Integrating HR Systems Can Deliver Rich Rewards

Business leaders can extract more value from separate HR technologies by integrating the systems.

May 1, 2014 | Dave Zielinski

You'll get little argument from HR technology leaders that integrating disparate talent management systems—or tethering those systems to the mothership of a human resource management system (HRMS)—can have significant payoffs. Whether by generating more-insightful workforce analytics, creating improved decision-support tools for line managers or delivering a more seamless experience for HR technology users, systems integration can also help raise HR’s profile as a strategic resource.

Consider the process integration of a succession planning and recruiting system. As a result of that merger, a recruiter might open a job requisition for a management position, only to encounter a pop-up box alerting her that three “ready now” employees already exist in the company. That knowledge could save the recruiter a hefty sum in headhunter fees or other recruiting costs and also could result in the rapid hiring of someone who quickly becomes a top contributor.

So given the advantages of systems integration, why does it remain so rare in HR organizations? According to CedarCrestone’s 2013-2014 HR Systems Survey, there is very minimal integration either between talent management systems or between those systems and an HRMS. The survey from the technology consulting company included responses from 1,266 organizations representing 20 million employees.

About a third of respondents reported no integration, says Alexia Martin, CedarCrestone’s vice president of research and analytics. “That surprised me,” she adds, “particularly the number who reported no integration between their talent management systems.”

A July 2013 survey from the Aberdeen Group, a Boston-based research company specializing in human capital management, found that the majority of respondents are still focused on “tactical” integration, defined as integration between workforce software and payroll or other core HR systems—typically a starting point for companies on an integration journey.

While that level of integration has benefits, primarily in eliminating manual transactions, it’s a far cry from integrating workforce management data (such as time and activity tracking) with talent management data, something only 29 percent of “best-in-class” survey respondents reported doing. Data extracted from the latter type of integration can be used to help develop more-robust internal talent pipelines and to realign employees to match shifting strategic priorities.

Why Integration Lags

If the implementation of an individual system runs over time or budget, integrating it with other talent management systems or an HRMS often falls to the back burner, says Steve Secora, senior human resource information system (HRIS) manager at International Gaming Technology (IGT) in Reno, Nev. “Unless you get it on the first go-round, it becomes harder to make a business case for the integration piece,” he explains.

The business strategies of industry vendors also play a role in integration trends, Secora says. “Vendors always look to differentiate themselves from competitors, but that differentiation rarely comes on the ease of systems integration as a selling point,” he says. “It comes in creating the best and most functional individual systems they can build.”

Jessa Kilgore, who has worked as an HRIS manager primarily in the health care industry for 20 years, says the “siloed nature” of functions within HR is another obstacle to systems integration.

Those working in recruiting, learning and development, compensation, and other functions often have little time—or incentive—to work across functional borders, Kilgore says. She believes that until HR executives overseeing those groups demand more cross-functional collaboration, little will change in terms of configuring disparate technology systems to link to each other for the greater good of the business.

One common argument in favor of integration is that it can create improved workforce analytics—and in many cases generate data faster. But Kilgore encourages HRIS leaders to ask themselves whether real-time analytics is something they really need.

“In most cases, you don’t need HR data in real time,” she says. “The time urgency just isn’t there because many processes are running on look-backs. Compensation planning and performance management run on a previous cycle or previous year, for example, and in those cases you don’t need up-to-the-minute data.”

Kilgore believes a better reason for integrating systems is to create more-seamless user interfaces for employees using disparate HR technologies, which some companies accomplish through the use of portals. “It’s for employees enrolling in training, changing their addresses, accessing performance reviews and the like online,” she says. “Is it all in the same environment with the same look and feel and ease of navigation?”

Four Stages of Systems Integration

Alexia Martin, vice president of research and analytics for CedarCrestone, places integration along a continuum of increasing sophistication. Her company’s 2013-2014 HR Systems Survey identifies four distinct stages:
1. Baseline or “minimal” data integration. File transfer protocol technology is typically used to run a report from one talent management system, export that data to Excel and then load it into another talent management system.
2. “Simple” integration. Vendor-supplied application program interfaces—tools that enable different types of software to interact with each other—are often used to create a one-way integration from a talent management solution to a human resource management system (HRMS). An example is a recruiting system that feeds data to an HRMS on new hires.
3. “Two-way” integration. Integration between talent management systems and an HRMS is often provided as a solution from a vendor or created by using middleware or service-oriented architecture (SOA) to facilitate the integration. SOA is a systems design that enables companies to orchestrate business processes across different software products.
4. “Real-time” solution. All talent management systems, as well as their data and reports, are available on the same platform as an HRMS. Integration between the systems is pre-built.

Unified Platforms

One way HRIS leaders attempt to solve the integration challenge is by turning to vendors with unified offerings, where talent management systems are available on the same platform as an HRMS. The CedarCrestone survey found that organizations using such “one-stop-shop” vendors grew 13 percent since 2012. The theory is that such systems will be easier to integrate, support and manage.

Karen Carpentieri, vice president of human resources at Berkeley College, which has 1,500 employees in 10 New York and New Jersey locations, chose a vendor based on many of those reasons. Searching for a single, scalable solution, Carpentieri opted for a system from Ultimate Software that has talent acquisition, onboarding, performance management, and time and attendance systems on the same platform. The tight integration of recruiting and onboarding systems on the platform created new efficiencies, she says.

However, experts caution that the level of integration offered by some unified platform providers—where talent management and HRMS come bundled together—may provide only rudimentary data sharing between systems. That’s because the majority of HR vendors haven’t grown their talent systems organically.

“Companies often think they can overcome their integration challenges by investing in just one provider, but the reality is many of those vendors can offer those diverse solutions because they’ve acquired other companies that had them,” says Madeline Laurano, research director of talent acquisition solutions for the Aberdeen Group. “You may be told you’re buying one integrated solution, when in fact it’s a system of four or five different companies.”

Andy Rice, a longtime HR practitioner who now heads Black Box Consulting, a San Francisco-based company specializing in integrated talent management strategies, agrees. “These vendors are still using disparate systems and are trying to put a common user interface on top of them,” Rice says.

That leaves HRIS leaders with a choice: Go with a unified HRMS/talent management platform that provides a base level of integration and perhaps sacrifice functionality in some talent areas, or opt for the best talent systems from different vendors and then cobble them together on your own using middleware.

Most vendors offer middleware tools designed to connect their software to everyone else’s. Third-party companies offer middleware solutions as well. CedarCrestone’s Martin says middleware can be used not only for analytics but also for process-level integration. “A middleware solution should be reflective of a long-term HR systems strategy,” she says. “Ideally, it should be used both for analytics and for HR process integration.”

The Next Frontier

Experts say the next challenge on the integration front will be combining analytics generated by different talent management systems. Most new vendor software-as-a-service systems now come with an embedded analytics component, Martin says, which ratchets up that challenge. “If you have a recruiting system from one vendor with its own analytics piece and a learning system from another vendor with its own analytics, ideally you want those merged,” she says. “An enterprise middleware solution is one answer to get data from both.”

Consolidating workforce analytics from multiple talent systems is no small task, says IGT’s Secora. “Today’s ‘big data’ might live in five to seven different systems, and each of those systems has its own metrics piece,” he says. “But you can’t share something from system A to system B without creating an interface.”

Rice says most clients he works with face problems around HR analytics reporting, especially when they want to combine data from different systems. One solution is to create a centralized data repository for merged analytics. Companies that don’t have some sort of data warehouse or data repository “wind up greatly reducing the [return on investment] from their integration projects,” he says.

Dave Zielinski is a freelance writer and editor based in Minneapolis.