Today's business environment requires smart thinking, quick action and rapid adaptation to constantly changing conditions. And the marketplace increasingly rewards those who respond to the demand for innovation driven by internet business models, technology advances, globalisation and shifting demographics.

Under these conditions, HR has a more critical role than ever in achieving business success. New ways of doing business require new ways of engaging people. Speed, flexibility and innovation are achievable only when effective human capital management strategies support business objectives. Organisations that understand - and act on - this truth will be the ones that attain and retain competitive advantage in the next decade.

In short, it means building a new "eHR organisation" focused on connecting people to business strategies, to each other, to shared knowledge and to the operational tools necessary to drive organisational success.

The eHR Solution

eHR is not just about technology. It is about uniting technology and strategy to connect people to people and people to business, in order to adapt quickly to changes in both people and business needs.

At the same time that technology is making eHR possible, strategic business needs are making eHR necessary. Much has been written in the past several years about HR acting as a strategic partner. HR leaders have been told repeatedly that they must earn a "seat at the table" with corporate management in order to play a significant role in the development of organisational strategies and business success.

But, while many HR leaders have become active participants in strategy sessions occurring in boardrooms around the world, they are continually hindered by the need to think and act strategically, while still overseeing the time-consuming administrative aspects of day-to-day HR. It is clear that HR must be relieved of administrative burdens in order to maximise its contribution to organisational strategy.

The Technology Foundation

Technological change is a key driver for HR transformation, providing the foundation to support HR's growing strategic focus. In particular, web technologies have already given workers direct access to each other, to HR, and to business information with such ease and intelligence that every worker can contribute more directly to business results.

Various HR functions - recruiting, payroll, benefits, pensions and others - tended to deploy their own business applications and databases with separate rules and requirements for data retrieval. Managers and employees in search of comprehensive information had to access multiple sources, a time-consuming and often frustrating exercise. These self-service models did little to connect people to business information or to each other beyond simple e-mail.

Today, new web technology options exist that will overcome the limitations of previous technologies, so that HR can further satisfy the needs of employees and managers while continuing to free up resources to focus on strategy. The organisations that successfully transform themselves into eHR organisations will be those that understand how to select and apply new technologies in ways that best meet their unique needs.

Key Components of an eHR Technology Foundation A significant amount of discussion in the past year or so has centred on the situations and solutions that have emerged due to new web technologies. The topics in the current landscape of HR focus include portals, system integration, Enterprise Resource Planning systems (ERPs) and best-of-breed applications. Portals - Employee portals give workers the "big picture" in terms of their organisation's investment in them by providing electronic access to everything from benefits enrolment to training opportunities, and more. At the same time, portals give employees a sense of control over personal information as well as access to critical business tools and information. The potential for portals is unlimited as companies increase the breadth, depth and integration of business tools and information available to workers. Seamless Integration of Systems - Through the use of Extensible Markup Language (XML) and other technologies like it, it is now possible to integrate multiple systems that often abound in HR departments and among their vendors. It is also possible to extend the reach of the core Human Resource Information Systems (HRIS) - without the pains of recreating, replacing or rebuilding those system functions. Leveraging the ERPs - One of the biggest sources of dissatisfaction with ERPs has been the inability to easily - and economically - customise and update their modules. Technological developments now allow companies who have already purchased ERPs to integrate other applications without wasting their investment. Companies can continue to use the modules of their ERPs that suit their organisations while incorporating other third-party applications. The ability to integrate ERPs with new applications allow companies to have the most appropriate HR delivery tools in place for their organisations' needs. Selecting and Integrating Best-of-Breed Web Solutions - Matching the right technology applications with the right business strategies requires choosing vendors who understand both the mechanics of their technologies and the context in which they will be applied. Although certain products may be considered top in their category on the basis of cost, functionality, technology innovation or ease of implementation, no single product can really be the best solution for all business needs. Building an eHR technology foundation requires a thoughtful process of matching business needs to product characteristics. However, that is no easy task - the process of selecting solutions is complex due to the sheer number of vendors offering HR-related technologies and services. Companies ranging from dot-coms to old-line traditional firms are seeking to capture part of the $190 million human capital management industry - meaning that due diligence has to be a vital part of any vendor selection process.

Adapted from Watson Wyatt's report, "eHR^TM: Transforming the Role of Human Resources". For more information on the report, please contact lewis.yu@watsonwyatt.com or helen.miao@watsonwyatt.com