People power
- Article 66 of 77
- Information Age, December 2003
Human capital management technology promises to fully unlock the potential of the workforce.
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Standing side by side on a New York stage, not even the blinking flashbulbs of the press photographers could wipe the broad grins from the faces of Carly Fiorina and Michael Capellas.
The CEOs of Hewlett-Packard (HP) and Compaq were buoyantly unveiling the largest takeover in the history of the computer industry. But behind those smiles of two years ago, the two chief executives knew that the odds of a successful merger were stacked against them. “The jury is still out on this one,” said one Wall Street analyst at the time. “They have two years of no growth and a massive integration task ahead of them.” Capellas would have felt the risks most keenly. He knew that Compaq had been down the mega-merger road before, with Digital Equipment and Tandem, and those journeys had spun out of control.
Unsurprisingly for a couple of technology companies, software played a critical role in HP and Compaq's attempts to avoid a repeat performance. That software, under the newly coined label of 'human capital management' (HCM), helped HP managers to rapidly absorb the new workforces into the fabled 'HP Way'.
From the outset, HP's HCM system, based on technology from a variety of suppliers including PeopleSoft, Vignette and HP itself, was able to communicate huge amounts of information to its newly acquired workforce - everything from a product roadmap to the names and biographies of the new management team. “Day one for the new HP, we were delivering consistent, comprehensive messages to 141,000 employees plus contingent workers in 162 countries in every time zone. We had 'playbooks' available for all customer-facing employees. In five weeks, we had trained 20,000 managers,” says Steve Rice, HP's human resources (HR) president for the Americas. Over time, records of the skills of the vast numbers of former Compaq workers were gradually added to HP's system. That made it easier for managers to target resources, categorise skillsets and even, potentially, identify areas of overlap where cutbacks could be made.
Two years on, and while there have been occasional rumours of discontent and turf wars emanating from the new HP, executives say the integration of the two companies could have hardly been better handled.
That merger was one of HCM's biggest tests and one that it seemed to pass. It also signified a breakthrough for the next generation of people-centric software.
First, in the 1970s and 1980s came the bedrock of payroll and personnel software. Then in the 1990s there was the broader base of human resources (HR) software - aimed squarely at the HR department. As an adjunct to that came self-service HR - automating administration tasks by getting the individual to input data via the web - and employee relationship management. And, most recently, came HCM - a super-set of these and a number of related technologies including HR, e-learning and knowledge management, designed to get the most out of the company's most precious assets: its people. Theodore Schultz, the late Nobel prize-winning economist who pleaded with managers to do a better job of recognising the potential of their 'human capital', would doubtless have approved.
Chequered past
Estimates of the size of the HCM market vary from hundreds of millions of dollars to several billion dollars. Part of the problem is that HCM is a difficult market to track and categorise. Market analysts say there are at least 50 significant software suppliers that can realistically lay claim to an HCM expertise - often from very disparate backgrounds. There are suppliers from the enterprise resource planning market (including SAP, Oracle and Lawson Software), professional services automation (Primavera and Changepoint), labour/workforce management (Kronos and TempoSoft), HR (PeopleSoft and Rebus) and employee relationship management (Siebel Systems), to name only a few. And Microsoft, as always, looms large in the background.
“There's no consensus, so everything but the kitchen sink ends up in there,” says Monica Barron, an analyst at AMR Research. Workforce analysis, planning and scheduling; employee performance management; knowledge management; training; employee skills databases: some or all of these could be implemented in an HCM system, she says. But rival vendors do seem to be able to agree on two things, at least. First, their products need to target employees and managers, rather than the HR department. And second, the focus of the applications has to be on performance and productivity rather than merely on automating existing HR functions.
An AMR survey points to strong demand for HCM products. It found that almost 90% of companies were planning to roll out some sort of HCM project by the end of 2003, while 70% had at least one 'major' HCM initiative in the pipeline. Particular 'bright spots' were found to be technologies aiding with workforce acquisition, incentive management and workforce optimisation.
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