Table of Contents
- Address common “pain points” of HR software purchasing
- Spec out your HR software requirements
- Explore potential vendors
- Cloud versus on-premise HRMS solution
- Considerations (integration, training, security, support)
Resources and tools
Address common “pain points” of HR software purchasing
Different teams take different paths to realize they need a new human resource management software (HRMS) solution. It might be a scenario of a new startup seeking to efficiently manage an HR team. It could also be a growing SMB (small and medium business) that has found that the existing solution doesn’t scale to their needs. Regardless, adopting any new enterprise software requires forethought and careful planning.
Key HRMS functionalities
A typical HR department is responsible for managing talent recruiting to employee welfare. An enabling HRMS solution can help streamline department operations and automate routines.
There are many software vendors on the market that offer different HR software packages. Below are core features that leading HR software vendors offer.
Recruiting – talent acquisition, applicant tracking, onboarding
Employee development – performance management, talent management, learning and development, workforce rewards
Timekeeping – time and attendance management, time off tracking, attendance and leave management, time and absence
Benefits – benefits management, compensation
Payroll – manage payroll, taxes, and earning statements
Workforce management – workflow management, workforce planning and analytics, workforce experience management, HR and people analytics, performance management
Wellness – workforce rewards, work-life solutions, wellness campaign
Others – HR auditing and internal controls, employee surveys
It’s important to consider software performance as well. A reliable solution is secure, robust, and scalable (see Considerations section).
Spec out your HR software requirements
An enterprise software is a long-term investment. Before committing to a vendor, a company should thoroughly assess its specific HR software requirements. That will help it arrive at a cost and performance optimized software solution.
Listing HR needs
Spelling out your HR software requirements is a critical step. Here are a few starter questions that can help a company realize its software requirements:
What routines does your HR department need to perform?
What does an HRMS need to do to streamline HR department operations?
What are the integration requirements? E.g. does the HRMS solution need to sync with equipment and other enterprise applications?
What is the budget requirement?
Is there a specific time frame the software needs to go live?
To ensure that requirements are comprehensive, examine features that existing HR software vendors offer1. Also, professional literature like white papers, research reports, articles from industry thought leaders can also help a company realize its own software needs. Get to know how leading industries are running their HR departments and see what else is worth adopting.
Must-have vs optional requirements
Some software requirements are necessary and others are optional. For example, an HRMS needs to have an employee tracking functionality; yet features like employee surveys are good to have to gather employee feedback and improve company-to-employee relationships, but it’s not a must.
To determine whether a requirement is a necessity or a wish list item, assess how much it contributes to streamlining HR department functionality. If it can make key functionalities more efficient and save time and resources, then the requirement should be prioritized.
By separating must-have from optional requirements1, a company can ensure that they don’t pass on a suitable software that meets its top priority requirements. As well, wish list items can be used to distinguish two or more software that has similar performance.
Vendor assessment requirements
Keep in mind that vendor performance requirements should be included in considering new HRMS. To ensure that the HRMS solution is reliable, including a list of qualities a company wants in its software vendor.
There are several ways to assess a vendor:
Trust: How long has a vendor has been in business? What is the vendor company’s background? Can the vendor disclose relevant financial information?
Customer: How many quality customers does a vendor have? Do customer feedback and testimonials back up the vendor’s credibility?
Expertise: Does the vendor possess the expertise to guarantee quality support and security?
Vendor requirements can be kept in a separate list as part of the comprehensive HRMS requirements.
Create a mini Request For Proposal (RFP)
A Request for Proposal is a formal document used to communicate software requirements to potential software vendors. It’s a good professional practice to software purchasing.
To create an RFP, organize software requirements by relevance and priority; use headers to group requirements and create excel sheets with different tabs, if necessary. Make content logical and easy to understand so that team members can review it and add to it. Leave places for vendors to check off requirements and leave an additional comment. Businesses should also prioritize its top requirements and separate those from optional features that are good to have, but not critical.
Keep in mind that RFPs can take weeks to be generated1 and evaluated by a vendor, so reserve enough time for this process.
Explore potential vendors
Once there is a requirements list, it’s time to evaluate vendors. Start with a list of high-ranking vendors and narrow them down. You can collect vendor brands from referrals, search, or industry experts.
A company can get software referrals from clients and partners. Ask about their experience with using the software and other recommendations. Add that software to the potential vendor list and make notes.
An Internet search for high-ranking HRMS vendors will yield a list of solution providers. Note software feature lists, reviews, pros, and cons.
Consult industry experts
Consult industry thought leaders and software blogs for further recommendation and expertise. Big cloud players like Microsoft, Google, Amazon, IBM, SAP have whitepapers and consult lines. You can also consult pure-play cloud experts for unbiased guidance.
Request a software demo
Solution providers will often provide free software trials and demos to help companies evaluate how well its software performs. If it’s not already listed on their website, contact vendor support to request a review session.
Take advantage of demos to test drive key functionalities. Also, demos are excellent for evaluating a software’s user interface — whether it is intuitive to use and how much training will be required. Companies can make a copy of their RFP or HR requirements list for each vendor (see Requirements section) and use them to rate solutions and note their pros and cons during trials.
Cloud versus on-premise HRMS solution
The software and cloud industries have changed how modern enterprise applications are deployed. There are pros and cons7 to each solution type.
Cloud solutions are applications pre-installed on remote servers that subscribing clients access via a browser or app. Major benefits of cloud platforms include over-the-air updates, low maintenance, and database scalability.
