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New Horizons

A recap of the highlights from this year's HR Technology Conference and Expo®, which drew a record attendance and featured keynote addresses on evidence-based management and scenario-driven software demos, along with breakout sessions that examined everything from talent-management suites to using blogs and online games to recruit and develop employees.

Wednesday, November 1, 2006
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Jutting 3,000 feet into the blue waters of Lake Michigan, Chicago's Navy Pier is one of the world's longest piers and, after a complete restoration in the 1990s, the most-visited tourist attraction in the city. It was also the site of the 9th annual HR Technology Conference and Exposition®, which this year enjoyed a record attendance of more than 1,900 people and 215 exhibitors on the Expo floor.

This year's event, held from Oct. 4 through 6, featured keynote addresses on evidence-based management and scenario-driven software demos, along with breakout sessions that examined everything from talent-management suites to using blogs and online games to recruit and develop employees.

The conference also featured its second annual PeopleSoft User Panel, a first-ever Integrated Performance and Learning Management Shootout (featuring four vendors that offer integrated learning and performance management products; Plateau Systems emerged as the winner of this year's shootout) and the second annual Oracle and SAP shootout (won this year by Oracle).

Next year's event will take place at the Navy Pier on Oct. 10 through 12 (visit www.HRtechnologyConference.com for details). Below are some of the highlights from this year's conference.

The Trouble with HR BPO

Why aren't HR business-process outsourcing vendors making any money?

That was one of the first questions Bill Kutik, conference co-chair and moderator of the show's annual Industry Analyst Panel, posed to the four panelists at the event.

"The method by which vendors took over their clients' systems has not proven profitable, and now they're trying to move from a 'lift and shift' model to one based on 'transfer and transform,' " said panelist Lisa Rowan, program manager for HR and talent management services at IDC in Framingham, Mass. "Many of the larger HR BPO vendors are running out of capacity," she added, referring to firms that assume responsibility for four or more HR processes at a single client.

Nevertheless, said Rowan, the HR BPO market's prospects look good for the long-term, adding that most of the so-called "early adopters" have renewed their contracts.

Naomi Bloom, managing partner at the consulting firm Bloom & Wallace in Fort Myers, Fla., said she was standing by her predictions (made a few years earlier) that HR BPO would be the dominant form of HR management by the end of the decade "in spite of the difficulties some of the vendors are having."

"[HR BPO] lets you get rid of your unnecessary processes," she said. Drawing laughs from the audience, she added, "And if you're concerned about a vendor that uses offshore service centers, well, if they outsource to Arkansas instead, the accents will be just as hard to understand."

Jim Holincheck, research vice president for HR applications at Stamford, Conn.-based Gartner, said "something needs to change" in order for HR BPO to become a profitable business. "The problem is, there isn't a standard set of services that you can buy. There isn't a standard set of technologies underlying [HR BPO], either. So I'm less optimistic than Naomi that it will prove to be the dominant model."

Kutik asked Paul Hamerman, vice president of enterprise applications at Forrester Research in Cambridge, Mass., about the state of Oracle Corp.'s long-awaited Fusion product line.

"I think Oracle will gradually introduce Fusion into more and more of its products," said Hamerman. "I would compare Fusion with SAP's Netweaver product. I think Oracle's architecture has come a long way, but [it] still [has] work to do on [its] applications. My advice to customers is to not make any transition plans for now."

Truth: An Endangered Species?

During his opening keynote, Jeffrey Pfeffer reiterated his now-recognized and published caution to the HR community to consider truth and evidence before purchasing or implementing new programs.

Referring to what he said were failed systems of the past and present -- such as forced ranking, social promotion in schools and merit-based pay for teachers -- Pfeffer warned listeners that HR has yet to consider facts and learn from mistakes before moving forward.

"Bottom line: We don't pay attention to evidence," said Pfeffer, professor of organizational behavior at Stanford University's School of Business in Palo Alto, Calif., and co-author of Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting from Evidence-Based Management. "We live in a world where truth is an endangered species."

He encouraged attendees to treat their organizations as unfinished prototypes where ideas and initiatives are introduced through "experimenting/learning mind-sets" rather than assumptions.

One faulty assumption, for instance, occurred in the auto and airline industries, he said. Many organizations sought to increase performance by cutting wages and benefits, "based on the assumption that this will, indeed, improve performance."

But leaders never considered the reaction of employees to such cuts -- as they fell into "active disengagement," he said. The companies assumed cutting labor costs was equal to cutting labor rates, but "if I cut your wage and you respond by doing less or nothing, I haven't saved anything, have I?"

