The message from Washington

IHRIM’s major HR technology conference sees trends toward web-based HR software

The beginning of April signals more than just the end of winter weather. It’s also the start of the new HR technology year. HR technology vendors from across the globe gathered in Washington, D.C., last month at the annual International Association for Human Resource Information Management (IHRIM) conference to showcase their new wares.

It’s a great opportunity to spot new trends and review the latest crop of human resource management system (HRMS) products.

SOA-based HRMS

The biggest trend this year was SOAP. No, not the laundry or dishwashing versions but simple object access protocol (SOAP). It’s a protocol that allows disparate systems to exchange information and services via the Internet using extensible markup language (XML). Most of the vendors of “best-of-breed” products in e-recruitment, e-learning and other HR services are using SOAP to move to what is called a service oriented architecture (SOA). Putting the alphabet soup acronyms aside, service oriented architecture heralds a fourth wave of HRMS computing platforms. HRMS has moved from mainframes to PCs to client server and now to the web.

HRMS and best-of-breed platforms built using service oriented architecture act and feel just like the Internet services most employees have come to expect. Companies like eBay and Amazon use service oriented architecture to present data and information on a PC from different sources using web services. This makes for easier integration of data from different systems. There is no need for defined interfaces between the different systems.

Web services rely on common definitions of information laid out in a web services description language (WSDL). By defining WSDLs, information can be brought into a system without building a complex interface and can reuse existing information regardless of the system or programming language used to build the applications.

These changes allow users to mix and match information and services over the web in much the same way children build structures out of Lego. If an organization needs to change the way its HR system works due to a change in business processes, it changes the WSDL, not the software, making flexibility the hallmark of systems built on this framework.

This has interesting implications for companies with no HR system, inadequate HR systems or with mixed enterprise-wide environments. If a company runs SAP for financials and materials management but PeopleSoft in HR, new SOA products may allow easier integration of data in third-party HR applications.

New entrants

The IHRIM show offered the first glimpse of Workday, a new company from Dave Duffield, founder of PeopleSoft. Workday is now ready to release a new HR system based on web services and SOA. Workday expects to provide a general release later this year.

Workday is the first of the major “tier one” HR applications to be sold as a “software-as-service” model. An organization doesn’t own Workday — it licenses it and pays a monthly fee. It has the option of having the application hosted by Workday or delivered on premise using its own servers or intranet. This reflects, potentially, a growing acceptance of application service providers (ASPs) into the mainstream of corporations. In the long term this may lead the way to a significant reduction in internal IT infrastructure and a lower overall cost of ownership.

Designed from the ground up to be a web-based global HR system, Workday is an HRMS designed to be run over the web and purchased as a service. It is not a product that needs to be purchased and installed like many HR systems such as PeopleSoft, Oracle and SAP. Because it runs over the web, and can be configured using web services, it allows companies to avoid the high installation and integration costs that come with traditional systems. Other vendors will likely follow suit with similar offerings.

Oracle, for one, is faced with a difficult challenge. It owns four large enterprise HR systems (Oracle e-business Suite, PeopleSoft, J.D. Edwards and Seibel). The cost of maintaining four products and supporting a huge installed base of users on different versions is driving Oracle to a new solution, currently called Fusion.

Fusion will be a new product, not just a remake of one of its four products. Oracle indicates there will be at least one more major release of each of the four products over the next few years so owners of these systems can heave a sigh of relief.

Fusion will likely be built on SOA and will incorporate the most popular features from each of their products — for example, the stock administration features from PeopleSoft and the labour relations modules used in J.D. Edwards. But the Fusion product will have a different look and feel from all of them. Current users of the Oracle products can expect to be approached sometime in 2007 (or later as the schedule slips) to migrate their existing HR systems and data over to the Fusion product.

Rise of HR analytics

HR analytics is another major trend gathering steam in the HRMS market. HR analytics products extract information from HR systems and make it available throughout the enterprise to all users. While not entirely new (data warehouse companies like SAS, Business Objects and InfoBuilders have been marketing specific HR analytics products for several years), there is a growing crop of new products that will make this area a hotbed of activity.

PeopleSoft and SAP both offer HR analytics products (PeopleSoft has Enterprise Performance Management and SAP has its Business Intelligence HR platform), but they are more aligned to their products. Imagine an environment with SAP for financials, PeopleSoft for HR, Kronos for time and attendance, ADP for payroll, Taleo for recruitment and various home-grown spreadsheet applications for other HR areas. Providing an integrated HR measurement system in an environment like this would, likely, cause a few HR nervous breakdowns, not to mention the havoc it would create in any IT department.

To create cross-platform analytics in such an environment, a data warehouse first needs to be created. Then the information from all of these systems needs to be extracted, transformed and loaded. The measures and reports can then be created and distributed for management to use.

But it’s the second part that’s the killer. Extracting information from the existing systems requires in-depth knowledge of the database structure of the information stored in the enterprise system. This is not always present in an organization. The specific ins and outs of the HR data may be more complex and require specialists in data warehousing with the specific system to get the necessary information.

And while extraction is difficult, the transformation of data between two systems is even more complex. Date formats, codes used to store data, file layouts and definitions of the data are often the most difficult tasks in setting up an HR analytics offering. Have you ever tried to define a full-time equivalent on three different systems? Each likely has its own way to define a full-time equivalent and one probably doesn’t handle it at all.

