HR systems have certainly moved with the times over the past 40 years: while
changes in technology have seen administrative functions drift from outside to
in-house, the most recent Internet advances could mark a return of outside
HR professionals of a certain age can remember when payroll was always
outsourced and the closest they got to automation was a bit of borrowed time on
their firm’s mainframe computer. The development of the PC changed all that,
providing systems that gave the function independent control over its own data.
Now the wheel is turning full circle. Within five years, suppliers expect
many HR departments to be subscribing to application service providers (ASPs),
simply renting their system requirements from outside as they are needed.
That may seem like a return to outsourcing but the difference this time is
that after nearly four decades of technological development, HR requirements
will be closely associated with the main business accounting systems, not just
provided as an afterthought.
"HR used to be overshadowed by the requirements for payroll, with an
additional system being bolted on to the outside," explains Peter
Collinson, managing director of Midland Software. "Then as companies held
more and more information about their employees, systems became dormant information
repositories – just records with no real value. But there has been a big-step
change in the past few years, and payroll is now viewed as part of HR."
Midland Software is one of a handful of companies which has been in the game
since the start. Another is Rebus, until recently called Peterborough Data
Processing after the town where, in 1963, an engineering programmer used spare
capacity on his firm’s mainframe computers to set up a bureau payroll service
(see box, p44).
These electronic behemoths could also be used for recording employee data,
although accessing it was a cumbersome process. Dave Johnson, business future
manager at Rebus, remembers as a personnel officer at Kodak in the 1970s having
to fill in a form and send it to IT. "You had to wait a week to get it
back, but at the time I thought it was a pretty good service," he says.
A breakthrough came in the mid-1980s with the arrival of IBM’s personal
computer. For the first time it became possible for HR departments to choose
their own system from standalone services packages provided by suppliers such
as Pegasus, Sage and Infosupport. That ended the stranglehold of payroll
bureaux and gave HR departments the independence to record and manipulate the
data they were interested in without reference to other parts of the business.
At Infosupport, sales and marketing director Robert Wyath recalls, "Our
first product was a DOS system called Professional Personnel, a database that
enabled you to report easily, write letters and speed up administration tasks.
Later versions allowed for easy customisation and include diary features."
A Windows version followed in 1991, with updates that provided more
functionality. "A major step was to allow the customer to customise the
system themselves," says Wyath.
Towards the end of the 1980s a new wave of large-scale products appeared,
spearheaded by US providers Oracle and PeopleSoft, which started to challenge
traditional thinking about UK systems.
"PeopleSoft brought a breath of fresh air to the industry," says
Dennis Keeling, chief executive of the Business and Accounting Software
Developers Association. "Until then the products were built around
character-based screens and the software was boring. PeopleSoft was the first
to deliver HR systems in Windows with a user-friendly modern design, and it
took the market with it."
Being designed for an international customer base, these systems at first
included no payroll element, owing to the heavy dependence of payroll on local
legislation. But gradually the big suppliers started to include payroll.
A new breakthrough occurred last year when SAP launched an international
payroll package that works in most industrialised countries. "It is an
incredible feat to build all those complex requirements into one package. Oracle
tried to catch up but SAP is way ahead," says Keeling.
Major UK suppliers which started out providing payroll services now make
that one element in their product ranges. Midland introduced a product six
months ago with the focus on HR administration, responding to a shift in the
market. "Companies want to see benefits from HR solutions that impact on
the bottom line," says Collinson. "Everything is controlled by a
workflow engine, which streamlines administration processes and ensures that
things happen when they are supposed to."
Collinson also stresses the importance of knowledge management in the new
system, to identify the skills and development needed to fill the gaps. A
watershed occurred three years ago when the value of the Internet and intranets
truly started to sink in.
"That has been a tremendous change," says Rebus’s Johnson.
"Personnel departments had gone through a stage of independence, in that
they had control of the data and could do what they wanted. But the downside of
standalone PC systems is that they tended to isolate HR from the rest of the
"Since the mid-1990s, HR systems have moved from independence towards
interdependence. Now it is all about connecting one part of the organisation
The facility for employees to enter their own data in self-service kiosks
has given added momentum to the move from administrative to strategic input by
HR, underscoring the contribution of technology to the function’s overall
The universality of Web systems is a major element of this shift. "In
the past, the only people who used the system were from HR but we are seeing a
big move towards taking it to the rest of the organisation," says Francine
Gregory, business consultant at Lawson Software. "That means the system
has to be easy to use. Our product is accessed via a browser, which is like
surfing the Web and minimises the need for training."
Another advantage of Web technology is that it facilitates integration.
While big systems like SAP and PeopleSoft combine payroll and HR, mid-level
suppliers tend to specialise, and this has led to fragmentation. "The
trend is towards a ‘best of breed’ approach," says Mick Bow, managing
director of Trace Employer Services. "Web analysis tools link these data systems
together, so from the user’s point of view they look like one system."
