Intranet Upgrade

By Warren Lutz

Corporate intranets can cut costs and improve employee communications, but at a price.

After years of struggling to fine-tune online operations to meet emerging customer needs, banks are finding that many of the key issues and lessons pertaining to consumers also apply to online communications with their own employees.

Many organizations built their intranets incrementally, without proper planning for future needs, and therefore are poorly equipped to expand the functionality of their systems. "Information overload is overwhelming organizations," says Toby Ward, founder of Toronto-based Prescient Digital Media and an intranet consultant. "No longer is sharing the information such a problem. It's retrieving the right information, with some form of context."

These problems can be overcome, however, and there are compelling reasons to do so. Although initially expensive, B2E technology pays for itself over the long term by helping institutions reduce human resources staff. Understandably, it's a delicate topic, but institutions that possess robust intranets are able to automate many HR functions.

"B2E" as a label, in fact, is becoming increasingly displaced by "e-HR," which stands for "electronic human resources." Bank employees who work in the intranet or human resources areas are just as likely these days to use e-HR to describe their work as B2E.

Another reason for investing in a robust intranet is that employees increasingly expect it. New hires, typically in their 20s, have been using e-mail for most of their adult lives. They expect, for example, to be able to access their 401(k) plans online. They want to be updated on the latest company announcements and appreciate other features, such as online shopping, although this is an area that obviously needs to be handled with care. Employers want their intranets to serve as helpful aids rather than distractions from normal work activity.

Sense of Community

From a technological perspective, banks have had an easier time building business-to-employee online systems than they have with either business-to-consumer or business-to-business applications. And that only makes sense. Intranets function in a much smaller, more self-contained environment, unencumbered by troublesome customer relationship and marketing issues. Most large banks now operate multi-functional intranets.

That's not to say there are no B2E challenges confronting financial institutions. Corporate intranets are expensive, costing from $200 to $300 per employee annually at some companies. And maintaining a simple, seamless user experience remains more of a goal than a reality, given problems with multiple log-on screens, poor access and insufficient bandwidth.

B2E, or e-HR, can include a variety of technologies. Most major banks have provided some form of automated personnel information over the phone for years. First Union Corp., a predecessor organization to Charlotte-based Wachovia Corp., developed its own satellite television network to air corporate news and training programs.

By the late '90s, however, B2E typically referred to corporate intranets, which are private and sometimes password-protected networks that let members of a business or organization access information through a standard Web browser.

Outside of technology giants, such as Microsoft Corp. and Hewlett-Packard Co., the nation's leading banks have been among the most aggressive intranet developers in any industry because of their need to link operations spanning multiple regions. "We have 50,000 employees across 24 states," says Jeffrey Brown, vice president, intranet services for Minneapolis-based U.S. Bancorp. "For this many people and that much geography, we need more ways to create a sense of community."

Driven by such immediate business needs, banks were able to get intranets up and running more quickly than retail or corporate online operations. Building its intranet around an online corporate directory in the mid-'90s, Chicago-based Bank One Corp. has since ported nearly all of its HR procedures and functions online. For example, the system delivers news of organizational and management changes as well as company press releases. Employees can also use it to order supplies and equipment and adjust their 401(k) investment allocations.

By today's standards, in fact, an intranet is not doing its job if it does not let employees take action with their personal data. Such an online, self-service HR function helps reduce errors and transfers responsibility for personnel data to the employee who owns it. "Employees like to be able to have access and control," says Michael Rudnick, enterprise portal leader for the Washington, D.C.-based consulting firm Watson Wyatt Worldwide. "HR departments like it too, because it gets them out of a heavy administrative role."

Intranets are also becoming an indispensable management tool. Wachovia has a separate HR network for managers, who can access information about their employees, submit employee reviews and pay raises, and process terminations online. Bank One managers can likewise process employment decisions over the Web. Since Wells Fargo & Co. employees confirm their time sheets and attendance records online, branch managers can use the site to see who's available to work on a particular day.

Before this scheduling process was moved online, managers at Wells Fargo spent an hour or two every pay period filling in paperwork that was later scanned and uploaded into the bank's system. "It was an extremely costly process," recalls Teddy DeRivera, senior vice president of human resources. "Taking all the paper out of it saved us a significant amount of money."

Recognizing the cost benefits, Wachovia requires its managers to fulfill certain tasks online, such as employee reviews and office procurement. Bank One employees are allowed to book travel arrangements over the phone but are strongly encouraged to go online. "There's a lower transaction cost by booking through the Web site," says Mark Gallagher, a company spokesman.

Content Deluge

Building and maintaining a corporate network usually involves a mixture of in-house development and vendor-provided tools and content. While it's often cheaper to outsource the applications or content, the predominant urge in banking is to do it all in-house. "Banks come from a culture of systems development," Rudnick says. "They've built up extensive IT organizations."

U.S. Bancorp, for example, primarily relied on in-house development in its drive to put its entire HR information and benefits enrollment process online. "It's all our own code, we know where the problems are, and it's easier to deal with in the long term," Brown says.

Some companies try to get the best of both worlds. When the former Banc One Corp. — now part of Bank One — wanted to streamline its HR department, following a 1998 merger with First Chicago NBD Corp., it signed up Watson Wyatt, which specializes in human resources and benefits consulting.

