The Next Generation

Michael Traskey remembers the dark ages of HR automation. Of course, that was just two years ago. Back then, every time the director of organizational development at McCormick & Company, Inc. wanted to fill a management position internally, he had to wait for days as faxes and voice-mail messages sloshed back and forth to HR offices in California, Canada and the UK. Personnel managers in the field pored over files and employees’ qualifications before forwarding lists to Traskey, who then waded through them to find the right candidate. In the end, it was a highly inexact science. “We couldn’t always locate the best candidate as quickly as we would have liked,” Traskey recalls. “It was slow and frustrating.”

No more. Today, managers at the 104-year-old, $1.5 billion (sales) spice company can tap into a central data base of everyone in the 7,700-employee organization, including their education, training, language skills and preferences. “We wanted to automate the internal resume process and have a system do the searches for us,” Traskey explains. “If we needed a person with manufacturing experience, an MBA and a willingness to relocate to Morocco, we didn’t want to have to spend weeks trying to find him.” McCormick’s sophisticated new computer system can spit out a list of qualified candidates in minutes rather than days. Perhaps more importantly, it’s now possible for managers virtually anywhere in McCormick’s far-flung empire to do the search. That relieves the company’s central HR staff of the burden of doing every search while also giving managers away from the corporate center greater control over their operation’s destiny.

Traskey isn’t the only HR executive diving headfirst into the information revolution. All across America, companies large and small are finding new and innovative ways to use computers to collect, store, process, analyze and share information. That allows HR departments to tear down many of the barriers between themselves and the rest of the company—a key step in becoming equal partners in corporate affairs.

The new breed of system often uses desktop personal computers (PCs) linked together into so-called client/server networks to process information in far more efficient ways. At the core, or hub, of each network is a computer dedicated to two tasks: controlling the traffic on the network and storing data in a sophisticated relational data base. This central computer, called the server, may be anything from a mainframe to a powerful PC. Meanwhile, desktop computers, called the clients, are used by individuals to accomplish tasks ranging from data entry to sophisticated analysis.

This technology is breaking down organizational barriers, getting work off HR managers’ desks, and allowing those closer to the action to handle tasks and make decisions. The result? HR no longer is perceived as an entity that merely loads paperwork and bureaucracy onto the backs of other departments. It’s now viewed as a business partner that adds value and solves problems. “It is transforming human resources from a transaction-oriented entity into a department that can provide valuable insights into the workings and capabilities of the organization,” says William E. Berry, chairman of the Consulting Team, Inc. of West Palm Beach, Florida.

Indeed, the current generation of hardware and software is empowering workers in new ways. Sitting at a desk, an HR professional can do sophisticated spreadsheet modeling or succession planning—with a vast corporate data base at his or her fingertips. Software can automate recordkeeping by allowing employees to update appropriate portions of their own files at terminals or kiosks, yet it also protects everyone’s privacy and corporate confidentiality. New programs can track hiring, firing and promotion patterns and provide details about how managers deal with women and minorities; offer sophisticated modeling for downsizing or reengineering efforts; even handle changes in business rules and government requirements, so that an HR department can change employment criteria without reprogramming or aid from information services (IS).

Most importantly, today’s PC-based client systems are far simpler to use than the mainframes of the 1970s and ’80s. Now usually equipped with a user-friendly graphical user interface (GUI) made possible by operating programs such as Microsoft’s Windows, IBM’s OS/2 and UNIX, these “machines,” as technology buffs call computers, eliminate the need for memorizing arcane computer codes and help streamline data collection and processing. In many cases, they provide easily understood icons that identify key concepts and processes. Ultimately, a properly implemented client/server system moves critical data out of the thick-walled fortress of IS and into the hands of users.

But progress doesn’t come without a price. Equipment can be expensive, changes can be time-consuming and stressful, and there’s no guarantee that the new system—despite hype and rosy testimonials—will ever perform up to expectations. “You can spend months researching vendors and studying systems, only to find yourself back at ground zero,” complains Gary Montgomery, director of quality management and HR at Ropak, a plastic manufacturing and container company located in Fullerton, California.

Nevertheless, a growing number of companies are migrating to the new technology to provide greater flexibility and capabilities. “HR is changing, and in order to keep up with the times it has to have the tools to be able to do the job,” says Brenda Miller, an HR program manager at Houston-based Compaq Computer Corp. “Today, management wants and expects answers—they want to know about impacts and costs and what effect various scenarios might have on the company. It is HR’s responsibility to provide that.”

