Making the Case for HRMS Investment
Most human resource professionals who are intent on making the case for investments in HR management systems (HRMS) must focus on how such systems can deliver business value. HR consultants Cedar Enterprise Solutions found that 67% of surveyed companies require a business case to justify HR technology projects.
To make such a case, HR professionals should determine how proposed changes will improve customer service. Among companies that have implemented new HR management systems, the ones that had the greatest success tended to focus more on serving employee needs than on just automating HR transactions. Systems that focus on the customer tend to result in higher worker usage rates and fewer calls to HR professionals from employees seeking help with routine personnel matters. Such outcomes can be predicted and measured, becoming part of a business case for investment.
Those making the case for investment should also consider the firm's underlying intent, suggests the Human Capital Index (HCI) study conducted by Watson Wyatt Worldwide. The study tried to quantify the link between HR practices and corporate financial performance. It found that providing employees with easy access to communication technologies tops the list of HR service technologies that are most closely correlated to shareholder value. But a company's basic objectives seem to be key. Asked to identify the objectives that they considered "a key goal in implementing HR service technology," the most successful companies cited their intent to reduce costs, improve service to employees and managers, and increase transaction accuracy and integrity. The less-successful respondents said their key goals for implementing HR technology were related to improving employee communication or promoting corporate culture. In short, technologies tend to be most effective when they're focused on clear, concise business outcomes.
Of course, a focus on cost-cutting can take an HRMS only so far. There comes a point at which transactions cannot be conducted for any less. So how do firms justify next-generation technology expenditures? Experts suggest looking beyond administrative costs for a return on investment. "The ROI in HR applications is not in the HR department," says John Johnston, who is director of strategic consulting for Arinso International, a Belgium-based consultancy operating in 19 countries. "It is in all the other departments of the organization. HR ignores that at its peril."
In fact, one of the keys to providing greater business value may be in allowing non-HR employees to find new ways to put HR data to use. One way of doing this, for example, would be to give facilities managers access to HR data so they can keep better track of the company's workforce, making it easier to calculate how much space needs to be leased to accommodate employees. At one Manhattan bank, that idea was first met with resistance from HR, which felt that no other division should have access to the HR data. The argument was successfully made that HR is the custodian rather than the owner of the data and that such data can add more value to the company if it's appropriately shared. These are the types of innovations that may help HR professionals make the business case for additional technology investments.
For more about the Watson Wyatt Worldwide Human Capital Index study, see "Human Capital Index: Human Capital as a Lead Indicator of Shareholder Value" at
http://www.watsonwyatt.com/research/resrender.asp?id=W-488&page=1
Also see the Watson Wyatt research report "e-HR: Improving the Return on HR Technology Investments" at
http://www.watsonwyatt.com/research/resrender.asp?id=W-525&page=1
It's often a good idea to compare figures both within and outside one's industry when making return-on-investment calculations. HRI doesn't recommend specific Web-based services, but quick benchmark data and ROI calculations are available from Cedar, a UK-based international enterprise software consultancy, at
http://www.cedar.com/.
More advice about calculating the return on investments in HR technology can be found in a Bulletin to Management article entitled "HR Administration Technology: Good Calculations Needed for Proof of Self-Service Savings," August 1, 2002, page 244.
Additional information used in preparing this TrendWatcher included the following:
Bill Roberts' article "Count on Business Value" in the August 2002 issue of HR Magazine;
"Web-Based Tech Solutions Save Staff Time" in Best Practices in HR, April 6, 2002, pp. 1, 6;
Roger Woehl's white paper "Implementing the Front End First: A Self-Service Strategy," at
http://www.enwisen.com/www/company/Q1780.asp.
To make such a case, HR professionals should determine how proposed changes will improve customer service. Among companies that have implemented new HR management systems, the ones that had the greatest success tended to focus more on serving employee needs than on just automating HR transactions. Systems that focus on the customer tend to result in higher worker usage rates and fewer calls to HR professionals from employees seeking help with routine personnel matters. Such outcomes can be predicted and measured, becoming part of a business case for investment.
Those making the case for investment should also consider the firm's underlying intent, suggests the Human Capital Index (HCI) study conducted by Watson Wyatt Worldwide. The study tried to quantify the link between HR practices and corporate financial performance. It found that providing employees with easy access to communication technologies tops the list of HR service technologies that are most closely correlated to shareholder value. But a company's basic objectives seem to be key. Asked to identify the objectives that they considered "a key goal in implementing HR service technology," the most successful companies cited their intent to reduce costs, improve service to employees and managers, and increase transaction accuracy and integrity. The less-successful respondents said their key goals for implementing HR technology were related to improving employee communication or promoting corporate culture. In short, technologies tend to be most effective when they're focused on clear, concise business outcomes.
Of course, a focus on cost-cutting can take an HRMS only so far. There comes a point at which transactions cannot be conducted for any less. So how do firms justify next-generation technology expenditures? Experts suggest looking beyond administrative costs for a return on investment. "The ROI in HR applications is not in the HR department," says John Johnston, who is director of strategic consulting for Arinso International, a Belgium-based consultancy operating in 19 countries. "It is in all the other departments of the organization. HR ignores that at its peril."
In fact, one of the keys to providing greater business value may be in allowing non-HR employees to find new ways to put HR data to use. One way of doing this, for example, would be to give facilities managers access to HR data so they can keep better track of the company's workforce, making it easier to calculate how much space needs to be leased to accommodate employees. At one Manhattan bank, that idea was first met with resistance from HR, which felt that no other division should have access to the HR data. The argument was successfully made that HR is the custodian rather than the owner of the data and that such data can add more value to the company if it's appropriately shared. These are the types of innovations that may help HR professionals make the business case for additional technology investments.
For more about the Watson Wyatt Worldwide Human Capital Index study, see "Human Capital Index: Human Capital as a Lead Indicator of Shareholder Value" at
http://www.watsonwyatt.com/research/resrender.asp?id=W-488&page=1
Also see the Watson Wyatt research report "e-HR: Improving the Return on HR Technology Investments" at
http://www.watsonwyatt.com/research/resrender.asp?id=W-525&page=1
It's often a good idea to compare figures both within and outside one's industry when making return-on-investment calculations. HRI doesn't recommend specific Web-based services, but quick benchmark data and ROI calculations are available from Cedar, a UK-based international enterprise software consultancy, at
http://www.cedar.com/.
More advice about calculating the return on investments in HR technology can be found in a Bulletin to Management article entitled "HR Administration Technology: Good Calculations Needed for Proof of Self-Service Savings," August 1, 2002, page 244.
Additional information used in preparing this TrendWatcher included the following:
Bill Roberts' article "Count on Business Value" in the August 2002 issue of HR Magazine;
"Web-Based Tech Solutions Save Staff Time" in Best Practices in HR, April 6, 2002, pp. 1, 6;
Roger Woehl's white paper "Implementing the Front End First: A Self-Service Strategy," at
http://www.enwisen.com/www/company/Q1780.asp.