Integration and Beyond

Just to get this subject off to a controversial start, Michael Howard of Frontier Software told me that "Best-of-breed is only for organisations who do not want to gain benefit from an integrated system". The debate over the pros and cons of integrated systems versus best-of-breed systems is clearly not dead, and the key issues of the traditional debate are shown alongside.

Traditional integration issues

Separate payroll and HR systems, linked by interfaces, are said to be integrated. Systems that share a single database are often described as "fully integrated". Both avoid the need to maintain data separately and, in practice, users may not know whether their data are held in one database or in two interfaced databases.

Employee-based systems that are integrated to varying extents include payroll, personnel administration, specialist HR functions, time and attendance, pensions administration.

Applying the "jack-of-all-trades, master of none" principle, it is argued that the component systems offered by suppliers with integrated solutions may not be as good as specialist suppliers who supply "best-of-breed" solutions.

The issues may be academic if IT policy dictates the options available to users.

Despite the level of integration of payroll and personnel systems, most organisations continue to keep the two departments separate, with consequential data ownership issues.

The issues were summed up for me by Eric Smart of Smart PeopleTime. "A package from one supplier that does everything, has the same technology, that uses a single database, should be perfect. The downside is that some parts of the system may be poor or, at least, not special." His systems currently link to 42 different payroll packages, but he admits that there is an overhead in maintaining the interfaces when those systems are enhanced by their developers.

Interfacing problems

A common warning from suppliers of integrated systems is that there can be problems in interfacing systems from different suppliers. Peter Collinson of Midland Software suggests that the advance of technology has minimised this difficulty. "You may be happy with the financials offered by a supplier, but not the HR system. Most systems today are capable of running in almost any environment and this has opened up the opportunity to buy best-of-breed again."

And best-of-breed suppliers are bullish about their specialist role. Propath Solutions, for example, specialise in HR systems. "We have best-of-breed partnerships with three leading payroll solution providers", explains Richard Anderson. "We strongly believe that our expertise is best concentrated on HR and that we should partner similar companies to provide the perfect solution to our clients, whatever their requirements." A further interesting twist is that developers of integrated HR and payroll systems are starting to describe themselves as "best-of-breed" suppliers. Ed Ramshaw of Cyborg Systems says that "as a market leader in the HR and Payroll market sector, we concentrate on being a best-of-breed supplier with no dilution of our focus by trying to capitalise on other business areas."

Going even further, Michael Richards of Snowdrop Systems believes that these integration issues should be relegated to the past. "The issue is no longer about integrated systems or best-of-breed", he maintains. "These problems have been solved by the better suppliers." What does he think are today's issues? He makes two points. "First, too many organisations rely on archaic paper-driven processes. Second, despite payroll and HR system integration, these departments remain quite separate operationally. A new computerised and integrated system will not by itself improve poor processes."

Application service providers

A new aspect of the traditional integration debate are the so-called application service providers, or ASPs. This variation on outsourcing provides users with access, usually over the Internet, to a suite of software applications hosted on the provider's website. The customer needs only an Internet connection but, otherwise, has no capital outlay and requires no in-house IT expertise. Users however are dependent on the provider's choice of systems and the level of integration between them. There is little possibility for best-of-breed selection unless a provider can be found that is using the customer's preferred payroll or personnel system.

The traditional integration issues are still around but of increasing importance is the way in which systems, however integrated, are being used and contribute towards the performance of the organisation. The comments reported so far have started to highlight a number of the newer issues surrounding integration, for example, the need to look at structures and processes and the use of the Internet. The suppliers of both payroll and HR systems have quite a consistent view on where integration is going. The common areas of interest are (1) workflow, (2) web-enablement, and (3) intranets and self-service.

Before considering each of these areas, Dave Johnson of Rebus Software draws some interesting pointers from Peter Drucker's book, Management Challenges for the 21st Century. "Three of the major challenges discussed have a direct impact on integrated HR and payroll systems", he suggests. "The first is getting the right information to people to do their jobs, part of which is making sure that line managers have the information they need to make decisions. The second is to increase the productivity of 'knowledge workers', in part by the use of knowledge-sharing intranets. The third is self management, supported by the use of intranet technology to enable staff to take control of their own information and careers."

Workflow

Michael Richards commented earlier about 'archaic paper-driven processes' and the inefficiencies caused by separate payroll and personnel departments. Richard Anderson finds that "payroll and HR departments are maintained separately and protect their function with a vengeance from each other". These are some of the problems that are addressed by workflow techniques. Instead of the process of, for example, setting up a new starter being dependent on the actions of individuals, each of the steps is controlled and moved forward by the system itself. Peter Collinson of Midland Software says that "older personnel and payroll systems used to be information repositories with reporting tools. Now they are process-driven systems, capable of managing the daily administrative workload, ensuring that processes are managed and completed in a timely fashion."

The payroll and personnel systems from Northgate Information Systems (formerly MDIS) also come with built-in workflow tools. "These enable users to identify the bottlenecks in the business processes," Malcolm Aldis explains. "Having defined each task in a process, how they link to each other, and who is responsible for making them happen, the system takes over and, as each step is completed, it sends an e-mail to the next person in line."

Web-enablement

Most users of payroll and personnel systems have become familiar with the Windows interface. Many systems suppliers have now produced versions of their systems to "enable" them to operate over the Internet, with the distinctive appearance of web sites. Peter Collinson of Midland Software believes that "within five years, all systems will be accessible 24 hours a day, 7 days a week, over the Internet, from anywhere in the world". He advises organisations who are looking for new systems now to consider one that is fully web-enabled.

Northgate's approach to web-enablement is to give their standard payroll and personnel systems an interface that looks like a web-based application. The advantage of this, Malcolm Aldis explains, is that "they have the same look and feel wherever they are used. Whether you run them on your desktop or log in from somewhere else in the world over the Internet, they work in exactly the same way."

Intranets and self-service

Access to web-enabled payroll and personnel systems can also be provided through an intranet, an in-company Internet. As a result, anyone in the organisation can, with the appropriate security, gain access to the system, from anywhere. Richard Anderson of Propath Systems describes an intranet as providing "a window on information from multiple databases from any location which has access, which means that users can update and view each other's systems in real time."

There are two obvious benefits: firstly, line managers can maintain and examine employees' records no matter where they are and, secondly, employees can also look at their own details and maintain items that their security level permits. They may even be able to identify their personal development needs, book themselves onto courses, apply for job vacancies, or manage their flexible benefits. Going even further, an intranet would allow each department in an organisation, or even individual workers, to set up their own in-company web page to describe the work they do and provide information for anyone else in the business.

Integration, beyond the traditional issues, is opening new ways for both payroll and personnel staff to provide a broader service to their organisation. When speaking to prospective suppliers about their payroll or personnel offerings, make sure you look beyond your current requirements and examine the ways that workflow and web-enablement can take your business forward.

To conclude, Michael Howard of Frontier Software suggests another opportunity opened up by integration. "We have many clients in Australia and New Zealand using e-mail to send payslips to employees. Why is this not done in the UK?"