A Few Years Late, Portals Gain Ground

By Douglas Shuit

Sep. 3, 2004

As one of the original designers of what would become the world’s largest virtual doorway, Michael Marfise, vice president of product and program management for Workscape Inc., says he faced a daunting task at General Motors Corp. The software communication system had expanded with widely differing and independent pieces. Divisions like manufacturing and marketing had their own Web sites, intranets and internal portals. “They must have had a couple of hundred different, independent sites,” he says. “The result was that the No. 1 place employees went for company information was the public media. They would read about it in the newspaper.”

    Workscape and its partner in the GM project, Sun Microsystems Inc., set out to change that by building a centralized electronic single point-of-entry, a virtual front door, or portal, for all of the company’s 275,000 employees in the United States. These days–three years after the launch of GM’s portal, called MySocrates–as many as 120,000 GM workers a day enter through the portal and onto its Web pages, with human resources getting much of the traffic. Along the way, the technology has saved GM millions of dollars, the company says, and won awards for cutting-edge technology for itself, Workscape and Sun.

    Given all that success, it’s natural to think the rest of the world would be quick to follow. That didn’t happen. Web portals designed specifically for internal corporate communications, particularly in finance and human resources, have been growing in fits and starts over the last few years as major components of workforce-management strategies. Portal development experienced a surge in 2000 and 2001, with the GM project being one of the largest. Then the economy cooled, and along with it investment in technology.

    But that is changing. Watson Wyatt reports that there is a surge in corporate spending on employee portals and intranet systems, driven by the growing economy. A META Group trend report shows that 46 percent of the companies it surveyed spent more on portals in 2003 than they had in the previous year, with strong spending predicted for the next three years. Those findings were borne out in interviews with some of the leading players in the field–PeopleSoft, Authoria, SAP, Softscape and Workscape.

    “Investments in these products were definitely put on the back burner for a while,” says Christopher Faust, vice president of global strategy for Softscape. “Human resources executives are now seeing that portals are a strategic piece of their human capital management systems.”

    Tod Loofbourrow, president and chief executive officer at Authoria Inc., a fast-growing technology company with a human resources focus, says the company had a “huge second quarter.” Interest in the firm’s employee adviser and manager adviser products, which can be accessed through portals, is particularly strong, he says. The employee adviser answers workers’ questions about a variety of issues such as health benefits. A pregnant employee might message the system that she is having a baby and ask for advice. She will get back a list of steps to take to access available services and benefits.

    Defining a portal can be difficult. The term is often used interchangeably with corporate intranet. The most highly evolved portals, like the one at GM, represent a significant upgrade over intranets, which often have an impersonal bulletin-board or storage-room feel to them. Intranets dispense the same general information to all employees, from senior managers down to entry-level clerical workers, a one-size-fits-all approach. They are places where someone can order up an expense form or check out health-care providers but may not be able to get the kind of personalized information available through a portal.

    With a single sign-on, advanced portals know who you are and often what you want or need to know before you know it. The new systems are about ease and speed and in certain ways mimic commercial portals like Yahoo. They are tailored to individual employees. Among the bells and whistles are real-time information flow that goes in both directions and a screen full of helpful services, including internal company communications, employees’ personnel records, access to training programs, job-performance rankings, benefits updates and personalized plug-ins to search engines.

    Some of the push for portal development is coming from a much savvier generation of employees, many of whom grew up with the Web and sign on to commercial portals like Yahoo and Amazon as easily as their parents open a newspaper. “Companies are realizing that in order to retain and attract the younger generation, they have got to provide an online environment that is not in the dark ages,” says analyst Michael Rudnick, national intranet and portal practice leader at Watson Wyatt. He says that widely used portals like Yahoo and Amazon have spoiled people. “People complain that when they go on their corporate intranet, it doesn’t work like Yahoo. They get frustrated.”

“Human resources executives are
now seeing that portals are a
strategic piece of their human capital management systems.”

    Despite the upsurge in interest, many companies are sitting on portal software–often purchased as part of a much bigger technology package–but haven’t been willing to spend the money to develop the employee gateways.

    A white paper released last year by Plumtree Software, one of the big players in Web-based communication products, estimates that 40 percent of portals are empty. The costs of launching a portal often come in high multiples of the investment in the actual software because of the hours charged by the programmers and technicians required to develop and maintain it. For that reason, reliable numbers on the cost of the systems are hard to come by. List prices, themselves often subject to deep discounts, tell only part of the story.

    Wellpoint Health Networks Inc., which has added employees in big gulps as it grew through acquisitions, is one of the companies that decided to take on the added investment of developing a portal as part of their employee self-service software. Wellpoint is in the process of going live with a company-wide portal that could provide the same point of access to its 20,000 employees.

    Wellpoint estimates that it has spent about $8.5 million with its chief software vendor, PeopleSoft, over a period of years, constantly updating its employee self-service and intranet system. As the company grew from 6,000 employees to 12,000 to 20,000 by buying Blue Cross systems across the United States, the process of accessing important information became cumbersome, even comical, says Chuck Moore, staff vice president of human resources at Wellpoint. Information was available, but often confusingly so.

   Moore sees portals as a natural part of the evolution of employee self-service technology. The track record established by Wellpoint’s technology improvements forms a sound basis for continued investment. By going to an essentially paperless pay system based on self-service, the company saves $1.17 per employee per paycheck, or more than $600,000 a year, Moore says. Wellpoint used to pay outside vendors $20 a head for handling open enrollment on its health insurance. With the PeopleSoft system, it went in-house and also will save an estimated $600,000 this year alone. The biggest savings may have come in the area of retention. The company used to have embarrassingly high turnover rates. These days, the software system enables the company to stay on top of employee problems and needs so effectively that the turnover rate has fallen by half. Moore estimates the savings, based on recruitment, training and other hiring costs, to be around $65 million.

    As the employee self-service and intranet systems developed, the volume of information became so great that it could be hard for employees to find what they were looking for, Moore says. “With a portal, we can tell if the person accessing the information is a supervisor or not, union or not, exempt or not,” he says. “It knows who you are and what you can or can’t do.” Information, or access to information, can be dispensed in a much more focused way.

    Consider GM’s portal. Once connected to MySocrates, GM employees and managers can use simple point-and-click keyboard commands to link up to a vast array of information. Relatively simple things such as keeping up with pay records, merit awards and the latest statement from the CEO are available, as well as far more sophisticated tasks like using a pension calculator to work through various retirement scenarios. When the company changed its retirement formula not too long ago in an effort to reduce its workforce, its pension calculator enabled eligible employees to model various scenarios online rather than have to call GM’s benefits-processing center. Employees performed more than 90,000 calculations online. It saved processing costs and sped up decision-making, allowing GM to hit its goals sooner.

    Coming up with hard numbers to produce a return on investment high enough to satisfy CEOs remains a problem for portal developers. Executives sigh when the issue arises. Once a portal is plugged in, advocates say, it’s hard to go back. “It’s like the phone system,” Moore says. “Does a phone system pay for itself? Take it away and see what happens.”

Workforce Management, September 2004, p. 57-58Subscribe Now!

Schedule, engage, and pay your staff in one system with