Calculating Costs of a Human Capital Management System

How to hit a homer when deploying a human capital management system.

Project Overview

An employee at your 12,000-person accounting firm makes a vacation request. Do you hear your bottom line sinking?

Youd better, especially considering that you spend an average of $80 to process a single human-resources (HR) transaction and $1,500 a year to administer HR for each employee. And those costs are just maintenance; they dont begin to account for how to align staff behind business goals, or, scarier still, make sure theyre happy.

So youve decided to make a technology investment in your most valuable commodity: employees. A human capital management (HCM) system is an enterprisewide HR platform that manages everything from payroll and benefits to recruiting and staff deployment. HCM vendors such as PeopleSoft and Oracle have established a good track record for reducing HR costs at other companies, so youre optimistic that your investment will pay off. Your challenge will be to convert your patchwork of legacy systems and old-world HR expectations to the Web-based, employee-driven HCM approach.

A consultant will help your project team manage that transition, which will focus as much on educating your staff as it will on customizing and gradually rolling out the dozens of application modules that comprise the all-in-one HCM platform. While many companies outsource HCM, a system for a company of your size will need a fair amount of tweaking; so youve decided to host and support the application yourself. And while HCM vendors talk about reducing HR costs by as much as 75%, youll settle for one-third of that and still return your investment within the first year of operations.

Now go ahead and finish filling out that vacation request—youve earned it, or you willl soon.

To read the details behind this planner and to fill in your own numbers, download the spreadsheet from

Automatic HR

A human capital management (HCM) system is a set of applications that delivers comprehensive services to employees through a single Web site. HCM applications handle basic functions like payroll and scheduling, but the system really pays off by showing how staffers can be deployed more effectively and reducing such big-ticket HR costs as turnover and recruiting.

Baseline created this project planner. Technology solutions co., chicago, helped estimate project scope and costs. This planner does not reflect any specific implementation.

Reading the Planner: Line items sum upward to the boldface total for each section. Those figures, added downward, comprise the total cost within each of the four boxes.