A primer on workflow

So what is workflow? Well obviously the first thing that comes to mind are the simple messages that we get when a database event happens. However, I’d like to take some time and expand on what this means, and what the possibilities are. In HR, workflow is HUGE because of the interactions with large numbers of managers (approving timesheets, performance evals, merit increases) and large number of employees making data changes (in employee self service). While all this automation is wonderful and efficient, you need structure around it.

First of all, the obvious benefit of workflow is the elimination of manual paper handling and routing. In the database, the database agents manage all of these processes and data flows. The major pitfall (although also a benefit) is that your HR department and the organization’s managers are not going to have to abide by the workflow rules. While you can program a workflow to be somewhat flexible (if X, do this, if Y, do that), one of the points of workflow is your ability to standardize processes. In HR we know how important it is to treat similar events in similar manners. Other business groups may need more flexibility.

So lets talk workflow types. There are basically a couple of types I should mention. The first is a simple trigger event. For example, if Joe hires a new employee, the workflow automatically sends messages out to IT to get a new computer installed. The second type of workflow is a database agent that has no event. In this case, the agent is looking for data that matches your criteria. For example, you want to be alerted anytime Joe’s licenses are within 90 days of expiration. The database scans nightly and alerts you when the conditions match the program request.

OK – so what happens next? When a workflow is triggered by one of the above conditions, the workflow either sends an e-mail, or puts an action item on some sort of work list for you. These items go out to anyone or multiple people based on your design. You may also want to include approval levels for things like performance reviews. Perhaps a VP must approve all reviews before people get their raise. Eventually, there is an ending action where the workflow closes and you can wipe your hand clean of the event.

In the last few years, a new type of workflow has appeared. Due to the advent of enterprise portals, your employees may be interacting with data outside of the home database. So supply chain is notifying vendors that you need more widgets, and managers give employees raises in the 3rd party portal rather than the ESS system delivered with your HRMS. This means that an external workflow engine is processing data and routing work and approvals and your HRIS administrator no longer has control over this. As an enterprise portal, your IT department is managing these interactions, and you have lost track. Even worse, you might need an event triggered from your HRMS (license expiration) to trigger a workflow in your enterprise portal (manager notification and action). Once it’s done, the portal sends messaging back to close your original HRMS workflow. This is all very confusing, but the technology exists today to automate not only the employee interactions, but the data interactions between disparate systems.

Just keep in mind that your end result of less manual intervention and the streamlining and procedurization of process is for the better. As people talk about outsourcing to vendors, we can also talk about “outsourcing” to systems to make us more efficient. If you want to know more, here’s a great whitepaper from Lawson.

Plumtree portals and ROI

Plumtree has just made it much easier to substantiate the ROI on your portal investment. Of course, your organization has to be using the Plumtree portal, but this is one of the best out there anyway.

Portals generally allow you to maintain a single point of entry for a disparate user population accessing disparate systems, wrapping some sort of active directory technology around it. So your HR portlet on the master portal might have employee information coming in from the 401(k) vendor, the HRMS system, the benefits system, your stock option data, the LMS and ATS, etc…

Plumtree’s new analytics server basically will monitor all the activity and which databases users are pinging. Thus, not only do you have very accurate hit counts, but you also know where you’re ROI is coming from. You also know where you need to provide enhanced communications to grow the ROI in less used areas. This is cool stuff!!!

This should not be construed as a “plug.” SAP’s netweaver does the same, but you have installed a few SAP apps befire you have gone to SAP portal. To have a critical mass of systems on SAP, you’re technology direction has been set quite some time ago and (yada yada yada).

Single sourcing HRO?

What’s up with HRO vendors revisited.

As sort of a follow-up to my last post on HR Consultancies, here’s an interesting article about HRO and the wisdom of single sourcing your entire HR relationship to one vendor. I’m not actually sure that you can put all of your eggs in one basket, but you sure can put alot of them there.

