing techniques," she cautions. Translation? "There's no magic bullet," she says.
Esther Shein is a freelance writer specializing in finance and technology.
And the Survey Says ...
According to a new survey of 342 companies conducted by information management consultancy The Hunter Group, more than 80 percent of the respondents said they plan to deliver HR services to employees via the Web in 2001.
That sort of wholesale adoption is not surprising. Workers seem to want self-service HR, which gives them greater control over 401(k) plans, expense report processing, and the like. In fact, the survey showed that worker satisfaction with HR services rose dramatically when self-service portals were launched. "There's an expectation in the workforce that they can get the same kind of service from their own companies that they can get if they're buying from other companies," says Alexia Martin, research director and principal consultant at The Hunter Group.
Furthermore, the do-it-yourself approach appears to save corporations a bundle. Thanks in part to minimal project cost overruns, the average transaction cost for businesses in the Hunter survey fell by 60 percent. In fact, some respondents reported a 100 percent return on investment within a year of implementing self-service applications.
A number of companies reported that the biggest savings came from Web-enabling low value, high-volume transactions. Circulating pay stubs electronically, for example, saves an average of $7 per transaction, according to Martin.
Mary Ruiz, director of human resources technology and operations at Redwood City, California-based Excite@Home, says the new media specialist's intranet enables workers to key in changes of address in their employee files. Not glitzy, perhaps, but in Silicon Valley, that sort of simple application can save a company a ton of worker-hours. Says Ruiz flatly, "We can't afford not to do this." —Kathy Ford