Profit Magazine - November 2007

Accountability to taxpayers is another benefit of ESR. “We’ve seen health service funding grow from something like £ 35 billion a year to more than £90 billion a year over the last few years,” says O’Connell. “It’s a huge, huge investment, and we want to make sure the taxpayer is getting a decent return on investment. Functions become leaner, more efficient, and more productive, with savings that could be plowed into things that have an impact on the patients.”

ESR is conservatively expected to save the NHS £119 million annually, reflecting savings in three areas. The largest sum, £92 million, is an estimate of savings if the NHS could reduce the overall sickness absentee rate from 4. 7 to 4. 35 percent. “When I worked for a local hospital trust as HR director some years ago, I managed to move the sickness absence down to 3 percent,” notes O’Connell. “My view is that this will be very doable with the right reporting tools.”

Savings from single data entry accounts for about £ 25 million per year. “This is just about having single data entry between HR and Payroll,” he says. “It doesn’t take into account the benefit of having a single data entry that will take you through to the Finance system, the Occupational Health system, or the Pension system, for example. That kind of integration will save even more.”

The final £ 2 million stems from having a data warehouse that functions as a central repository when the NHS conducts its annual census of medical and nonmedical staff. An ongoing benefit that has not yet been quantified in financial terms is the savings that will result from having a central repository when employees move from job to job among the 600 trusts. Each year, about 150,000 new positions are filled within the NHS, with the majority of successful applicants coming from elsewhere within the organization. In the past, those employees were treated as new hires. With ESR, their employment records are portable and move with them, eliminating costly startup paperwork. An additional one-time savings of £ 18 million [US$36.6 million] reflects an estimate of procurement costs if each of the 600 healthcare trusts had to procure and implement its own HR system instead of using ESR.

Further savings are possible from future development of shared services. “One of the things that’s currently being looked at, using ESR as an information platform, is assessing critical mass and overhead and possibly re-engineering processes with five or maybe three shared service centers,” says O’Connell. “It’s already happening in Finance. ESR gives us similar opportunities to radically change how we deliver back-office functions such as HR and payroll, at least in the high-volume transactions. At the moment, we’re not far down that road, but I think there’s consensus that in three to five years’ time, we’re not

>>SNAPSHOT
National Health Service
(England and Wales)
www.dh.gov.uk
Year founded: 1994
Headquarters: Richmond House,
Whitehall, London; Cardiff, Wales
Employees: 1. 3 million
Project completed: Electronic
Staff Record
Implementation time span:
2001–2008
Oracle products: Oracle E-Business
Suite, including Human Resources
Management, Payroll, iRecruit-
ment, Learning Management, Talent
Management, Self-Service Human
Resources; Oracle Data Warehousing
Other products and services: Con-
sulting services from McKesson; IBM

going to have 600 HR departments and 200 payroll groups.”

FIRSTHAND VIEW

With the final rollout that began last
February, O’Connell relinquished
command as ESR programme director
and is now director of Workforce and
Organisation Development for NHS South
Central. Ironically, he’s now working in
the region undergoing the final wave of
implementation, and he sees firsthand the
impact of ESR. “When I came to South
Central, I got pressure to get numbers on
how some of our organizational restruc-
turing was impacting staffing numbers,”
he explains. “I couldn’t get consistently
accurate numbers, and then I realized that
the accurate numbers were coming from
the areas where ESR was already imple-
mented, and I was having trouble with
areas where they were still in the process
of implementing it. ESR was the differentiating factor.”

While O’Connell sees vast benefits from the record-keeping capabilities of ESR, he’s frustrated that more users aren’t taking advantage of advanced functions such as talent management and learning management, which have the potential to dramatically expand workforce development capacity. “If I have one regret, it’s that we didn’t get more people live on that richer functionality from Day One,” he says. “It’s the general concern I have about IT implementations, that we have these fantastic systems developed with a lot of wonderful functionality, and we still only use something like 35 percent of it immediately postimplementation. We’re probably three years out from full functionality. In retrospect, I would have had a bigger implementation team that would really drive out the benefits. We’re doing some of that with ESR, but it’s as if the benefits implementation team is always a bit of the poor relation. It’s never quite as huge as the team that goes in to get the system embedded and live in the first few months.

“Still, people take real pride in the fact that ESR is the largest HR-payroll system in the world and that they did such a good job on it. That’s one thing I’ve taken with me outside the project arena, the ability to engender the same level of focus and energy that we’ve had on this project.” <>