The ABCs of Return on Investment

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The ABCs of Return on Investment

June 200

PeopleSoft White Paper Serie


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The ABCs of Return on

Investment

P E O P L E S O F T

J U N E 2 0 0 1


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The ABCs of Return on Investment

Contributors: Alexia Martin, Marcia Barkley, and David Link, Cedar; Lisa Hartley, Yvette

Cameron, and Julie Thomas, PeopleSoft

2001 by PeopleSoft, Inc. and CedarAll rights reserved. Published 2001.Printed on Recycled Paper.

Restricted Rights

Printed in the United States of America.

The information contained in this document is proprietary and confidential to PeopleSoft, Inc.

No part of this document may be reproduced or transmitted in any form or by any means,electronic or mechanical, including photocopying and recording, for any purpose without theexpress written permission of PeopleSoft, Inc.

This document is subject to change without notice, and PeopleSoft does not warrant that thematerial contained in this document is error-free. If you find any problems with this document,please report them to PeopleSoft in writing.

PeopleSoft, the PeopleSoft logo, PeopleTools, PS/nVision, PeopleCode, PeopleBooks,andVantive are registered trademarks, andPeopleTalkand People power the internet. aretrademarks of PeopleSoft, Inc. All other company and product names may be trademarks of theirrespective owners. The information contained herein is subject to change without notice.Copyright 2001 PeopleSoft, Inc. All rights reserved. Printed in the USA.

This document contains or may contain statements of future direction concerning possible

functionality for PeopleSofts software products and technology. All functionality and software

products will be available for license and shipment from PeopleSoft only if and when generally

commercially available. PeopleSoft disclaims any express or implied commitment to deliver

functionality or software unless or until actual shipment of the functionality or software occurs.

The statements of possible future direction are for information purposes only and PeopleSoft

makes no express or implied commitments or representations concerning the timing and content of

any future functionality or releases.


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The ABCs of Return on

Investment

The Human Resources function is in an historic period of transformation. Business drivers and

economic change are forcing HR to shed its 100-year legacy as an administrative necessity to

become a strategic, value-enhancing business partner contributing to the competitive advantage of

the organization. HR must step up to the plate to guide the organization in its productive use of

human capital. Effective, accelerated use of technology is essential to change fundamentally the

way organizations conduct HR businesswithin the HR department, with the customers of HR

(the workforce), and with business partners.

Developing a compelling business case for these new technologies that effectively competes with

other organizational demands for investment is the first hurdle HR must address. Cedar, formerly

The Hunter Group, created this white paper to address the challenge that HR is facing in justifying

technology enhancements critical to fuel this HR transformation. Through extensive research and

practical trials, we have created a set of ROI tools specifically tailored to address the pain HR

professionals are experiencing in expressing the value of HR technology in both hard and soft

dollars. Our experience clearly indicates this new information is necessary to enable HR to moveforward quickly with key initiatives such as web-based administration of HR, self-service, portals,

workforce analytics, and HR knowledgebases, to attain the level of excellence for which HR

professionals are striving.

Internet technologies used directly by all employees and managers provide a radically new

approach to managing work and personal decisions. The results of their use are dramatic. But

they need new tools to articulate their value. Traditional ROI models tell one side of the story

the hard dollar, tangible value. HR requires additional business case support showcasing the

intangible savings that an organization can derive through technology deployment in support of

acquiring, developing, and managing human capital.

The model explained in this white paper will help HR professionals present a compelling businesscase illustrating the hard and soft dollar savings of technology investments to accelerate decisions

about technology deployment. Faster decisions coupled with accelerated deployments yield faster

return on investment and can catapult HR to its desired role of providing strategic value in the

organization.


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THE ABCS OF RETURN ON INVESTMENT JUNE 2001

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Start by Taking a Fresh Approach to Cost Just ification

After seeing IT take greater and greater bites out of corporate budgets, executive management is

more inclined than ever to scrutinize technology spending. This is even more pronounced in the

HR arena, since it is an internal function without direct impact on revenue, meaning that the cost

justification must rely on a cost-savings argument. A typical way to create a cost-savings business

case is to show how the organization can accomplish labor cost savings. But this often translates

to reducing the number of people in HR service delivery, and it goes against HRs grain toterminate their own staff. Further, when the market is strong and productive employees are hard

to find, it is shortsighted to focus on reducing headcount. As a result, the benefit rationale is often

couched in generalized statements such as overall staff count can be increased without adding

support staff, or HR staff can be redeployed to value-added activities.

