Managing the people supply

E-procurement tools aren't just for pencils and widgets. Companies can use them for the acquisition of human talent, too.

With an eye on the bottom line, Verizon Wireless is working to automate the procurement of labor services, in hopes of standardizing the hiring process, obtaining discounts and saving a lot of time.

The mammoth wireless phone service provider in Bedminster, N.J., recently announced that it will use hosted applications from Chicago-based Fieldglass Inc. to acquire IT contract labor via the Web.

The system, which has been in pilot testing since May and went live last month, will let Verizon get rid of old paper-based processes, improving efficiency and helping the firm keep to its fixed budgets, says Cheryl Rowden, director of IT and finance at Verizon Wireless. The company expects to see a return on investment from contract discounts, efficiency gains and rate reductions. The system will also slash overbilling.

"One of the real wins for us from a management perspective is we'll be able to approve our new job orders before they are sent to a vendor," Rowden says. "In the past, that didn't happen until after the fact, and the approval process gets messy."

Moreover, the Fieldglass system gives Verizon contractors access to online time sheets, and managers will have job-tracking capability via a Web browser. When jobs are completed, electronic invoices will be created and sent to the vendor, approved and returned for Verizon to make payment -- all without a piece of paper coming into the process.

"It's a huge win for us in terms of the processing time it takes," Rowden says.

Fieldglass is one of several software vendors that help companies procure, manage, allocate and hire personnel, as well as predict future spikes or drops in demand for people with particular skills.

Proponents argue that companies pay attention to buying things like pencils online yet ignore automating the procurement of contract and temporary workers and other services -- an area where big savings could be realized.

Companies have "done a pretty good job in [online procurement for] manufacturing but have never done a good job with procuring people and skills," says David Hofferberth, an analyst at Aberdeen Group Inc. in Boston.

While there have been a handful of small companies offering applications for staffing or professional services automation, only now are large enterprise resource planning vendors addressing this area. Recently, Pleasanton, Calif.-based PeopleSoft Inc. announced the rollout of a set of applications, acquired from its buyout of SkillsVillage, that will handle what it calls enterprise service automation.

These applications could handle service distribution and supply chain processes for internal help, but most companies are focusing on procuring temporary workers, says Monica Barron, an analyst at Boston-based AMR Research Inc. Frequently, the user has already installed procurement software from vendors such as Ariba Inc. to buy indirect materials and wants to reap the same sorts of benefits when securing services. The benefits include standardized buying processes, a reduction in the number of preferred vendors to deal with, the ability to benchmark vendors, and savings from volume discounts, Barron contends.

However, one manager says that instead of purchasing an elaborate system for contract workers, users could expand the same system they use for hiring full-time employees. "It's the same thing; you're still trying to get talent in the organization," says Gary Caulfield, executive director of human resources at Calgary, Alberta-based Bell Intrigna Communications Inc., a telecommunications services provider.

His firm uses applications from E-Cruiter.com Inc. in Ottawa, which have cut the time it takes to hire full-time staff. He says the application could also be used to link to third-party recruiters for contract services.

Dayton, Ohio-based business machine maker NCR Corp. is considering linking up its professional services automation applications to external vendors to allow it to procure services, according to Joe Federer, vice president of the company's Teradata division.

NCR has been rolling out applications from ChangePoint Corp. in Richmond Hill, Ontario. When fully installed, the software will let users create a project plan, identify what types of skills are needed to complete it and determine the availability of appropriate staff. Federer says the ChangePoint system doesn't have the ability to match up with an external human resources marketplace, although he thinks it would be a plus.

But automated supply chain systems geared toward human resources and services are new territory for most companies, so managers will have to be trained to get the job done in new ways, says Verizon's Rowden. For example, most hiring managers rely on a network of personal contacts, something that won't be necessary with automated procurement. One advantage is that firms can use these processes to eliminate nepotism or cronyism during hiring.

"You don't need to have a relationship with Joe or Jim" at the placement firm, Rowden says. "They just need to send you good candidates."

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