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HR software: can the pick 'n' mix approach work?

Bettina Pickering
PA Consulting Group
HR Zone
9 September 2008

HR managers are caught in a trap. They want to take a holistic view of the organisation, but often have to do so with a rag bag of software systems. John Stokdyk and Lucie Benson explore the possibilities for pulling the different pieces together.

As anyone who has trawled through the HRZone.co.uk guide to human resources software will know, the breadth and variety of HR software available is bewildering.

In most organisations, HR software has been deployed piecemeal, with different functions automated at different times, sometimes with discrete programs from different companies. In extreme cases, this can lead to overlaps, gaps and duplication of effort, such as the need to key payroll details into an accounts system.

The wider world is now coming around to the idea that people really are a strategic resource and that HR activities should be aligned to the organisation's long-term goals. Automated systems make this ideal feasible, but to do so effectively they need to work seamlessly together.

Within the software industry, this contrast is usually termed the 'best of breed versus integration' debate. This article will review some typical user attitudes and experiences and try to help HR managers navigate the complexities of procuring and integrating appropriate software.

Lord Carter's legacy

The biggest stimulus to HR-related software sales in the past few years has been the drive towards mandatory online filing for PAYE returns and other corporate reports inspired by Lord Carter. The need for accredited e-filing mechanisms forced many companies to review and replace their payroll software, often triggering wider examinations of their organisational structure and HR functions. Linking payroll modules more closely to employee records and central accountant systems, for example, can improve reporting and budgeting and give better control over headcounts and related people costs.

PA Consulting's Bettina Pickering confirmed that tackling specific HR pain points left many organisations with multiple HR and development databases. But the new holistic thinking around HR management information is encouraging organisations to pull all employee-related information into a single place.

Integration at ITV

Hayden Feeney, HR manager at ITV, recently described the organisation's experiences with an Oracle-based HR system to HRZone.co.uk editor Lucie Benson. The system was initially set up to cater for finance requirements with HR functions added as an afterthought. It wasn't really user friendly and a lot of the information on there wasn't really applicable to HR - common experience with the integrated 'enterprise' approach.

But a recent finance restructure brought in a newer version of Oracle and the company is one of the first in Europe to use Oracle OBI, a new reporting tool. "It is still finance-led because senior managers are asking for better financial information. But as a result, there is an overhaul on the HR side of it too," says Feeney. ITV has created a manager's HR toolkit and has expanded it into an employee HR toolkit. Every employee now has access to self-service Oracle tools, so they can update their employee records, look at online payslips, and so on.

Visitors to the CIPD's HR Software Show in June were adopting a more sophisticated approach, according to Marlo Tapley, managing director of international sales for Silkroad Technology. During 2008, she commented, HR software buyers were increasingly "looking to invest in things like performance management and on-boarding modules to get a complete solution".

Logica's Patricia Taylor added that visitors to the event typically had the core HR functions and were coming back for additional features. "Rather than core HR & performance management with employee and manager self-service, they want more of a full suite with training, recruitment and performance," she said.

Raising consciousness about human capital

While executive consciousness has heightened about the human capital value chain, PA's Pickering pointed out in a recent HRZone.co.uk article that organisations have struggled to produce measures to demonstrate the bottom line impact of people and talent management initiatives.

But it is possible to gauge HR performance, she explained. Breaking down line management competencies and measuring these competencies through 360-degree feedback and against employee turnover figures can reveal where line management up-skilling activities have worked and highlight competencies where HR might need to push for improvements.

"It is vital that an HR director not only develops the right measures for their business, but also makes sure that some basic structures are in place to gather the right data in the right format and quality. Furthermore they need to have analytics software in place to be able to support trend analysis and combinations of various business and HR measures," Pickering advised.

Embracing human capital management (HCM) is a good way to embed the value justification and quantification mentality within HR function, she added. But so far, organisations such as the Royal Bank of Scotland Group, that have adopted these techniques, have relied on big, enterprise-scale software systems from the likes of Oracle and SAP.

The mantra of traditional client/server enterprise software has been that enlightenment comes through integration. But too often this has come at an eye-watering cost. And there are other disadvantages, according to Mark Kieve, an executive with online niche specialist Amris E-recruitment. He commented: "The biggest mistake large companies are making right now is to go for large ERP systems and recruitment modules that take two years to implement. The net is changing at such a fast pace that these systems will be out of date by the time they come on line."

Second tier suppliers such as COA Solutions and IRIS Group are taking the one-application-for-all-functions approach, but even these more modest integrated HR and payroll systems can cost tens of thousands of pounds to implement. They also demand a major commitment to organisational change and may not be the best solutions to consider if the organisation is more concerned with moving quickly, for example to meet impending online filing deadlines.

Why not pick and mix from best of breed components?

