Business intelligence software is capable of boosting the value of the data that employers collect through their HR information systems. Geraint John looks into a development that has major implications for personnel professionals...
Software Source (article updated June 2002), 25 Feb 1999
The phrase on the lips of those jockeying for position in the lucrative market for management information software is "business intelligence". For personnel professionals it promises to be a powerful weapon in the battle to demonstrate the positive correlation between good people management practices and good business performance.
Strip away the techno-babble that inevitably surrounds it, and business intelligence turns out to be about something simple: namely, turning raw data into information that can be used to make better decisions. Yet, as many companies have discovered, getting there is not as straightforward as it might seem.
Large organisations in particular have been putting a lot of time and money into enterprise resource plannin" (ERP) systems - software designed to integrate functions such as finance, manufacturing, operations and HR more closely. Until now, such projects have focused mainly on streamlining business processes, automating everyday tasks and building databases in which to hold vast quantities of cross-functional data. But clearly there is little point in spending hundreds of thousands - if not millions - of pounds on collecting data for its own sake, hence the surge of interest in software that claims to make sense of it.
Three factors
Three main factors lie behind the rise of business intelligence. First, the advent of the "data warehouse" has made mass storage not only technologically viable, but also much cheaper.
Second, the analytical devices needed to manipulate data and identify trends have become more sophisticated. Powerful tools from specialist firms such as Cognos and Business Objects are now being used (see case study: "Bristol & West's cognoscenti").
Lastly, more intuitive and user-friendly software is allowing business managers, as opposed to computer programmers, to access the data. The rapid development of corporate intranets means that increasingly even the most complicated analysis can be carried out from within a standard web browser.
To understand what this means in practical terms, consider a typical example of information system usage today. HR staff collect a range of data, which is then fed into a functionally specific, stand-alone system. From this, they generate relatively simple monthly reports, covering issues such as headcount and absence levels, which are then passed on to managers elsewhere in the organisation. Even where this transactional data is what the manager wants, it may simply indicate that there is a problem without giving any clue as to what lies behind it.
Spot the relationship
By contrast, in a business intelligence model, although each function continues to use its own system, they are linked to a shared data warehouse containing all of the firm's critical business information. This gives a wider range of people access to HR data and also allows them to ask broader questions (see: "Share the data"). For example, a company might want to know whether there is any relationship between the training it gives its sales teams and the revenue they generate, or the effect that staff turnover is having on growth.
Visually, these "information cubes" can be thought of as the data equivalent of a Rubik's Cube on which multidimensional analysis can be performed. As well as allowing more variables to be compared at the same time, these models allow analysis to take place at different levels, from the entire organisation down to the individual.
Take absence, for instance. Using business intelligence software, you can plot the overall trend and then "drill down" to look at absence levels by business unit, department, team or a particular employee. Having identified a problem area, its effect on profitability can be assessed and the information compared against data on the pay structure, overtime, length of service or training history.
For personnel professionals, the ability to show causal relationships between "people data" and traditional financial measurements can only be good news, allowing "soft" KPIs such as customer and employee satisfaction to be measured and compared against the harder numbers.
"Business intelligence adds to the credence of HR as a decision support function," says Sean Harman of the HR product marketing group at SAP (UK). "The impact of HR decisions elsewhere in the organisation can be analysed in a way that wouldn't have been possible before."
"You only have to look at HR people's faces when they see the software demonstrated. They realise it has huge potential and would like to be able to use it now," says Jan Paxton, HR planning manager at Peterborough Software.
Measured response By dramatically reducing the time and money spent on managing human capital, the latest HR software systems are freeing up more time for strategic thinking