Ottawa-based Cognos announced its new Workforce Performance product at the conference. Built on a new release (Cognos eight) of its business intelligence platform, Cognos has addressed the difficulty of getting the HR information into a warehouse to use for reporting. The Workforce Performance product has been 18 months in development according to Eric Yau, vice-president of performance analytics for Cognos.

Cognos built the new application to use metadata (information about the data contained in a field) from an application’s data dictionary to perform the extract, transform and load sequence. In the case of PeopleSoft, extractors have been custom built to provide extraction from PeopleSoft HR 8.3 and 8.9 directly from the database tables. They intend to release similar extractors for SAP HR data this year.

This significantly reduces the effort required to build the HR analytics and a new design tool (called the open adaptive application framework) makes it easier to extract information from other systems.

Cognos claims to have already designed more than 100 measures and 1,000 workforce-related attributes, which it delivers out of the box. These measures and reports can be used with other Cognos tools and presented directly to users and managers in the form of PDF files or spreadsheets.

The Workforce Performance offering is based on user roles and the current organization structure so managers can run the same reports but only see the information that pertains to their departments or roles in the organization.

Among the provided metrics are such items as:

•full- and part-time head count;

•active employee head count;

•employee-filled job count;

•contractor head count/contractor-filled job count;

•retired employee head count;

•years to retirement;

•new hire/rehire counts;

•promotion count;

•employee turnover rate;

•avoidable and unavoidable separation count;

•voluntary and involuntary separation count;

•retirements count;

•gross pay and bonus pay;

•salary total and annual salary percentage change;

•incentive payment amount;

•total hours worked;

•employee and employer contributions, such as medical, dental and pension plan;

•employee deduction or refund;

•employer deduction or refund;

•leave entitlement year to date;

•leave taken year to date, leave carried over; and

•length of service.

Measures may be examined from different perspectives such as age, gender, company, business unit, department, work location, job family, job function, job types (regular, temporary, seasonal), salary band or by government reporting classifications.

This gives HR departments a powerful tool to analyze the performance of employees. It also simplifies the process of getting there.

“Our application is designed to deliver greater insight, visibility and understanding of the workforce to not only the HR department but also to the wider audience of front-line management and executives,” said Yau. “For example, your line managers can understand the skills development their teams need. Your department heads can better plan for the impact of retirees over the next five years. And your CFO can understand the impact on the bottom line caused by shifts in workforce composition.”

Companies that already have Cognos as a reporting tool may want to investigate the upgrade path to acquire Workforce Performance and others may find the time is ripe to get into the HR analytics area.

Other new entrants into this market at the conference included Apophecy, a new product offered by a joint venture between Spectrum Human Resource Systems Corporation and United Kingdom-based Strata Systems Corp. Based largely on measures defined by the Saratoga Institute, it provides another product in this space.

Best-of breeds widen offerings

The last clear trend emerging from the IHRIM conference is the approach that best-of-breed solutions such as e-recruitment, e-learning and other stand-alone HR offerings are using to widen their offerings to the market.

Taleo Corporation, founded in Quebec City, announced version seven of its Enterprise Edition Talent Management Suite. Originally, Taleo (formerly known as RecruitSoft) operated only in the e-recruitment area. With this new release, Taleo moves inside the organization offering a new on-boarding module that eases the transition of new employees.

This application forwards new hire information to others in the organization, such as IT, HRMS systems, telephone administrators and others, to facilitate the provision of services. It also provides new hires with forms and benefits information to reduce the amount of effort required to integrate them into the organization before they actually start.

Other new modules include management screening and hiring for hourly, contingent and project-based staff both inside and outside the organization. The contingent and project modules allow for the consolidation of time and reporting, and the management of invoices from multiple vendors for accounting and project tracking purposes.

Two additional new features, Taleo Connect and Taleo Passport, use SOA and web services to integrate new hires with the company’s HRMS or other backend systems such as payroll. Taleo Passport uses similar integration protocols to link with external services for things like assessment testing and external background screening with Taleo partners.

Authoria, once only a vendor for managing documents and benefits information, has grown through acquisition and added features for salary planning, incentive management, executive compensation, performance management, competencies, succession planning, career development, employee self service, applicant tracking, e-recruiting and staffing analytics.

Kenexa, another talent management vendor, is heavily invested in performance management, 360-degree feedback and employee surveys.

Deploy Solutions, an e-recruitment vendor, is engaged in on-boarding, performance reviews, termination processing and other employee lifecycle activities.

In sum, the best-of breeds are developing functionality through all parts of the employee lifecycle but leaving core transactional processing of employees such as benefits, employee information and organizational information in the core HRMS.

By offering these modules and services, the best-of breeds are chipping away at the monolithic HRMS systems. And with SOA and web services it will become increasingly difficult to sort out where HR information comes from and goes to in the future. Is this a good trend? Probably. It leads to an overall lower cost of ownership and an increasing acceptance of HR systems as an integrated network of systems. Whichever application provides the best value and service will be used, and whichever application collects the information will share it with all who need to know.

John Johnston is a principal in Human Resource Management Solutions, a consulting firm specializing in HRMS strategy, systems selection and change management. He can be reached at (905) 825-4127.

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