Web Wise

It seemed, at one time, that the year 2000 would never arrive. Now it is drawing to an end and there is no let up in the escalating pace of technological change. Everywhere is "The Web", with www-this and e-that. Where is all this leading? What will happen to your payroll and HR systems in just a few years? If you were dragged screaming from DOS into Windows, you might think twice about reading on…

One of the buzz-words for 2000 was "web-enabled", used to describe systems that may be used through a web browser such as Microsoft's Internet Explorer and Netscape's Communicator. Paul Beaumont, product director at PWA, says "The payroll and HR market is awash with applications that claim to be "web-enabled". However, the term should be limited to systems that have been designed around web-based technologies. Just because a system allows access via a browser does not mean that it is web-enabled."

David Stallion, managing director of Meta4 agrees. "A system may be described as 'web-enabled' but, if they've just stuck a browser on the front, it doesn't deliver anything in terms of web capability. Many multi-site companies use the Internet as their principal means of communication and that will only be successful where the systems have been specifically designed for the web, and not those using traditional client-server structures."

The accessibility of the Internet is driving this trend, according to Peter Collinson, customer services director for Midland Software. "Most prospects are looking for web access", he says. "It is the most cost-effective way of gaining remote access to business applications around the clock, wherever you are in the world, whether you're at work, at home or on the move."

Software online

The emergence of web-enabled systems has opened up a new type of payroll service, offered by Application Service Providers, or ASPs. In the context of payroll, customers simply log on to the Internet, visit the ASP's site, enter the password, and have full access to, and control over, a payroll system, as if it were running on their own computer.

Web-enabled systems are essential for a good ASP service, according to John Rutherford, managing director at Rutherford Webb. "You can't just use a client-server system. You can preserve the payroll engine that does the calculations, but the screens, the reports and printing routines all have to be rewritten."

Who are likely to use a payroll system from an ASP? "We thought it would be attractive to companies with fewer than 25 employees", explains Rutherford, "but there has been more interest from larger companies, especially those that are already making full use of the Web for their businesses. However, larger companies with many sites are more likely to develop an intranet, but that still requires the latest in web-enabled systems."

Looking to the future, Stallion observes: "Web-enabling has the potential to impact seriously on the structure of organisations. Decision-makers can see the benefits, but will the implementers embrace the new technologies? For example, from a commercial and strategic viewpoint, the payroll and HR functions should be together, making joint use of an integrated, web-enabled system. Some organisations will not go in this direction because of internal politics, i.e. the managers in those departments just don't want it. On a greater scale, the prosperity of organisations is at risk if they are not 'webcentric' and fail to embrace these technologies and the new organisational structures that go with them."

Best-of-Breed

The growth in web-enabled systems forces a fresh look at the long-standing issue over system integration. Midland Software and PWA both have web-enabled integrated HR and payroll solutions and their arguments are fairly predictable. Collinson says "Integration has clear advantages; information is only updated once and there is full access in every area of the system." Beaumont reports that, for most prospective clients, integration is a prime requirement. Interestingly, both companies describe themselves as offering 'best-of-breed' systems, on the basis that an integrated HR and payroll system is a single solution.

Rutherford's company specialises in payroll and takes a different view. "You cannot have top quality in both payroll and HR systems", he maintains. "They are philosophically different systems; payroll is a batch system, has a precise statutory basis and is deadline driven. HR has no deadlines and is concept-oriented. You cannot expect a development team building an integrated system to satisfy both positions."

Enterprise products

They all unite, however, in the view that Enterprise Resource Planning (ERP) companies that offer integrated software solutions for other business functions such as accounting, manufacturing and distribution, as well as payroll and HR, cannot produce best-of-breed solutions. Rutherford: "The problem is not with linking systems together but with the quality of the parts." Collinson: "It is much easier to integrate systems now, so the market is moving back to best-of-breed." Beaumont: "ERP businesses are trying to be 'jacks of all trades' but are 'masters of none'". Stallion: "We are seeing the closing stages of ERP. There is no advantage from a massive suite of programs from one supplier, and you pay a high cost premium."

Those views demand a reply and it comes from Colin Addison, product manager at Oracle Corporation. He explains that ERP includes systems to manage the "extended enterprise", i.e. an organisation's customers and suppliers. "Our systems are fully web-enabled," he insists, "and that has been our strategy for a number of years. We don't say that there isn't room for 'best-of-breed' in a particular business area but, to support the extended enterprise with web-based systems, integration is more effective and demands less of busy IT departments if it is delivered as part of a product suite. It isn't integration that's the problem, it's the volume of integration involved when applications from many different suppliers are used."

Self-service

The concept of employees updating their own computerised record is not new but web technology has opened up new opportunities. Beaumont describes two distinct types of self-service: "Employee self-service allows employees to change their personal and bank account details, to book themselves onto training courses and to request holidays. It gives them access to their payslips and to company policies and procedures. They can even manage their own flexible benefits. Line manager self-service provides access to the payroll and HR records of their direct reports, to approve holiday requests, identify skills, manage absence and vacancies, model salaries and manage careers."

What opportunities does the Internet and the use of intranets for self-service open up? Collinson believes that the role of the HR department will change. "We are already seeing a devolution of admin responsibilities to employees and line managers. Web-enabled applications save money by reducing administration and providing access from anywhere in the world. As a result, HR departments can become more involved in policy and strategy."

Addison illustrates the financial benefits of self-service with Oracle Corporation's own experience. "We have implemented our own web-based self-service for our staff and line managers to use, with an annual saving of $900,000. We now have one benefits administrator for every 3000 employees, instead of one for every 800. The annual maintenance cycle has reduced from 45 days to 12."

How soon companies will introduce self-service depends on the culture of the business as well as the availability of the technology. "Payroll people will resist," Rutherford suggests, "because they demand greater control than personnel. Access is likely to be limited to name, address and bank account details."

Considerations

These interviews raise some interesting issues that should concern payroll and HR people. Think about these:

If you have been shopping in the past few years for a multi-user system, you likely have a client-server system, offering access over a network. Despite developers claims that their systems are 'future-proof', they may not have the potential offered by the Internet and intranets.

ASPs are only one of a number of ways of obtaining a payroll or HR service. In the future, we could see an organisation using an in-house system for HR and an ASP for payroll, without the users being aware of it.

We may be seeing a reversal of the integration issues. If the whole attraction of web-enabled systems is that they are easy to link together, why not find your 'best-of-breed' web-enabled payroll system and link it to your 'best-of-breed' HR system? However, developers with their 'best-of-breed' integrated HR and payroll systems, and ERP suppliers with their 'extended enterprise' applications, may not entirely agree.

Will payroll really hold out against self-service? As long as there are proper controls in place, surely it must be better to pass on some of your excessive workload to employees and line managers.

Finally, one of the suppliers interviewed, who shall be nameless, suggested that payroll is only a transaction-based process, i.e. it exists just to produce payslips. He felt that a web-enabled HR system would be of benefit to a business, but payroll should be outsourced as its purpose is just to pay people. Is that all payroll is? Is the advance of technology going to take away the potential strategic role of payroll?