New Electronic HR Tools Are Hitting Their Stride

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The marketplace for electronic human resources solutions has been so fragmented and confusing that it barely has a name.

Fortunately, after years of trial and error, it appears that eHR is starting to hit its stride. The eHR tools out there are helping educate, bring efficiency to benefits processes, encourage intelligent utilization of benefit programs and cover legal compliances.

All these goalsfrom the practical to the idealcan be achieved today with the right systems in place.

If your organization has been burned in the past, you owe it to yourself to understand what has been happening in the world of eHR and where the opportunities are today.

Administration First. The initial generation of eHR products planted its roots nearly 10 years ago in large companies, first with software installed on employees computers and eventually through the Internet.

It was instinctual triage for consultants and software providers to focus on an HR departments most acute pain: benefits enrollment. The first systems were squarely aimed at automating the enrollment process in part because HR would be able to find the budget for a solution that simplified their lives.

In retrospect, the enrollment solutions tended to be oversold on their value and therefore underperformed due to unrealistic expectations. Why? For all of the great back-end processing, all the employee saw was a glorified enrollment form delivered on a computer screen. The promise of “employee self-service” was yet to be realized. Because the emphasis was originally placed on high-priced administrative products, mid-sized and smaller employers were left out of the benefits technology game.

The Communication Gap. Selecting benefits electronically was a fine place to start, but the most essential need still was neglected by technology providers.

Employees actually have to understand their benefit programs to make smart choices. It would seem logical that communication should have been the foundation of an eHR strategy before enrollment tools were laid on top.

In the early days, perhaps paper sufficed. Only the bigger employers could justify the cost of the small army of writers, programmers, web designers and account managers needed to slap brochures up onto Web pages. Maybe that was the problemwe now know that communicating benefits effectively through an Internet portal is different from paper. We had to transition from wordy paper-based communications to the Internets bullet-point style.

A cultural shift also was required. Today people are much more receptive to being sent to a Web site for information. Only a few years ago, it was anathema for certain employers to shirk their personal, “drop by our office” approach for the “go get it yourself” approach. Much like ATMs have now become a readily accepted alternative to bank tellers, employees have come to prefer 24/7 access to eHR portals.

Early Limitations. A notorious flaw of the early eHR products was the cumbersome, labor-intensive implementation of these products.

Often consultants were called into the mix to link the practical business requirements to the technical programming side. Employers were not empowered with the knowledge or tools to control or effectively manage the process. Every little change involved overblown consultative exercises with commensurately high fees. Its a good thing the economy was going strong.

As the Internet emerged as the better alternative to installed software, a new breed of vendor called an ASP (application service provider) rose to meet the challenge. Under the ASP model, the vendor assumes all responsibility for developing software, hosting, system maintenance and security.

The model has many advantages, but unfortunately some of the ASPs put a sour taste in the mouths of IT and HR people. When these start-ups shuttered their doors, they turned off their systems, leaving the employer to find another source to keep precious data and knowledge. Such experiences disintegrated the innovation value and contributed to the bad reputation of Internet firms.

Change Is Good. Its time for companies that have gotten burned from deploying eHR systems to take a fresh, unprejudiced look.

Nearly a decade after their introduction, the fundamentals of eHR products havent changed because the basic business problems they tackle are the same. However, the way in which they are delivered and maintained has undergone major overhaul and vast improvement. As part of this evolution, the costs involved have stabilized and dropped.

For one thing, HR has more involvement in the implementation and day-to-day maintenance of their systems. What used to take months to launch can now take hours.

The best eHR platforms have Web-based tools that allow non-technical people to build and control systems on the fly. That person can now be the employer rather than the vendor. For example, an HR person very easily can publish a communication campaign (news, changes, enrollment information, etc.) to an employee portal in minutes.

Today, the ASP model is one of the most efficient, effective approaches to introduce Web technology to HR. IT likes it because the vendor handles the nitty-gritty, which alleviates IT staff of the burdens for maintaining systems for HR and frees them up to focus on other corporate priorities.

The eHR marketplace has stabilized and, as Darwin would have predicted, the best vendors have survived. There are now thoroughly market-tested products that have demonstrated performance for more than a 2-year cycle. This field is no longer seeing its vendors evaporate. In fact, healthy M&A activity among these vendors promises more integrated solutions.

New distribution channels have simplified the choices for employers. Insurance brokers have discovered their ability to compete more effectively for business by delivering distinctive service.

With limited options for controlling health care costs, brokers have turned to providing “value-added” technology to clients as a way to cement their relationships. In fact, they often pay for eHR solutions. Many companies that shied away from spending on HR technology through the economic downturn have been able to introduce technology because of their brokers.

Finally, smaller companies ought to take a fresh look at their HR management systems with an eye at upgrading to a pure Web-enabled solution. These easy-to-use systems have the ability to track everything from employee records, required tax and employment forms, time off and more.

A well-organized system could be the best defense against legal exposure.

And with such technology readily available and very affordable, there is little reason to delay implementation of a better HR management system.

is chief executive officer of OnlineBenefits Inc., Uniondale, N.Y., a company that provides Internet-based employee benefits communication services.


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 6, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.