Cost justification also poses a challenge because it forces an organization to measure current costs

to effectively determine cost savings. But most companies dont know what costs to measure in

the first place and dont have effective ways to measure them. Luckily, new internet technologies

are so compelling in their transformation of the way we work, the cost justification is easier than

its ever been.

This paper will discuss a methodology and tool that not only squeezes actual costs out of the

business process but also shows how soft benefits translate into hard-dollar savings. For example,

we will discuss how improved employee satisfaction and improved decision making translate

into hard dollar returns for an organization.

Analyzing Return on Investment

Before they will accept a business case for acquiring new internet technologies such as self-service

or employee portals dedicated to HR services, management will want to know how much money

they can save by making this investment. Management asks HR/IT whether the proposedinvestment in technology is going to give the organization an appropriate financial return. HR/IT

must be prepared to justify the expense in the same way that the manufacturing team would be

expected to justify their proposal to buy new production equipment: does the benefit outweigh the

expense, and by how much?

In response, when HR/IT builds a business case, it does so with the rationale that implementing

new applications can reduce the time it takes employees to do certain activities and by reducing

the time they spend, thereby reduce their labor costs. Reduction of costs has a direct, positive

effect on profit, but to demonstrate this and build a winning business case takes time and

resources. Typically, HR makes the business case during a business process redesign effort since

the organization is already analyzing processes, tallying costs, and identifying volumes. Then, the

future potential of redesigned processes is determined based on a new technology solution.However, this is often an involved and time-consuming process.

We have developed a way to shorten this ROI analysis process with our new PeopleSoft

Collaborative Applications/Portal calculator. We use activity-based costing, which is widely

regarded as a proven methodology for ROI analysis. The tool does much of the time-consuming

process decomposition for you. Heres how it works.


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JUNE 2001 THE ABCS OF RETURN ON INVESTMENT

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Activi ty-Based Cost ing as the Foundation

Activity-based costing (ABC) is a method of cost accounting that measures the cost of steps in

processes such as HR service delivery.1 ABC precisely delineates costs of all the time of all the

players in a process,2 covering, for example, employees who initiate the process, supervisors or

managers who approve, HR administrative staff who may log a transaction, processing staff who

may do data entry, and HR specialistssuch as a compensation analyst who may get involved in

research or analysis related to the process. ABC also covers direct cash outlayfor example,covered by this accounting method would be the printing and mailing costs associated with

routing a form from the employee to the administrative staff for logging a request and to

processing staff for data entry into the data repository.

Typically organizations use an activity-based costing spreadsheet (Figure 1) to compare the steps,

process time, elapsed time from start to finish of the process, and costs of processes under current

operations (As Is) to how they might operate in the future using HR self-service (To Be).

Figure 1: Training Enrollment As Is Process

Cedar developed these As Is averages from reengineering work conducted in dozens of

companies in manufacturing, financial services, entertainment, business, and government services.

We developed average cycle time (start to finish of a process), elapsed time (actual time spent

doing a step), and printing and distribution costs for over 50 HR service delivery processes

covered by the implementation of the PeopleSoft 8 collaborative applications.

1 For a thorough coverage of activity-based costing (ABC) and the subject of using activity-based

management (ABM) for operational improvements and strategic decisions, we refer the reader to:

Robert S. Kaplan and Robin Cooper, Cost and Effect: Using Integrated Cost Systems to Drive

Profitability and Performance (Boston: Harvard Business School Press, 1998), p. 3.

2 In this article, we use salaries plus fringe benefits per unit of time spent on a process. We do not

include overhead costs such as office occupancy, legal, and accounting services.


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Figure 2: Training Enroll To Be Process

We follow the same steps to develop a To Be scenario, where an organization has implemented

PeopleSofts collaborative applications. In this case, the scenario begins with an employee

accessing an employee portal or a self-service application, instead of requiring human

intervention.

As the example shows, by envisioning employee training enrollment through self-service, we see

how PeopleSoft eDevelopment, one of the PeopleSoft 8 collaborative applications, can provide

internet access to courses to support employee development of new skills and competencies.

