Software to help TVA cut temp labor costs

FRAMINGHAM (01/30/2004) - The Tennessee Valley Authority is installing a contingent-workforce management system that's expected to pay for itself within a year, partly by enabling electronic bidding by companies that supply IT contractors and other temporary workers.

The TVA, the nation's largest public power generator, began deploying Elance Inc.'s workforce management software in late December.

The browser-based system, which will be hosted by Elance and is due to go into production by May, is expected to help the TVA negotiate better labor rates for the approximately 1,500 IT workers, engineers and clerical staffers that it typically uses to augment its internal workforce.

For example, Diane Bunch, the TVA's senior vice president of information services, said she expects to save her group US$200,000 to $300,000 a year in labor costs from the competitive bidding capabilities made possible by the new system.

"Now we'll be able to enter a job description into the system, and it'll be like eBay (Inc.)," said Bunch. About 85 contractors are currently being used to supplement the TVA's 643-employee IT staff, she said.

Bunch said the system should also provide other benefits, including an electronic history of the IT projects that contractors have worked on.

In addition to contractors, the system will support the Knoxville, Tennessee-based TVA's seasonal hiring of about 4,000 union trade workers, such as electricians hired to do preventive maintenance work during off-peak periods in the spring and fall. That part of the system is scheduled to go into use by midsummer, said Paul LaPointe, the TVA's senior vice president of procurement.

The TVA currently relies on a manually intensive process to manage its contingent workforce, said LaPointe. Requests to the 15 to 20 companies that supply the contract workers are typically handled through a flurry of phone calls, faxes and e-mails, with a mix of spreadsheets and other systems used to track the head count and whereabouts of temporary help, he said.

LaPointe didn't disclose the software project's cost but said the TVA expects to get a return on its investment within 12 months. Beyond the initial ROI, he said, the authority anticipates that the system will generate ongoing savings through improved compliance with workforce policies and contract provisions, process standardization and system-generated invoicing.

Ashley Stirrup, vice president of products and marketing at Sunnyvale, California-based Elance, said the total cost of a hosted system for a large company is typically $3 million to $7 million over three years, depending on the procurement volumes processed through the system. The TVA's contract falls within that range, he said.

Before starting the project, the TVA looked at other companies that had installed similar systems, such as General Electric Co. and FedEx Corp., to assess the potential benefits and do cost benchmarks. The project was approved by the TVA's budget review committee in November, LaPointe said.

The TVA is currently working with Elance to integrate the software with its mainframe-based procurement system, which is based on applications developed by Indus International Inc. in Atlanta.

FedEx Express, which went live with Elance's software in August 2002, got a payback in less than six months and has reduced the time it takes to find temporary help by more than 75 percent, said Zondra Brown, manager of express business services at the FedEx unit.

Elance's rivals include Ariba Inc. and PeopleSoft Inc.

Christa Degnan, an analyst at Aberdeen Group Inc. in Boston, said users of the workforce tools should be able to shave their contract-labor costs by 10 percent to 15 percent.

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