Total Integration

Capitalize on the payoff of linking different HR applications to create a single database.

By Dave Zielinski November 1, 2011
November Cover

The challenge facing Shawn Davis was one common to many human resource information systems managers. Davis, director of HR workforce solutions and analytics for Intermountain Healthcare, a nonprofit health care system operating in Utah and Idaho, managed multiple HR technology systems—from a core HR information system to recruiting, performance management and compensation platforms—that ran parallel to one another but weren’t interconnected.

These stand-alone systems produced impressive process efficiencies, but the fragmentation had drawbacks. Davis says the structure meant users would often get inconsistent data on employee turnover rates, for instance, depending on the system they used. And, some systems were optimized for data entry but not reporting. That made it onerous to generate workforce data reports out of a core HR information system, for example, at the same time payroll was being processed.

The technology silos meant Davis didn’t have the single repository of data needed for higher-level workforce analyses and planning. HR and business-unit leaders couldn’t identify, in "one view," what recruiting sources were producing top hires in the organization, where preventable turnover might be an emerging issue, who the high-potential employees were, or how workforce changes were affecting revenue or profitability.

"We wanted one source of the truth," Davis says.

The Road to Integration

That Holy Grail—a single collection of employee system-of-record data integrated with workforce and talent management applications—remains elusive for many HR leaders. Whether due to the technical challenges of marrying different systems, limited time or budgets for integration projects, or business goals that stress efficiency over strategic talent analyses, such integration is rare.

A 2009 study by the Boston-based Aberdeen Group of 349 human resource and line executives revealed that only a slight majority of respondents had at least partially integrated their talent management processes, systems or data. However, those that achieved integration across at least one of those three areas achieved "significantly greater performance gains than companies with no integration," researchers found.

Findings from Stamford, Conn.-based information technology research firm Gartner Inc. also suggest that full-fledged HR systems integration remains the exception rather than the rule. "A surprising number of customers don’t integrate talent management applications" with their core HR information systems, says James Holincheck, a managing vice president at Gartner. "And when they do integrate, the projects tend to be relatively pedestrian, such as a batch interface run nightly to move data."

The Aberdeen study compared the employee life cycle to the human life cycle. Imagine, the study authors wrote, if a child was sent to a different set of parents at each of his or her development milestones—birth, toddler years, adolescence and beyond.

"Then imagine that, in each stage, the child’s new family had not been given any information about how he or she had been raised by the previous one," the authors continued. "Such inconsistency would pose a huge obstacle to development. The reason for this analogy is to show the problems associated with stand-alone talent management processes and data."

Potential Payoffs

How does consolidating disparate HR systems serve business goals? Integrating performance management and HR information systems might enable HR or business-unit leaders to examine employee attrition rates as one set of data, for example. Such reporting could provide greater insight into where high-potential employees are leaving at higher rates, data proving more actionable than an "average" attrition rate of high-potentials across the organization.

Systems integration can have benefits at many stages of the talent life cycle. "If you’re doing a midyear performance review, and as part of that you’re counseling employees to do some specific type of development, but your performance management system isn’t integrated with your learning system, you may not know what learning to choose or what someone’s already signed up for as part of their development plan," Holincheck says.

Larry Dunivan, senior vice president of global human capital management products at St. Paul, Minn.-based Lawson Software, says HR organizations function on a technology continuum that starts with a desire to create efficiencies through automation and often evolves into a need to develop greater insight into workforce data via integration.

"The latter is about developing rich, actionable information about people across a range of touch points in the employee life cycle," Dunivan says. "But when organizations aspire to glean insight, instead of just process efficiency, the data demands become radically different."

The consolidation of compensation systems proved to be particularly valuable since it made sharing talent across the organization easier.

HR leaders driven by efficiency metrics might be content to simply interface a recruiting system to a core HR information system, passing off new-hire information to the system’s mother ship to avoid duplicate data entry. But if they’re seeking strategic talent analysis around succession management, for example, they’d need to access a more complex combination of data that could include information managers generate in assessments of high-potential candidates.

HR professionals looking to use analytics to better leverage workforce data also might want to integrate core competency models or job profiles with recruiting or learning systems to make better use of key competencies in hiring or training decisions.

To understand where a business is going, executives like to compare revenue or profitability data with changes occurring in a workforce, according to Ross Melbourne, co-founder and chief technology officer at Aquire, an HR software company based in Irving, Texas. Systems integration can facilitate such cause-and-effect comparisons.

