HOMEGROWN HR TECHNOLOGY

Qualcomm's decision to buck conventional wisdom and build nearly all its own CUSTOM HUMAN RESOURCES SOFTWARE stems not only from its business needs, but also from its culture of innovation and taking risks. A look at how this particular gamble has paid off for the company.
NANCY HEMRY swears she has nothing against vendors of workforce management software.
As director of human resource management systems at tech firm Qualcomm, Hemry helped in stall a PeopleSoft system at her firm in 1997 and is now looking at vendors for a couple of different products. But for about eight years, she and her staff have almost exclusively built, rather than bought, the company's HR software.
Centered on a Web portal called MySource, Qualcomm's systems cover areas such as employee profiles, pay stubs, benefits administration, open enrollment, performance evaluations, 360-degree appraisals and employee training. Most recently, Hemry's team of nearly two dozen people added Web-based applications for recruiting and new-employee orientation.
The home-brewed approach makes the San Diego specialist in wireless communications an oddity among large firms. It also flies in the face of conventional wisdom that custom systems result in snarls, cost too much and quickly become outmoded. Jason Averbook, chief executive of consulting firm Knowledge Infusion, recommends that firms limit tailor-made applications to unique business processes, such as a company-specific incentive program.

"Spend your dollars there, as opposed to on the whole enchilada," he says.
But Qualcomm's applications garner praise from both company employees and outside observers. What's more, Hemry is part of a firm with a maverick streak, quite willing to chart a different course in the realm of technology.
"In general, we always did try to look at what was in the market," Hemry says. "It just made a lot more sense to build."

DONE WAITING FOR PEOPLESOFT
Qualcomm makes software and other products that underpin mobile phone systems. Founded in 1985, it raked in revenue of nearly $5.7 billion for the year ended September 25, placing the company at No. 381 on the Fortune 500, and employs about 9,300 people worldwide. About 15 years ago, the company disrupted the telecommunications industry's plans to settle on a particular wireless technology by introducing its rival code-division multiple access (CDMA) technology. CDMA has since become a major standard in the U.S., and is now being adopted abroad in countries including China.
That willingness to buck the trend helps explain Qualcomm's homegrown HR technology, says Gary Morlock, a manager in the company's HRMS group. "The culture here is one of innovation and taking new approaches," he says. "There's support for taking risks that could pay big dividends."
Among the dividends, the company says, is greater productivity for managers. In an internal survey, one Qualcomm manager estimated that MySource trimmed the time needed for each merit review cycle by 80 hours. Given that the reviews are held twice a year, the savings amount to a month per year per manager that can be directed elsewhere, the company says.
Qualcomm's bet on its own HR system has roots in the company's rapid growth in the late 1990s. At that time, the company was adding 100 hires a week, Hemry recalls. It hoped to ease its paperwork burden by turning to PeopleSoft, which had outlined a plan to offer Web-based self-service applications. But the software company was too slow, Hemry says. "We bought PeopleSoft for the promise of the Web," she says. "We quickly realized that we needed a solution right away."
So Qualcomm built its portal for employee and manager self-service. And it did so in a way not common among software vendors, who tend to focus on the needs of HR administrators, Morlock says. "We built it from the employee's perspective," he notes. As a result, he says, a wide variety of information of use or interest to employees can be snagged from the site, including a to-do list, benefits enrollment, pay stubs and links to company policies. Employees can even pick out what gift they'd like when their anniversary with the company comes around.
In addition, Hemry's team is working to let employees take content of their choosing from MySource to a personalized intranet page, where they can view such things as company news, important alerts and stock quotes.

