HR Systems: Powering a Systems Overhaul

By Joe Dysart July 1, 2000

When it's HR system needed a revamp, a city power authority plugged managers and users into the planning process.

The need to upgrade software may carry all the charm of a paper clip convention, but if you put off too many upgrades for too long, you'll find yourself facing something even worse: a major systems overhaul.

That was the experience of the Los Angeles Department of Water and Power's (DWP) Human Services Department, which discovered last year that its PeopleSoft HR management system was so out of date that a simple upgrade was no longer possible.

"We were facing a situation where the vendor support for the current version on our systems had run out. If for some reason the system crashed, we had no one to turn to," says Suzanne Hobbs, senior information systems supervisor for the DWP, a 7,300-employee organization.

Any HR department facing an overhaul might benefit from the experience of Hobbs and Caroline McKnight, DWP's employment services manager. Their advice: Sell executives on the need for the changes. Get users involved early, so they feel the new system is something they can buy into.

And if your current system's inadequacies have prompted users to create their own, home-grown technology solutions, you may have to make some deals to get those users to accept the new system.

Missed Opportunities

Hobbs and McKnight had long known that their HR software, mostly used for medical benefits administration, was sorely in need of an upgrade and expansion to handle other tasks. But past opportunities for upgrades had fallen victim to the usual culprits—money, politics and user resistance.

DWP internal politics had slowed approval of a project that would inevitably cost millions. Competing business units within DWP could not agree on a standardized HR management system. Some wanted to go with PeopleSoft. Others, whose business units had developed a unique, in-house system called FOCUS, preferred to stick with that system.

DWP's payroll and retirement personnel were not convinced that a PeopleSoft upgrade was the way to go. And throughout the internal deal-making, DWP experienced management changes, which inevitably slowed progress while new managers were brought up to speed on the reasons for the upgrade.

The need was great. DWP installed the 3.1 version of the PeopleSoft system in 1996. By last year, the 3.1 version not only was no longer supported by PeopleSoft, it also was not Y2K compliant and neither was other, third-party software DWP had bolted onto the PeopleSoft system over the years. The system also couldn't be expanded to perform other functions HR now wanted, such as tracking grievances or administering training.

The potential for a devastating system crash—as well as the ominous threat of Y2K problems—gave McKnight and Hobbs the leverage they needed to push the project through. McKnight and Hobbs focused on selling top brass on what had evolved from a simple software upgrade to a major systems overhaul.

McKnight and Hobbs wanted to stick with PeopleSoft and move to the company's 7.5 version of the HR system. Although dated, PeopleSoft's 3.1 had served them well. The new version's web interface had some heavy developmental guns behind it, and, Stamford, Conn.-based Gartner Group, a technology market research firm, gave PeopleSoft's HR Management System 7.5 high marks for quality.

McKnight and Hobbs estimated that the cost for the overhaul, a six-month project, would run $5.2 million. They got a lucky break on cost: DWP's information technology (IT) department had decided independently to add 227 new Pentium III PCs. McKnight's and Hobbs' project would directly benefit from this hardware upgrade—which provided faster machines to run the faster HR system—but they did not have to include those hardware costs in their budget for the project.

Ultimately, it was the Y2K deadline that provided the sense of urgency that McKnight and Hobbs needed to get top brass to sign off on the project.

It was also clear that the two HR systems—PeopleSoft's package and the in-house, proprietary FOCUS package—were duplicating efforts and creating inefficiencies enterprise-wide. With two systems both handling medical benefits, HR didn't always have an overview of benefits administration for all units. And HR was unsure as to whether the units using FOCUS were conforming to DWP policies.

Benefits Self-Service

McKnight and Hobbs also believed the enhancements in PeopleSoft's 7.5 version would help DWP run more efficiently. For one, unlike its predecessor, version 7.5 enabled the HR department to keep a centralized record of the training history of each employee.

Version 7.5 also would help with recruitment and tracking international assignments and health and safety regulations, as well as support various labor agreements. DWP found that the system could facilitate routine HR tasks, such as counseling, performance management and compensation, to free up HR staff to concentrate more on strategic planning.

The new version also had a web interface, allowing DWP employees to enroll for benefits and check their benefits and employment records via the Internet. Web access would allow employees to make changes to their personal data, such as numbers of dependents or addresses online, and they also could review their paycheck information, benefits summaries and data on covered dependents.