"To assess how well you’re achieving something like quality of hire at certain positions, you often have to pull in data from different HR systems," Melbourne says. When data on first-year turnover rates of new hires is married with the recruiting origin of those hires, "you start becoming more intelligent about what is happening in your business," he continues. "Who doesn’t want to figure out where they get their best people from?"

At Nissan Americas in Nashville, Tenn., a systems redesign consolidated eight legacy HR information systems—each with its own compensation system—into one. That change helped significantly reduce HR costs per employee, streamline the performance review process and make human resources more of a strategic resource.

"When we talked to senior business leaders, they were frustrated that HR was focused more on transactional work and maintaining systems than in adding strategic value," says Anish Baijal, director of talent management and HR services at Nissan Americas. "That led us to reassess our service delivery model."

The result was an HR shared service center operating on one consolidated PeopleSoft HR information system and integrating systems from SuccessFactors including performance and goal management, compensation management, succession management, and employee profiles into one process.

The consolidation of compensation systems proved to be particularly valuable, Baijal says, since it made sharing talent across the organization easier.

"In the past, if we wanted to rotate a finance person from a manufacturing unit to another unit supporting sales and marketing, we couldn’t do it because we essentially had to fire him from one unit, since he was on a different comp plan, and hire him again on a new plan," Baijal says. "There was no free flow of talent, and from that perspective we weren’t adding value to the business."

Crafting a Solution

How did Intermountain Healthcare solve the challenges caused by disparate HR systems? Davis says step one was to move all core HR data from its Oracle HCM system into a pre-existing data warehouse. That enabled his HR group to apply business intelligence tools to create efficiencies in data reporting, as well as to combine workforce data with revenue or profitability numbers to do higher-order workforce planning.

"We use IBM’s Cognos business intelligence software as a reporting tool, so now everyone can go to just one source, rather than multiple ones, for their reports," Davis says.

The move also created standard definitions for employee turnover and other metrics, enabled creation of custom data graphics and accelerated reporting. "It might have taken us hours before in the old system to run a balance report from the payroll system," Davis says, referring to a report that tracks employee earnings over a certain period of time. "In the data warehouse, we can pull that out in minutes."

It has also become easier for employees outside HR to access data in the system. "They can see consolidated views of data in a way that no longer stresses our production systems, and the process ensures they only see data they need to see," Davis says.

With the move to the data warehouse complete, the initiative’s second phase involves consolidation of four HR systems—recruiting, performance management, career planning and succession, and compensation—into one.

"We’ll eventually have a single system that brings together all the data for talent management in one place. Then we’ll feed all that data into our data warehouse," Davis says.

Overcoming Challenges

Although Intermountain Healthcare’s consolidation project has reaped benefits, Davis cautions HR leaders not to downplay the technical expertise and resources needed for integration. "You shouldn’t underestimate the amount of work required to do the extracting, transforming and loading data from one place to another," he says.

Holincheck says many HR organizations tend to "underappreciate" the challenges of integration. For larger companies, there may be up to 100 interfaces maintained from HR systems to other business systems, he says.

Attracted by best-of-breed stand-alone systems, HR leaders sometimes overlook what’s required to map different vendor architectures together or to create the end-to-end connections that make processes run efficiently. "When things don’t run smoothly, people tend to throw up their hands. But had different choices been made earlier in terms of applications, and more thought given to end-to-end processes, organizations might not find themselves in a pickle," Holincheck says.

Forging a good working relationship with his information technology group helped Davis when the time came for systems consolidation. Now, a dedicated data warehouse employee meets weekly with the human resource team to discuss projects, priorities and resource allocation.

"We have a strong partnership with our data warehouse team, which has been key to making this work," Davis says.

From Pain to Gain

While those human resource groups seeking process efficiency from HR technology systems still greatly outnumber those pursuing strategic talent analysis through integration, there appears to be growing interest in the latter goal.

Clients say, " ‘We want to gain efficiencies, but we also need more quality data and a more holistic view of that information,’ " says Lawson’s Dunivan.

If the experience of Intermountain Healthcare serves as a barometer, the temporary pain experienced during consolidation can have substantial payoffs in terms of workforce analytics that enhance HR’s value to a business.

Consolidation can have substantial payoffs in terms of workforce analytics that enhance HR's value to a business.

"We can now more easily access quality data and do workforce planning that enables us to partner with nursing or pharmacy leaders to help them find the right people with the right skills going forward," Davis says. "We’re spending much more time on analysis rather than on waiting for reports to run or on extracting data from our systems."

The author is a freelance writer and editor in Minneapolis.

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