HUD tells its HR success story

Agency adopts a new systems strategy based on ‘buy it’ rather than ‘build it’

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Officials at the Department of Housing and Urban Development took a close look at their human resources business processes and supporting technology about three years ago. They didn’t like what they saw, which was a costly mishmash of HR systems.

They decided to invest in the development of a commercial HR system from PeopleSoft to replace those systems. Early in the systems development phase, they thought it made sense to assess other agencies’ experiences with PeopleSoft.

“Our intent was to benchmark their experiences, lessons learned and best practices,” said Charles Butler, director of HUD’s office of field coordination and technical support.

One of those agencies was the Treasury Department. At the time, Treasury was preparing to install HR Connect, a shared-services solution based on PeopleSoft’s  HR application. When HUD officials met with Treasury HR managers to get their perspective, it was a revelation.

“It was at that meeting that we became aware that Treasury could offer services as an HR provider with an already established, proven and tested system,” Butler said.

HUD officials began to build a business case for using HR Connect instead of a HUD-unique system, and they outlined their objectives.

The agency wanted to replace 17 HR systems with modern HR management software, Butler said. Officials wanted to ensure it was aligned with federal e-government initiatives. They required a two-way interface with the National Finance Center, the agency’s payroll provider. Officials wanted to use PeopleSoft licenses that HUD already owned.

Treasury’s HR Connect met all of those requirements. “HR Connect had many factors in its favor, such as [being] an already federalized software product, which would let HUD benefit from Treasury’s systems investment, and it was an established system that supported more than 100,000 employees,” Butler said.

In addition, HUD officials estimated that the agency would save $10 million by using HR Connect instead of building their own HR enterprise system.

That’s a big plus for any agency. By outsourcing HR functions to a shared-service center, agencies can move to consolidated, standardized processes and reduce expenditures by eliminating redundant systems, said Lynn Eddy, associate chief information officer of the HR Connect program office, which the Office of Management and Budget established through its Human Resources Line of Business initiative.

OMB agreed to let HUD proceed with HR Connect in late 2004. HUD implemented it in six months and within 10 percent of the projected cost.
HR Connect is slowly changing the perception of HR administration at HUD, Butler said. 

“We’re moving [HR] from a technical role to a strategic one,” he said. “The strategic value aspects of the HR Connect investment forces us to focus on managing human capital by supporting functions such as recruitment, competency management, employee development and employee customer service. HR Connect provides our HR professionals with the time and opportunity to be a strategic partner with their customers.”

For its part, Treasury is able to provide HR services with significant economies of scale. “In Treasury’s case, when we brought on HUD, we were able to service their roughly 10,000 employees with only two additional staff” members, Eddy said.

An independent study showed that HR Connect can scale to 400,000 employees with no additional hardware or adverse effect on performance. HR Connect currently provides services to 14 agencies and 150,000 employees.

Economies of skill are another benefit, Eddy said. “When you have a provider whose business is to deliver HR services, you get people who are experts in the field. This is their business.”
6 Tips for choosing a shared-services providerSome experts advise agencies seeking a shared-services center to do their homework before selecting a provider. Lynn Eddy, associate chief information officer for HR Connect, the Treasury Department’s Human Resources Line of Business application, recommends that agency officials:
  • Determine whether a service center will meet their future needs.
  • Understand which services they are buying.
  • Examine the provider's track record and plan to measure performance.
  • Ask if full project management services are included.
  • Find out how much training is available.
  • Investigate the center’s strategy for technology upgrades.
— Richard W. Walker

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