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| Working Smarter |
| Companies are realizing how employee self-service on the Web can streamline internal operations and save money. |
By G. Patrick Pawling
Illustration by Federico Pepe |
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The good news embedded in a less-than-ideal economy is that it gives companies a compelling reason to find new ways to do more with less. Implementing employee-services applications is one way to give your company the opportunity to become more productive.
Efficiency is the key to success in uncertain times, and the key to efficiency is savvy use of the Internet—not just for serving customers, but for serving employees as well. Web-based applications allow companies to cut costs, automate processes, improve productivity, and communicate more effectively.
"There are still enormous benefits to be gained," says Bettina Zwerdling, an analyst at AMR Research. "There are tremendous advantages, and there is still a long away to go. We're still at the beginning of this; it's a very young market."
But while the market is young, some of the companies saving money by moving internal processes online are older, more traditional corporations. Always a sign of the times, General Electric recently announced that in addition to its strong focus on the sell-side of online business, it has expanded its Internet focus to include buy-side activity (supplier auctions) and make-side activity (digitizing the business). GE had already moved its travel-and-reservation system and some of its paper-laden HR processes online in the past year.
Employee-services applications can reduce operating costs by enabling employees to book their own travel, manage their 401(k) accounts, order supplies, and prepare expense reports online. In addition, implementing Web-based self-service applications can help a company retain employees through bolstered e-learning programs, reduce travel through meetings held online with Webcasting, and cut time spent on many administrative tasks.
Companies across industries are seeing results from online employee-services applications. For example, in the medical industry, Medtronic's intranet eliminated paper processes and now provides one-stop shopping for business processes; natural-gas carrier TransCanada streamlined expense reporting and allows employees to handle benefits tasks online; and financial-services firm KeyCorp now handles procurement online.
"The first five steps are plan, plan, communicate, communicate, and then communicate some more," says Gartner Analyst Jenni Lehman. "The key is getting the right players to play. The technology is really a small part of it. Part of the culture change is saying to employees again and again, 'Here's how it won't change your life,' as well as, 'Here's how it will.' And there has to be demonstrated commitment from the top regarding the parts that will change. The employees will be asking, 'Is the CEO doing the same things they're asking me to do? Because if [he or she] is, I guess I can do it too.'"
Starting Points
Companies should begin by identifying where they can realize significant productivity gains. For many companies, the easiest place to begin is in human resources. If companies can persuade employees to use self-service applications for more HR tasks, the return on investment adds up quickly and is easy to quantify.
For example, the cost of manually handling a personnel transaction—such as an employee address change—has been reported to be as high as $35 in some organizations, according to Lehman. Yet, the cost of the same transaction drops to pennies when employees use a self-service Web-based application to make the changes themselves. If a company has 10,000 employees, and each employee conducts 15 HR transactions a year, the savings add up quickly, even if only a quarter of those transactions move to the Web. And employees often find it easier to go online than to visit the HR department or find the correct forms.
Cost control in purchasing is another powerful benefit of employee-services applications. By centralizing and automating the purchasing function, companies can get more visibility into overall buying patterns and use that information to negotiate prices, set limits, and take other action.
"Companies typically don't have enough insight into where they're spending money," says Zwerdling. "Once they get their arms around that information, they can control costs and bring their spending down fairly dramatically and fairly quickly."
Realistic Expectations
Lehman warns that self-service applications can wind up costing a company if they're not designed or implemented correctly. For example, if an employee goes to the Web to make a change to a benefits plan, becomes confused, then calls HR for help or to complete the transaction, it's wasted effort. The Web application isn't getting the job done and has a negative impact on employee productivity.
Lehman stresses the importance of including e-learning components specifically designed to help employees navigate, learn, and understand new online processes. High expectations are also a big danger. A company might make only minimal investments in its applications, then expect exceptional outcomes. Essentially, companies that approach a project with the idea that they can buy and implement products without doing process reengineering will face major problems, as will companies that don't have the support of upper management. And without proper employee communications about the project, poor employee buy-in and system underutilization are risks.
The key to making employee-services applications work isn't the applications themselves, it's the company culture. Many employees are accustomed to calling someone in HR to get a quick answer or contacting someone in purchasing to check an order status. Most companies train employees to use the phone to get help. Now, companies are telling employees to use the Web instead.
The trick is to repeatedly communicate the benefits of an automated online system. Successful strategies include sending out regular briefings on new online solutions and their cost savings; having senior management explain why the company is using the Web applications; and putting up posters in high-visibility areas that detail cost savings reaped to date.
Moving to an online travel-reservations system can be particularly tricky. It can be tough to convince some employees that a self-service Web application is better than picking up the phone and having a travel agent do the work. In this case, Lehman suggests incentives, such as prizes, to encourage employees to use the new system. She also suggests promoting the advantages that self-booking travel often provides—such as better flexibility and more options.
Although convincing employees to use self-service systems can indeed be a cultural challenge, Lehman believes it is getting easier. "I think there is a little bit of a sea change," she says. "When self-service was introduced on a mass basis, people weren't used to doing things themselves. Now, we're using automated teller machines, pumping our own gas, and doing things on the Web at home. So it's not that much of a leap to say, 'I will change my own address at work on the Web or apply for a leave of absence.'"
