Human Resources: Corporate Stepchild is Favorite Son of ASPs

It's easy to dismiss human resources as a repository of touchy-feely folks who aren't sure how to turn on their PCs but who can screw up your insurance paperwork royally. In most companies, it's a poor stepchild of a staff function; in small companies, there may not even be a human resources department at all. It's low in esteem and even lower on the list of information systems priorities. Nevertheless, recruiting and retention, conduct and compliance are vital to corporate success.

Despite being relatively unpopular with corporate managers, human resources is very popular with the application service provider (ASP) industry. There are 149 companies in the ASPstreet.com Directory specializing in human resources, and many others that offer HR modules in addition to other corporate services. These companies believe that the low status of human resources in the eyes of in-house systems experts makes it ideal for ASPs.

"Generally speaking, HR is one of those areas in a corporation that doesn't get technical resources to do their jobs better and faster," says Steve Pollock, president of WetFeet Inc., which offers recruiting services on an ASP basis. "The ASP model is particularly attractive to HR departments because they are so far down the MIS priority list," he says.

Bypassing the IT department
David Russo, president and chief executive officer of Empliant, which offers employee handbook and benefit registration services, concurs. ASP subscriptions, he says, often can be fit into the human resources budget as a subscription service, saving them the headache of trying to make their case to the corporate IT gatekeepers.

If HR technology is a low priority in headquarters, it's even lower in branch offices and operating divisions. Recruitsoft, which also offers recruiting management services, believes that this makes an ASP especially attractive to multinational corporations with far-flung locations. "You want a consistent process on a global basis," says Julie Denardo, manager of corporate and investor relations.

Recruitsoft's clients often have thousands of hiring managers scattered around the globe. They need to make local specifications within a standard corporate framework, and they don't want hassles in getting support. Often, an outside vendor is far more responsive than in-house IT staff.

There's an interesting paradox here. Although many of these human resources ASPs started because of the need for technology in human resources, many human resources departments already rely on two outside technology companies for their needs: ADP and PeopleSoft, both of which are trying offer small company services on an ASP basis.

The three ASPs we talked with have taken similar approaches to winning clients. First, they have chosen market niches that may be overlooked or not handled well by the large players. Second, they have designed their systems around the budgetary and political realities of human resources. An enterprise software company may have nifty new modules, but their relationship may be with the IT department, not human resources.

GUIs obvious, rather than intuitive
Finally, the ASP's services may be used by employees throughout the firm. Hiring managers in overseas offices or sales people updating their benefits information don't know how to use more complicated software and don't want to learn it. Empliant's David Russo says that they designed their graphical user interface to be obvious rather than intuitive, as "employees are not accessing this on a day to day basis."

While these companies don't necessarily see PeopleSoft as a threat, they do see a need to integrate into that system. "Maybe you want to take the candidates you hire each day, export that data from WetFeet Recruiter and import it into the PeopleSoft system," says WetFeet's Pollock. Recruitsoft's Denardo agrees.

"We integrate with PeopleSoft, Oracle and SAP," she says. As for Empliant, its focus on small companies keep they safely out of PeopleSoft's orbit. "They are targeting large companies with large infrastructure. We're scalable, but we're targeting small to mid-sized companies that are unnoticed and underserved by PeopleSoft." In any event, data collected by the Empliant system can be integrated into any of the big companies' systems.

As long as corporate IT managers view human resources as an internal problem child, it appears the ASP industry will be there targeting it.