Talk to some of the Internet's most fervent adherents and you'll hear utopian tales of a society transformed: virtual workforces connected through cyberspace; small companies operating with all the capabilities of large organizations, thanks to ASPs that have provided bells, whistles, and continual technology upgrades and maintenance; busy consumers placing their grocery orders online—and enjoying prompt, speedy, and perfectly scheduled delivery; 24/7 access to all manner of products, services, information, and people. In short, a society unbound by time, geography, or human error.

Talk to some critics, however, and these tales will have a very different tone: technological breakdowns; software incompatibilities; frustrated, poorly trained workforces; dot-com upstarts undone by poor planning, grandiose promises, and not enough financing. In short, a utopia not yet ready for prime time.

In truth, the reality of the changes wrought by the Internet in just the last few years falls somewhat short of utopia. But that hardly implies failure. For while there have been some roadblocks along the way—technology not quite up to snuff, planning not yet comprehensive enough, users still resistant to changes in behavior—the impact of the Internet in every area of American life has been incredibly dramatic and has produced nothing less than a transformation in the way business is conducted.

That transformation is, arguably, nowhere more noticeable than in the human resources department where, increasingly, rote administrative tasks are performed not by HR department employees, but by the organization's entire, Internet-enabled workforce; where technology upgrades and maintenance are handled not by the company's IT technicians, but by an outsourcing service provider; and where the key function of the HR department is not processing address changes but strategic planning, strategic recruitment, strategic compensation management, and strategic human resources deployment.

"The challenge many organizations face today," notes Esther Laspisa, leader of the HR Delivery Products and Services Strategy Team at Hewitt Associates, "is thinking of HR from the customers' viewpoint." In this case, of course, the customers are the employees; the products and services they're "buying" are health benefits, payroll, vacation time, 401(K)s, training, job postings, and the like.

While it's become both accepted and expected over the past decade to turn payroll and benefits management over to outsourcing service providers, most organizations, Laspisa adds, still maintain HR departments that are organized functionally, in "silos," different people or departments handling each HR function. Though that system has its efficiencies, it doesn't, Laspisa says, allow the "organization to reap the true benefits of providing an integrated face to the user."

Rethinking the HR organization's structure, outsourcing non-core functions, providing users with real-time, interactive access to a wide range of data via the Internet, and freeing up HR department staff to work, in a consolidated, strategic manner, on a broad range of HR consulting and business planning —from communication to recruitment, from performance management to career navigation—clearly benefits everyone, from the HR staff to the rank-and-file employee.

According to a recent study, "over 94 percent of college students visit a company's website before going to an interview at that company," notes Laspisa. If that's the case, it's only natural to believe that that same applicant—and countless more like him or her—will expect to find the company sporting not only a sophisticated website, but 24/7, real-time, interactive web access where employees can change their addresses, manipulate their 401(K)s, compare health benefit packages, check on their vacation time, find out about job openings in the rest of the company, explore education and training options, and more. It's also natural, adds Mike Christie, HR Effectiveness Consultant at Hewitt Associates, that having such a Net-based offering will become increasingly de riguer for any company actively involved in the war for talent that is making strategic hiring a seller's market.

Appealing as the ability to focus on core activities and devote hours to strategic rather than administrative activities might be, the key driving force for any organization thinking about outsourcing HR activities, whether Web-based or not, is the opportunity to reduce costs. In an outsourcing arrangement, that savings is most clearly seen in operational efficiencies and sometimes seen in headcount reductions, particularly in arrangements where the organization's employees move over to the outsourcing services provider.

It's also increasingly evident in the time and money saved by having another organization worry about—and amortize the cost for—expensive technology upgrades and maintenance.

But Internet-based solutions provide some additional cost savings that are not so readily apparent. Think of printing, notes Christi Roger Wise, leader of the Internet Solutions Development Team for Benefits Outsourcing at Hewitt Associates. Direct access systems allow organizations to communicate with employees via email, rather than paper, to send documents required by law via the Net, rather than through interoffice mail, to update employee handbooks electronically, rather than continually reissuing printed tomes that employees are rarely able to find when they're most needed. And with the information constantly at an employee's fingertips, there's also less need for real people, whether they're in the HR department or at a call center, to be tracking down information employees can now easily find themselves.

The problem with all this technological opportunity, however, is that it can be overwhelming. Faced with so many possibilities, notes Laspisa, "many organizations are so excited, they're frozen. They don't know how to get started."

And they're not encouraged by those in other parts of the organization who, as Laspisa says, complain that "You're not even doing the basics right. Don't talk about getting strategic until you've got the basics under control."

Acerbating this paralysis is the fear and loathing with which many non-technologists—like most HR staff—approach the installation of yet more technology. As Christie points out, it's likely that the HR employee has recently lived through a painful ERP installation, a process that surely ran behind schedule and over budget--and didn't begin to deliver what the organization expected. If anything, because of the incremental, balkanized approach with which many organizations take on technological initiatives, it's possible that the department is more disconnected from the organization than it was before. Faced with Web enablement, then, the core-focused HR professional will surely say, "This isn't the business I'm in. I'm not a technologist."

The answer is not to shrink from the challenge, but to embrace it. Only not all at once. You don't just need a vision, says Laspisa, "you need an actionable plan." This means not doing 100 percent of what can be done, but, as she puts it, "doing 80 percent, and then refining it as you learn and get input."

Different organizations, clearly, will start at different points, depending not only on how technologically advanced they are, but on what sort of access, anxiety, and awareness their workforce has in terms of the Internet.

Step One, therefore, is a rapid goal definition and readiness assessment, determining where the company is organizationally, structurally, and technologically. What barriers is the organization facing—from data to culture? Is it ready to embark on this journey? Are the employees ready, too? What's the right path to take?

"You need to identify the realities of the environment," notes Christie, "prioritize the things you can do, think about sequencing, and then take the first few lead efforts and map them out, figuring out how they'll happen, how much they'll cost, and what will be required in terms of implementation."

Understanding this means more than understanding the immediate course of action and the change management issues that might be required, Laspisa notes. It also means knowing what other sorts of strategic initiatives might be going on simultaneously in the organization and understanding the collaboration necessary between IT and HR, as well as with partners outside the organization itself.

More often than not, these days, those partners outside the organization will include outsourcing service providers—companies who not only handle payroll and benefits (services many organizations have outsourced for years) but who supply the technology, build the websites, maintain the information, develop the infrastructure, and provide whatever other services are necessary to keep a Web-enabled, interactive, real-time, 24/7 direct access service up, running, and useful.

"The proposition of outsourcing," notes Christie, "is that somebody else can make this a core business, focus on it, scale the investments across a number of organizations doing the same thing, instead of reinventing it as a one-off." The outsourcing service provider can "scale investments and resources across various organizations, be more agile, and more innovative."

What makes this particularly relevant to organizations trying to remain competitive is that what has come to be called "e-HR" is, as Laspisa puts it, "never done." You're no sooner finished with one initiative than another opportunity, another necessity comes along. If someone else is monitoring the horizon and keeping you current, there's no need to struggle with organizational paralysis. You're always skating on the cutting edge.

And that's as true in an economic slowdown as it is during a boomtime. "A slowing economy will mean cost pressures," cautions Laspisa. "You'll still need the right talent; human capital in an organization will be that organization's competitive advantage."

But with the inevitable call for a headcount assessment that accompanies a downturn in the economy comes the need to understand who's who, who's performing well, whose function is critical. A web-enabled database and a strategy-minded HR department are instrumental in making that determination.