"As benefits programs and offerings change from year to year, pushing out personalized information to employees so they can easily make informed decisions is imperative," says Wendy Mitchell, benefits manager at Pleasanton, Calif.-based PeopleSoft.

The software features a Java-based web client, which enables the module to be accessed from virtually any type of computer, making home access easier for employees, adds Mitchell. And the module is designed to accommodate the low-bandwidth connections (modems accessing the Internet at 56K or less) that are currently most prevalent in the home.

McKnight predicted that with one, centralized system, all the business units within DWP would need to take more responsibility for entering and updating HR systems data on their personnel.

But perhaps most dramatic was the change to the system-response time that a move to version 7.5 would allow, Hobbs says. Early on, she predicted that administrators and users armed with the new software package and the 127 new Pentium III PCs would experience an 80 percent increase in system response time-a prediction validated since the new system went live.

Overcoming User Resistance

With top brass on board, McKnight and Hobbs went to work on securing all-important user buy-in. They held a series of workshops in which users helped them analyze specific changes the system needed. The users ultimately committed to use the solutions they helped create. At the same time, HR kept the attention of senior management by holding monthly steering committee meetings involving assistant general managers from key business units.

Not surprisingly, users already accustomed to the old PeopleSoft version were the easiest to bring on board. Many had long pushed for a system upgrade. "There was a lot of excited anticipation over the fact that we would be updating to a new, faster, more efficient system," Hobbs says.

Equally expected was some resistance from users of the FOCUS system. Understandably, many FOCUS users wanted to stick with their home-grown system because they were accustomed to its interface. Also, by using FOCUS, they could avoid adhering to HR recordkeeping and other administrative rules.

McKnight and Hobbs say they were able to overcome this resistance by making some concessions to the FOCUS users. The primary concession was a custom interface created to help FOCUS users adapt to the new system without completely abandoning their own procedures. "We were also helped by the fact that a number of FOCUS users were leaving the department; so, over time, support for FOCUS was continually dwindling," Hobbs says.

Other users were appeased by McKnight's and Hobbs' decision to enable users to access their HR systems using their choice of two Internet browsers—either Microsoft Internet Explorer or Netscape. The two also stuck as close to an off-the-shelf implementation of 7.5 as possible. The only major customization was a unique medical benefits module. "Even in this instance, we stayed close to the PeopleSoft software, since we used PeopleSoft Tools to create this module," Hobbs says.

After considering more than 30 providers of system-integration solutions, McKnight and Hobbs selected New York-based KPMG, which was ready to commit a manager to the project full time. KPMG also had participated in the development of the web interface of version 7.5, which gave the firm first-hand knowledge of how the interface works.

KPMG also promised at least 30 days of post-implementation support, an important service that is not always standard in system integration projects. And the integrator promised to engage in continual knowledge transfer as the installation was ramped up. "We didn't want a situation where our systems integrator was working in isolation from our team," McKnight says.

"I think we were able to reassure DWP that we had a firm grasp of what they wanted, as well as a firm grasp of the capabilities of the PeopleSoft software," says Howard Bishop, a senior manager at KPMG.

Living Up to Expectations

Despite all the planning, McKnight and Hobbs say that they would do a few things differently a second time around.

Transferring data to version 7.5, for example, took much longer and was more complicated than the two anticipated. "As a result, we had to do some data clean-up," Hobbs says.

Hobbs also wishes that the steering committee for the project had been larger and had represented an even wider spectrum of business units. "I think payroll in particular should have been more keenly involved in the planning process," she says. Consequently, integration with payroll is not as seamless as Hobbs had hoped it would be.

Finally, Hobbs says she wishes that the overhaul had come sooner. She estimates that the HR department suffered significant losses in productivity during the three years before to the overhaul, mostly due to inefficiencies created by working with older software and the duplicative FOCUS system.

But so far, top brass, McKnight, Hobbs and the DWP users have given the implementation a thumbs-up. Phase one of the implementation, which featured a major overhaul of training and development systems, benefits and all the interfaces needed to bring DWP's legacy systems into the loop, actually cost $50,000 less than anticipated, McKnight says. And the implementation has lived up to the hoped-for advances McKnight and Hobbs first pitched to executives and users.

Phase two, which includes overhauls of employee grievances and employee work flow, plus the web enablement of the system, is right on budget as well, McKnight says.

Joe Dysart is a software analyst based in Thousand Oaks, Calif. He can be reached at

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