What Mid-Sized Firms Need to Consider When Shopping for HR Technology

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Feb 20, 2015

A recent study of more than 200 companies by our friends at the Starr Conspiracy Intelligence Unit revealed that in the next 12 months, 57 percent of organizations plan to invest in an HR technology solution.

Companies with less than 1000 employees stated a higher need to invest in HR technology than larger counterparts (59 percent vs. 53 percent, respectively). This is not surprising because cloud technology makes it easier for smaller companies to access capabilities that a decade or two ago were only afforded to deep pocketed enterprises.

The benefits of cloud technology are overwhelming. Lower upfront costs and no future upgrade costs, shorter implementations leading to faster time to value, and less need for internal IT resources.

What to consider when shopping for HR solutions

Nucleus Research found that cloud technology yields 1.7 times the ROI of on-premise solutions. This is the good news. The challenge for shoppers is that the human capital management landscape is noisy, making it difficult to go beyond marketing and sales collateral to determine what’s best for a company.

So what should companies look for? What are key questions to ask during the due diligence?

It really comes down to this: building the business case for a solution that is suited for HR and easy for everyone else to use, while providing the necessary data to drive positive business outcomes.

If we agree with this statement, there are three (3) things for medium enterprises to consider when shopping for HR solutions:

1. Understand how to build the business case

It is important to make sure we understand the pain points of our existing process (or lack thereof) and build a case that speaks to the CFO. It has to be a credible return on investment (ROI) case study that focuses on direct and indirect cost savings.

Direct cost savings are understood by the CFO as they focus on hard benefits – labor costs, recruiting and turnover cost, maintenance costs and IT resource payroll. Use your own calculation or work with a vendor that uses a third-party tool that makes no assumptions about you or your process. The inputs should conservatively estimate savings based on the vendor’s demonstration and references.

2. Forget integrated solutions; seek a single application

This is especially important for companies looking for an HR system or record (i.e. HRIS). Having a single application with its own native analytics will provide better visibility into workforce data, which enables better decision making.

Don’t fall for integrated or unified marketing speak. Strategic HR relies on a single source of truth and an analytical solution that drills down into all critical processes from hire to retire in one source of data. Check out my 2014 entry on strategic HR.

3. Don’t forget about the tough stuff

This might be obvious, but I believe HR’s first priority is to maintain compliance. The last thing anyone needs is to read about their company in the newspaper due to a labor violation or a federal offense.

Work with a vendor that has a strong commitment and focus on ACA and other legislative impacts and compliance. You need to make sure your providers stay on top of legislation and offer solutions and services as your partner.

Cloud HR technology continues to grow at a strong clip. IDC expects that public IT cloud services spending will grow from $56.6 billion to more than $127 billion in 2018.

Every dollar is very important. Let’s spend wisely.

This originally appeared on Ceridian’s HCM blog.

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