Technology is evolving rapidly.
The evolution of computers in HR is remarkable. Only a decade ago, most users had to interface with huge mainframes tucked away in a data center, usually at corporate headquarters. Accessing the system via a dumb terminal (a screen and keyboard linked to the remote computer) required knowledge of hundreds—if not thousands—of codes. And if you didn’t remember the entire sequence for processing a new hire or benefits claim, you could easily wind up with errors in the system.

PCs changed all of that. Configured into networks and able to process data at the work site, they allowed users the hands-on access they desired. What’s more, they brought greater functionality and customization to HRIS software. Most end users could learn how to operate an IBM PC-, PC-clone- or Macintosh-based system quickly. And PC-based networks and software were only a fraction of the cost of installing and operating a mainframe.

But there was still one problem. Large tasks such as payroll couldn’t be downsized easily to a PC environment. And data bases containing employee records couldn’t easily be accessed within a network. So while local area networks (LANs, or groups of computers wired together to provide mutual access to files and data) and wide area networks (groups of LANs communicating with each other from separate locations) quickly emerged as a connectivity tool, limitations—including speed when the system is in heavy use—dictated a new solution.

Enter the client/server model.
Unlike a conventional network where the file-server (the computer providing data to the user) acts as nothing more than a repository of information—sending entire files to workstations upon request—client/server architecture allows a user to enter a request and receive only the specific data needed. Processing and manipulation of the data is handled at the workstation. Because computing power is devoted to the location where it’s needed, traffic over the network is lighter and the entire system operates faster. The server—the mainframe, midframe or high-powered PC that stores the data (typically referred to as the back end)—isn’t overtaxed by trying to handle all the processing.

Today, newer and more powerful superservers—high-powered PCs specially designed for the task—are accelerating the trend. Companies like Compaq and Netframe are making solid inroads despite a hefty $13,000 to $500,000 price tag per unit. The reason? The systems use several microprocessors to run networking software efficiently, and provide far more flexibility than off-the-shelf PCs retailing for $3,000. They can transfer data faster, provide built-in redundancy to avoid data loss in the event of a hard disk crash, and can be easily expanded.

Mainframes still have an important role to play, even in the client/server environment. For example, McCormick’s Traskey opted to use an IBM-95 mainframe linked to hundreds of PCs connected over local- and wide-area networks. The company installed elaborate succession planning and internal resume software from Annandale, New Jersey-based Nardoni Associates, Inc. (NAI). Today, data flows like lightning between offices across town and across the world. And Traskey, from his desk at the firm’s headquarters in Sparks, Maryland, can gather information simply by tapping a few keys on his PC.

“Client/server is a marriage that offers advantages greater than the sum of the parts,” says Carl Hoffman, president of Hoffman Research Associates of Chapel Hill, North Carolina. Hoffman says that systems have evolved considerably over the last couple of years. Not only has the hardware become more powerful, the software is driving changes in the way people work. “Software has changed from transactional—where people fill out forms on a computer screen and enter the information—to systems that provide detailed insights and analysis.”

Meet the next generation.
As wonderful as the first generation client/server networks appear, the emerging second generation offers even more. “The first generation introduced a graphical user interface—such as Windows—at the front end. That solved problems related to ease of use, but most of the computing burden was still on the server,” explains Kathy Urbelis, senior vice president of marketing at Integral, a leading HR software vendor. “Second-generation systems are breaking down the walls of incompatibility [among computer brands and software programs] and providing more computing muscle.”

This has a profound influence on HR. At Transco, a Houston-based energy company, Integral’s InPower HR allows human resources professionals to boldly go where they’ve never gone before. Not only does the Windows-based system allow everyone to benefit from event-driven processing—HR tasks are grouped according to a functional event and users are automatically led through all steps needed to process the various related transactions—the client/server system and relational data base can analyze data in new ways. Human resources managers can spot departments with excessive workers’ compensation claims or overtime, as well as managers who aren’t promoting women and minorities in acceptable numbers.

“The technology is allowing us to examine things in a completely different light,” says Kurt Basler, manager for payroll/HRIS at Transco. “We are finding significant ways to spot trends before they become significant. Instead of sinking under the weight of data, we are filtering it to find what’s really important.”

