While
the IT sector has had little good news since the internet crash, in HR there is
room for optimism. Keith Rodgers reports on companies looking for systems to
help them cut costs and get…
TEXT:
There’s nothing like a deep recession to focus the minds of those in IT
marketing, and the current downturn has certainly made its mark. With hopes of
a recovery in corporate spending dashed in 2002, software vendors are facing up
to the fact that 2003 is going to be yet another struggle.
From
the heady days of the internet boom, where potential counted for everything,
sales are now focused on the hard realities of cost savings and business
efficiency. That’s not to say that the next 12 to 18 months will be dull for
the HRIT industry. Products for such areas as self-service and performance
management are sufficiently maturing to catch the eye of the average
cost-conscious practitioner.
New
technical developments that haven’t yet hit the HR headlines – such as the
growing acceptance of digital signatures – promise to cut yet more
administrative hassle out of the HR job description.
And
emerging business challenges, particularly in respect of contractual workers,
are likely to spawn a new breed of application.
But
as they assess what the next 12 to 18 months hold in store for the HR
community, IT vendors and consultants tend to focus first on the financial and
practical realities. Financially, investment in IT today has to deliver
tangible returns, measured either in cost savings, productivity increases, more
efficient working practices or better support for management decision-making.
These
criteria mean that many purchasing decisions will be made from a relatively
narrow perspective – employee self-service, for example, is typically seen in
terms of the administrative costs it can save, rather than as a platform for
new, collaborative working practices. They also mean that bigger investments –
such as building a central data repository to allow for better performance
analysis and workforce planning – have to be approached from a very pragmatic
perspective.
Delivering
the basics
In
practical terms, meanwhile, HR has got to be able to deliver the basics,
starting with the core HRMS system. Jason Averbook, director of global HCM
product marketing at Peoplesoft, suggests that organisations will still need to
streamline their HR foundations in 2003, with a particular emphasis on data
accuracy and credibility. Just as the finance function is coming under glaring
scrutiny, so the HR function will need to ensure that its compliance and
regulatory activities are being carried out properly. This may just be a tick
in the list of basic requirements for many organisations, but it’s likely to be
a core concern for the board.
Steve
Foster, formerly at KPMG Consulting and recently appointed practice leader at
Rebus, adds that HR also needs to check that its core HRMS systems are up to
the job. In the mid-1990s, the expectation in HR was that you’d buy a product
and stick with it for the next five years. The internet has changed that, and
HR practitioners need to be sure that their HRMS system both exploits the
capabilities of the web and provides a suitable platform for them to build on
going forward.
High
on that list of web capability, of course, is self-service. Today, the
principle of HR self-service is widely accepted in both the UK and the US, even
if companies are in widely varying degrees of readiness and implementation.
Typically, organisations have started with relatively basic rollouts – perhaps
offering employees the capability to change their personal details online or,
as an incentive to use the system, distributing pay advice. This year, those
capabilities will gradually be extended at an employee level, and at the same
time, manager self-service will start to take off in the mainstream.
Mary
Kathryn Reese, who heads the Human Capital Management practice for Deloitte
Consulting’s SAP Alliance, suggests that this process has four stages of
evolution:
–
Employee self-service is typically applied to HR functions.
–
Self-service moves beyond HR itself, becoming a vehicle for better knowledge
management across the enterprise and for collaboration between different departments,
or even different companies.
–
Manager self-service begins to climb up the HR agenda. Experts agree that this
has been far less popular than employee self-service until now, partly, says
Reese, because the applications have not been rich in capability or
particularly intuitive. That, she argues, is set to change
–
Manager self-service also moves into the realm of collaboration.
Averbook
argues that the key emphasis in self-service will increasingly shift from
asking whether it’s being adopted, to ensuring that, as it rolls out, all the
necessary people are pulled into the process. To do this, companies need to
establish which business processes will allow them to reduce costs and focus
their efforts accordingly, ‘market’ the enabling technology to employees to
ensure the automated option becomes a natural part of daily activities, and
work out how the roll-out will impact on other parts of the organisation – for
example, if an individual makes an online change to one business process, will
it have a knock-on effect?
While
self-service provides both cost-savings and a collaborative platform in its own
right, it also has significant implications elsewhere in the HR function. Most
experts agree the gradual roll-out of self-service and employee portals will
also be a major factor in the adoption of HR data analysis, which is set to
climb from its relatively low levels today. "People are talking about it
more and more – how we are going to prove our worth, and do a bit more than
expected," says Foster. "You need a handful of early adopters who can
tell a good story – and some US companies are starting to take it on
board," he says.
