Contracting out HRIS easy call at Terasen Pipelines

Investing in IT support for HRIS not a focus for growing firm
By Uyen Vu
|Canadian HR Reporter|Last Updated: 08/15/2005

When Terasen Pipelines considered outsourcing its human resource information system, one of the biggest challenges was coming up with the specs.

The HR department used paper-based files and most of the eight-person team had no experience with technology.

A subsidiary of Vancouver-headquartered Terasen Inc., Terasen Pipelines for about 50 years remained a small owner and operator of a piece of pipe going from Edmonton to British Columbia’s Lower Mainland.

In 2001, the company then moved its head office from Vancouver to Calgary to be closer to the thick of the oil and gas action.

The move set off a spurt of growth at the company, which doubled in size both in terms of the length of the pipelines it owned or operated, as well as its workforce which now stands at around 400, scattered across two provinces and seven states.

“That’s the kind of growth we anticipate in the next two to five years,” said Dennis Ohman, senior HR advisor at Terasen Pipelines. “And one of the challenges is the fact that we’ve got employees across so many geographical areas, we need to make sure we’ve got accurate records, whether that’s payroll or whatever.”

The moment to consider the company’s HR technology needs arrived when Terasen received notice that its current software processing Canadian pay would not be supported by the current provider. The company had to look at an HRIS system that would accommodate considerable growth.

“In the past, we could maintain everything on spreadsheets and paper files. We’ve outgrown that,” said Ohman.

The top item on Terasen Pipelines’ wish list was a system that would integrate data for both Canadian and U.S. employees. Then it was a question of going to an outsourcer or looking for a system to purchase. That question seemed like a big deal at the time “but it came to us quickly that it was that simple a decision,” said Ohman.

“In order to house it in-house, would mean a whole lot of infrastructure in our IT department, both in terms of employees and equipment, and that’s not where we wanted to focus our energy and resources.”

As a case in point, when Terasen Pipelines recently completed an acquisition of a 120-person operation, the post-acquisition work involved in keeping employee records “made it so obvious that the systems we had in place were so manual, it was tough to determine whether data were accurate or not.”

Although the acquired company had its own HR information system, Terasen bought only part of the company and therefore had to manually import the acquired company’s employee data.

Had the acquisition been of a larger magnitude, “we wouldn’t have been able to handle it,” he added. In the end, that was really the argument that persuaded senior management of the need for such a change: the ability to handle future growth.

When it came time to choose the vendor, one of challenges facing Ohman was how to draw up a wish list of what a new system would do. Of the eight employees making up the HR department at Terasen Pipelines, only a few have had experience working on anything other than paper files.

“So there was a lot of training upfront to say, ‘Here’s what an HRIS is, here’s what it can do for us. Here’s what our current practices are. Now how would we want to change these? How would we like to see them in the future?’ And then we needed to test the systems to see if they would do that,” said Ohman.

Fortunately, Ohman added, some of the HR staff had experience working with an HRIS and were able to help their colleagues imagine new processes, as aided by a system.

Ohman recalled one theme often voiced throughout this process was: “You guys don’t know how hard we’re working when we can make it so much easier with a system that could do a lot of this for us. You don’t always have to run to the cabinet for the employee file just to get basic information. It can all be at your fingertips.”

One challenge Terasen Pipelines faced when it came time choose a vendor was the size of the company.

“Some of the larger HRIS companies didn’t see us as a large enough client. But we knew that we had a lot of growth ahead of us so we were looking at ourselves as being larger than we were,” said Ohman.

Terasen was already using a time management program, so systems that had a strong time management component were ruled out. Also eliminated were those that couldn’t integrate data from Canada and the U.S.

“So when it came down to it, there was really a small number of companies that responded to our RFP that met at first glance what we considered were the important requirements.”

The company settled on Hewitt’s application service provider (ASP) model with eCyborg, which means Terasen is outsourcing the IT work required in supporting the HRIS. The HRIS resides with Hewitt and is accessed over the Internet. Terasen still maintains responsibility for all data, including data entry and time entry, and Hewitt’s team is responsible for processing payroll and benefits for all employees and retirees in Canada and the U.S.

Jeff Koven, who heads up the payroll outsourcing group at Hewitt, said the current ASP model is different from the ASP model that has been around for decades. Whereas the latter was driven by the cost of maintaining an IT infrastructure, the impetus for today’s ASP contracts tends to be “the fact that the applications themselves have become more complex,” said Koven.

Terasen is also using Hewitt’s self-service program, called Interactive Workforce, which eliminates the need to mail out pay advices. Employees can also view their own benefits information and make changes to personal information, which means that “HR can work on more strategic things,” added Ohman.

The move has allowed the HR department to maintain its current size and still be able to enhance its strategic functions.

“We’re growing a lot and recruiting is a huge challenge in Calgary. So we have to make sure that we have the time and resources to be engaged in terms of doing more forward thinking, more organizational design, how we do succession planning, and how we plan for retirement and those kinds of things.”

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