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TA001128EAP

Technology Audit
Enterprise Applications

Oracle Oracle E-Business Suite HRMS 11i

Abstract

Written by: Teresa Jones Date: October 2006

The Oracle E-Business Suite Human Resources Management Solution is the companys suite of Human Resources functionality. It is fully integrated with the rest of the E-Business Suite, yet also available as a stand-alone product. Many organisations today are starting to recognise that people are one of their major assets, if not the major asset, and that they need careful management HR applications are no longer simply a record of who works in an organisation and their pay information; todays HR tools support the whole HR lifecycle from recruitment to departure. The challenge of ensuring that the right staff are recruited and developed for the right roles, means that an integrated set of functionality as provided by Oracle becomes a more cost-effective way of managing the overall process. Although it is a mature solution there are areas where there is still room for improvement, such as in planning, scheduling, and optimisation of resources, although recent acquisitions will help improve capability here. Medium to large organisations in a wide variety of sectors would find the comprehensive functionality beneficial, especially if addressed as part of a wider consolidation or standardisation project. Any comprehensive solution like this is complex to evaluate, but a good approach would be to compare business requirements with features within the offering, as well as by evaluating existing deployments.

KEY FINDINGS
Integration with the whole E-Business Suite keeps technical and deployment costs lower. Includes comprehensive reporting and management information. The solution runs on Oracle databases.

Key:

Product Strength

Product Weakness

Point of Information

It provides a comprehensive range of modules for newer HR areas. Can be used with a range of clients including mobile devices, supporting self-service. Currently has limited planning, scheduling, and optimisation capability, although recent acquisitions will improve this.

LOOK AHEAD
Oracle E-Business Suite HRMS has a roadmap that extends beyond the upcoming release 12, although the long term strategy is to add new features and functionality in line with the companys much-publicised Fusion strategy.

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FUNCTIONALITY
Human Resources (HR) is an area that has historically been overlooked when it comes to automation. Typically, organisations would automate personnel records and payroll, but that was about as far as it went. Today, there is a growing trend towards seeing employees as an asset to the organisation, on a par with capital assets. Undoubtedly, employees are a large fixed cost for enterprises, even in the capital-intensive manufacturing area, and especially in banking, insurance, and the like. Managers need to understand the cost base, to be proactive and to make the most of the resources available to them by recruiting, retaining, and generally getting the right employees in the right roles, developing them, and ensuring that they are aligned with the business objectives. Today, HR is about much more than basic administration. We are gradually moving from the times when the cost of administration was relatively high in proportion to the expenditure on people development (for example, training and learning schemes, personal development, talent management, and recruitment), towards a time when the expenditures are inverted a low proportion is spent on administration because of significantly more automation, and the larger proportion on developing the human assets of the organisation.

Product Analysis
Given the growing profile of HR and Human Capital Management (HCM) issues, businesses face a number of challenges. The desire to automate different areas can be met by niche solutions that address a particular pain point, and the benefit of this could be that issues can then be speedily addressed. However, integration will still be necessary and is often highly relevant given that personnel details are central to a number of processes within an organisation. To help address the wider aspects of integrated HR automation and cost reduction, Oracle offers a Human Resources Management System as a part of its well-established E-Business Suite, which can be deployed as a standalone module or part of the wider suite. Examples of how this can help meet automation objectives include a significant element of self-service, to allow staff to view payslips, make holiday bookings, and administrate performance appraisals (where it is possible to measure and monitor performance against objectives, all on-line). The time that managers, administrators, and staff often spend using a range of manual systems is all dead time and can be better used by having a common, self-service system. Of course, the right information is needed to make this work. The core building blocks of the application are: Database containing a comprehensive data model for all HR aspects. Business Process Automation covering workforce scheduling, time and attendance, learning management, recruitment, compensation and rewards, HR administration (including call centre capabilities), and contingent labour. HR Reporting helping management to get intelligence out of the system, especially in the area of performance management (often a highly labour and paper intensive process). Much of this functionality is by no means unique, but the application offers an extensive HCM footprint for the business processes that affect the human resources of an organisation. It offers an integrated approach, both from HCM functionality and a technology stack perspective. One area where the solution is differentiated is in the support for a mobile client, which can allow employees such as engineers and sales people to have access to the application from a mobile device, meaning that they do not need to access a self-service system on the shop floor or in the office. This allows staff like engineers to keep their qualifications up-to-date so that their skills are recognised and certified. Arguably for particular niche areas, such as incentive compensation, recruitment, and e-learning, there are vendors that offer specific functionality (for example, SumTotal Systems, formed by the merger of Docent and Click2Learn, is well known for its learning management solutions), but these may require significant integration to provide a balanced, whole picture of an organisations workforce skills profile. Where Oracle HRMS is currently lacking is that it still has a somewhat limited planning, scheduling, and optimisation capability for labour resources; although its recent acquisition of TempoSoft will bring enhanced functionality to this area (which will be included in a new product called Oracle Workforce Scheduling which will be released soon). Butler Group believes that the Oracle E-Business Suite HRMS offers a broad range of functionality that will be highly relevant for many medium and large organisations that are keen to address some of the more complex issues around wider HR processes, particularly if they are considering consolidating their IT infrastructure.