Pros Cons No internal server maintenance for cloud apps Cloud updates require Internet connection Automatic applications update Cloud migration requires expertise Low monthly subscription fee More security protocols needed for sensitive data transmission Remote application access In-browser interface Instant update syncing Easier integration with other cloud enterprise apps Scalable solutions
On-premise software are traditional solutions that are typically downloaded and installed on every workstation. They require upfront purchasing and software license fees, and relevant servers are hosted on-site and maintained by the client’s own IT department.
Pros Cons Server sits internally Higher upfront costs Suitable for high-level data processing security requirements Internal IT server maintenance Less connectivity requirement Less scalability Client owns the software Annual software license fees Limited high-performance computing capability
More modern HR solutions are deployed in the cloud, and a vast percentage of businesses are migrating to the cloud (see Trends section).
Build versus buy
Companies have the choice to build their own HRMS or buy one of the markets. Many pre-built solutions exist, so it doesn’t always make sense to build one from scratch, though there are exceptions.
Software experts5 recommend that building your own HRMS makes sense if your company is a technical product-based company; you can create an integrated IT system that you’ll own.
However, if a company just wants to customize its software, it’s more efficient to choose an open-source HRMS solution that it can build upon. For example, Salesforce offers an HR platform solution that allows companies to build their HRMS solution using its in-house developer’s tools.
After a company decides on potential software solutions, it can start ranking them on a number of factors.
End-to-end solution: Does the software comprehensively meet HR requirements? A reliable HRMS software should be able to tick off top priorities. Feel comfortable to expect this; the HRMS market is stunted with so many pre-built and open-source solutions that practically all companies can find one that meets their expectations and budget.
Scalability: Will the software platform scale with short term and long term goals? The staff takes time to learn and familiarize with any new enterprise software, so it’s more resource efficient to select a solution that can grow with business needs. Often, that means choosing a competent software vendor who is industry and innovation leading.
Task automation: Can the software automate HR functionalities? Many routine tasks can be automated by modern technology. A robust software solution can help HR departments reduce errors and manage resources more efficiently.
Integration: How does the software integrate with existing enterprise applications? HR operations can be tied to data analytics, ERP, accounting, and other applications. Many cloud solutions offer an integrated platform that allows companies to manage its multiple enterprise applications from one interface.
Modernity: How well-designed and robust is the software backend and front end? Staff can expect to encounter less technical issues with a well-built software. As well, servers should be robust enough to ensure fast data processing. To assess whether a software is robust, a company can test the software, read reviews and case studies, solicit information from vendors, and consult software experts.
Support: Is there reliable customer support readily available? Many software vendors offer comprehensive technical support. They will often detail the types of issues they handle and the turnaround time for communication. Avoid software downtime by ensuring that adequate support will be available on demand, and especially during go live, ahead of time.
Security: Does the software comply with high-security standards? Companies should make sure that their servers are secure and applications are only accessible by authorized personnel. For cloud applications, make sure that cloud servers comply with security regulations. PCI compliance and advanced fraud prevention protocols should be in place if the business handles banking transactions.
A new HR application will incur costs in software adoption, implementation; overhead costs for research, planning, and consulting; setup fees if it involves additional equipment; monthly subscription. Include training costs required in time and resources to adopt a new HR software.
Companies can review online software cost comparisons (See Resources and tools) to make sure overall expenditure fits their budget. It’s also convenient to request a quote from vendors to get specific costs.
Avoid unexpected costs by requesting information from vendors regarding hidden costs, lock-in contracts, support after the sale, and onboarding.
Businesses should plan out it’s HRMS implementation steps to minimize downtime. If the selected solution is an on-premise software, then the IT department needs to book a time frame for software installation and customization; if it’s a cloud HRMS solution, then team members should solicit information from the vendor on best practice implementation steps.
Keep in mind that software implementation will require teamwork. Technical staff should prepare to customize the software, import existing HR data, and integrate software with existing applications. These IT tasks can be minimized for cloud HRMS, though corporations should have technical support on standby during go live. Corporate employees should also be notified of when they can expect to access the new HRMS platform and be directed to documentation on how to use the platform ahead of time.
When adopting a new HR solution, it’s a good time to review how you can make your HR department more efficient and how you can leverage a new software for that goal.
An evaluation by Harvard Business Review6 sponsored by SAP shows that the roles of modern HR departments are advancing. A large portion of businesses have initiatives for major improvements in 2017, as shown below.
Additionally, SAP states that modern HR departments are also trying to blend more with the overall corporation to prevent a siloed department. In the HBR report, Dr. John Boudreau from the University of Southern California says one strategy is engaging business executives with models they are familiar with:
“Retool the movement of people—hiring, turnover, development—into a supply chain or an inventory model. Retool the analysis of turnover, shortages, or capability gaps in terms of business portfolio risk. Retool employee engagement through marketing and customer loyalty models.”
The cloud movement
“Modernizing HR Means Moving To Cloud-Based, Integrated Solutions” — Forbes2
Right now, the business trend is moving toward cloud solutions. The cloud industry is driving rapid advancements in connectivity and communication; for example, enabling sensor-based assets in IoT development.
Oracle, a leading cloud player, states that the cloud industry is positively transforming CIO roles from a “keeper of technology” who performs routine tasks to a true Chief of Information who pushes business innovation3.
Cloud experts at Microsoft4 also note that cloud is changing how software is chosen and deployed; where on-premise companies expect vendors to sit face-to-face to perform demos and draw analysis, cloud software is often selected and implemented through free trials, remote communication, and support. The latter is proven more efficient.
If a company wants to prep for cloud migration, adopt an integrated cloud HRMS solution. Choose a vendor that offers comprehensive integrated cloud platform solutions that cover essential enterprise applications so you can add those applications later.
HR Software Checklist