An Unusual Human Capital Management Suspect
Written By: Predrag Jakovljevic
Published On: October 12 2006
Human Capital Management (HCM)
The most progressive companies have been using best-of-breed human resource (HR) technologies for attracting, hiring, training, motivating, and managing their people. Software applications are getting more and more sophisticated to help companies with these tasks, and as these solutions continue to evolve and communicate with one another, user companies will have more seamless access to methods and data to manage their employees throughout the employee life cycle. On the other hand, laggard companies that do not embrace these technologies will likely fall behind in their quest for market dominance.
There is a true need for much tighter integration between performance management and compensation (regardless of the economic milieu), so that exemplary employees can be rewarded more often, and thus feel truly special to the enterprise. This is vastly preferable to the outmoded blanket-regulated, across-the-board annual "incentive," which typically produces mediocrity. Analyzing the workforce and strategically managing the company's human capital has become the latest focus of human resource management systems (HRMS), as a way to transform these systems from dull functions to applications that greatly affect corporate performance. To that end, integrated business information warehouses enable multidimensional analysis with powerful drill-down features, on information aggregated from internal and external resources (for instance, salary surveys), performance indicators (such as turnover), and views on strategic HR information. Some surveys indicate that almost a third of businesses are already using data warehouses; a quarter of them use workforce performance management or analytics; and one eighth of them are using workforce planning.
This brings us to the notion of human capital management (HCM) or talent management, which Gartner defines as a set of HR practices that focus on the acquisition, management, and optimization of the enterprise workforce. This includes such processes as competency and skills management, succession planning, and team management. The key tenet of HCM is that companies must change their habit of seeing employees as an administrative cost, and instead see them as a strategic investment and key enterprise asset, with a resulting focus on aligning workforce capabilities with business strategy. This more strategic view of the workforce will gradually become less an HR function, and more a management discipline.
HCM should be about value and not cost, since people should be regarded as value-adders and not overheads and liability. It should measure organizational outputs related to better management of people (such as profit, revenue, and service levels), rather than focusing on input measures (such as recruitment costs) or the HR "best practices" of earlier days. According to studies by the Brookings Institute, in the early 1980s tangible assets amounted to over 60 percent of firms' total assets. But now this ratio has been reversed, with over 80 percent of assets being intangible—most of which is represented by human capital. Yet, while decades have been spent investing in automation technologies for better use of tangible assets, only recently have enterprises begun to invest in optimizing human capital.
For an extensive examination of HCM, see Thou Shalt Manage Human Capital Better.
An Unusual HCM Suspect
Vendor consolidation activity continues, both among complementary and competing HCM products (see The Human Capital Management Market—Hot, but also Overpopulated?), and the HCM fray has lately been enriched by Infor, a somewhat unexpected (or under-regarded) HCM aspirant. Infor is a provider of extended enterprise resource planning (ERP) solutions for manufacturing, distribution, retail, services, and public organizations worldwide (see The Enterprise Applications "Arms Race" To Be Number Three). Although much better known for its manufacturing and supply chain management (SCM) expertise, the vendor has garnered a strong portfolio of HCM applications, mainly stemming from the former Infinium HR and Computer Associates (CA) Masterpiece/HR suites (that came via the recent acquisition of SSA Global), as well as from the recent acquisition of Extensity, which brought the former Geac HR and Payroll solutions. These applications have all achieved strong penetration in some service industries. In fact, Infinium remains the undisputed leader in the hospitality and gaming sector.
In August 2006, Infor announced the general availability of Infor Human Capital Management (HCM) 3.0, a comprehensive solution that aims at helping companies reduce workforce-related costs (which, as mentioned above, can contribute up to 60 percent of any company's total expenditures) and improve workforce productivity. With this product release, the vendor has combined both transactional and strategic HR functionality with integration to its flagship ERP and extensions solutions, so that its customers can better align their HCM initiatives with overall business strategy. The solution is integrated with core Infor Financial Management (Infor FM), Infor Portal, and Infor Workflow, and provides extension solutions such as Infor Corporate Performance Management (Infor CPM). Infor HCM and FM are not only integrated, but also share the same technology foundation.
In tune with the exhaustive market analysis presented in an earlier series, Infor believes that HCM is no longer a back-office function, but rather a key component of a modern extended ERP solution. This solution must be able to add value to uninterrupted business processes, and become a means to enable compliance through organizational alignment. Accordingly, Infor HCM enables companies to automate core processes such as HR, benefits, and payroll, and also offers capabilities including self-service, analytics, and workflow to better connect managers and employees. In other words, the efficiency and effectiveness of a user enterprise's operations and processes can be achieved via both core HR and strategic HCM capabilities, bundled with workflow integration and a workforce portal. Some potential benefits are thus reduced HR costs and time, through business process efficiencies and improved employee communication and productivity. The vendor claims that a vast number of existing customers surveyed have told it that they want to 1) improve workforce performance through accountability and visibility; 2) achieve greater efficiency and effectiveness by adding value to processes and increasing capabilities; and 3) lower total cost of ownership (TCO) through application flexibility and compatibility.