Oracle Oracle E-Business Suite HRMS 11i

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Product Operation
The Oracle E-Business Suite HRMS solution has an n-tier distributed architecture, in common with Oracle EBusiness Suite products. A typical deployment of three tiers is made up of the database tier (which manages an Oracle 9i or 10g database), the applications tier (which manages the Oracle E-Business Suite and other tools), and the desktop tier, which provides the user interface display (and this can also be extended to mobile clients for access on the move). The presentation layer on the desktop is in the form of a plug-in to a standard Internet browser. The core Oracle E-Business Suite HRMS software and other tools are deployed on a middle tier of servers, known as the application tier, avoiding the need to install and maintain application software on each desktop client, and helping the system to scale well, and to keep network traffic low. The diagram below illustrates the generic Oracle E-Business Suite architecture (including HRMS).

Figure 1 Oracle E-Business Suite Architecture

The functional areas addressed by the Oracle HRMS include Core HR, Payroll, Benefits Administration, Time and Labour, Self-Service, Learning Management, Recruitment, Incentive Compensation, HR Intelligence, Performance Management, HR Help Desks, Contingent Workforce Management, Services Procurement, and Pension and Stock Administration. Selected functionality addressed by some of these areas includes: Core HR the core module and a key component of the suite. It provides the base workforce information and has been localised for over 19 countries to support different legislative and cultural requirements. Oracle Payroll this is a rules-based payroll management system, which is also fully integrated with Oracle Financials (but could be integrated to other applications). This module supports the administration of global processes yet fits with local requirements, and allows employees to access payslips online, lowering administration costs. Oracle Advanced Benefits this is a flexible, rules-based benefits and compensation administration application that enables improved benefits support and analysis, while reducing overall costs through Internet-based automation. Oracle Time and Labour allows time to be entered online or offline via a template that can be uploaded later. It also covers rotation plans based on shift work. Oracle Self Service HR this is combined with the core HR module to provide employees and management with access to personal information, so that they can where authorised amend details easily themselves, including personal profiles, benefits, and expenses. Oracle Learning Management supports and manages a unified catalogue of training material, which can be accessed online by employees, and can also be extended to partners and customers. This module can also be integrated with the Oracle Collaboration Suite to allow collaboration with others. It also covers resource scheduling to ensure that resources and equipment are in place for training courses. Butler Direct Limited Oracle Oracle E-Business Suite HRMS 11i