Using eDevelopment, the employee navigates through selecting a course, enrolling, and

forwarding a request for approval to a supervisor in a fraction of the time it

takes in a manual environment. Associated costs also decrease dramatically. Labor costs decrease

from $14.42 to $4.87, and forms and reports costs decrease from $3.35 to $0.

Calculating the Value Proposi tion

Once a process has been decomposed, the As Is costs minus the To Be costs equals the value

or potential savings for each time a process is invoked. The next step in developing annual cost

savings is to determine how many times in a year a process will be invoked across your

organization. To see how the savings can add across your organization, we apply benchmark

assumptions to develop annual volume. For example, our research shows that, on average, 12percent of an organizations employee population will move and conduct an address change

process annually. Thus, we multiple the total number of employees times the process time savings

and costs, times the assumption factor of 12 percent to get the annualized cost savings for the

address change process. If the 12 percent is not accurate for your organization, you can override

the calculator assumption. All processes are handled the same way based on Cedar experience

from numerous reengineering projects and from benchmark data derived from a variety of sources

(see Table 1).


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Statistic Source

Average employee, manager, supervisor

salaries including fringe benefits

Bureau of Labor Statistics, Employer

Costs for Employee Compensation,

March 2000

Costs of forms, letters, printing paper,

and envelopes

Moore Business Forms with confirmation

from other forms manufacturers

Open enrollment costs WebMD

Hiring, retention, and turnover costs Saratoga Institute, Olsten Staffing Report

(annual), Workforce Online, Society for

Human Resource Management

Table 1: Industry Statistics Sources

With annualized figures, the potential savings are calculated for all employees who would have

access to a self-service or portal solution either directly at their desks or through public access

workstations. This is done for all parties who participate in the processes: employees, supervisors,

managers, administrative staff (HR clerks), HR specialists (benefits, compensation, recruiting

specialists or analysts), and processing staff who update the HRMS.

Solution Costs

The costs for HR self-service/portal solutions include software license fees or per user fees for an

outsourcing arrangement, maintenance, implementation services, training, employee

communications/marketing, and hardware. The hardware may include serversdevelopment,

test, and production servers and potentially additional network infrastructure. Further, if not allemployees have access to the internet through a personal computer, your company may choose to

include public access workstations or kiosks. Typically, these costs are categorized as capital

costs (hardware and software costs that come out of the capital budget and are written off over a

number of years) and other costs that are part of the normal expense budget (maintenance). Check

with your company to determine how it would like to handle the various solution costs.

All costs are also categorized as either startup or ongoing costs. Examples of each include:

Startup capital costs: Fixed assets with a life expectancy of several years, normally written

off over three years. These include application software, web and application servers,

network connections, personal computers, and personal access workstations or kiosks if not

already available.

Startup other costs: Also included as part of an up-front investment, but typically written

off in the first year, such as design and development of software and/or content, promotion,

and training.

Ongoing capital costs: Upgrades to off-the-shelf software and hardware, typically 15

percent to 25 percent of the initial startup costs.


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Ongoing other costs: Costs to improve and maintain self-service and portal solutions,

including allocations for content, design, and technical staff salaries, benefits, and expenses;

internet access if not already accounted for; and ongoing consulting, promotion, and training

fees. Software maintenance fees are also included. Often, there is a tendency among

companies to underestimate the cost of ongoing maintenance and continued development of

self-service applications and contentthese activities are important to the continued success

of self-service/portal solutions.

Analyzing Return on Investment and Other Financial Results

With savings and costs identified, it is now possible to calculate ROI, net present value, internal

rate of return, and payback period (see Figure 4).

Figure 3: Financial Metrics

Return on Investment (ROI) is the net benefit (savings from the technology solution, minus

initial and ongoing costs for the technology solution) divided by initial and ongoing costs over

the life of the project. It is represented by the following formula:

ROI = (Savings Investment) x 100

Investment

While management may request an ROI analysis, ROI is not the figure that serious financial

managers will use as it does not take into account cash flows and the time-value of money.

Net Present Value does take the time-value of money into consideration as well as dealing

with cash flows. It compares year-by-year savings with cash outflow for the investment. The

expected savings received each year and the ongoing cash outflows are both discounted by the

cost of capital. If net present value is greater than zero, the investment is acceptable. Further,

when the present value of the savings exceeds the present value of the cash outlays, the

investment is usually acceptable as long as this occurs within the solution lifetime (for

example, three to five years).