The consultants helped Bank One put together a single, automated system accessible by both phone and intranet. At the same time, however, the bank continued building some of its own network tools to customize the system — including the home page, employee and branch directory and yellow pages. "Some of the best applications on our intranet were developed in-house," Gallagher says.

Even when they mix-and-match in this manner, banks generally outsource on the technical side — system development, for example — but keep the generation of content an internal affair. At Bank One, for example, "We post a lot of fairly practical how-to-do-your-job-type stories that are not really sexy, but are popular with employees," Gallagher says. Other items include news on management changes, major business "wins," and alerts on computer viruses threatening corporate e-mail systems.

Wells Fargo likewise produces news stories and graphics for its intranet, including employee profiles and other newsletter-type items. U.S. Bancorp publishes a daily electronic magazine, along with information about operational issues and corporate credit policy updates. And Wachovia posts a variety of news in real time on its home intranet page.

All of this content proliferation poses problems, however. Information is coming into the intranet from many different areas of the bank now, which imposes a strain on the information handlers, typically the corporate communications department. As the group most responsible for creating and publishing corporate news and information, these employees now have the added burden of managing the traffic flow on the intranet as well.

There is also competition for scarce Web unit resources. As the intranets grow in scope, some banks have created multiple bureaucracies to manage them, such as separate advisory, editorial and IT staffs. The potential efficiencies of an intranet are often hurt by time and resource constraints, while the agendas of individual departments make it difficult to move in a common direction.

The push toward denser networks and personal data brings attendant security concerns, which conflicts with the drive for a simpler user experience. Many banks allow employees to access their personal information online, yet require multiple log-ons to get there. "We're not at the level where it's all single log-on throughout the portal," says Wells Fargo's DeRivera. "That takes a long time."

Lack of bandwidth creates another technical problem, particularly when it comes to producing more robust applications such as online training initiatives. Wells Fargo's electronic communications pass through the same network as its automated teller machines, so the bank has been careful as to how much data it pushes into the network. Rapid growth of Bank One's intranet strained that company's servers. "A couple of weeks ago, we were near 100% capacity," Gallagher says.

Achieving full employee participation can present another obstacle. Many bank tellers, for example, spend most of their time with customers, not online, so some institutions have dragged their feet in getting an appropriate number of PCs into their branches. Security concerns, meanwhile, make managers reluctant to allow employees to access the network from home.

To compensate, some institutions are setting up workstations in branches and allowing employees to share computer access to get online. This is hardly an ideal solution, since HR savings require total employee participation.

And then there's merger consolidation. Many intranet plans get put on hold when companies struggle to integrate employees, systems and real estate. "You have potential redundancies that have to be dealt with," Rudnick says. U.S. Bancorp grappled with this situation when it merged with Milwaukee-based Firstar Corp. in 2001.

U.S. Bancorp's intranet was six years old at the time; Firstar's was two. The two were merged into a single platform, but only after reconciling policies, procedures, and technical features. "Obviously, combining two networks can be a challenge," Brown says. "The bank was looking for one look and feel for its intranet."

Conversely, a unified intranet can help in a merger. Wells Fargo had its new intranet, Teamworks, up and running the day its 1998 deal with Minneapolis-based Norwest Corp. closed so that employees on both sides of the house had access to the same information. "It was one of the unifying factors," DeRivera says.

Tangible Savings

Despite all the problems related to maintaining an intranet, the long-term payoff is surely worth it, which is why banks need to stay focused on improving their B2E or e-HR capabilities. Consultant Ward estimates banks can recoup the money spent on their intranets within several weeks to two years. "Intranets save money and increase revenue," he says. "That's why people are investing in them, and that's why they've become a hot topic in recent years."

But banks are not inclined to share how much they're saving through their intranets, particularly when it comes to the thorny subject of replacing people with technology. Wachovia representatives, for example, say the bank doesn't track whether its intranet is reducing HR staff.

But some banks acknowledge the impact. Wells Fargo's HR staff has grown because of recent mergers, but the ratio of HR personnel to employees has dropped due to automation, DeRivera says. And at Bank One, fewer HR representatives were needed to handle hiring and terminations after the company moved that process online. "There were some tangible savings," Gallagher says.

Regardless of whether HR staffs are shrinking, the nature of these departments is definitely changing. With intranets, HR employees are shifting their attention from paper shuffling, data input and answering the telephone to employee retention, training and recruitment.

Wells Fargo, for example, claims to have reduced its unit costs for transaction-based functions, such as payroll and benefits administration, by 25%. Meanwhile, other HR functions considered strategic are still handled by live employees, which fits into the company's stated goal of developing "people as a competitive advantage." "The number of HR staff in certain functions declined, while in other more strategic areas, it has grown slightly," DeRivera says.

However the cost savings net out, the company benefits from flexibility in allocating its resources and employees benefit from better and quicker access to information. For all these reasons, the corporate intranet has become a standard feature of the work environment. Getting the best from these systems, however, will require a deeper commitment than many companies originally imagined.

Mr. Lutz is a freelance writer based in Eugene, Ore.

Copyright © 2003 by Banking Strategies, published by BAI.

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