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Oracle iRecruitment this module allows users to manage open job vacancies, search for candidates, and then manage the interview process. It can also integrate with third-party tools such as HireRight for pre-screening and background checks. Oracle HR Intelligence this module, which includes Daily Business Intelligence for HR (a self-service reporting tool), is a pre-built decision support system specifically for the Oracle HRMS that helps management analyse and manage HR processes. It provides access to accurate, timely, and comprehensive data from the various HRMS application modules, supporting the decision-making process. Oracle Incentive Compensation covers sales people, partners, and resellers, automating the process of calculating, allocating, and accumulating incentive credits. This module is integrated to Oracle Sales. Oracle states that the Oracle HRMS solution can scale to any size and headcount, from 50 employees upwards. One client in the UK has 1.2 million employees. The Oracle engine is already the backbone for outsourced HR providers that have millions of records within the Oracle HRMS product. Fault tolerance (including failover capability) is handled by the underlying Oracle Application Server and Oracle Database Server. Back-up provision is enabled by the software the policies and procedures for doing this will need to be defined by the customer and implementer during the implementation project. Each of the nine main modules is available separately, but only Oracle iRecruitment, Oracle Learning Management, and Oracle Incentive Compensation are available as stand-alone modules, so that only the functionality that is necessary is deployed. The rest of the HRMS modules must be deployed in conjunction with the core HR module and not stand-alone.

Product Emphasis
With this solution, Oracle is addressing the HR needs of the medium and large organisation in a comprehensive manner. The functionality available is comparable with similar suites on the market, but the integration capability with other Oracle E-Business Suite modules is likely to be of value to organisations that are also considering a wider integrated strategy.

DEPLOYMENT
As might be expected for an enterprise-scale solution, the Oracle E-Business suite HRMS can be deployed on a wide range of platforms, indicated below. Application Tier Microsoft Windows 2000 Microsoft Windows 2003 (x86) Linux (x86) Sun SPARC Solaris IBM RS/6000 AIX HP 9000 Series HP-UX HP Tru64 UNIX (Digital UNIX) Database Tier Microsoft Windows 2000 Microsoft Windows 2003 (x86) Linux (x86) Sun SPARC Solaris IBM RS/6000 AIX HP 9000 Series HP-UX HP Tru64 UNIX (Digital UNIX) SGI UNIX (Silicon Graphics UNIX) Data General Intel UNIX UnixWare (SCO UnixWare) IBM NUMA-Q DYNIX/PTX (Sequent) IBM OS 390 (MVS) HP Alpha OpenVMS (DEC) Fujitsu-Siemens RM200-600E Reliant UNIX Sun Solaris (x86)

