Not long ago, one of my friends bought a new car. He’d opted for a 4×4 version of saloon instead of the 2-wheel drive version and when I asked him why he told me the 4-wheel drive was “nice to have”. As I admired his gleaming new purchase, I couldn’t help thinking he’d paid about 40% over the odds (plus increased running costs) for something in all honesty he would probably never need to use.
Of course, it’s his money to spend as he liked. When we approach the issue of buying HR software on behalf of our organisation, it’s a whole different game.
Last year I presented my shortlist of recommendations to a client HR director. She had asked for an e-recruitment module as a ’nice to have’ even though predicted recruitment volume was about 8 heads per year for the foreseeable future. To accommodate this, she was going to commit the company to an extra five-figure spend plus on costs.
Somehow, the perception that buying a solution that has ‘everything’ will mean a better HR system, even though it ticks boxes that don’t really exist.
‘Buying big’ is another factor in the selection process. There used to be a saying in the IT industry that “no-one got fired for buying IBM”. It’s an adage driven by the fear that the decision to buy a relative unknown will open up unfavourable peer perception. I have heard more than once where a particular product stands out but “How am I going to tell my board that we are going to purchase this product when they’ve never heard of it?” or it doesn’t appear in some much-vaunted analyst reviews of HR software products that focuses primarily on the bigger players. It’s a risk aversion strategy that may not have the results you anticipate.
Large enterprise systems by their nature have a high degree of configurability and complexity, which although a good thing in the right context, by necessity comes at a price. Not just during the implementation phase, but throughout the life cycle of the system. If you haven’t got a team of product experts on tap, you may well find that after a year or so, your HR system ends up doing little more than acting as a glorified (and very expensive) address book because you don’t have the time or the budget to keep the underlying workflows, data fields and process rules up to date.
That these instances are commonplace is borne out by the number of times where I have been asked to find more appropriate replacements for well-known systems that proved to be expensive and out of scale with the client, both in terms of size and requirements. Clients of 500-1000 employees had been buying systems more suited to organisations of 2,500 plus, with a correspondingly higher price tag.
The end result is, again, unnecessary expense and running costs where a lesser-known contender (at least in analyst terms) could have met the case. Let’s not forget the value motive in this exercise.
In this regard, it’s worth considering the advantages of multi-tenanted software, where all clients share the same core code, and system can be provisioned “as is” with a generic set-up that covers the majority of HR transactions but allows for some configuration. These systems can provide significant cost savings in terms of the hosting cost, and product updates. It’s also worth noting that each client has secure access to their part of the application.
Different systems offer different levels of configurability; if your HR processes are multi-staged or convoluted, you need to be sure that the HR system can flex to fit them, but ask yourself first if you have reviewed these processes to establish whether or not they are still applicable, as they tend to be followed regardless of their relevance because “that’s the way we’ve always done things”.
It is vital before starting out on your HR software selection journey to do the preliminary background work. What are the problems you need to solve, the business improvements you want to make, the features you can’t do without and the costs you can justify?
Having done this, it’s important not be side-tracked by irrelevant functionality or flashy sales pitches for features that are a distraction from your goals and bring with them a cost that can be justified; the organisation has entrusted us with perhaps the most impactful task we’ll ever have to deal with, so let’s get it right.