Magazine article Workforce

Using Technology to Cut Costs

Magazine article Workforce

Using Technology to Cut Costs

Article excerpt

Despite an ailing economy, many HR professionals report that technology-used right-can be an excellent cost cutting tool. Ericsson Inc. is one firm that recently adopted a new technology approach, and it's already paying off.

Chris Gonser would never pass as a techno-geek. He's the director of benefits and HR for the Ericsson Inc. telecommunications empire, a self-described big-picture financial guy and employee advocate. But in the past two years, he's helped mastermind a progressive employee self-service system that has become a bright jewel in the company's ROI crown.

The economy may be in a nosedive, but technology is soaring into new realms, changing the very nature of the way HR is conducted while allowing many organizations to significantly lower costs. It was in January 2000 that Gonser and his colleagues at Ericsson's U.S. headquarters, near Dallas in Richardson, Texas, introduced an HR initiative that has revolutionized the way employee information is disseminated. With 90,000 employees throughout the world-8,500 of them in the United States-the global cellular-phone manufacturer can't afford to be slow-moving, and must be able to provide the latest in employee services to its educated, technologically savvy staff.

The first phase of the three-part program was to roll out an entirely automated compensation system. It was followed last summer by the debut of an online flexible benefit plan that the company calls e-flex. And in October, a complex pension-administration system premiered.

Gonser estimates that Ericsson saved more than $1 million in the first year, and that the HR technology-which was built in-house and is administered by Watson Wyatt Worldwide-already has added more than $1 million in organizational value annually. These figures don't include the "millions and millions" the company said it will save in difficult to quantify but invaluable benefits such as attracting and recruiting top talent.

Other large companies, which have turned to leaders in Internet data-analysis software such as Oracle, SAS, PeopleSoft, IBM, and Microsoft, are making far heftier investments, but also report substantial cost savings. Sears, for example, made a $57 million investment in HR technology with PeopleSoft in 1999 that has helped the corporation consolidate multiple systems and outsourcing. The $41 billion retail firm, which has from 300,000 to 320,000 people on its payroll at any given time, expects to make a full return on its investment by the year 2004, a cost-savings of $16.5 million annually, says Greg Whitson, director of operations and HR at the company's service center headquarters in Atlanta.

"We are very happy with the conversion process," he says. "The ultimate test is the ability to do something sensitive correctly, like the payroll system. We did it without a blip."

What makes Ericsson's program unique, Gonser notes, is that "very few companies are doing as much HR online, or are pushing ESS as much as we do. Because of the explosiveness of the Internet, we are light-years ahead of where we were in HR two years ago. With more ESS, HR has become much more integrated and strategic.

"We've not only cut costs, we've become more efficient, faster, and more organized. Our services help with attracting and recruiting talent. We are providing more information more accurately. It's been very, very successful. People's appreciation has been overwhelming."

ESS technology-which integrates and analyzes data into a single, individualized, accessible platform-is becoming mandatory for all types of companies as a way of allowing employees to view and manage their own records. The new model is shattering the HR tradition by providing executives, managers, and employees with a single point of access to vital personnel information ranging from compensation and medical planning to performance appraisals. And you don't have to be a consulting firm or software peddler to understand the potential benefits: improving customer intelligence; increasing productivity, efficiency, and accuracy; increasing collaboration internally and externally; streamlining operations; serving existing customers better; getting into new markets; and, of course, reducing costs. …

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