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Blue Shield cleans up HR with Oracle-PeopleSoft HCM

Blue Shield of California deployed Oracle's PeopleSoft Enterprise Human Capital Management 8.9 to automate transactions, centralize IT and modernize its HR department.

The human resources (HR) department at Blue Shield of California had some very messy problems on its hands about two years ago.

The department's business processes had fallen well behind the times, so much so that HR employees were still using handwritten, carbon-copied forms to implement personnel changes throughout the organization. And the IT systems that supported HR functions were completely decentralized and tough to manage, making it difficult to enforce information retention policies.

The worst problem facing Blue Shield's HR department, however, was the unsettling fact that the group as a whole simply wasn't adding any value to the organization and had become more of a hindrance than an asset, said Marianne Jackson, Blue Shield's senior vice president for HR. But that was all about to change.

Jackson, who was hired at the end of 2003 to revamp HR, set out to modernize HR processes and systems -- and Oracle's PeopleSoft Enterprise Human Capital Management (HCM) 8.9 offering would ultimately serve as the technological backbone of that initiative. Oracle acquired PeopleSoft in a hostile takeover in December 2004.

Today, Blue Shield HR uses HCM to automate operational transactions and centralize IT systems. The firm estimates that the software will save it nearly $10 million in labor and other related costs by 2008.

"We were probably 12 to 15 years behind in not just technology but generally the kinds of contributions that HR was making," Jackson said. "[Before HCM] it was a very decentralized and disparate organization."

The evaluation period

When Jackson came on board, the company was using some Web-facing technology from Horizon Software Ltd. to let employees update data and initiate operational transactions. But Jackson saw that this technology simply didn't cut it.

"Really there was nothing behind it," Jackson said. "What it took behind the scenes to actually do any of the decision support or transaction management or policy adherence […] was nearly impossible to keep track of or to keep consistent."

When it came time to evaluate potential replacements for Horizon, Omar Noorzai, Blue Shield's director of HR technology and process architecture, said the self-service aspects of PeopleSoft HCM seemed best suited to his firm's needs.

Noorzai said his firm looked at Lawson, Oracle, PeopleSoft and SAP at the enterprise level. He added that the self-service capability which ultimately led the firm to choose HCM is basically an intelligent workflow which lets users apply business rules to code.

"[Self-service capabilities] really allow you to get out of that mundane day-to-day business and become more strategic," he said.

Blue Shield and integration partner DuMonde Solutions rolled out the Oracle HCM applications in September of last year.

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Modernizing HR

Before Blue Shield could get started on implementing HCM to revamp its HR operations, it first had to modernize the HR department's structure and the business processes supporting it, Jackson said.

Blue Shield wasn't particularly adept when it came to implementing technology, and Jackson knew she would need to build a team around it, she said.

In just under two years, the department was restructured, trimmed down and divided into teams of HR architects who serve as the firm's HR experts, organizational development personnel who are assigned to clients, and those who handle relations with remote workers.

"It's wrong to just say that everything was solved by the Oracle solution," Jackson said. "It was the backbone of the solution, but it wasn't the whole solution."

Blue Shield needed to document all its processes and figure out not only its business rules but what kind of HR organization it wanted before it started with the Oracle deployment, she added.

At the same time all the decision making was going on, the firm implemented a new shared services capability and a new call center. Jackson said that later on, the self-service aspects of HCM would complement the department's new approach to business process by allowing employees and managers to interact with little or no intervention from the HR department itself. HCM, she said, allowed Blue Shield to create a paperless environment that lets managers access and update data about themselves and their employees.

The newly consolidated HR system has reduced operational costs and increased efficiency by connecting employees to business processes and automating common administrative tasks like changing names and addresses or promoting or terminating an employee, Jackson said.

Jackson added that with the new HCM deployment, Blue Shied was able to document more than 150 new workflow processes, enabling the department to cut cycle times significantly.

One thing that made it easier for Jackson and Blue Shied to choose HCM was the fact that there was no predominant and "hard-to-undo" technology in place at the time.

"That was one of the reasons that we picked PeopleSoft and 8.9," said Jackson. "We formed our policies to actually match what we thought was best-in-class decision making by virtue of what 8.9 brought to the table."

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