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Cost of Capital. Given the risk characteristics of a technology solution, and the cost of funds

under non-risk conditions, an organization will select a discount rate, or cost of capital, at

which the flow of income from the project will be discounted to yield a present value. This

risk-adjusted cost of capital is similar to deciding on a minimum acceptable rate of return on a

financial investment. It can be based on bank rates, desired rate of return, potential external

investments, and so forth. We use a cost of capital of 10 percent, but you should always

check with your controller or CFO to obtain the cost of capital used by your organization.

Internal Rate of Return is a precise financial calculation of rate of return on the cash flow,

in total, over the project life. It equates the positive (incoming from savings) cash flow with

the negative (outgoing investment) cash flow associated with the project costs and is the rate

at which funds are presumed to be reinvested.

Payback Period is the number of years required to recapture the initial investment. It is the

amount of time it takes to break even on your investment.

Hard Dollar Savings

The ROI analysis included the following conservative but significant savings:

Labor Cost Reduction

Reduction in process time yields reductions in labor costs. By automating manual, paper-based

processes and replacing them with automated processes, you reduce process time (time that people

actually touch a process). As mentioned in the earlier example, an address change process, using

PeopleSofts eProfile Home and Mailing Address Change transaction can save approximately

25 minutes of processing time. This translates to a labor cost savings of $8.91 per address change.

When multiplied by the number of employees who move each year (on average 12 percent,

according to Cedar survey estimates), a company with 25,000 employees can realize savings of$26,760 per year. This rationale applied to multiple processes yields significant savings. Please

see other process savings in Table 2.

Process Manual

Costs

Self Service

Costs

%

Savings

eBenefits: Enroll in benefits $109.48 $21.79 80%

eDevelopment: Enroll in training $17.77 $4.87 73%

eProfile: Home and mailing address

change

$12.86 $3.39 77%

eRecruit: Apply for a job $21.31 $11.85 33%

eCompensation Manager Desktop:

Salary change

$44.67 $18.26 59%

eProfile Manager Desktop: Approve

promotion

$48.64 $14.01 71%

eRecruit Manager Desktop: Create job

requisition

$36.89 $11.11 70%

Table 2: Process Savings


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Material and Distribution Cost Reduction

Using self-service, organizations can reduce many of the costsassociated with printing,

publishing, binding manuals; and distributing forms, letters, memos, faxes, reports, benefit

statements, policy manuals, handbooks, and so forth. Again, using the address example, HR self-

service can save $0.55 for forms and mailing costs. In our hypothetical company, with 25,000

employees, with 12 percent moving each year, we can save an additional $1,650. (Please note that

material and distribution cost reductions are reflected in the costs in Table 2.)

Productivity Savings

Weve taken a very conservative approach to calculating the key financial measurements. We

collect cost savings only on administrative, processing, or HR specialist staff and call this savings

ROI savings. Our rationale is that with good job redesign, these types of employees could be

redeployed. They could also be reduced through termination. Either way, the timesavings for

administrative activities become a realcost savings.

Employees, supervisors, and managers benefit from using self-service/portals for administrative

activities. They benefit from timesavings, which we call productivity savings. They can use

their saved time in activities directly related to their primary job responsibilities, making them

more productive. The ability to quantify these savings exists within the calculator framework

Employee Acquisition Cost Savings from Reduced Turnover

For busy employees, who see time as a resource, anything HR can do to make life easier for them

contributes to their job satisfaction. Increasingly HR self-service/portal solutions are offering

worker-beneficial services that can assist employees with both work and home activities.

Assisting the employee with work activities makes the employee more useful and will contribute

to personal satisfaction. To the extent that home activities are simplified, life is less stressful, and

the employee can work more effectively, and this leads to improved productivity and from there to

increased satisfaction.

Self-service lightens the work burden through making administrative tasks simpler and more

accessible. For example, new hires come to work their first day, already predisposed toward your

company being a great place to work because they have had an easy time of completing their

benefit selections. To that experience, add the rich set of resources you make easily available

through an HR self-service/portal solution while employees conduct their work and life affairs.

Perhaps your employee portal helps mothers find local physician services, or assists employees

with aging parents to find assisted living options, or provides mortgage or car loans at reduced

rates.