Like a growing number of companies migrating to client/server systems, Transco has embraced a relational data base on the back end. That allows end users—regardless of what type of computer or operating environment they are using on the front end—to access corporate data seamlessly. Such data bases—including those from Oracle Corp., Sybase Inc., Gupta Corp., Novell Inc. and Microsoft—are not only adding muscle to HR capabilities, they’re accelerating a trend toward open architecture and cross-platform capabilities. This means that the same data can be used by different HR offices or other departments regardless of what type of computer they have on their desks. “The reality is that today, companies use applications and different operating systems for different purposes,” says Integral’s Urbelis. Being boxed into one proprietary system reduces the flexibility and capabilities of any department.” Adds Ren Nardoni, president of Nardoni Associates Inc., “Open architecture greatly reduces the need to constantly create custom computer codes.”

Second generation client/server systems offer other advantages as well. At Compaq, HR Program Manager Brenda Miller says the firm is presently migrating from a mainframe environment to a client/server system incorporating one of the company’s high-end servers and networked PCs. That will translate into less HR time spent maintaining records, and less training on the mainframe. Because the system is able to instantly update changes in legislation and company policy—and then use the information to affect the way employee records are handled—it also means fewer mistakes and potential problems.

Not surprisingly, software vendors have been eager to jump on the bandwagon. Recently, many have begun to pull business rules and legislative changes out of the application’s programming code. Instead, they are creating business rule tables that can be managed and changed by the end user, which allows HR professionals to take control of the data. “It is making HR less dependent on IS; it is allowing the company to devote more mainframe processing time to other needs,” explains Laurie Swift, manager of information systems for Southern Company Services, an Atlanta-based electric utility.

Southern Company is a classic case of how a well-implemented client/ server system is able to neatly tie together frayed ends. The firm previously used a hodgepodge of systems, including an old mainframe that was unable to handle anything other than simple batch requests. In addition, HR couldn’t access data real time—there was often a lag of days or weeks until files were updated. It had different versions of the company’s data base on different systems, and the firm had six different payroll systems and more than 500 different data software systems. As if all of that weren’t enough, the 25-year-old HR system was a dinosaur.

“In the old environment, nobody knew the right answer. Depending on what system you were using, you would get entirely different information,” says Swift. Moreover, the HR department simply couldn’t keep up with changes in tax laws and benefits, and IS professionals had to constantly tweak the system. “We had HR system professionals spending all their time handling basic functions,” she adds.

It was costing the company time and money. And upper management didn’t let the fact go unnoticed. So, over the last few years, Southern Company Services, with 30,000 employees spread among six different companies, has implemented second generation client/server technology. Although it continues to use a mainframe for data storage and processing, networked PCs based on Intel Corp.’s high-speed 486 microprocessor are linked to a data base and provide instantaneous data to 1,200 workstations. In the end, the PowerSoft system, which combines HR recordkeeping with payroll functions—is expected to save the company $5 million a year. It’s also expected to slash data redundancy by 70%.

Because today’s client/server systems use relational data bases, linear data processing models used by mainframes (which tackle one task or process a single report at a time) are vanishing into a brave new world that’s three-dimensional. Here, computers mimic the work patterns of humans. Events-driven processing lets HR know what real-world events need to occur when an employee marries, changes positions or is terminated. In the last case, for example, the system can prompt the user to handle that transaction—including collecting keys, company credit card and changing access codes. It also can provide COBRA data, open the position to recruitment or process a succession-planning module. Human resources doesn’t have to depend on memory or a long checklist to process the necessary data and forms. Most importantly, the entire process can take hours instead of days or weeks.

But the modeling capability of the software may be the most astounding feature of all. It’s allowing HR departments to entirely reengineer themselves and become a business partner for the first time. Programs like Ross Systems’ Human Resources CS Systems, Tesseract’s Intuition and Human Resource Manager, NAI’s Succession Plus and Integral’s InPower HR, linked to relational data bases, can offer blue-prints for different actions and scenarios. They can build a model of an entire enterprise able to recognize how human resources and other departments interface and affect one another. Such systems can project how 10,000 layoffs would affect the organization—not only in bottom-line costs, but training, skill levels and overall productivity. They can measure how changes in compensation, benefits and training would affect the firm in six months, a year or five years.

“Today, it’s not only important for HR to be able to do its own analysis, but also play a role in shaping the direction of the company,” says Compaq’s Miller.

Out of HR central.
Over the years, most HR departments have found that they operate most efficiently when operations are centralized. It isn’t difficult to understand why. Updating data bases and files at secondary locations usually means shipping a steady stream of floppy disks or tapes back and forth. Trying to coordinate actions between offices in, say, London and Los Angeles can translate into a torrent of phone calls and faxes. The larger the company, the bigger the potential headaches.

