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“Does my HR Management System (HRMS) add
any real value?” This is a question which till some time back
did not hold much significance for Indian enterprises, already burdened
with the onerous task of calculating the RoI from their finance,
marketing, sales and other systems. “My payroll and personnel
administration systems are working alright and are up to date”—is
the response that you might have elicited from HR managers. But
that does not seem to suffice anymore as enterprises today are maturing
to a more effective usage of their HRMS. They are not only seeking
a well-calculated RoI to justify their investments, but are also
demanding much more out of their systems. The debate on HRMS’
value, believe experts, in the future is going to move beyond the
premise of RoI calculation and also incorporate factors like greater
employee empowerment and empowering HR’s role in meeting larger
business objectives.
With changing business requirements the HR Management
Systems will also need to undergo changes to address new organisational
requirements, maintains Amitava Sain, principal consultant with
PricewaterhouseCoopers. With many companies now moving towards the
second phase of their HR automation, the emphasis is going to be
building on top of the foundation to create a dynamic HRMS that
runs through the breadth of the company enabling employee and manager
self-service. And instead of heralding an ‘end of life’
for the HR department, dynamic HRMS is paving the way for greater
HR involvement in the company’s business objectives. According
to Rajesh Jagtiani, solution architect of HR solutions with SAP
India, the role of HR managers is now growing beyond administrative
duties to play a more strategic role in meeting business objectives.
Being one of the most people intensive segments
of the Indian industry, the IT services and IT enabled services
companies have been one of the front-runners driving this emerging
trend. With companies like Wipro and Infosys leading the way in
terms of adoption of these latest HRMS trends, others too are catching
up at their own pace. And solution providers like SAP, PeopleSoft
and Oracle are increasingly aligning their solutions in line with
these trends. According to S P S Grover, senior director of e-business
with Oracle India, the major drivers for HRMS in India are adoption
of a competency-based approach to better manage the organisation
strengths and cutting down cost of the HR function by increasingly
moving to self-service function.
RoI is important
The premise that an HRMS needs to work towards
making the HR department administratively more efficient no longer
holds valid. It needs to impact the bottom line. Companies have
started realising this in the last couple of years, with the result
that RoI calculation on HRMS is fast becoming a standard practice
in many IT companies.
Vinayak Kamath, vice president of HR at Kale
Consultants, adds, “RoI calculation is important because every
management strives for better productivity, accuracy and quick availability
of information. Besides being a feel good factor, an HRMS must facilitate
business and its evaluation should be similar to any other organisation
initiative, i.e. by calculating RoI.” To this Sunil Gupta,
executive vice president of vMoksha Technologies adds RoI is very
critical for an HRMS solution. The company is currently in the process
of implementing PeopleSoft HRMS ver.8.8 and will go live on it in
March 2004. “We expect to add savings to our bottom line, post
the implementation,” he maintains. Companies have listed down
their future cost savings on some of the following grounds—material
and distribution cost reduction (with regards to stationery usage),
productivity savings, employee acquisition cost savings from reduced
turnover, reduction in HR administrative overhead in terms if strength
required for HR functions and lower agency and sourcing costs.
With RoI fast catching the fancy of HR managers,
more and more companies are now in the process of evolving set standards
for calculating the return on their investments into HRMS. For instance,
vMoksha has already outlined the cost savings that it expects from
the following HRMS processes after implementation: eBenefits (80
percent savings); eDevelopment (73 percent); eProfile (77 percent);
eRecruit (33 percent); eCompensation Manager Desktop (59 percent);
eProfile Manager Desktop (71 percent); eRecruit Manager Desktop
(70 percent). The cost savings have been calculated based on the
self-service costs vis a vis manual costs.
While there is no industry-wide acceptable standard,
so far companies are evolving their own RoI parameters based on
their specific requirements and the factors of paramount importance
to them. Kale Consultants, which has been using an in-house developed
solution called HR-EYES since February 1999, has been calculating
the RoI benefits in terms of less man efforts, better employee and
management service, quick availability of information and reports,
increase HR team productivity and exhaustive analysis and reports.
Before the HRMS all HR activities were done manually which was time
consuming and lot of efforts had to be put and due to manual preparation
of reports, accuracy of data was not there. In terms of long-terms
benefits, the company has identified cutting costs as one of the
key benefits. On the other hand, with the implementation of Smart
Service desk, which is a part of HCL Comnet’s HRMS (a special
portal which hosts employee requests/complaints/problems logged
in and resolved within a specified time frame and provides complete
visibility to the employee in terms of query status and time taken
to resolve the issue), the company has calculated reduction in phone
calls by 99 percent.
