As human resource departments begin to move from predominantly paper-based, often forgotten divisions toward strategic contributors to the larger organization, many companies are starting to seek comprehensive human capital management (HCM) software to help facilitate that transition.
Today's HCM includes broad new sets of functionality, including employee performance management; enterprise incentive management; workforce optimization; and talent acquisition/recruitment. These new capabilities are helping to augment the core HR functions (time and attendance, benefits management, payroll, personnel records) that companies need as they face the widely recognized shift in workforce demographics from baby boomers to Gen-X and Gen-Y. Couple this with the prevalence of outsourcing, offshoring, and increasing pressure to "do more with less," and it's easy to see the need for expanded human resource management tools.
AMR Research has found that the human capital management software market is growing more than twice as fast as the overall enterprise applications market, and is on track to surpass the $10 billion mark within the next five years.
In response to the new workplace demands, ERP provider Exact Software, for one, is taking a proactive approach to building out HCM functionality within its two product suites. Many ERP software providers offer core HR functionality within their modular offerings. The key, says Matthew Bather, product marketing manager for Exact's Americas business, is to go beyond core functions and place each employee in context to the larger organization. On its own, "employee data is just one small piece of HCM," he says. The real ROI comes from gleaning "metrics that reveal where each employee fits into the organization -- their level in the value chain, how they interact with the organization and with suppliers, customers, and the product."
In addition, Bather says, in industries concerned with regulatory compliance, achievement of compliance requirements boils down to each employee's behavior. The kind of metrics that put people into context in the organization, then, can be used to reveal the degree of compliance on an individual level and help optimize such efforts.
According to Mike Gabriele, president and CEO of HR software provider Perfect Software, the average ratio is roughly one HR staffer for each 100 employees. With approximately 25 transactions to process with each new hire, and another 15 when an employee leaves, at an average turnover rate of 22%, the number of tasks adds up quickly.
And in the age of companies continually trying to do more with less, HR is hard-pressed to process traditional transactions while focusing on larger strategic projects as well. "There's no value in processing forms," Gabriele says.
The answer, he says, is self-serve functionality that frees HR professionals to concentrate on strategic projects. By giving employees self-service access to core HR functions such as downloading forms, signing paperwork, and tracking vacation time, human resources professionals free themselves to focus on strategic projects, and therefore change the HR department?s reputation from cost center to more of a profit center.
Another argument for automating traditionally paper-based HR functions, he says, involves the cyclical nature of HR activity, such as the October-November benefits season. Hiring additional staffers to process forms is not a cost-effective option, but the alternative is an overwhelmed department with no time for strategic efforts — unless the company automates some of those functions.
Rachel Lyubovitzky, director of HR software provider KnowledgeSum, adds that the use of Web-based HCM software can help with the cyclical workload and go a long way toward uniting increasingly dispersed workforces and ensuring adherence to common standards and procedures, regardless of location. Lyubovitzky also contends that HCM software can help with efforts to ensure regulatory compliance.
"With legal and compliance challenges growing," she says, "it becomes necessary to track key performance metrics" on an individual basis in order to achieve strategic HR goals while maintaining efficient operations — the latter a requirement in all areas of the organization.
In the face of HR's challenges, including the maturing workforce, far-flung operations, and tight labor markets in the United States and worldwide, it's more of a challenge than ever to attract and retain qualified workers. "Striking a balance between the work and life domains is a challenge that HR needs to incorporate into [a company's] operations while maintaining operational efficiency," Lyubovitzky says.
One of the areas where an HR system can directly contribute to a manufacturer's cost containment effort is worker's compensation and safety administration, says Tom Tillman, director of product marketing for Sage Software's Abra HRMS system. Such a system can track the information needed for complete OSHA reports, which in the case of an audit can preclude fines or, worse, a mandatory shutdown of operations. The same data can help safety teams make corrections or adjustments in procedures and equipment to make work environments safer, leading to lower worker's comp and insurance rates. In the event that a manufacturer is self-insured, Tillman says, the system can help track the costs associated with each safety incident, such as medical expenses and time missed from work, so the company can get a better handle on the cost of insurance per employee.
When it comes to recruitment, many companies' traditional tendency to allocate the majority of their resources to hiring workers has become too costly, says Larry Dunivan, vice president of global human capital management products for ERP vendor Lawson Software . Today, facing the impending retirement of a large chunk of their workforce, American manufacturing companies, he says, are beginning to place emphasis on performance management as a means by which to measure the capability of their workers.
"Some really forward-thinking companies are even starting to take data and correlate it to predict the capabilities of future managers," Dunivan says.
Here's a look at the 10 most compared human resource management (HRM) products on ManagingAutomation.com (7/1/07 - 9/30/07), with information on the degree of HRM functionality that each product supports, according to MA's directory database:
1. Oracle Applications, Oracle's platform including comprehensive HR functionality from core HR transactional functionality through service automation and delivery to enterprise talent management (100% of MA's HRM functionality supported)
2. Finesse, by Enhanced Systems & Services, an ERP suite designed for highly-engineered projects (92% of MA's HRM functionality supported)
3. IFS Applications, a suite of more than 60 Web-based components, including time and attendance, project reporting, and expense reporting functionality (70% of MA's HRM functionality supported)
4. Vantage, an ERP suite from Epicor including applicant tracking, benefit programs, workforce training and development, union dues calculations and benefits (72% of MA's HRM functionality supported)
5. Infor ERP Syteline, an ERP package including workforce management and deployment, and talent management functionality (62% of MA's HRM functionality supported)
6. Sage MAS 500, a set of business management applications including Abra Attendance, Abra Human Resources, and Abra Payroll (51% of MA's HRM functionality supported)
7. Macola Enterprise Suite (ES), by Exact Software North America, an ERP solution designed for the mid-market (65% of MA's HRM functionality supported)
8. Plexus Online, by Plexus Systems, an on-demand manufacturing performance system containing HR functions such as recruitment management, personnel management, and payroll reporting (29% of MA's HRM functionality supported)
9. EMPulse Series HRMS, by ORANGE Digital Systems, an HR management system including payroll preparation, payroll processing, advanced project tracking and job costing functions (72% of MA's HRM functionality supported)
10. Perfect HR, from Perfect Software, a suite of systems based on .NET including applicant tracking, attendance tracking, benefit enrollment control and tracking, payroll and job tracking (95% of MA's HRM functionality supported)