CWS 3.0: August 28, 2013

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What Is a System of Record?

By Steve Knapp

So, what is the definition of system of record? It is an information storage system that is the authoritative data source for a given data element or piece of information. This doesn't necessarily mean the place that you go to look at it or run a report to get it. This means the origin — the original... the source of truth, if you like.

Why is it important to know this? Because when you are implementing a VMS tool, you will invariably need to build integrations with other systems. Sometimes those will be inbound feeds, like users and cost centers. Other times they will be outbound feeds, like invoicing and worker feeds. If you pick the wrong source, you could be using out-of-date or inaccurate information. Furthermore, if you confuse or designate multiple sources, then you are in for a reconciliation nightmare.

I have worked with a number of clients that have struggled to understand this concept, so let me give an example. Consider you create new cost centers in your financial system, which are then fed to your human resources system and associated with people, then fed from the HR system to a procurement system to be used to buy things. What is the system of record for Cost Centers in this example? If you guessed “financial system,” you win. Again, it’s where the cost centers start. This is very important when designing system integrations. As often as possible, you want to be going to the “system of record” for information rather than downstream systems that may not have current information. This way you can be assured of having the most accurate information.

Click images to enlarge.

Another example. If you use a VMS tool to requisition, source, contract and manage contingent labor and the VMS feeds contractor information, such as name, start date, engagement manager, end date, etc. to an HR system, which then feeds the data to various on boarding systems, perhaps background checking, access control, badging, etc. what is the system of record for contingent workers? If you’re following along at home, you should have said “the VMS system.”

Like I said before, I have worked with many clients who struggled with this concept, and it is especially important if you are trying to keep your HR system in sync with the VMS for contractor data like end dates and engagement managers/supervisors. The problem comes when you either try to allow updates to contractor records in both systems or you want to enforce a company edict that the HR system is the system of record for people and only allow updates in the HR system.

In the first scenario, you will either need to continually update and sync both systems manually or build two-way integrations between the systems. These options are expensive and inefficient, and you still could end up with inaccurate information. In the second scenario, you will again need to either update the systems manually or through two-way integrations (rather than one-way from the VMS to the HR system) and you get the added downside of using a system that is not built for this purpose and does not have the fiduciary controls offered by a VMS (plus other features like assignment versioning, effective dating of rate changes, historical tracking of supervisor changes, et al).

The flow of information for a single data point should always be from the system of record to the recipient system, with updates to that data point only allowed in the system of record. Below are three examples of integrations of a single data point, such as end date for a contractor:

The Ideal Design:

The Less than Ideal Design*:

*Sometimes this design is used because the system of record is too difficult to interface with, or because the intermediate system also combines the original data with other data like user data with approval hierarchy data, or because the intermediate system sends information to multiple recipient systems and it is most cost effective or efficient to leverage that existing infrastructure.

The Poor Design:

So when you are implementing a VMS (or any third-party tool) and you are determining where to go for data, remember:

  1. Always use the system of record whenever technically feasible
  2. The system of record is the source of truth
    1. Only allow updates in the system of record

Steve Knapp is senior associate with Brightfield Strategies, which helps Fortune 500 companies with contingent workforce strategies. He can be reached at sknapp@brightfieldstrategies.com.

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