HR jumps on line

Whether your company has decided to push ahead with Web-enabled, self-service human resources applications or to wait for a more solid environment, one thing is for sure: Think it through. Bottom-line cost savings may not be what they appear to be.

In this article:
AT A GLANCE: Carolina Power & Light
"Web applications users want"
HR Web applications wish list
For more information on self-service HR apps, contact these companies:
Two years ago, Carolina Power & Light was feeling the squeeze of deregulation and a newfound need to compete. "We had a specific goal of cost savings," says Cindy Wall, a project support analyst in the human resources department at CP&L. And taking the HR staff out of the equation looked like a good way to trim costs.

CP&L had already implemented PeopleSoft's HRMS payroll, pension, and benefits administration modules, so the company decided to add the Web-enabled, self-service human resources application. Since the Raleigh, N.C.-based utility started using Web-enabled PeopleSoft HRMS in 1996, the $3 billion company has reaped benefits such as cutting paper and administrative costs and reducing its HR headcount.


"PeopleSoft is an excellent HR and payroll tool, but it's not something you want to rollout on every desktop."
--Cindy Wall, human resources project support analyst at CP&L
"It's eliminated the paper trail environment we used to have," says Wall. Employees now take charge of their own data, making name changes, altering beneficiaries, entering education information, and the like on the corporate intranet. This saves HR representatives from costly time spent on the phone, chasing down the minutiae of CP&L's 6,400 employees. And CP&L's HR headcount has been cut by 30%, Wall says. A company spokeswoman notes that the layoffs in HR were due to a corporate reorganization and are not directly attributable to the self-service application.

Take advantage of self-service

It's all well and good for an application to result in bottom-line cost savings, but most companies that use the Web to support their HR operations are doing it to improve the quality of service to their employees and to enhance communications within the company. And this is a worldwide phenomenon.

AT A GLANCE: Carolina Power & Light

The organization: Carolina Power & Light is a $3 billion utility company with 6,400 employees serving customers in North Carolina and South Carolina.

The problem: How to reduce administrative HR costs to gain competitive advantage.

The solution: CP&L implemented a Web- enabled, self-service HR application through which employees access their own information, make changes, and apply for jobs over the corporate intranet.

The IT infrastructure: Microsoft Internet Explorer Web browsers; a Microsoft NT Web server connected to an HP 9000 running PeopleSoft; and NetDynamics to integrate all sources of employee data.

More and more companies are taking advantage of the power and ease of Web technology, coupled with enterprise applications such as PeopleSoft, to perform HR functions. In 1997, HR consulting firm Watson Wyatt in Bethesda, Md., conducted a survey of 466 large companies and found that employees at half the companies polled now conduct some human resources transactions over the Web, nearly doubling the number (27%) from the year before. While corporate communications, job postings, recruiting, and training are currently the most popular HR applications to be done on the Web, benefits administration is the number one priority for more than half the respondents (see the chart, "Web applications users want"). Watson Wyatt's survey, "Forging Global Links," examines the growing phenomenon of companies creating "virtual" HR departments, in which employees perform HR functions via a Web browser, usually on a corporate intranet.

Mark Huey, senior research analyst at Meta Group, a consulting firm in Stamford, Conn., says that the real power of employee self-service HR applications is a whole lot squishier than hard-cost savings. Employee empowerment, data quality, and transforming the HR function are more substantive reasons, he says, because at the end of the day, not all self-service, HR-associated cost savings are real.

"[Self-service HR applications] can definitely be worthwhile," says Huey. "You can improve processes and the quality of the data. But you have to look at this for the right reasons and not just for astronomical cost savings, because that's been over-hyped." Indeed, the Watson Wyatt survey found that the goal of increasing productivity ranked a distant third behind enhancing communications and improving service (see the chart, "HR Web applications wish list").

In fact, companies thinking of Web-enabling an enterprise resource planning application like PeopleSoft 7.5, SAP's R/3, or Oracle's industry applications should be careful that cutting costs isn't the only motive. Even if you have an enterprise application in place, it takes time, effort, and money to rollout the self-service HR application. Many companies find they must resort to a third-party vendor such as Edify in Santa Clara, Calif., or NetDynamics in Menlo Park, Calif., for an application that will smooth the way, says Huey, because despite their protestations, R/3, PeopleSoft, and the other monolithic applications are not yet optimized for easy employee self-service applications. Generally, users would have to program their own method of culling employee data from all disparate sources and pouring it into the enterprise application before it could be accessed by the self-service HR application. As Huey points out, the enterprise applications--at least at this point--are not good at interfacing with data sources other than their own.

For more information on self-service HR apps, contact these companies:

PeopleSoft
http://www.peoplesoft.com

SAP R/3
http://www.sap.com/usa

Oracle HRMS
http://www.oracle.com/

Edify: A third-party vendor
http://www.edify.com

NetDynamics: A third-party vendor
http://www.netdynamics.com

Reducing administrative expenses

For CP&L, cutting HR costs was key. By implementing the Web-enabled, self-service component of its PeopleSoft HRMS application, employees can make benefits selections on line, view historical pay stub information at the touch of a button, and even forward resumes and apply for in-house positions--all from the comfort and convenience of their familiar Internet Web browsers. Managers have control over information on all of their reports and do not have to ask HR to hold their hands when they do salary modeling or job posting. And the remaining HR staff moves into a strategic consulting role, cutting out the administrative fat.

Adding the self-service component of HRMS looked like a real no-brainer. But CP&L IT executives felt it would be too burdensome to put a copy of PeopleSoft on every desktop, so they chose a quick solution. The IT group rolled out NetDynamics' Platform Adapter Component (PAC) for PeopleSoft to jump-start their virtual HR effort. CP&L finished the rollout with enviable speed. The PeopleSoft HRMS implementation was done in June 1996, and the self-service application was rolled out by the following January.