To accommodate the last requirement—lower TCO through application flexibility and compatibility—the suite is built on open standards, including Java 2 Enterprise Edition (J2EE) and extensible markup language (XML). It can be deployed on multiple platforms, including UNIX (Sun Solaris, HP/UX, and IBM AIX), Microsoft Windows, IBM iSeries, Multiple Virtual Storage (MVS), and Virtual Storage Extended (VSE) mainframe operating systems (OS). It can also be deployed on Microsoft SQL Server, Ingres, Oracle, IBM DB2, Informix, and CA-Datacom databases. Initially available in English only, the product suite has since been internationalized to accommodate multiple language and currency support, and Spanish, French, Italian, German, Norwegian, Finnish, Danish, Brazilian Portuguese, Simplified Chinese, and Japanese are being rolled out throughout 2007. The product is also slated for continued adoption of the recently released Infor Open SOA (Service-oriented Architecture) (see Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field).
The product already features J2EE-based self-service and talent management (as in learning management and performance management) modules, and a J2EE/XML-based user interface (UI) and integration layers (whereby the integration layer also supports Microsoft .NET). The future should see continued adoption of J2EE, and more modular SOA development. These traits have been provided with potential customer benefits in mind, such as the ability to capitalize on and leverage existing IT infrastructures, and the potential to further meet global requirements. Thus, one should see Infor HCM as a major cross-selling product in the ongoing merger of a few fellow extended-ERP providers (Infor, SSA Global, and Geac); pre-merger Infor's native HCM capabilities have been all but non-existent thus far, despite an immense product portfolio.
What Does Infor HCM Entail?
Diving a bit deeper into some individual modules, the Infor HR module covers traditional multi-organizational workforce management, multi-job position management, workforce development, training administration, basic recruitment, and salary planning and budgeting. However, the novel Infor e-Recruitment module seems particularly comprehensive in terms of global applicant tracking and Internet-based recruitment, and is taking care of both salaried and hourly hiring support on a single platform. It manages most of the business processes in the web-based staffing process, including requisition management (creation, sign-off, and approval); candidate sourcing tools (including corporate job boards and job cross-posting, and resume parsing and searching); customizable applicant screening and ranking, interviewing, candidate communications, selection and offer generation; hiring and on-boarding; and internal talent management. Also, there is the management of such employment applications as portable document forms (PDFs). The underlying workflow management tools support customized business processes, and the analytic tools provide customized activity and metric reporting.
Infor Benefits Administration provides virtually unlimited benefit program management in terms of benefits plans, providers, and rates. The module identifies appropriate dates for calculating coverage and deductions, provides maintenance of dependent and beneficiary information, and supports flexible benefits plans, such as the definition and maintenance of flexible credits. There is also compliance with the US Health Insurance Portability and Accountability Act (HIPAA) and Family and Medical Leave Act (FMLA). Infor Payroll is also quite functional with support for payroll and year-end accounting, including compliance with US Equal Employment Opportunity (EEO) laws, and the US W2, 1099, and 1099R forms. It also includes compliance with Canadian T4, T4A, and other germane forms. There is a plethora of earnings and deductions combinations, as well as support for basically any type of payroll period (weekly, biweekly, semimonthly, monthly, and special [executive] pay cycles). Other notable features are possible overrides of earnings, deductions, and taxes; retroactive payroll processing; "compute-a-check" (on-demand payroll and check provision); workers' compensation; absence management; and garnishment tracking and deduction.
Infor Self-service provides four modules:
- Employee Self-service, to update personal and contact information, access learning management, update skills and competencies, and view performance management;
- Payroll Self-service, to view paychecks, submit tax elections, change pay locations, view W2 forms, and view or change direct deposit information;
- Benefits Self-service, to view benefits summaries, view or edit lists of dependents and beneficiaries, perform benefits enrollment, and view or enroll in flexible spending accounts; and
- Manager Self-service, to view employee information and conduct employee status changes, and for performance management and salary planning.
The Infor Learning Management module provides support for many training methods, including instructor-led, online or web-based, computer-based training (CBT), event-based, synchronous, and blended methods. There is integration with leading collaboration platforms such as Centra, Placeware, and WebEx, and a solid online content management repository from multiple internal and external sources. This repository includes a built-in authoring tool and "anytime, anywhere" content development and uploads. The module supports self registration and group registration using credit cards, cost centers, subscription, or purchase orders, while collaboration can take place through discussion forums, e-mails, and chat rooms. There is delivery and tracking of proprietary and standards-based content, including Aviation Industry CBT (Computer-based Training) Committee (AICC) and Sharable Content Object Reference Model (SCORM) standards. The module is also integrated with its SSA counterpart modules (Performance Management, Development Planning, and Competency Management).