AMR's Zwerdling agrees that the transition isn't always difficult. "Think about yourself. Do you like to use the ATM, or do you like to wait in line at the bank? [Automation] saves people from the thankless routine stuff." Still, she points out that companies must provide training and tools for employees to use self-service applications. They also must promote the use of the applications across the entire organization.
Proof Points
Medtronic, a medical technology company, is reaping the rewards of its Web applications. The company is growing fast, medical technology is changing rapidly, and just as important, patients and their families are becoming more sophisticated about getting information online regarding their conditions and treatment options. Medtronic had multiple Internet efforts, but it hadn't developed an overall strategy to ensure that the various projects were helping the company meet its goals. For example, individual business units had their own Web sites, and while they were informative, many lacked functionality and information desired by end users.
"Our objective is to provide valuable information to end users that enables them to act on what they learn about various conditions and treatment options," says Jon Linden, director of Medtronic's eSolutions Center. As part of its Internet strategy, Medtronic also participates in the Global Healthcare Exchange, an e-marketplace that enables customer e-commerce.
As one of its first steps, representatives from Medtronic visited Cisco Systems. "We talked about how Cisco has made it easier for customers to do business with the company and how it has leveraged employee applications to enable Cisco employees to be more productive," says Linden. "That's what we took away from the session and it's what we adopted as our guiding principles."
Medtronic made significant changes in its intranet strategy. Medtronic worked with Data Channel and KPMG to create myMedtronic, an employee intranet portal. Medtronic plans to use the Web to eliminate paper processes and to provide employees with online access to tools and information. myMedtronic is integrated with enterprise HR and finance systems, which enables role-based information and tools that can be customized for employees and by employees themselves.
The grand vision, Linden explains, is to make myMedtronic a central tool that helps employees perform their work. The company has started small, but the victories are already apparent. In the first four months, employees went online to make more than 3,000 employee data changes. The changes would have previously been processed manually. The company's business groups are also using the document management functionality to share documents and information with employees and workgroups, often replacing the need for intranet Web sites.
Employees use myMedtronic for self-service HR administrative tasks, such as changing addresses or emergency contacts, checking pay stubs, and updating W-4 tax forms. Managers also use myMedtronic for pay changes and promotions. Managers who have received myMedtronic have processed more than 2,000 transactions online. For both employee and manager self-service, myMedtronic is now the only way to process these transactions. Later in 2001, myMedtronic will include the annual benefits enrollment activities. The company also plans to integrate a Life Event section where, for instance, an employee who just had a child could go to the page and the system would guide the employee through a checklist of employee and benefit data changes.
Medtronic also implemented a corporatewide online procurement initiative using the Ariba automated ordering system. To date, approximately 7,000 employees are able to order nonproduction goods and services—such as computer hardware, office products, and lab supplies—through Ariba. The U.S. deployment and full integration with ERP systems will be complete by April 2002.
"The Ariba ordering system has eliminated purchase orders and invoices, automated the corporate approval process, and provided an standardized role-based procurement system for all offices," says Barbara Anderson, Medtronic's director of procurement. "Employee reaction has been very positive, especially related to the application's ease of use and flexibility."
As Medtronic implemented its Web applications, it realized it had some challenges related to changing how employees performed these activities. The company reinforces the value of the new methods by showing employees the "robustness of the applications," says Linden. "I think people are starting to get the vision and they wind up thinking, 'You know what, this really is better.'"
Consistent Communication
According to Gartner's Lehman, companies that have installed employee-services applications often admit they should have spent more time planning and making sure the right people were involved—that is, everyone at the top, and often partners and customers—and getting to know the system they installed before tinkering with it. They must also examine the internal company processes. Many companies have tried to do too much too quickly, which not only costs money but frustrates employees.
"There is a twofold thing going on," says Lehman. "One is definitely efficiency. Can I cut costs and reduce the time it takes to complete a transaction? That's the simple side of it. Any time a process can be made more efficient, companies are interested. The other is that companies are starting to understand they can do more online. They can manage employee relationships, increase loyalty, incent certain behaviors, and send the proper messages regarding organizational values and culture."
As with any project, the messages must be consistent. Suppose a company gives employees a "We know your time is valuable" speech while rolling out the new, Web-based, do-it-yourself travel booking system? If the process takes five times longer with the new system, employees aren't going to buy the story.
Lehman cites a company that was having safety problems. The company pushed safety-incident information to its managers via the Web, showing them comparisons between their workers' safety records and those of similar companies in the same industry. "They got an immediate response," says Lehman. "The company had sent a very strong message."
Lehman advises companies to be careful about what messages they send—both in words and in action—however, "No matter what you do, you are sending a message. You need to make sure it's the message you want to send because it will create a response," she says. "A lot of companies aren't thinking about this enough."
Most companies are looking for ways to engage their employees, but just putting self-service transactions in front of them won't do it, says Lehman. In fact, she says it may send the message that the company thinks the HR department's time is more valuable than the employees' time. But if companies design the system in such a way that the employee understands the benefits, they have the opportunity to increase loyalty, motivate behaviors, and improve employee retention.