Gathering
the data
One
reason for the slow adoption of data analysis in HR has been the difficulty of
gathering the necessary data, which typically lies in a mixture of HR, financial
and other operational systems. The major application vendors have pushed a
‘data warehousing’ strategy to tackle this, encouraging organisations to build
a central repository to collate the necessary information and then use business
intelligence tools to analyse the results. But that task isn’t always easy to
justify from a purely HR perspective. While a number of larger, high-profile
organisations have gone down the data warehousing route, others have preferred
to extract specific data from a limited number of operational systems and carry
out smaller-scale business analysis.
In
the end, it may be other parts of the business that help provide the answer.
Wayne Carstensen, UK managing director of Arinso, believes that data
warehousing will come to the fore in the next 18 months as organisations seek
to improve the level of intelligence across their entire company, not just in
HR. Customer relationship management or financial projects may drive the
initiative, but HR will benefit. Whatever prompts an increased take-up, the
benefits will be significant. Averbook comments, it means companies will be
able to focus less on gathering input as on the quality of the data output.
Alongside
self-service and data analysis, IT experts expect a range of other technologies
to come to the fore within the next 18 months, including applications designed
to tackle long-standing HR requirements such as competency management and
software aimed at newly-emerging challenges.
Some
developments will arise from steps taken by vendors to fill holes in their
portfolios – Carstensen, for example, argues that multi-jurisdictional payroll
will become a pressing requirement in the coming years. Others will represent
changes in delivery mechanisms to overcome HR’s ongoing cost-constraints
-e-learning providers, for example, will come under pressure to distribute
content more cheaply. Then there are the technological advances that will begin
to have a bearing on the HR function. For example, Reese suggests that wider
acceptance of electronic signatures will allow HR to reduce levels of
paperwork, cutting the signed hard copies typically required to back-up e-mail
and other electronic communications.
This
is not just a technology issue – like self-service, it’s also a matter of
embracing new forms of verification that require a higher degree of trust in
employees.
Know
your workforce
Reese
also suggests that software vendors will start to release more products to help
companies understand their contingent workforces. In the Harvard Business
Review last year, management guru Peter Drucker pointed out that a
"staggering" number of people who work in companies are no longer
traditional employees – companies either employ temporary workers directly, or
outsource large chunks of their business altogether. As Reese argues,
understanding these members of the extended workforce – where they work, how
much they’re paid, and so forth – is becoming ever more important.
Competency
management is also rising up the HRIT agenda. Long a bugbear for HR, Carstensen
reports that increasing numbers of companies are now acknowledging that they
can’t avoid the issue much longer. Historically, the biggest barrier to
competency management has been the sheer scale of the task – defining a core
set of common competencies is a headache in itself, and that’s before
organisations attempt to persuade line managers to start the process of
evaluating employees against those ‘standards’. Averbook suggests, however,
that the process could be kick-started as organisations start to carry out
performance reviews online, a process that will automatically begin to collate
the core data required.
Competency
profiling also feeds into a broader requirement for effective resourcing.
Companies require a better understanding of their workforces’ skillsets and
whether they they’re deploying their human capital assets to the best effect.
The applications that support this kind of analytical exercise stretch from
specialist recruitment software to the planning tools that allow companies to draw
up a talent management strategy.
This
kind of interaction between different HRIT applications suggests that
technology may at last be catching up with the long-standing strategic demands
of HR. The concept of ‘joined-up HR’ may be somewhat hackneyed, but the reality
is that very few organisations today can claim to have integrated the core
activities that form part of a human capital management strategy. Aligning
corporate objectives with departmental and individual goals, including in
incentive systems, measuring performance and rewarding on the back of that
measurement, is a loop that makes perfect sense in theory.
In
reality, it is only now becoming achievable as the different components are
automated and integrated. There is no easy way for the technology industry to
make joined-up HR a reality, but the foundations are falling into place and
will support the trend in the coming years.
Key
factors in self-service
–
Establishing which business processes will allow them to reduce costs and focus
their efforts accordingly.
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–
‘Marketing’ the enabling technology to employees, ensuring that the automated
option becomes a natural part of an individual’s daily business activities.
–
Working out how the rollout impacts other parts of the organisation. If an
individual makes an online change to one business process, for example, does
that have a knock-on effect on another?
