by Joe Angione

HR self-service drives competitive advantage. That’s the conclusion of the Cedar 2002 Human Resources Self-Service/Portal Survey. These excerpts provide important data for HR and Information Technology professionals as they develop and execute strategies to transform employee and manager service delivery.

The fifth annual Cedar Human Resources Self-Service/Portal Survey, conducted among major corporations here and abroad, clearly documents "the direct tie between HR self-service portals and competitive advantage," reports David Link, vice president of Baltimore, Md.-based Cedar Consulting, an international business applications and consulting firm with offices in nine countries. The survey drew responses from 299 large U.S. and foreign corporations, each employing more than 1,000 workers.

"We've seen HR self-service and portal technology grow from an interesting idea that could provide some administrative benefits into a necessary force for driving an efficient workplace and an effective workforce, thereby bringing significant competitive advantage to an organization," adds Link. "This is true for all types and models of companies doing business in all industries. Managing HR effectively equals competitive advantage." Although HR self-service can be implemented in-house, Link sees a growing level of importance for outsourcing, particularly boosting the fortunes of those outsourcing firms that are switching their focus from the administrative aspects of HR to creating the processes and systems employees can use to access HR information. All this adds value to an employer in the form of improvements in its human-capital management programs.

The survey found that the vendors who stand to gain most from the trend to HR self-service are the ERP firms that are maturing and moving to address this space, third-party add-on solutions providers, and those providers who are leading the emerging business of corporate portal technology. According to Link, portal technology focuses on merging human-capital management applications as the centerpiece of a portal framework, which offers an organization a "single view" that couples many applications in a role-based format. This allows personalization of a much more mature workflow.

The impact of today's soft economy has produced evidence that corporations are tightening up on their spending for information technology. "Although there is less money being spent on HR technology, we're seeing this investment being made more aggressively and intelligently on technology products that are more sophisticated and provide more value per dollar spent. The IT budgets may be smaller, but they're having a greater impact on a company's success with human-capital management," says Link.

Lexy Martin, Cedar's director of research and analytics, notes: "2002 IT budgets were down from the previous year. But 2002 actual spending was more than was budgeted in at least two areas: software and hardware. To do this, some companies are diverting money from functions such as marketing and change management."

Where is this money being spent? Martin reports: "HR self-service budgets fund applications supporting three areas of performance: employee productivity, manager productivity, and those strategic applications directed toward human-capital objectives such as attracting, developing, and retaining key employees vital to achieving organizational objectives.

"We began to see strategic applications bloom in our 2001 survey. But today, these applications are expanding 30 to 50 percent faster than other HR applications. At the heart of this trend to strategic applications are e-learning and e-development applications. In 2001, the focus of human-capital strategy was on recruiting the best personnel. Now it's shifting toward applications that help a company make better use of existing personnel and assist in retaining them longer," says Martin.

HR self-service applications have been able to demonstrate an early and substantial return on investment for users, often cutting the cost of HR transactions by as much as 50 percent, and delivering an ROI for many organizations in under three years.

"The best return on IT spending is derived by organizations that have developed a clear, concise vision for the organization, have created a comprehensive HR strategy to support that vision, and have applied the best technology solution to that strategy," observes Cedar Consulting's CEO, Tom Rump.

The savings and increased productivity attributed to HR self-service are building an exploding appetite for it in the marketplace. "The undeniable fact," says David Link, "is that an organization that doesn't supply HR services in a digital format, the way employees want them, will have a negative impact on its workforce."

From the Cedar Survey

Cedar has conducted research into the state of HR self-service since 1997. The first year, we surveyed the early adopters-those with sophisticated self-service in place at that time for at least one year. In the next three years, we focused our survey on organizations in the United States. In 2001, we turned our attention not just to HR self-service but to employee portals and knowledge management for HR service delivery. We also moved from a U.S. perspective to a broader North American perspective that incorporates Canadian responses, and expanded our focus to European and Australian/Asia Pacific organizations. In 2002, we continue with a global perspective, covering organizations in North America, Europe, and Australia/Asia Pacific. We also return to some of our 1997 early adopter organizations and provide you with their stories about where they are today and the lessons they learned over the past five years.

While we have four years of historical data, in this report we focus on telling the story of today-what is in use and planned going forward. We also juxtapose these results to what was in use and planned in 2001 for all macro regions. The results will be of particular interest to global organizations, as they will be able to see variations by major macro region and plan accordingly.

This year, we have trend data globally, but summarize it judiciously. In addition, we offer supplements whenever we have enough data points to do credible analysis and comparisons. In 2002, we have a total of 299 responses, with 79% from North America (United States primarily plus 10 responses from Canada), 16% from Europe, and 5% from Australia/Asia Pacific-percentages, in fact, exactly equal to last year's research results. Over 9.2 million employees are represented by the responding companies in our 2002 survey, with 7 million from North America, representing over 5% of the entire working population. For North America, we used the IHRIM (International Association for Human Resource Information Management) membership as our source of respondents.We sanitized the list, reducing it to organizations with over 500 employees and excluded consulting and vendor organizations. Our response rate was 8%. We also expanded our mailing to include Cedar and partner prospects and customers whose profile is similar to our sanitized IHRIM sample. For Europe, we used the IHRIM Europe mailing list and achieved a 9% response rate. For Australia, we were provided with a list of contacts by associations and partners in organizations, again with a similar profile to those surveyed in North America and Europe. We sanitized that list to a sample of 46 and achieved a 33% response rate. In terms of industry representation, the distribution of North American respondents matches the distribution of large establishments of over 500 employees as reported by the U.S. Bureau of Labor Statistics for the categories in Figure 1. Results are also consistent with prior years' results. We are thus comfortable providing trends and stating that North America responses are generally applicable to all North American organizations of comparable size.

Survey Conclusion

Today and in the future, the trend towards stronger success will be achieved through attention to financial, organizational, and communication factors. Financial attention is focused on creating credible business cases, ensuring adequate funding, and then measuring results. Organizational attention stems from executive commitment, strategies and plans around enterprise-wide solutions, and collaboration between HR and IT to ensure success. Communication attention is focused on strong marketing and employee communications to address culture issues, as increasingly sophisticated technology is implemented, especially with manager self-service deployment. Success is achieved through a combination of high-tech/high-touch solutions, blending technology, organizational, and individual needs. HR self-service/portal initiatives are changing the way HR adds value to the organization as it supports the management and effective performance of our most valuable resource-human capital-for the benefit of both the organization and the individual.

Charts and text adapted with permission from the Cedar 2002 HR Survey. A copy of the complete 30-page survey report is available without charge by contacting lexy.martin@cedar.com.