OFF THE UPGRADE TREADMILL
About 22 people are devoted to Qualcomm's HR software systems. Of this group, dubbed the "Dream Team" by managers, half are assigned to the HR department and half to the information technology department.
The software developers from IT, though, are paid out of the HR budget. A staff of this size might sound wasteful, but Hemry says that even if Qualcomm used external vendors, a number of those employees would be needed to run or monitor third-party systems. In addition, after completely unhooking itself from applications including PeopleSoft about four years ago, the company has avoided upgrade charges and annual maintenance fees that can reach into the millions, she says.
Qualcomm also has skipped the major integration hassles that can accompany new versions of business software. "This has freed us up from the treadmill of upgrades and patches," Morlock says.
What's more, the company can concentrate on exactly the features it seeks when it wants them, says Pradnya Powale, manager in the company's IT department. "This just gives us the agility to do things on our time, based on our priorities," she says.
In the aftermath of the wildfires that crippled the San Diego area in 2003, for example, Qualcomm added a mobile communications feature. Managers can now access data such as employees' home numbers and emergency contact information over cell phones. The MySource eRecruiting application has features including candidate search, candidate tracking, new-hire authorizations and electronic offer letters. The onboarding section allows new employees to take care of benefits enrollment, acknowledge policies and download forms such as W-4s.
There also have been unforeseen benefits from MySource. Qualcomm's telecommunications group came to Hemry and asked whether information about laptops and cell phones assigned to employees could be tracked on the portal. No problem, she said. And a nice payoff ensued. Hemry says the company saved about $500,000 simply by turning off mobile phone services that weren't needed.

HOMEGROWN PROS AND CONS
Qualcomm isn't alone in cooking up its own workforce management applications. Computer chip maker Intel is among the companies that use at least some homegrown HR technology, having created learning management software. Travel and real estate services conglomerate Cendant has also done some of its own HR software coding.
Jodi Starkman, director at human resources consulting firm ORC Worldwide, leads a group of HR and technology managers from about 40 Fortune 500 companies who meet periodically. She says a handful of these companies have opted to build some homegrown systems rather than buy the software, lease it or outsource the technology.
There can be sound reasons to do it yourself, Starkman suggests. When it comes to employee and manager self-service applications, products from major vendors have not been ideal, she says. They "have not really been as easy to use or as intuitive as they could be," she says. "Progress is being made, but in many cases it is still not where it needs to be." A custom-developed application, in contrast, may be more user-centered in design and meet specific business rule requirements of the company, she says.
Cendant has used HR technology from vendor Lawson Software, but customized Lawson's product, says Freddye Silverman, vice president of human resource technology solutions at Cendant. For example, Cendant created its own user-interface system for inputting data. The changes partly reflected the needs of a company that at its peak housed 21 different business units, Silverman says. "We made it do what we needed it to do," she says.
Cendant is in the process of breaking into four different companies, and each is establishing an Oracle-based HR system, Silverman says. She is skeptical of Qualcomm's highly homegrown approach, arguing that it requires maintaining a staff savvy in both HR issues and technology
"I can't imagine that they wouldn't run into problems," she says.
By making virtually all its HR tech in house, Qualcomm is taking an ever-more lonely path. Just 10 percent of the Fortune 500 choose to build a significant amount of their workforce management software these days, down from 25 percent five years ago and 70 percent 10 years ago, Knowledge Infusion's Averbook estimates.
Averbook served as a product executive at PeopleSoft for eight years before founding Knowledge Infusion last year, and he agrees that PeopleSoft dragged its feet on self-service applications. He also says that the seemingly eternal cycle of upgrades--the "Habitrail wheel," as he calls it--has been a real headache for customers of business software.
But the case for doing it yourself has weakened in recent years, he argues.
Homegrown, custom systems can be costly and frequently cause problems by establishing isolated sets of data, he says. At the same time, installing third-party software systems has gotten easier with new technology standards, and many of the upgrades can be accessed by simply flipping a switch in a configuration panel--rather than through a one-off coding job, Averbook says.
What's more, the latest generation of HR applications delivered over the Web and paid for as a monthly subscription means customers can skip huge upfront licensing costs and gain clout over their technology suppliers, he says. "You can really work with the vendors these days to get them to build what you need, when you need it."
Companies selling workforce management software as a service, such as SuccessFactors, tout their ability to push out new features quickly, which can help companies adjust to shifting business conditions. SuccessFactors, for example, offers customers a new feature each month. The company likens the frequent enhancements to the way Google and Yahoo regularly offer vast numbers of users new options, such as making phone calls over the Internet.
Morlock, though, is skeptical of the new software services. "If you're using a Web service like that, you're still locked into their definition of the way you do business," he says.