"Bottom line, use the tools to market to your employees," says Lehman. "Secondly, make sure they value the benefits of working with the organization. Many companies provide benefits that their employees don't recognize. They can't value them if they don't know about them."
Overcoming Challenges
TransCanada, a 50-year-old natural-gas carrier in North America, recently faced some difficult challenges. Competition was increasing, and customers were demanding new services at more competitive prices.
TransCanada teamed up with some of its key customers and with consultants from the Cisco Internet Business Solutions Group (IBSG) to identify ways to reduce costs, improve processes, and generate new revenue. The results? Timesheets and expense reports are now processed online; employees manage their own pension and health benefits accounts; and managers schedule plant maintenance, using an online system that is linked to procurement modules and that automatically secures needed parts through either inventory monitoring or purchase orders. The changes also allow the company to spend much less time mining its financial data because it's more easily accessible through the new system.
When it rolled out its first Web-based, self-service tool for customers—an electronic bulletin board that allows 24x7 scheduling of gas shipments—rather than just announce the new system, the TransCanada sales representatives personally introduced the new system to the company's customers and provided them with on-the-job training.
The Business Case
When it comes to ROI, Lehman advises companies to look at the big picture. "There are no easy answers," she says, "but a lot of companies that logically know they need employee-services applications, and know the applications make sense, are struggling with building their business case. They're too focused on hard returns. Can I reduce head count? How can I get real hard savings? They aren't looking at the opportunities, and they aren't looking to the business benefits. Their best bet is to build the business case and tie it to enterprise returns."
For example, say an auto-parts retailer noticed that its stores with higher employee-retention rates also had more sales. The retailer builds its business case on improving training and reducing voluntary attrition. It implements a training program and realizes improved sales figures in each store. That, Lehman explains, is an indirect hard return.
Or consider a restaurant chain that discovers that servers who are most knowledgeable about wine sell the most wine. Because wine sales help overall profits, the company might consider creating an e-learning application to quickly educate new servers about wine. The company can update the information easily and doesn't have to employ a trainer or hold classes. Employees receive consistent, up-to-date information, which they can access at their own pace and use to better serve their customers.
Proper Infrastructure
As with any Internet initiative, employee-services applications won't succeed without the proper structure behind the scenes. A flexible, state-of-the-art network infrastructure is a critical business asset and a key factor in the success of an employee-services initiative. It allows companies to quickly and easily deploy applications.
"One major suggestion: Build a strong foundation that you can quickly iterate on top of—a foundation with a very Web-centric, self-service environment," advises Mary deWysocki, a workforce-optimization consultant with Cisco IBSG.
Another key is to get all these tools to remote workers. Mobile office tools make it easier than ever before to give traveling and remote employees accurate, up-to-date information anytime, anywhere, which they need to make sound business decisions. When employees spend less time looking for information, they have more time for making strategic contributions to the business.
Accuracy is an important benefit of Web tools. "The closer you can get to the source of the information, the fewer errors you will make," says deWysocki. "If I request vacation time with a self-service tool, I'm the one entering that information, and it all flows directly into the application. Self service is far more accurate than if I fill out piece of paper and take it to someone who then types the information into another system."
Cisco estimates the hard and soft benefits of its employee-services applications totaled $86 million in the most recent fiscal year. That number includes budget savings, productivity increases, and other soft measurements. This year, Cisco has identified additional areas of savings, including Web conferencing, which minimizes travel and helps with e-learning, and online travel booking.
"We're seeing a lot of companies have started down that Web path, but they haven't seen the improvements because they are not executing all the way," says deWysocki. "They're not becoming Web-centric, or they don't really believe in the free flow of information."
Successful Transitions
Even companies with long-established processes and many years of proven success are embracing new employee-services applications and reaping tangible benefits. To their credit, these companies see change coming and decide to embrace, rather than fight, it.
For KeyCorp, a large financial-services company, the challenge was similar. The problem—and the opportunity—was to control costs while offering more services to a growing contingent of Web-savvy customers. KeyCorp knew its traditional business of community-branch banking would no longer be adequate. It concentrated on maximizing its internal efficiencies by lowering costs and streamlining processes. KeyCorp had been reengineering its procurement processes by centralizing its 15 accounts-payable and purchasing sites into a single central, strategic sourcing organization. That move alone convinced the company that online employee-services applications could also produce significant savings. KeyCorp partnered with Cisco and Ariba to install an online procurement application, Ariba Buyer, which manages travel-and-expense accounts and handles the procurement of goods, services, and capital items.
"Before we had Ariba Buyer, we were awash in paper requisitions," says Debbie Manos, KeyCorp's director of corporate sourcing technology. "The application routes requisitions electronically, reducing the amount of manual intervention and freeing our procurement professionals to concentrate on truly value-added activities like strategic sourcing."
Like many other companies, KeyCorp knows that when it comes to the Internet, now is no time to retreat or delay, regardless of the challenging economy. Now is the time to use the efficiencies the Internet provides to the fullest. 
September/October 2001
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