One thing to keep in mind when it comes to outsourcing an aspect of your business to an Application Service Provider (ASP) is how well suited it is to remote hosting and management. In this column we have already looked at high-profile candidates for an ASP approach, like e-mail and collaborative services. This month, let's take a look at another aspect of your business that just might be ripe for outsourcing-human resources (HR). There are several HR activities that naturally lend themselves to remote application management.

According to the ASP Industry Consortium, there are three groups of clients that can greatly benefit from an ASP-based approach to outsourcing any business process. First are the small-to-medium companies that must implement solutions quickly and without interrupting their business. They need standard processes and application offerings that integrate easily and can grow as their business grows. The second group is midlevel companies. They can also take advantage of many of the standardized offerings but may require some level of customization to fit special business requirements. And lastly, there are global companies that require unique solutions combining both customized and standard features to serve their employees around the world. With these in mind, we're going to take a brief look at a couple of major players in the HR niche of the ASP universe.

Extending human resources

While much of the information you see about the ASP space deals with e-mail, ERP, CRM, procurement, and other business-process services, there are ASPs that have tackled the HR services marketplace. Resource Partner Inc. (RSP), an application service provider and PeopleSoft Certified Outsourcing Partner, has been delivering outsourced HR solutions for midsized and large organizations since 1997. In March 2000, RSP was acquired by Interliant, which continues to operate the company as an ASP specializing in outsourced HR and financial services. RSP says it provides a fully integrated HR solution built upon a deep knowledge of the PeopleSoft application and the surrounding business processes. The ASP model provides HR- and finance-related application management, hosting, and business-processing services.

RSP believes its services enable clients to focus their attention on the strategic aspects of HR, while RSP focuses on the infrastructure and back-end operations. Customers benefit because many either don't have or can't find the right resources to manage applications internally. This situation is often the case for HR departments, because they are often not at the top of the IT agenda.

Depending on the client, there can be cost advantages to the ASP model, because clients don't have to build and support an HR IT infrastructure. RSP's ability to leverage database administrators for many of its clients is a simple example of the economies gained by choosing an ASP over your own internal solution.

Finally, there's the speed-to-benefit aspect of the ASP model. In general, the ASP space has had a positive effect on implementations. Many ASPs claim that they can install applications in 90 days or less. Compare that to the 12 to 18 months of average implementation time for companies with their own internal solutions.

Another player in the outsourced HR services arena is PriceWaterhouseCoopers. Billing itself as the world's largest professional services company, PriceWaterhouseCoopers has long been involved in assisting clients with managing their various business processes.

In the past, PriceWaterhouseCoopers would take one of two approaches to outsourcing. In one approach, it would bring in its technical resources and people and operate the systems at the client's premises, using the client's platforms. In other situations, the client's processes, people, and applications would be moved into a PriceWaterhouseCoopers Solution Center and operated remotely. But now, the company has added a third approach by aggressively pursuing an ASP model.

Outsourced benefits

One example of PriceWaterhouseCoopers' HR services in action comes in the form of its relationship with long-standing client BASF. PriceWaterhouseCoopers determined that BASF could save money by moving its employee-benefits administration into PriceWaterhouseCoopers' self-service center in Cary, N.C. This cut significant costs and delivered a higher level of service to the employees.

But there still were some cost-related problems that needed to be addressed. PriceWaterhouseCoopers discovered that the interactive voice-response systems combined with live-call representatives still had a significant per-minute cost. This led to the Web and the PriceWaterhouseCoopers ASP initiative. By moving these services into an ASP model, costs were cut even further. BASF employees now receive these same services (such as 401(k) plan administration and benefits plan enrollment) directly via the company's intranet or over the Internet, accessing applications hosted remotely by PriceWaterhouseCoopers. In addition to further reducing the time and costs involved in serving the company's employees, this approach also saves money on the technology side for BASF.

Tony Martin is global leader for PriceWaterhouseCoopers' HR outsourcing business. He says that application hosting, as his company is doing for BASF, and the delivery of subscription services for HR and benefits administration, are only the starting point. PriceWaterhouseCoopers' outsourcing business goes on to offer complete end-to-end service in a multiclient environment, including customer care, inbound and outbound document handling and imaging, management of interfaces, process and service among multiple vendors, and financial reconciliation and controls.

And how does BASF feel about moving to this ASP model? Employee feedback at BASF on self-service over the Net has been excellent. It's tracked every month, and, according to Jay Hurst, manager of HR information systems for BASF, satisfaction is consistently rising. And the time saved in processing employee requests has been significant. During a recent open-enrollment period at BASF, employee calls to the self-service center that had previously taken 10 minutes on average were being completed over the Web in less than a minute.

Obviously, you will need to do plenty of research if you are considering outsourcing some or all of your HR services to an ASP. But if the fit between your company and the ASP is right, and the pricing is good, you just might find that outsourcing HR services is the way to go.

Contributing Editor Don Fitzwater is a principal partner in Interface Solutions, a Minneapolis consulting firm.