Oracle Oracle E-Business Suite HRMS 11i

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The underlying technology required for installation of the solution includes the Oracle Database (versions 9i or 10g) and the Oracle Application Server. In addition, a Web browser is required as a thin client, for the user to log onto the applications wherever they may be, and this is not limited to Internet Explorer, but can be deployed using any Internet browser. Oracle HRMS can be deployed in a hosted model, either using a partner or directly hosted by Oracle. Implementation resources will typically include technical, project management, and functional experts. Oracle recommends implementing the HRMS solution in a phased manner with the scope of each phase being clearly defined. Part of this process will be to optimise the business processes being used, and it may be necessary to change these processes as part of a general process improvement exercise, or to then mould the application to fit how the organisation wants to work, by configuring it to suit. Heavy customisation of the application is not recommended, but most clients may need to carry out some customisation. Oracle or its implementation partners can provide many of the necessary resources to assist with deployment, but organisations should take care to ensure that key staff from the relevant areas, especially from HR management, are available to take key decisions on process, policy, and strategy. Project timescales can be as little as four months for a relatively small customer, four to six months for a typical tier-2 customer, and more like six months plus for a large tier 1 customer, although large projects are likely to take up to 18 months overall. Training will depend on the client and the implementation, but it is usually carried out via a mixture of on-site and remote training delivery methods. It may be necessary to integrate the HRMS application with other business applications, particularly if the solution is not being deployed alongside an existing E-Business Suite implementation. A range of APIs and integration technologies are available within the suite, such as PL/SQL procedures, Java classes, XML Gateway messages, Electronic Data Interchange (EDI) messages, open interfaces, concurrent programs, business events, and Web services. These are available as a comprehensive online directory or catalogue of Web services, interfaces, and integrations points that act as the service broker for Oracle E-Business Suite. In addition, the Oracle BPEL Process Manager, an integral part of Oracles Business Integration solution, can be used to deliver a Service Oriented Architecture (SOA) approach to integration, but this would require additional licences to be purchased and extra skills and time to deploy. For organisations that are looking for a processcentric way of integrating disparate applications this may be a valid way of addressing integration. The company provides three levels of support under its Applications Unlimited strategy: Premier, Extended and Sustaining Support. Premium Support lasts for five years from the generally available release date of the product. This covers access to new releases, bug fixes, and regulatory updates. Extended Support covers a further three years, with similar coverage, but costs an additional fee. Sustaining Support is available after this time where the customer can call the help desk and log issues, and if a solution already exists then Oracle states that it will help the customer. However, during this time period there are no further regulatory updates provided although the customer could explicitly pay for this if necessary. Apart from the database and application server, there are no other major product dependencies, although other Oracle and third-party technologies can be integrated with the solution depending on requirements. Implementing any kind of new enterprise application is always an opportunity for an organisation to review its business procedures in order to take advantage of the new technology and the new functionality available within the system. It is therefore likely that business processes will change as a result of deployment of Oracle HRMS, but it will not of itself force change; it can be configured to meet individual requirements. Leading HR practices are embedded within the system, allowing the organisation to take advantage of good practices. The emphasis of the solution is not only on initial deployment, but also on supporting process improvement over time. Any major application deployment carries an element of risk, and Oracle HRMS is no exception. However, Oracle suggests that any risks can be minimised by clearly defining the scope of the project and setting up a good design, in conjunction with business management. Senior management commitment will be vital to project success, but such participants must know the business well so that the design and implementation accurately reflect the business processes of the organisation. Oracle also recommends that its customers use as much of the configuration capabilities and out-of-the-box functionality as possible, rather than focusing on customisation to meet every last managerial whim. Configuration allows the way that screens look and feel to be easily altered, as well as defining what fields are required or adding edits or validations to the screens.

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A key aspect of this latter recommendation is that it makes it much more straightforward to upgrade the application as required and therefore be able to take advantage of new features, as well as reducing the time taken to implement the system.

PRODUCT STRATEGY
Oracle now provides a range of enterprise applications including the original E-Business Suite of which HMRS is a part having acquired PeopleSoft (which was well known in the HR space) and with it JD Edwards. This gives it the ability to sell new modules to existing customers who are comfortable to deal with an existing supplier. The Oracle EBS HRMS product is likely to be of particular interest to the developing HR outsourcing market (although the incumbent product here is probably the Oracle PeopleSoft HRMS). The companys geographic range and reach will be valuable for larger customers that require a common approach globally. Oracle offers HR solutions that are very horizontal in nature, but which also reflect specific industry functionality such as Public Sector requirements, and this vertical focus is likely to continue in future releases. It sells globally to organisations of 50 employees upwards, although its sweet spot is in the mid and enterprise market, where the global reach and scalability of the solution are needed. Oracles sales strategy varies somewhat depending on the size of the potential customer; typically for Tier 1 customers (with 10,000 employees upwards) the company sells directly via an account management setup. For smaller customers in the EMEA and APAC regions, it sells via partners or via the reseller channel, which it also supports with marketing assistance. The company maintains key business partnerships with the main Systems Integrators in the EMEA region such as Accenture, IBM Global Services, Deloitte, Cap Gemini, and Arinso. It also has many relationships with system integrators, management consultants, and service providers at a country level. Oracle has partnerships with a range of technology partners, including HP, SUN, and IBM. Oracle offers a range of pricing models, including annual, term, perpetual, and subscription. However, the most common pricing method is per employee, and the company also offers its solutions as bundles or as modulespecific options. Maintenance fees are from 20% of the original licence fee, depending on the type of support required. Typical project values are hard to pinpoint since it will depend significantly on the size of the client and the project requirements. Usually, the average ratio of licence fee to services is 1:4. Maintenance costs cover new releases but not new modules or specific new functionality this would require a new licence to be purchased. Oracle recently announced its Applications Unlimited strategy, where it intends to continue support for each of the main products within its portfolio alongside its Fusion strategy for the future of its applications. To this end, it will typically release a new version on an annual basis (Oracle E-Business Suite version 12 is due later in 2006). The company routinely releases family packs and Roll-up Packs, which are enhancements to an existing release; and these are cumulative so that customers do not have to take every enhancement, and can upload the packs on their own schedule. Fusion is Oracles strategy for a completely new enterprise application suite, based around a SOA, combining the major functionality from each of the main applications that the company now owns. The first release of Fusion is due toward the end of 2008. In a move to provide more capability for the mid-market, Oracle plans to release a new offering called Simply HR, which covers core HR functionality, self-service, and payroll. This will be sold with a fixed price implementation via partners, and is anticipated to be available early in 2007. Oracle faces significant competition in all sectors of the market, although its competitors vary according to geography, client size, and the specific HCM solution segment. Within EMEA, the principle competitor is SAP, and there are a number of niche vendors that offer more specific solutions for individual areas of HR. However, Oracles vision of Fusion, once clearly understood by the market, should help it to win in competitive situations, especially as it adds more functionality, and further localisation for specific vertical markets and regions. It may need to address issues around a general lack of awareness of Oracle as a provider of HR solutions within some markets, and may also face a degree of competition from its own packaged applications in the mean time.