Consider, too, the messages a company sends out by the incentives it introduces, he said. If incentives are intended to speed up service, make sure the program doesn't backfire, as occurred in Albuquerque, N.M., where the city's sanitation truck-drivers responded to such incentives by missing pick-ups, receiving speeding tickets and failing to empty trucks because drivers were more interested in the incentive pay than in the services they provided.

In the world of HR and IT, he said, consider what vendors are selling and demand the truth from them. "If a vendor will not put you in contact with unsatisfied as well as happy customers, will not tell you the downsides and risks of its product or service, will not tell you what might go wrong, what has gone wrong in the past and what it has learned from the process, find another vendor," he said.

Applying evidence-based management to HR technology means "taking the time to experiment with an investment or initiative," he said. "Take the time to reflect on it, question it. What are the goals, and does the system really support them, and has it done so in the past? Spend time looking back on significant past decisions -- technology implementations, mergers, whatever -- not to assign blame, but to reflect and learn how to do it better next time."

PeopleSoft Revisited

The conference's second annual PeopleSoft Users' Panel featured three satisfied PeopleSoft customers, one satisfied former PeopleSoft customer now using SAP, a dissatisfied -- and vocal -- PeopleSoft customer in the audience and a roomful of engaged attendees.

The session was moderated by Jason Averbook, a former marketing executive at PeopleSoft who is now CEO of Knowledge Infusion, a Minneapolis-based consulting firm.

"How many of you are PeopleSoft customers?" Averbook asked. Nearly everyone in the packed room raised his or her hand.

The panel included Doug Krey, senior vice president of HR operations at McLean, Va.-based Capital One; Don Brown, senior vice president of HR at InterVoice, based in Dallas; Mary Leahy, vice president of HR global information systems at Franklin Templeton, headquartered in San Mateo, Calif.; and Greg Peters, vice president of HR shared services at Minneapolis-based Carlson Cos.

All four panelists had been PeopleSoft customers at the time the company was acquired 22 months ago by Oracle Corp., and three of them continue to be. Brown was the exception.

"Early on, after the merger was announced, I grew very uneasy about it," Brown said. "I was concerned about whether the two very different cultures of Oracle and PeopleSoft would ever mesh. We decided to switch from PeopleSoft to SAP."

At one point, Brown's praise of the Germany-based ERP firm grew so effusive that Averbook drew chuckles from the audience when he said, "I must remind everyone that Don does not work for SAP!"

Averbook asked the panelists about the biggest changes they've experienced since Oracle took over PeopleSoft. Leahy said the biggest change for her was "navigating through the Oracle infrastructure -- PeopleSoft was smaller, so it was easier to get answers quickly."

Near the end of the session, Averbook asked the panelists whether they were satisfied with the support they were receiving from Oracle. All of the PeopleSoft users said they were. Then a member of the audience stood up and addressed the room.

"My company has been a PeopleSoft customer since the early '90s," she said. "Even then, we did not receive great support from the company. Since Oracle took over, it's gotten worse! Maybe because we're only a 6,800-employee company, Oracle doesn't think we're big enough to warrant getting good support."

Averbook asked the audience whether they were also dissatisfied with the support they received from Oracle. More than half raised their hands.

Averbook asked the panelists whether they would be willing to leave Oracle and receive third-party support for their PeopleSoft products. All of the PeopleSoft users on the panel said "no."

"Personally, I feel we retain a certain leverage over Oracle if we're using their support," said Leahy.

When asked whether he was more likely or less likely to buy best-of-breed products today than before the merger, Krey noted his company was more likely. "From a usability standpoint, none of our PeopleSoft products are close to the top in terms of usability, while many niche products have much greater usability."

Peters said "uncertainty" continues to surround PeopleSoft products. The question of when Oracle's long-promised Fusion product line will be launched, and what its eventual functionality would be, left him "much more inclined to look at alternative products. Also, subject-oriented architecture makes it much easier to integrate niche solutions."

He added, however, that he believed his company would eventually migrate to Fusion. "Oracle has too many customers to screw this up," he said.

Panelists also addressed the topic of the user interface, with Peters noting he was pleased with the progress Oracle has made. "We're five years deeper into using the Web," said Peters, adding that there's a much better understanding today of what's a good user interface.

Leahy added that one of Oracle's newer products, HR HelpDesk, features a much more intuitive interface.

Finally, Averbook asked the panelists for two questions they'd ask any human-capital-management vendor.

" 'Can you give me configurability and usability?' " said Peters.

" 'How about low total cost-of-ownership?' " said Krey.