One significant benefit of improved employee satisfaction is that it leads to reduced turnover,which in turn, leads to reduced cost of employee replacement. Organizational Diagnostics is a

management consulting firm in Mountain View, California, specializing in research in high-tech

Silicon Valley companies. Over the past 10 years, its staff has conducted research on the effect of

employee satisfaction on employee retention. They have found that for every two-percent increase

in employee satisfaction, there is a one-percent increase in employee retention. Put another way,

to the extent that you satisfy your employees with services they need, you can reduce employee

replacement costs. You can reduce these costs both in terms of lost productivity while you are

replacing an employee who quits and bringing the new employee up to speed, and in terms of the

actual new hire acquisition costs. The Workplace Resource Learning Center reports that


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replacement-hiring costs are approximately $14,000 for an employee with a high school diploma

and $66,000 for an employee with a college degree.3 You can avoid or reduce these replacement

costs by providing employee service and comprehensive employee communications through an

HR self-service/portal solution.

Reduced turnover means your employees are staying with youthey are loyal. As employees

stay longer, their productivity rises and training costs fall, and the combination of employee job

satisfaction, along with their knowledge and experience, leads to better service to customers.Satisfied customers are more likely to stay loyal and to continue buying your products and

services. This loyalty-based dynamic, which starts with satisfied employees, can grow company

profits by significant increments. At MBNA, a major bank, a five-percent increase in retention

grew the companys profits by 60 percent by the fifth year.4 The result is that the company can

pay employees better, which reinforces this loyalty-based chain. HR self-service, portal, and

knowledge-based solutions contribute to this result through improved and consistent employee

communications, easy access to training, and performance feedback.

Improved employee satisfaction can lead to improved revenue. In retailing, there is a chain of

cause and effect from employees behavior to customers behavior to profits.5 Sears and

Roebuck Company research correlates an increase in employee satisfaction to an increase in

customer satisfaction, and in turn to an increase in revenue, which in a well-managed companyyields an increase in profits. Implementing an HR self-service/portal solution provides for process

simplification and enables access to useful, relevant services. These improvements enable

employees to conduct transaction services more easily, perform their jobs better with improved

access to information, sell more effectively, and make more money for your company.

Enabling Human Resources to Provide Value-Added and/or Strategic Services

In addition to direct savings, another commonly used rationale for self-service is that by giving

employees direct access to services, HR is relieved of administrative tasks and thus can serve morestrategically. Employees and managers need to initiate these actions anywayfrom a simple

address change, to open enrollment, to promoting an employee. In the pre-self-service

environment, employees or managers start the process but rely on HR administrative staff to

complete it, typically through data entry, filing, and distribution tasks. In the self-service/portal

environment, the employee starts the process, but then the system performs automatic distributions

and notifications. HR administrative staff are not involved and thus are freed for other value-

added activities.

But can these administrative staff migrate to performing strategic tasks? Yes, with work redesign

and training. Data entry clerks cannot just become analysts or specialists doing tasks such as

competitive compensation analysis or strategic competency development. They might, however,

3 Gary Cornick, The Cost of a Poor Hire, SHRM Online, PeopleWise HR Forum, October 1999.

4 Frederick F. Reichheld, Loyalty-based Management,Harvard Business Review, March-April,

1993, page 65.

5Anthony J. Rucci, Steven P. Kim, Richard T. Quinn, The Employee-Customer-Profit Chain at

Sears,Harvard Business Review, January/February, 1998.


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be part of a team that spends its time compiling compensation data for managements use, or that

focuses on the administration of competency developmentboth more strategically focused

activities.

The bottom line impact of the combination of deploying direct-access self-service technology and

thoughtful work redesign and retooling can be significant. For example, you can use self-service

to reduce overtime hours related to open enrollment, and use staff for compensation analysis.

Freeing administrative staff to perform analytical work such as compensation analysis has asnowball effect of enabling higher-paid compensation analysts to do even more strategic work

such as counseling managers. And if managers get more timely compensation analysis, they can

move more quickly to modify the compensation of an employee who might otherwise leave, and

the company avoids paying for new employee acquisition, orientation, and development.

Strategic redeployment focuses on tasks such as those in Table 3. The more valuable

redeployment opportunities are in the areas of finding the right talent to further the objectives of

the organization, and then developing and managing that talent.