Take for example Hewitt. So you give them HR call center, HR administration, benefit administration, retiree administration, payroll services, and they implement Cyborg HR for you. They don’t have the greatest talent aquisition, so they partner or you choose someone else. Then you have succession planning, and learning, etc… Go with the best in class.

I think it’s a great advantage to be able to outsource and strategize with a single partner who understands your business better than anyone else. Then you pull in a few point solutions that are best in class and wrap the whole thing together with a self service portal like Plumtree in the front end and a data warehouse like Cognos on the back end.

The point being, its ok to have one huge vendor doing most of your stuff. Integrate the core functions that are critical to have in a centralized database. Piece out the rest. Same with sourcing – you don’t want to have 20 vendors pointing fingers when something goes wrong. But when you can get the number down to a single partner with 3-5 other vendors, you’re in good shape. Technology allows us to create integration points we could not manage 10 years ago.

ESS, ROI, and SHRM

If you have access to SHRM.org, you might want to check out an article called “Leveraging the Shift to Self-Service-It’s Time to Go Strategic” by “Leslie A. Weatherly, SPHR, HR Content Expert.” It just further proves to me why I don’t pay any attention to SHRM. While it’s very nice for them to finally validate things like:

“the notion of using Web-based technologies to automate the growing list of administrative transactions for employees-payroll, benefits, training, corporate resources and the like-serves as a catalyst for transformation for those seeking to move the human resource function to a strategic vantage point” and

“The benefits of automation are significant. It can eliminate routine, repetitive paperwork” and

“Finally, self-service also means that HR specialists are now free to spend less time on day-to-day recordkeeping and focus on value-added functions.”

SHRM: thanks for finally hopping on the bandwagon. You are only 3-4 year behind, so it must feel good to be catching up.

Sungard is going private

In a surprising move (to me) Sungard is going private with the purchase of the company by a group of investors. Why is this important to HR? There are a couple of aspects. First, they do provide some 401(k) technology services to 401(k) administrators we know. More importantly however, Sungard provides data back-up and disaster recovery services for many of the organizations we belong to. Possibly one of the best known back-up service providers, your HR data may be backed-up using SunGard and you don’t even know it (IT would know).

As Sungard goes private, some of the disclosures regarding internal processes might dissapear. This should not be of major concern, but you should know where your data is going and what happens to it.

How Interest rate hikes affect ROI

As interest rates keep inching higher, HR professionals often have trouble with creating ROI presentations that are meaningful to financial executives. This week, Greenspan announced that there is some inflation risk in the economy, meaning that interest rates may rise even faster in the upcoming months. As you will see in the following conversation, as interest rates increase, ROI will be much more difficult to find as you try to justify your software purchases.

So why do interest rates impact an ROI? Well, a standard ROI will project cost savings for various processes over a period of time, often 3, 5 or 10 years. As you (an HR practitioner) project these costs over time, a financial executive will want to understand what these costs are in relation to the “Net Present Value” or NPV. For a ROI novice, a simple ROI might mean that a $10K implementation with a $5K/year savings has a 2 year payback. In reality, year 2’s $5K savings are not worth $5K in today’s dollars because of interest and inflation. What is a 2 year payback to the ROI novice is a 2+ year payback to a financial executive. While this does not seem significant, if we use 5-10 years, a simplified (non-NPV) ROI might return a positive dollar value, but a NPV ROI might show that the investment will never produce a financial return.

So what is NPV? NPV is a means of identifying what the current cost of a future investment is worth. NPV uses interest rate assumptions based on the current cost of capital that the CFO uses to borrow money. In other words, if the $10K implementation we used earlier was borrowed money at 14% interest, you can see why it takes more than 2 years to pay off that implementation.

14%??? Yes, 14%. Most CFO’s use their base cost of capital plus a minimum required ROI. So a loan of 7% + minimum ROI of 7% gives you 14%. This is a good thing. Because the CFO uses 14% (most are somewhere between 14-18%), if you can get a ROI of $0 savings using the NPV ROI method, you have achieved the CFO’s minimum ROI requirements. If you need more help, here’s a good site.