Cezanne Software's marketing director Sue Lingard recently pointed out how the adoption of internet technologies fuelled an explosion of web-based 'best of breed' applications, particularly in the field of talent management.

Pick 'n' Mix at C&W

James Eastwood, HR director for shared services at Cable & Wireless, says that the company's old SAP HR and payroll system was failing the reporting and performance management functions that HR wanted.

Earlier this year, C&W implemented several SuccessFactors modules to help align employees' objectives to its corporate goals. "We want colleagues to take more ownership for their development and use the system to demonstrate that there are different routes they can take within the organisation," says Eastwood. SuccessFactors is not seen as an IT or HR system, he adds, "it is about their own development". The system also helps HR identify the talent it has and how to deploy that talent and plan for succession.

An upgrade to the SAP system now gives more flexibility to the self-service schemes available to employees. "Hopefully we will bring those two together so that SAP is still there and does the basic pay, core details, basic master data, etc, but anything to do with the individual, their objectives and development and so on, would sit on SuccessFactors," says Eastwood. The SAP system combined with another focused on talent management works for C&W, but it still needs to get reporting from both. "What we need to do is to find a way of building those reports, and making that overall value statement to do with people and playing that back to the business," says Eastwood. US software company Tableau is currently helping with this.

These applications offer companies a way to tackle specific processes such as performance management or online recruitment. "The problem was that they were disconnected from other talent-related activities and from the core HRIS so, while companies benefited from automation, they still had the same challenge of managing silos of information with no easy way to link it together," she wrote.

The software industry is responding in two parallel ways. The best of breed vendors are extending their products to offer integrated solutions that incorporate a wider range activities, while traditional HRIS vendors have redesigned their products around web and workflow technologies to incorporate these new wave talent management features.

Unfortunately, HR managers are caught in this flux. As ITV's HR manager Hayden Feeney describes it (see case study, above left), finance often calls the shots on which system to implement for HR, and will dictate the form and content of the reports. The built-in reporting libraries may not cater for their specific performance measures, or may not be able to draw in relevant information from systems used elsewhere in the organisation.

Alan Whitford of the Abtech Partnership described a common best of breed scenario: "We are all now used to living in a browser, but with every new application, we get another set of windows on our desktop. You'll have the Oracle payroll window open, the Oracle HR window open and perhaps another recruitment system and an expenses system like Concur. You've got four windows open and suddenly you are outside your comfort zone."

The sad fact is that you may still have to be an Excel or Crystal Reports guru to assemble data to achieve a holistic picture of organisational dynamics and the HR department's contribution. And to be perfectly frank, even some self-proclaimed integrated systems fall down on this front.

Integrated pick 'n' mix - we have the technology

"Why can't I just have one portal and one bit of work?" wondered Whitford. The reason why not is because all the software companies have created their own HR data structures, which do not map coherently into rival systems.

"This is really a nonsense," he said. "More than 70-80% of the information we use in HR is the same, it's based around payroll, assessments, recruitment and so on. Those areas aren't rocket science - you should be able to map then in an easy-peasy way."

The reason he speaks so passionately about the subject is because Whitford chairs the European branch of a consortium that is trying to do just that through an HR data exchange standard called HRXML.

"Integration doesn't have to be one to one to one. It can be one that goes into the centre and back out again. We're trying to create that sort of middle management piece of technology with HRXML," said Whitford.

Major HR vendors such as Oracle, SAP, Lawson and Taleo all support and adhere to the HRXML standards, which now stretch to nearly 40 different HR functions. The project isn't just theoretical as HRXML implementations have gone live, including a number of job boards in Europe and the UK which link back into HRIS systems.

Altrusitic projects like this often suffer from neglect. An integrated HR software sales person with lots of modules on their hands won't go out of their way to push the product's external integration capabilities. Another common bug bear, according to Whitford, is that "90% of the people who drive standards come from the technology vendor community, so you don't see enough of them reaching out to end users".

For an integration technology like HRXML to prosper, users need to identify the data they most want to share between their systems and to push their suppliers to fill in the missing gaps. Strategic-level HCM measures, too, continue to baffle the technology boffins.

"They can only map things at the top level, where they're just trying to create buckets of data and define descriptions of what it is," said Whitford. "But everybody defines metrics differently and measures them differently. We're trying to create a framework, but there are still a lot of bespoke HCM approaches."

The HRXML project suggests hybrid systems that can deliver best of breed functions within an integrated environment are within our reach. But as experience has shown, the gap between software promises and delivery can be very wide indeed.

By all means push your suppliers to show you their integration facilities and stance on HRXML, but they may not be available right here and right now. It's better to go for components that meet your original project objectives than to keep moving the goalposts. If you put in a new payroll package that has the ability to integrate with accounts or HR systems this year, you can always add new features at a later date.

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