TECH-SMART USERS
Qualcomm says it can enhance its system rapidly in response to its users. In fact, those users--many of whom are engineers--may be a secret weapon for Hemry's team.
"The engineers are not shy about sharing their thoughts," Morlock says.
A Web-based, easy-to-use HR portal is important at a large technology company, suggests Keri Wilcomb, senior public relations coordinator at Qualcomm. A majority of employees spend a lot of time at their computers, and they'd rather spend time tackling technical challenges than jumping through administrative HR hoops, she says.
A 10-year Qualcomm veteran, Wilcomb says MySource has greatly streamlined once-irritating tasks. Among other things, she appreciates being able to assess her vacation balance and fill out weekly time cards through the site. "You can do it right on your screen, while you are on a call," she says. And with so many chores handled automatically, the HR department is free to answer any outstanding questions effectively, she says.
Qualcomm will not disclose an overall cost-benefit analysis of the HR systems it built, but the company points to employee happiness with MySource. In a 2004 study, 99 percent of employees responding to a survey said they were satisfied or very satisfied with the system. The survey was e-mailed to all employees, and about 25 percent responded, Morlock says.
MySource has been a factor in earning the company a spot on Fortune magazine's list of the "100 Best Companies to Work For" eight years in a row, Morlock says.

SELL THE RECIPE?
More than once, Qualcomm has been asked whether it would sell its HR software. The company, which markets the Eudora e-mail software application, flirted with the idea a few years ago. Qualcomm even considered selling it as-is, without support services, as a streamlined approach, Morlock says. But company executives ultimately decided to focus on Qualcomm's core businesses.
Hemry and Morlock admit their system isn't perfect. For one thing, the software was written before the company ramped up its overseas presence. The team has to "retrofit" many of the applications, such as merit reviews, for operations abroad, Hemry says. In addition, the "Dream Team" created something approaching a software nightmare by "hard-coding" many HR policies that change periodically, such as benefits eligibility. When these sorts of rules are altered by the company or government regulations, Hemry and her group have to ferret out the various instances the rule may be written into the software. And they may have to fix it several times.
A newer approach to this problem is the use of a "rules engine," which is a layer of software that allows business managers to change a policy once and have it automatically update all the necessary parts of the system. "I wish we would have had a rules engine in the very beginning," Hemry says.
She's now assessing various vendors of rules engine products, such as Haley Systems, Ilog and Fair Isaac. But don't be surprised if Qualcomm once again decides there's no place like home when it comes to creating the best HR technology. "Who knows," Hemry says with a laugh. "Maybe it will be that we end up building it."
Workforce.com
Companies find HR technology a challenge: workforce.com/toughtech

AT A GLANCE

QUALCOMM
Qualcomm develops code-division multiple access technology used in wireless communications equipment and satellite stations mainly in North America. It also supplies its OmniTRACS satellite vehicle tracking system to the trucking industry. Samsung and Sanyo are building phones designed around Qualcomm's chips that are designed to transmit multimedia content. The company has also developed its BREW custom mobile phone software to compete with the wireless software market. Samsung, Motorola and LG Electronics account for about 40 percent of the company's sales.
CEO: Paul E. Jacobs
Ticker symbol: QCOM (Nasdaq)
Headquarters: San Diego
Employees: 9,300
Net income: $2.14 billion (2005)
Market cap: $63.4 billion
52-week range: $34.53-$53.01
By Ed Frauenheim