Other benefits
While RoI is a definite indication of an implementation’s
success, all benefits cannot be quantified. And the consideration
of unquantifiable and subjective benefits will start gaining ground,
moving into the future, as companies have already started seeking
benefits other than cost savings, like empowering their employees
at large as well as HR in meeting the larger business objectives.
This is already being reflected in the long-term benefits being
outlined by the companies. According to Sain, some of the long-term
benefits that are being sought by companies are—single administrative
point for organisational structures across all e-HR applications,
lower cost of ownership, improved performance monitoring systems
and thereby improved productivity, low ratio recruiters to staff
and better placement of new staff (lower attrition).
Long-term benefits foreseen by Kale Consultants
are almost on similar lines. The company seeks benefits from HRMS
in the form of better services from HR to employee and management,
aligning the workforce to corporate goals, improving decision-making
by capturing better performance metrics, identifying and deploying
most capable resources to key initiatives, getting goal alignment
in synergy with organisational vision and changing business scenarios.
Similarly, S M Arif, vice president of HR at HCL Comnet, points
out that the use of information technology in HR management will
increase the productivity, optimise the business process, improve
the quality of service and provide information-based decision support.
As a result, gauging the unquantifiable benefits is becoming as
critical while evaluating the value provided by HRMS.
Emerging trends
A look at these benefits that companies are looking
at deriving out of an HRMS throws light on where HRMS is headed
in the future and defines the emerging trends in this space. The
focus, it seems from this, is clearly on deriving benefits in terms
of greater employee empowerment and analytical abilities, which
will ultimately help in meeting the overall business objectives.
Jagtiani says, “With basic HR automation through in many companies,
they are now thinking of newer areas like score cards, performance
management, e-learning, employee interaction tools and employee
portals. They are looking at new ways of doing things and more efficiently.”
These requirements the vendors are trying to meet through the introduction
of tools and features like performance management, e-learning, employee
portals, integration with diverse applications like recruiting systems,
performance management systems, and compensation and benefits (C&B)
information systems.
Commenting on the emerging trends, Preneet Bindra
Sinha of Sapient says, “More Indian organisations will experiment
with high-end work flow management, even for core HR processes to
drive the highest levels of self-service. This will serve as the
medium for activities like policy administration through self-help,
time and expense reporting, approval routing, kicking off other
core processes like 360 degree feedback.”
Though at present the number of companies who
can boast of implementing these kind of dynamic features is few,
there are many who have included them in their future HRMS roadmap.
For example, during phase two of its implementation, vMoksha is
planning to add features like Track Global Assignment, Manage Labor
Relation, Monitor Health and Safety, Budget Training, Position Management,
Succession Plan, Compensation, Benefits and Resource Management.
For Kale Consultants, some of the tools in pipeline are Responsive
Workforce Recruitment, Total Compensation Management, Reporting,
and Analysis, Competency, Career, and Succession Management, Integration
with Other Collaborative Applications, Comprehensive Reporting and
Analysis, Workforce Management, ESOP Administration and Tracking,
Generation of Organisation Chart and All HR Planning and Employee/Managers
Self-service. According to Jagtiani, SAP already boasts of quite
a few customers for these kind of enhanced tools.
Self-service, in fact, lists on the top agenda
of most of the companies with some having already gone for self-service
tools and others planning to do so in next 1-2 years. If one sees
the evolution of requirements then in the past the knowledge and
use of computers in human resources remained the responsibility
of only a few so-called technical experts in HR departments or worse
the responsibility for managing HR information was given to someone
in Information Technology department. Today the scenario has changed
and HRMS includes everyone, including the employees and thereby
the need for enhanced tools to help drive greater self-service.
Apart from providing greater empowerment to the
employees another area of focus for the companies will be to provide
HR managers with tools that enable decision-making. With analytical
capabilities built into the HRMS, HR managers are going to play
a strategic role in the business objectives of their organisations
and their administrative roles will decrease. Analytics will play
an important role in terms of workforce planning for projects, determining
workforce rewards, etc. Moving into the future, Sain predicts that
technologically HRMS tools will have to develop more predictive
tools for analysis, incorporate international standard reporting
like XML which will address human resources related documents including
resumes, job postings and time cards as well as helping with tasks
like benefits enrollment, payroll contributions, background checks
and the establishment of performance.
shipra@expresscomputeronline.com
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