 

No More "Black Holes"

Though seemingly simple and straightforward, the story of Union Bank of California's transformation from a paper-based compensation system to an automated one raised many questions from interested listeners during a session on Oct. 5.

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It was three years ago that the bank chose to streamline its system for 10,000-plus employees at 320-plus branches in California, Oregon and Washington, Steve Kennedy, the bank's vice president of compensation, told attendees of a session entitled "Selling and Automating Compensation Planning at Union Bank of California."

With some 2,500 paper compensation profiles submitted, checked and processed on a yearly basis, in addition to 400 to 500 weekly profile change transactions, "we would be collecting profiles from all kinds of financial managers in various forms and from various parts of the company," said Kennedy.

"You know the problems with paper: It's confusing, cumbersome and labor-intensive, filled with incorrect input and often late or missing altogether. We've received copies of copies, copies of faxed copies, originals with no signatures, originals with six signatures ... . I'm seeing a lot of nodding heads out there."

Since contracting with Workscape, said Kennedy, the bank now offers managers drop-down menus giving them overviews of pay and bonuses for each employee in direct, updated comparisons with the compensation budget.

When the e-profile system is fully up and running, managers will also be able to review and rank their employees, manage their budgets, work within merit guidelines and gain approvals electronically. Employee histories, merit and promotional guidelines, effective dates, resources and information on training modules will soon all be accessible in one place.

"No more black holes ... wondering where the forms and approvals ended up," he said.

Attendees, most of them compensation and benefits professionals, raised numerous questions about the impact the change had on HR and IT staffs, something Kennedy said "has yet to be sorted out and may lead to more of a call-center HR service down the road."

Others wanted to know about the future of the bank's e-profile system and whether it might one day merge with a performance-management system, a direction Kennedy confirmed the bank was headed in. There were many questions about the company's preparations and lessons learned.

"One thing we learned, in hindsight," said Kennedy, "was the importance of exploring ways to challenge and change your current methods and guidelines before even talking to a vendor. We also should have established more interaction with our own IT folks beforehand. It's a huge project. Prepare yourselves for continuous testing, regular meetings, disagreements and misinterpretations.

"And don't assume your own IT team or the vendor understand the business requirements the first time, the second time ... . Be prepared to have to spell that out on numerous occasions."

Enabling Workforce Analytics

Building an HR dashboard was a crucial component of enabling workforce analytics at McLean, Va.-based Capital One, said Andy Suh and David Segueira at a session on leveraging technology for strategic human-capital management.

Suh, now director of HR operations strategy for Freddie Mac, was working in the HR technology solutions group at Capital One with Segueira, now a director of human resources, when they worked together to improve Capital One's analytical capability.

Key to their effort was creating an integrated data store. The benefits of such an approach, said Suh, are the scalability and the ease for supporting strategic initiatives. Potential negatives? "It's hard to do and it's costly and you have to justify it -- but if you can push this through, this is the way to go," he said.

Workforce analytics are important, he said, because CFOs "can either view human capital as an investment or a cost but either way, they want to quantify it."

One of the first stumbling blocks along the three-month journey to build the Web-based, self-service, tiered-access architecture was defining head count, Segueira said, as every business group had a different definition of what head count was and reported different metrics -- metrics that didn't match the data of other groups.

Also, the existing data was unreliable, he said, as it was often out of date. To make the new system useful, it was necessary to change reporting relationships for the data.

Head count was the team's entry point for building the architecture, he said. "This wasn't characterized as an end-all-and-be-all solution but a window" into the data, Segueira said.

Once the team "was on the same page with head count, the momentum built," said Suh, adding that attrition, promotion rates, learning time and survey data are already part of the HR dashboard or will be included soon.

 

Segueira noted that he had always thought change management was "a fluffy term until I had to do it." Training, communication and involving stakeholders -- IT, finance, some lines of the business -- in the process early on are key to success, he said.

But once all of the data is accessible, Suh said, "You have to ask yourself, 'So what?' It's up to HR analysts to take that data and use it in a proactive way."

It's a circular process: Metrics are useful, he said, but the numbers often lack context. That requires analysis, Suh said. And analysis requires a "comprehensive view of your workforce. ... You have to understand the whole entity and understand the key metric drivers."

"The difference between [metrics or benchmarking] and strategic human-capital management is the proactive part of it. Do something before something becomes a problem."

Noting he once worked in a management role at a nuclear power plant, Suh said, "Human-capital management: It's not rocket science. It's harder."

-- Anne Freedman, Kristen Frasch and David Shadovitz contributed to this report.

Read New Horizons, Part II

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