IT doesn’t want technology, top management does!!

In a bizzar twist, AT Kearny announced a new survey saying that IT professionals were less likely to want to be on the “bleeding edge” of technology than many business leaders. Seems that these business leaders are getting used to the idea of looking to technology to imporve the bottom line and IT departments are wanting to wait until these same technologies are more proven and stable. Makes sense to me considering IT has to fix it when the 30,000 bugs in the latest software take the whole system down for 3 days, and the management representative just got fired and isn’t there to take the heat anymore.

So in this new age of IT not wanting cutting edge stuff they’ll have to fix later, HR is increasingly going to have to be educated on how to write convincing business cases and cost justification in order to get their stuff OK’d by the CFO, CEO’s. Traditionally, HR has not been that able to get what they want, but as HR is increasingly providing strategy level input to the business, we need to provide similar strategy level justification for our own internal processes.

Aon’s self serving press release and ROI

I promise I will do a post on ROI in the near future. This is a bit of a rant about consutling company studies that are publisehd in trade magazines that are clearly not an attempt at objectivity. Aon is normally seen as an HR consulting company with an HRO arm. Their VP of HRO wrote a bit for Business Insurance Magazine about hour HRO enables companies ot optimize the workforce while reducing costs. First of all, I love the questionable cost commentary, and second, the rest is so completely obvious that it’s not worth saying again.

1) ROI on full HRO is nowhere near cost effective in most cases. OK, if a company is fully replacing their call center, call center technology, getting rid of 30 systems that they had to have full integration for in order to make the call center work, and outsourcing payroll production, benefit administration, etc… then maybe HRO works. However, most HRO clients are not doing that. They are seeking a higher level of service for their employee base, offloading a much smaller portion of activities (they never had full call centers with adequate technology in the first place) and doing it at a much higher cost. However, they have decided that the higher cost is justifiable in order to get better service and increase the satisfaction of their human capital, and this is OK. The better service, metrics and insight into the workforce very well might be enough to pay the money for.

2) Don’t we all aready know that offloading a few administrative activities allow us all to focus more on strategy? This is the same old outsourcing mantra that we’re all getting a bit sick of. It’s nothing new and we all know it. The thing is, there may not be any other MAJOR value proposition for outsourcing.

Sarbanes Oxley and a case for Outsourcing

Thought I’d take a minute to comment on Deloitte’s top 10 problems for financial reporting in 2005. See it here Note that the top 2 items are very HR oriented (number 2 because it hits everyone). The first item is the whole problem with stock options, and since I know relatively little about stock option reporting, that’s not the focus of my commentary.

Instead, I wanted to talk about item #2 which is about Sarbanes Oxley. Sox expenditures are sometimes double what companies initially projected. As organizations get better about auditing these processes and certifying them, the costs should go down, but these are costs that must be recurred on an annual basis. Considering the number of systems that impact the financial systems, the costs can become staggering. As an HR organization, those who outsource benefits or payroll seem to have a “leg up” in these costs. That’s because a decent vendor should provide many of the SAS 70 type 2 audits already done. If they have, an organization would be able to take this documentation to their own auditors and be done with it.

Let’s also say that you only host your systems with a vendor (ASP, or application service provider). They should also have some of the technical SAS 70 reports done, although I think you’d still be on your own for the functional processing of your data.

This is one huge area where an outsourcing philosophy has a pretty decent advantage. If your entire HRMS, PR processing, and benefits administration process is outsourced, it could get your organization out of doing as many as 10 SAS 70 reports. At a cost of $50-100K each, this is a major item to add into the ROI whenever you’re making a decision to outsource, or auditing your vendor.

Smaller organizations tend to outsource more readily, and the entire debate regarding Sox and company size may push more comapnies to outsource. (CFO Magazine and an article about Sox and small public companies going private)