Talent AcquisitionRecruiting efforts (hiring profiles, establishing alliances with web

recruiters, campus interviews)

Training and

Development

Training enhancements (curricula and course development)

Business improvement of human performance technology initiatives

Training surveys

Talent ManagementSalary studies

Succession planning

Enterprise performance management (developing metrics for the

organization)

Performance analytics (who performs well and why)

Strategic counsel to operations

OtherIdentifying and establishing alliances with new benefit providers

(including analysis of offerings, rates, etc.)

Employee communications

Any efforts to improve customer service levels (surveys, focus

groups, action teams, forums, etc.)

Gaining vendor sponsorships for HR web pages

Establishing vendor alliances with key HR service providers

(benefits, 401k, financial planners, educational planners, employee

health and fitness, etc.)

Table 3: Redeployment Opportunities (Source: Cedar, 2000)


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The Last StepConvincing Management

Thoughtful implementation of HR self-service/portal solutions can lead to hard-dollar savings as

weve shown through the activity-based costing model. A comprehensive ROI study that also

incorporates the ability to turn soft benefits into tangible savings, may capture managements

commitment to a HR self-service/portal implementation, because these solutions can lead to an

actual increase in revenue, not just cost savings.

In our experience, one of the best ways to convince managers is to involve them in the evaluation

and justification of the new technology. Key players can and should be involved in the evaluation

design, particularly the identification of the desired key results, and definition of indicators to

measure those results. If all major constituent groups state their expected results and reach

consensus as to their value, the solution implementers can more effectively anticipate expectations

and measure them, both during and after the implementation.

Conclusion

Building a credible, compelling business case for new technologies with the intrinsic and actual

value of the PeopleSoft 8 collaborative applications need not be onerous. The model developed

and presented in this white paper is designed to help HR professionals in illustrating thefullvalue

of technology investments to facilitate accelerated and effective decisions about their deployment.

Quicker decisions, coupled with accelerated deployments, yield faster ROI for HR and the

organization as a whole, keeping the organization vibrantly competitive.

About the Authors

Alexia Martin is a Director and Principal Consultant in the eWorkplace practice of Cedar,

including the company formerly known as The Hunter Group. She works with clients to define

self-service, workflow, knowledge management systems, and call center solutions that enhance

service delivery to HRs customers and extend the value of the organizations enterprise resource

planning systems. She runs Cedars research program that includes the annual HR Self

Service/Portal Survey and other analytical and metrics research.

Marcia Barkley is a Senior Consultant in Cedars Management Consulting practice. She was

instrumental in the development of PeopleSofts ROI Calculator for Collaborative Applications.

David A.Link is vice president of eWorkplace at Cedar. He is a recognized industry thought

leader in workplace transformation via the internet, with emphasis on the HR function and

corporate portal solutions. He has over 13 years of experience in HR self-service and related

solutions.


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PeopleSoft Case Study

In January 2001 PeopleSoft went live with PeopleSoft 8 Human Resources Management. The

implementation included core HR, Benefits Administration, FSA, and Payroll for North America

as well as all the collaborative applications except eDevelopment and eEquity. The Employee

Portal was also deployed companywide. The implementation took five months. To date the

applications are deployed in 26 countries and have about 10,000 users (which includes 8,000

employees and 2,400 consultants). Managers are posting job requisitions online, employees areviewing paychecks, and people are logging into their portal every day for company information.

This project is the result of hugely successful cooperation between the internal HR and IT groups,

who worked together with an eye on the bottom line.

The Employee Portal: A Single Point of Entry

PeopleSoft felt strongly that the only way to roll out PeopleSoft 8 HRMS was through its

employee portal. Our portal is the key to presenting pertinent HR data to our employees, says

David Thompson, PeopleSoft chief information officer. They can follow links to see their paid

time off balance, benefits elections, or paycheck data. It also serves as an excellent way tocommunicate company information. At a glance, employees can read company news stories or

receive alerts that require action. An employee might be reminded to purchase stock before the

end of the employee stock purchasing period. A manager might receive a reminder to place a job

change request for a terminated employeeeffectively cutting off the former employees access to

data and securing the network.

Important information doesnt get buried in email anymore, says Linda Furline, an HR project

manager. If I get 150 emails a day, things get lost and forgotten. But if a reminder shows up in a

nice-looking portal, Im more likely to click it and take care of my business.