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COMPANY PROFILE
Oracle Corporation (NASDAQ:ORCL), is the worlds second largest independent software company, specialising in information management. Product lines cover database, tools, and enterprise application products. The company also offers consulting, education, and support services. Oracle was originally founded as Software Development Laboratories Inc. (SDLI), by Larry Ellison, Robert Miner, Edward Oates, and Bruce Scott in 1977. In the early days, the company built a commercial database management system for IBM, in a project commissioned by the Central Intelligence Agency (CIA) with the code-name ORACLE. In 1982, this became the new name for SDLI, and the company pursued the development and distribution of database software, with Miner, Oates, and Scott concentrating on the database development side, while Ellison was, and still is, responsible for the vision of the organisation and for bringing clients on board. Oracle went public in 1986. With headquarters in Redwood Shores, California, Oracle now has 300 offices in 145 countries worldwide. Of the 56,000 full-time employees, just over 23,000 are based in the USA and 32,900 elsewhere in the world. Around 14,400 employees are in research and development. Oracle technology can be found in nearly every industry worldwide and in 98% of Fortune 100 company offices. The company has made a number of acquisitions in its history, the most significant of the recent ones include PeopleSoft (including JD Edwards) and Siebel, pitching Oracle firmly in the Enterprise Applications market. Key customers for Oracles HRMS product include Whitbread plc, Lloyds TSB, Emirates, Carphone Warehouse, Dubai Duty Free, NHS, France Telecom, and Iberia Airlines. The company has around 4,500 customers for Oracle HRMS of which 1,600 are in the EMEA region, and approximately 14,000 customers for all three of its main HR application product lines Oracle HRMS, PeopleSoft HCM, and JD Edwards HCM. Oracle has around 275,000 customers in total (including Technology and Applications customers). The companys financial year ends on 31 May, and selected figures for the past three years are shown below. Around 27% of the companys licence revenues now come from enterprise applications. 2006 Revenue (US$ million): Change on previous year (%): Total Net Income/(Loss) (US$ million): 14,380 22% 3,381 2005 11,799 16.2% 2,866 2004 9,475 7.2% 2,681

SUMMARY
The Oracle E-Business Suite HRMS is now a mature offering, covering much of the newer aspects of HR and HCM that larger organisations are looking for. The breadth of coverage is good, allowing savings to be made both in cost and time by reducing or even removing the need for many manual steps and procedures. Better visibility for management is a distinct advantage that is available from an integrated offering that is much harder to achieve with niche solutions, which then need integrating into the rest of the corporate infrastructure.

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