All Tied Up

With much of the payroll software industry currently focused on Inland Revenue compliance standards and accreditation schemes, it is easy to overlook the rapid development of technology in other areas.

The Internet, in particular, is defining new levels of usability and accessibility. Having been dragged, screaming, away from their beloved DOS screens and into the Windows environment, payroll users are now faced with new challenges - the web browser and the portal.

At the trade exhibitions, such as the recent Softworld event, "web enablement" is all the rage. Versions of all business systems, not just payroll and personnel software, are appearing with an interface that allows them to be used with the Microsoft Explorer, Netscape Navigator and other browsers.

At the forefront of this revolution are the software houses that provide "enterprise" system solutions for the largest national and multinational companies. Following along behind are many other software developers who recognise that this is the future direction of their applications.

The enterprise package

The business systems supplied by these three organisations are generally known as "Enterprise Resource Planning" applications, ERP for short. The term "enterprise" refers to the organisation, in the broadest sense, that uses a particular software application. It could be a single company, or all of the companies within a group, or even a company together with its suppliers and customers.

The systems used within the enterprise are designed to manage its "resources", including its human resources, materials and products, and they are used for "planning", to support decision-making. As well as HR and payroll, such systems include financials, manufacturing, supply chain management, and customer relationship management.

The role of the ERP application provider is to supply a whole suite of these critical business systems. Colin Addison, Product Manager at Oracle Corporation, explained the rationale for this. "There are significant benefits for organisations when they take a number of integrated systems from the same supplier", he told me. "If you get systems from different suppliers, you have an integration problem. Maintenance becomes a major challenge as suppliers take their products in different directions and introduce upgrades at different times. This is costly as it ties up users and support staff in continuous system testing. When close integration of systems is a requirement, it is very difficult to justify buying them from different suppliers."

Integration issues

I asked Mark O'Dowd, Head of HR and Payroll Solutions for SAP UK, how they handle the situation when a client wants to buy their suite of applications but prefers to use a payroll and HR system from another supplier. "When a client identifies what, in their view, is a best-of-breed solution, we have to discuss the integration issues", he explained. "There are many attractive 'point solutions' aimed at small and medium enterprises, especially in the HR and payroll markets, but integrating them with other major enterprise solutions can be a nightmare. There is significant work involved in building interfaces between systems from different suppliers, and even the ledger interface is a problem. At the end of the day, almost anything is possible. However, interfaces have to be maintained when the systems change and this increases the cost of ownership."

Liz Bailey, Product Strategy Manager for PeopleSoft UK, takes a pragmatic view of the integration issues raised when clients take systems from more than one supplier. "The concept of ERP is that you buy a total solution from one supplier and benefit from the same technology, the same tools and the same look-and-feel throughout the enterprise", she began. "The reality is not always that simple. First, not all vendors have all the systems that a company requires and you cannot avoid going elsewhere for certain niche products. Second, companies may feel that the advantages of a best-of-breed system outweigh any on-going maintenance problems. Third, the upgrade paths for systems from the same supplier do not always coincide. Complete integration is an ideal but it is not always possible."

Online access These traditional best-of-breed and integration issues have not gone away but are certainly under review now that the Internet provides ease of access to many diverse systems. The ERP application providers have been among the leaders in the Internet revolution and now offer enterprise-wide e-business and e-commerce solutions. "ERP systems are still a vital part of this new market", Mark O'Dowd told me, "except that our traditional solutions, including HR and payroll, must now be available over the Internet. The market is moving on and new opportunities have opened up."

Liz Bailey describes this as a 'huge transformation'. "We have retained the underlying systems and databases", she continued, "but we have redesigned all of the user interfaces. With our web-based solutions, the users can now go to any PC with a web browser and get at all the applications and data they need to do their jobs. However, this ease of access does not mean that integration is no longer an issue. The web front-end must be completely integrated with the 'back office' systems and work still has to be done to make point solutions from other vendors as accessible as our ERP solutions."

Colin Addison describes these changes in terms of focus. "ERP applications were traditionally 'internally facing'. For example, in the context of payroll and HR, it was only the people in those departments that used and updated the systems. The Internet has changed the focus completely and ERP applications are now 'externally facing', of value to the extended community. Payroll and HR systems are now accessible to employees and line managers throughout the business, and to external organisations that supply employment benefits."

With much broader access to systems, what are some the market opportunities open to ERP providers? "The Internet has widened our market", Mark O'Dowd told me. "Instead of just concentrating on large businesses, we are working to make our applications available through Application Service Providers (ASPs). Small and medium enterprises will soon be able to run our systems, including payroll and HR, over the Internet." Does the use of ASPs to host applications affect their design? "We take their potential use as hosted applications into consideration when we plan new developments", Colin Addison responded. "The web interface has to suit larger enterprises that run our systems in-house and smaller businesses who may rent the system and pay for the service on a per employee basis. This means that they can choose one option now and change to another in the future."

Portal developments

The accessibility of systems through web browsers has created a new ease-of-use feature called the "portal". Liz Bailey explained that portals are "the key place where users go to access all applications needed to do their jobs in total, and to do personal transactions. This is more than just self-service, where employees can update details on their computer records and obtain information to make informed decisions. The portal has to be role-based, so that everything available is relevant to each user. An employee portal, for example, is a web browser page that has links to the payroll and personnel systems and any other internal systems needed for the job, and to links to external sites and systems such as benefits providers and government departments."

Mark O'Dowd sees the portal concept as a powerful way to motivate staff. "There is so much accessible information, it is a compelling way to work. Your portal understands what you need and provides it at the right time. It connects you to all the people and processes on which your job depends. For example, you have special needs when you first join a company. Your portal takes you through an induction checklist and gives you information on everything you need to settle in. Later, when you're thinking of moving house, you can obtain discount with a removal company and make the arrangements online; or if there's another child on the way, you can review your benefit package and medical cover."

The ease of access to critical business information and systems offered by the Internet is set to revolutionise the way we work. How far will this go? Liz Bailey has the last word: "Information for employees is available anywhere, anytime. They can work at home - so why shouldn't they do personal things at work? The distinction is blurred; doesn't it make sense to book a holiday at work, over the Internet, using the corporate travel agency rather than take a three-hour lunch break to visit a local travel agency? And the organisation gets the commission!