The new generation of client/server technology is changing all of that. It’s far simpler for firms to create decentralized departments and divisions—offices linked together without regard to walls, buildings and geographic distances. Although the information often is stored in one location, employees can access the data from a workstation anywhere within the company via a local or wide-area network. Security measures can effectively create levels of access, so that key data remains private.

Those who have embraced the technology say it is changing the way they work. At Transco, for example, employees maintain their own personnel records at PC-equipped kiosks located throughout the company. If there’s a change of address or phone number, it’s the employee’s responsibility to make sure the files are up-to-date. At Illinois Power, approximately 600 of the more than 1,700 employees who participated in last year’s benefits enrollment used kiosks equipped with a PC and Tesseract software. They could examine how different choices would affect their paychecks, as well as fill out electronic forms. Once they had punched in their selections, the results were immediately available to HR. “The idea was to create a system that could get employees more involved in the process, reduce errors and decrease the demand on staff,” says Susan Anselmo, supervisor of applications development at Illinois Power.

Yet she recognizes that’s only part of the picture. The client/server system, which also includes dozens of other tools, is helping make the company more competitive and better equipped to handle strategic decisions. “HR is clearly moving away from a centralized structure,” Anselmo says. “Line managers, area managers and others in the field have the tools to input data, analyze information and make decisions.”

To be sure, slick GUIs joined with networks and data bases are a powerful combination. Yet, as with any complex technology, it isn’t always easy to get the machinery to fly. The biggest challenge, HRIS experts say, is sorting through the myriad of choices. “There’s an infinite array of possibilities,” says Hoffman. He suggests HR departments focus on the software side—educating themselves about what programs offer the greatest benefits and ease of use, and provide input to IS. “Hardware is something that HR shouldn’t worry about.”

Debi Luddy, manager of HRIS development for Minnetonka, Minnesota-based Cargill Inc., admits that it took her firm eight months to decide on software. After developing a list of “musts” and “wants,” the company approached the vendor of choice. But the firm held off on signing a contract until HRIS had examined all implementation issues. By creating a ranking system based on points and asking vendors to perform on-site demos of their products, Cargill was able to make a choice that worked well.

Then there’s the cost issue. Even small firms can afford entry into client/server hardware and software, which can run as low as $10,000. At the other end of the spectrum, systems suitable for large companies can easily run into the millions of dollars, with software alone costing $30,000 to $100,000. And an integrated system that can handle compensation plan design, benefits enrollment, administration, statutory compliance issues, staffing functions, disciplinary-action management and business-rules management can run into the mid six figures or higher.

Moreover, according to HRIS specialists, not all costs are immediately obvious. “You may have to relocate people, and you will definitely have to train people,” says Betty Kagan, senior principal at Technology Solutions Co. in New York. In fact, some experts suggest that the costs of downsizing a computer system can dwarf by 10 times the hardware and software expenditures.

Making the transition without disrupting work flow is another vexing issue. It isn’t unusual for a client/server system to require a year or more to install and debug—and during that time an HR department must not only modify the way it functions internally, but learn to use the new software. “A lot of HR departments find it difficult to reinvent themselves from a mainframe to a client-server shop,” warns Kagan. “There aren’t a lot of people with the appropriate skills, and there’s the task of figuring out what kind of organization you want to set up. Lines blur when you have a decentralized organization. It requires a good deal of planning.”

Not surprisingly, the companies that succeed are the ones that take the process in stride. For instance, when McCormick’s Traskey committed to a client/ server system and wide-area network to implement its succession-planning software, management decided to make it a four-year mission. “You have to crawl before you can walk,” says Traskey. At Compaq, the migration to a second generation client/server is taking well over a year. “It is a methodical process,” explains Miller.

The transition does not always lead to a happy ending. Ropak’s Gary Montgomery spent nearly a year in search of a client/server system that could handle payroll and HR in both the U.S. and Canada. He also needed a system that could run UNIX but provide cross-platform capabilities and sophisticated report generation. He eventually threw up his hands in disgust. A major software vendor—whom Montgomery won’t name—promised nothing less than a turnkey operation, but instead it delivered a system that required high-level programming. Now, he’s back to searching for a new system. “Most people get burned,” Montgomery says, “not because they aren’t smart, but because they don’t know the right questions to ask.”

Nevertheless, second generation client/server technology is rolling through corporate America. It’s helping transform HR from simple administrators to strategic planners who are influencing CEO decisions. “The straight mainframe will continue to be around for years to come,” says Nardoni Associates’ Ren Nardoni. “But there is no other system that can provide the flexibility and power of a client/server environment. This is the basis for the entire process of reengineering. This is the basis of the Information Superhighway.”