In addition to its potential for increasing productivity, Furline believes the Employee Portal will

function as a retention tool. After employees have come to PeopleSoft, will they want to go back

to a company where they have to call five different people to track down basic information? It

would frustrate them. They would think, Ive been on the fast track. Why am I going back to the

old way of doing things?

Any Browser Will Do

Part of the allure of implementing PeopleSoft 8 was the pure internet architecture that required no

code on the client. Since so many of our employees work remotely (in client offices), we wanted

the ease of use a browser brings. Regardless of where they work, employees are connected to

PeopleSoft from the minute they log on.

Deployment proved to be an easier task than in the past. Because PeopleSoft 8 requires no code

on the client, this is the first time weve done a global implementation without sending our

technicians around the world to handle the installation, says Chuck Hebert, PeopleSoft director of

HRIS. Whether Im working remotely or from the office, I can now run a complex query from

any web browser and take advantage of the server doing all the processing, says Kelly Aabed, an

HR business partner.


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Smart Self-Service

Once theyre logged onto their portal home page, employees follow intuitive links to PeopleSoft

collaborative applications, which provide the functionality they need to act on their decisions.

With self-service functionality at their fingertips, employees are more productive and eliminate

many of the hassles typically associated with HR functions. How many times have you gotten a

pay stub, put it in a drawer somewhere, and forgotten about it? says Aabed. Now if I want to

check my vacation time or tax withholding, I can see every paycheck Ive ever had just by logging

onto my portal. Its there on demand.

PeopleSoft 8 HRMS collaborative applications also help employees perform functions such as

changing benefits enrollment, exercising stock options to maximize their earnings, and monitoring

the distribution of their paychecks. They also automate complex processes such as recruiting. By

integrating external content and service suppliers, the eRecruit Manager Desktop application aids

our recruiters and managers by posting job requisitions to the internet, collecting the most relevant

resumes, and being able to perform testing and background checks online.

The manager and employee self-service pushes information back into the hands of the people

who understand it so they can make decisions, says Jason Blessing, vice president of information

systems. We can now tell our customers that we know firsthand how streamlined daily tasks can

be with PeopleSoft 8.

Enabling Strategic HR

With PeopleSoft employees and managers using collaborative applications to manage many of

their own administrative requests, the PeopleSoft human resources department can focus on

strategic factors such as increasing retention and recruitment.

Understanding why people leave and why people stay is one of the most important things we, as

HR folks, can do, says Andy Hauer, vice president of compensation and benefits. Being freed

from the administrivia to concentrate on strategic HR decisionsthats where we want to go.

Implementing our own technology to do this is very satisfying.

The Bottom Line

PeopleSoft 8 HRMS pure internet applications translate to real savings throughout PeopleSoft.

PeopleSoft used the HRMS Collaborative Applications Calculator to measure financial metrics

that were key to finding the real tangible benefits of its endeavor. The results (projected over a

period of 5 years) were as follows:

ROI 415%

NPV $8,152,777

Payback 1.5 years

IRR 78%

These numbers reflect the ROI for the collaborative applications only. PeopleSoft believes

additional benefits will be derived from deploying the employee portal (which was not part of the

calculator at the time of its analysis).


18/19


15

In evaluating the far-reaching benefits of PeopleSoft 8 HRMS, Dennis Driver, vice president HR,

Worldwide Field Operations, sums it up best, A world-class business requires a highly effective

global human resources infrastructure. It gives me great pride and confidence as an HR

professional to know that we are using our own state-of-the-art technology, PeopleSoft 8, as a

cornerstone.


19/19

PeopleSoft Inc.

Corporate Headquarters

4460 Hacienda Drive

Pleasanton, California 94588 USA

Toll Free 1 888 773 8277

Tel 925 694 3000

www.peoplesoft.com

PeopleSoft, the PeopleSoft logo, PeopleTools, PS/nVision, PeopleCode, PeopleBooks, Red Pepper,

Vantive, and Vantive Enterprise are registered trademarks, PeopleTalk, and People power

the internet. are trademarks of PeopleSoft, Inc. All other company and product names may be

trademarks of their respective owners. The information contained herein is subject to change

without notice. Copyright 2001 PeopleSoft, Inc. All rights reserved.

3050 0601

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The ABCs of Return on Investment