Last but not least, Infor Employee Performance Management provides the ability for the enterprise to establish objectives and goals, and track them to completion via features like "360-degree feedback" (meaning feedback from all sources connected to the employee), including peer reviews. It also enables automatic calculation of performance review scores based on employee ratings and weight inputs. There is support for formal and informal performance appraisals, based on accomplishment of established goals and attainment of competencies. Again, in this context there is underlying automated workflow (to ease administrative tasks and ensure that performance reviews are completed on time). Other notable capabilities are detailed skills and gap analyses that more clearly identify areas for improvement and development; cascading goals to help users align employee performance measures with those of the organization; and role-based assessment of individual competencies and skills to provide further insight into employee performance. All these capabilities aim at identifying top performers to aid in corporate succession planning.
How Does This All Fit Together?
In a little demonstration of the Infor HCM system at its 2005 Global Client Forum (GCF) user conference, former SSA Global illustrated how the process of bringing new employees on board and deploying them into the organization can be streamlined, with all information set up in internal systems beforehand to ensure that new hires are productive from the first day. This is often a time-consuming, paper-intensive process which results in low engagement during the early days of employment. In the demonstration, a new recruit in the information technology (IT) department has accepted an offer of employment, and needs to become registered in the company's systems. The HR administrator completes an online job hire wizard in the aforementioned Infor e-Recruitment module, and this automatically creates an employee record in Infor HCM 2.0. For speed and efficiency when on-boarding new employees, Infor Workflow will automatically notify various departments to continue the process of setting up the new employee. Accordingly, an e-mail notification is sent to the benefits administrator, and there is a workflow inbox for the administrator which contains the actions necessary to complete the new hire process. By clicking on these links, the administrator can complete the benefits enrolment process for the new employee.
When the set-up process is complete, the employee has immediate access to Infor Self-service, where it is possible to enter annual tax elections in the Infor Payroll solution, and also to verify and update personal and work-related information, such as name and address, emergency contacts, and work location. In Infor Learning Management, the new employee can enroll in learning and development plans during the first day of orientation training, since it is possible to access the course online. When the course is complete, the learning transcript and evaluation can be made available to management. The HR department can view all employee information online, including analysis with Infor Enterprise Reporting and Analytics (with Cognos as the underlying platform). Finally, with the new employee deployed into the organization, HR executives can proactively plan and budget for future staffing needs using Infor Enterprise Planning and Budgeting.
Rounding Out with a Talent Management Acquisition
Infor Global's capabilities in HCM were enhanced by the late-2005 acquisition of Boniva Software, a provider of e-learning, skills management, and performance management applications. The addition of new, complementary HCM functionality expanded Infor's ability to address the growing need among its customers for solutions that support employee recruitment, learning management, competency and skills assessment, and employee performance planning. The Boniva applications were based on a similar SOA, and built using the same J2EE technology as the Infor Open SOA mentioned above. The combined architecture has provided the flexibility to integrate with existing enterprise applications, and to quickly tailor solutions for specific industries.
As for addressing its customers' foremost requirement—accountability and visibility of workforce performance—Infor offers a combination of capabilities like workforce planning and budgeting, HCM analytics and reporting, and talent management. Logically, potential customer benefits should arise from alignment with corporate strategy by combining workforce requirements and business plans. They should also gain the potential for improved decision making through visibility of performance, and the ability to acquire and develop the best talent. To that end, in mid-2006, Infor (formerly SSA Global) announced the general availability of Infor Talent Management 4.5, a comprehensive workforce management solution for midsized and large enterprises.
Infor Talent Management is enabled by many HCM components and cross-integrations, including workforce planning; web-based recruiting; employee performance and competency management; workforce development; succession planning; learning management; and compensation management. The solution was designed for easy integration into core ERP systems, and can be implemented as an Infor Global-hosted solution, or installed as a licensed solution. Its modular format makes it possible to integrate only the required talent management functionality into a customer's existing platforms or services. The solution is double-byte enabled, making it a suitable talent management solution for multinational companies that need to manage a workforce in several countries. Infor Talent Management 4.5 is currently available in English, with plans for localization in more languages in 2007.
There should be no automatic selection decisions for add-on modules favoring incumbent ERP, HRMS, or HCM providers, but rather the development of a defendable list of HCM requirements that each contesting vendor has to demonstrate. Of course, learning about new features and attractive pricing is beneficial, if only for information and for leverage with other vendors. We suggest evaluating the flashy "bells and whistles," the price, reference sites within the user's industry, and the corporate viability of other vendors, before making a selection. ERP providers like Infor are offering much deeper HCM functionality than ever before, and should be given a serious look by both current and prospective customers, bearing in mind that some best-of-breed HCM vendors may still excel with depth and experience in their horizontal and vertical niches.