Another supplier convinced of the benefits of this technology is Northgate
Information Systems, formerly MDIS, whose relaunched Resource Link product
makes the whole application Web-enabled.
"The product was functionally rich but we came up against hurdles with
the look and feel of it," explains Northgate’s director of HR systems
Malcolm Aldis. "Instead of the standard Microsoft design we saw that the
market wanted a new-era e-commerce product, so we designed our new system with
a Web feel.
"It has had an amazing effect," he says. "Whereas most
providers have rewritten elements of their application to provide a Web
environment, here every element of the screen looks exactly the same wherever
it is being used."
Just as most organisations are finally getting to grips with intranets,
suppliers are preparing for yet another seminal change. The hot topic of the
moment is the advent of ASP, the supply of software via Net links.
One big selling point of ASP is it will make some of the functionally-rich
applications provided by PeopleSoft and SAP available to smaller businesses.
"They will not have to worry about updating and technical issues,"
explains Deirdre Hardy, global HR solutions consultant at PricewaterhouseCoopers.
"A new release involves sending out thousands of CDs with updates and
redoing the literature, which is unnecessary with a single central
ASP will not become a practical alternative until fast links are provided.
That will start to happen next year when high capacity connections become
available. But there is unlikely to be a stampede to the new technology.
"Everyone is talking about ASP but I don’t see it being widely used for
at least five years," says Hardy. "Intranets have been around for a
long time but companies are only now making use of them."
Most experts think, however, that the predicted shift to ASP by software
suppliers generally means HR will inevitably follow suit. "Things do
change quickly and it would be naïve to say it won’t happen," says Hardy.
"Technology moves much faster than people, and it is not clients but
the industry that makes the decisions."
The history of Rebus Software reflects the changes in both IT and HR
over the past 40 years
Early 1960s Ian Evans-Gordon, a programmer at Perkins Engines,
Peterborough, sets up one of the first bureau payroll services using spare
capacity on his firm’s mainframe computer. He names the company Peterborough
1972 The firm launches Unilist, a software system that enables
customers to analyse the data held on its payroll programme. The company now
has 18 staff.
1975 Unipersonnel is launched in response to the demand to add more
detailed information about staff and their development. Systems are updated to
enable on-line data entry instead of batch processing.
1987 PS 2000 is launched, a user-friendly PC system that includes
modules for recruitment, absence management, training administration and
others. This starts a period of rapid expansion for the firm.
1996 PS 2000 is updated to exploit emerging Web technology and to
enable organisations to gain competitive edge by making staff responsible for
1999 PS Enterprise, an integrated HR and payroll product, is
launched, including an Intranet-based portal that uses self-service kiosks. The
firm changes its name to Rebus Software, and is now a global company with 400
HR managers and their machines
Three personnel managers weigh up their systems’ functions,
user-friendliness and effectiveness
Graeme Kettles, personnel business manager at MOD agency Defence
Evaluation Research Agency, whose People-Soft HR system went live last
"What is especially exciting about this system is that it supports
eight other key business applications, including sales and marketing,
financials, and resource recording. That puts HR at the hub of the wheel. It
gives greater visibility to HR assets across the organisation, making it easier
to deploy people in the best way.
"Measurement and benchmarking is now a practical choice. You can
measure the relative merits of recruitment strategies by looking at the cost of
recruitment and success rate. Equal opportunities monitoring can be done at
touch of button rather than bothering a lot of people for data.
"Making our data much more transparent across the business puts a
certain amount of tension into HR activities – if we aren’t up to date the other
functions cannot operate properly. But that is healthy tension, and it wasn’t
the case 20 years ago."
Helen Robinson, HR manager at Alenia Marconi Systems, uses a system
called Professional Personnel supplied by InfoSupport.
"It is good to have a database that is user-friendly; that helps the HR
department look professional. Also, the system is easy to modify as the needs
of the business change.
"We have a long-standing relationship with Infosupport, which is
important to ensure the constant improvements made necessary by business
pressures and changes in employment law.
"It helps that the database provider has approachable help desk staff
who can assist us with simple and complex reporting, and who are responsive to
"We constantly seek to improve the quality of the information we hold.
For example, we have invested in a Web-based front-end to provide on-line
information to managers, and are in the process of trialling it before launch
later this year."
Annette Dimond, HR officer at Spelthorne Borough Council, which has
been using an Intellect Workforce system since 1994.
"Two of the modules are for employee statistics and training
administration. It is easy to use and it is immensely useful to have everything
at the touch of a button.
"The main thing I get out of the system is the creation of statistical
reports that I am always being called on to supply. But we carry out other
surveys as well, analysing employee data and monitoring equal opportunities.
"Now we are planning to buy the recruitment module to analyse directly
where applicants are seeing advertisements and help with ethnicity reporting,
which at the moment is being done by hand."