CP&L had 250 power users of PeopleSoft HRMS, and Wall was wary of rolling it out to the rest of the company's employees. Going with a third-party product like NetDynamics meant all employees would have access to their HR-related information without the need to expand the PeopleSoft rollout. "PeopleSoft [HRMS] is an excellent HR and payroll tool, but it's not something you want to rollout on every desktop. There are complexity and expense issues," says Wall.

A Java-based application, NetDynamics' Platform Adapter Component integrates with PeopleSoft's message agent API and interfaces with other corporate data sources as well. "NetDynamics provides value to the customer beyond what the large enterprise applications have already bundled in," says Stephen Berger, public relations manager for NetDynamics. The major advantages are integration of data, programmer productivity (through a visual development environment), and flexibility (applications can be HTML, Java applets, mainframe terminals, or Windows-based apps), according to Berger. (NetDynamics' Platform Adapter Components for PeopleSoft start at $5,000 for 25 concurrent users with additional user sessions priced at $250 each.)


While corporate communications and Web applications will decrease in importance in the next few years, job posting, training, and benefits administration are on the rise.
Source: Watson Wyatt

Bob Johnson, a business analyst in CP&L's information technology department, says NetDynamics is one slick tool. "It encompasses a variety of different servers and platforms. [NetDynamics] has written its own custom-class libraries tuned for database access. You can write your own queries and get information. It's completely dynamic," he says. Another plus is that the tool resolves security issues and designates access rights seamlessly to the end user. "The system sees who the user is and only pulls information that is appropriate for that user," says Johnson. NetDynamics PAC works off the business rules that have already been programmed in PeopleSoft.

CP&L officials declined to give exact numbers for cost savings associated with the Web-enabled self-service HR application. There's little doubt, however, that significantly reducing the number of HR personnel--for whatever reason--is a big cost saver. CP&L is farther ahead than most companies. Its self-service application is more robust, so its cost savings are greater than companies with a relatively simple implementation.

Some of the cost savings aren't really real

What cost-savings estimates do not show is the cost of shifting the data-entry task from low-paid clerical help to the rest of the workforce. After all, someone will still have to pay for the cost of the time the employee is now spending dealing with the electronic forms, databases, and such. Self-service HR begins to look more like simply off-loading costs from a cost center (HR) out to the broader employee population, where they will be more difficult to track.


"The [NetDynamics] system sees who the user is and only pulls information that is appropriate for that user."
--Bob Johnson, business analyst, CP&L information technology department

"This idea that you can get rid of 500 employees in your data-entry department--that's been over-hyped," says Meta Group's Huey. "The reason you had a concentrated group of employees to begin with was specialization of labor. It's not worth the CEO's time to be entering data.... You'll see vendors say, 'You can decrease staff and save $75 for every time they don't call the payroll clerk to ask for a number.' But what those numbers don't take into account is that if the system isn't well defined, the employees spend lots of time scrambling for information themselves."

He adds, "How many companies have an ERP application and nothing else? The reality is that virtually all global 2000 companies have numerous legacy systems and multiple applications from different ERP vendors. And enterprise applications aren't generally strong at integrating with best-of-breed applications, legacy applications, or each other." Companies may need to build a self-service workbench via a third-party product that talks back to the major system--such as PeopleSoft or R/3--that sits behind it.

Another problem that causes users to turn to third-party companies for help is that many of the enterprise vendors attempted a quick-and-dirty version in the early days of self-service apps a few years ago. Some vendors' solution to creating a self-service HR application was to "screen scrape" the old interface onto a Web browser and call it Web-enabled.

But vendors are beginning to come around to the idea that employees are not HR professionals. They don't want to know the details or the HR jargon; they just want the system to point them to all the appropriate materials. The big vendors are beginning to enable self-service applications that make sense to those serving themselves, says Huey. "The key to self-service is to match the application design to the user in terms of interface complexity and scope of interaction."

Think it through


Most companies want to enhance employee communications, while others seek to improve service to employees and increase productivity when they implement HR Web applications.
Source: Watson Wyatt

One user waiting to make sure that his self-service application--to be built on top of SAP's R/3--will be solid, without the need to buy a third-party product, is the director of human resources information systems for a large West Coast electronics company. He has decided to table the self-service app until he's dead-sure of its stability. The director, who requested anonymity, views cost-savings estimates with a jaundiced eye.

"There are a lot of good reasons to do [an employee self-service HR application]. But I don't think cost is the best motivator. The biggest savings is so the engineers and managers don't have to walk down the hall to deliver some forms to HR. It's not real money. The company won't hire fewer engineers every year just because they can do some HR functions on line," he says.

The electronic company's HR IT director is waiting until his company makes the transition to R/3 version 4.0, which is expected to have improvements in its self-service feature. "We're just not ready to do the development effort right now. I'm going to have to be sure R/3 is ready for this. It's not there yet," he says.

Sue Hayden, HR solutions manager for SAP's Strategic Human Resources business unit in Waltham, Mass., certainly does not agree. "We have had employee self-service applications up and running since the second release," she says. However, Web-enabled R/3 features are still being rolled out.

Whatever the situation, before users begin to sort through different options for doing self-service, they had better make sure that reasons other than costs are driving the deployment. Transforming the HR function to emphasize a consultative role and allowing employees a coveted sense of control over information--these are subtle but worthy reasons to go self-service. Says Huey, "Self-service can't be a cost-focused application. If you're just focused on cost, it's entirely bottom-line driven and your opportunity is much smaller." //

Lauren Gibbons Paul is a freelance writer based in Belmont, Mass., who writes frequently on Web self-service applications.







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