For human resource professionals, HR technology assessment and vendor selection are paramount. However, choosing the best HR software is no easy task.
Embarking on the HR solution provider selection process can be overwhelming, whether one seeks HCM, payroll, benefits administration, or other solutions. There are countless possibilities. Hence, businesses must consider all their options and make a calculated decision.
By transforming HR, companies can optimize data processing and security, saving time and money on repetitive and time-consuming tasks. An optimized workflow could give the HR team extra time to focus on more pressing matters, like improving overall employee efficiency and job satisfaction.
So, how does one choose the best HR software?
This article taps into the expertise of both expert consultants and the solution provider community to round up the top tips for HR software vendor selection success.
The Expansion of HR Software & Its Importance
HR software is a digital tool that helps human resource professionals manage their tasks and optimize their work. Research shows better performance in companies that use modern HR technology than those that don’t.
Before digitalization, the human resources department was primarily paper-based, as were many other business sectors. It wasn’t until the 1980s, when Oracle introduced their first client-server-based management system, PeopleSoft, that HR software had its humble beginnings.
Since then, technology has come a long way, and many things in the HR industry have changed. The need to reduce costs, attract top talent, and improve overall efficiency pushed HR to further explore the digital and AI possibilities..
Managing a department with such responsibilities can be challenging, so alleviating some of the pressure makes human resources software an irreplaceable tool in the workplace. Its continuous innovation helps companies identify and acquire new ideas and solutions.
In fact, HR software has become increasingly valuable for every organization, and statistics show that this industry could reach $38.17 billion by 2027.
The best thing is that, regardless of the industry, business model, or company size, HR systems are flexible enough to meet all company requirements. So much so that now, businesses have to strategically handle the HR technology assessment and vendor selection process to sort out the most suitable option.
But before their vendor assessment, it’s necessary to understand the different types of HR solutions and what they mean for the business.
Types of HR Software
There are countless HR tech solutions, from tools that help workers and HR staff track vacation days to employee engagement and performance management systems.
These different types of HR solutions automate many human resource operations. In terms of their primary purpose, there are six HR software categories:
- Talent-focused software
- Recruiting-focused software
- Training-focused software
- Workforce-focused software
- Performance-focused software
- Benefits-focused software
Based on its organizational type, the HR department can use one or a combination of more software types, cloud-based technologies, digital tools, or entire HR systems. Thus, the HR technology assessment and vendor selection largely depend on the company’s needs.
Here’s a short overview of some of the most common HR digital systems covering one or more HR software categories.
HRIS
The Human Resource Information System is a comprehensive tool that stores, tracks, and manages all HR data. That includes but is not limited to accounting and bookkeeping payroll, tracking time and attendance, and other benefits. Based on the main HRIS functionality within an organization, the system can be operational, tactical, strategic, or comprehensive.
HRMS
Human Resources Management System is a more advanced HR tool than HRIS. It usually includes all HRIS features, plus some additional benefits. The comprehensive HR system focuses on both quantitative and qualitative data, implementing talent management tools like performance evaluations, onboarding, and training.
HCM
A third, similar option to HRIS and HRMS is the Human Capital Management system. The difference, however, is that this technology solution mainly focuses on bringing businesses financial value. HCMs feature onboarding, professional development, and performance evaluation features, among other things, and have excellent analytical functionalities.
ATS
Applicant Tracking System is an HR tool that helps organizations recruit and hire the best employees. The talent acquisition software efficiently carries this process from start to finish. Using ATS HR software is a great way to speed up recruitment through faster application screening, reducing administrative tasks, and enhancing the overall candidate experience.
Payroll Systems
The payroll system, on its own, manages everything within an organization that has to do with employee payments, including salaries, bonuses, and taxes. Companies can use this software separately or integrate it with other HR systems.
Expert Tips for an Easier HR Vendor Selection Process
Outsourcing an HR provider can be challenging and time-consuming. One should consider all aspects before making a decision that can potentially impact а business and its employees.
Thus, spending time on HR technology assessment and vendor selection processes can appoint businesses in the right direction, especially with the support and expertise of consultants and solution providers who reached out and shared their most significant insights.
1) Talk To Existing Customers
HR technology assessment gives a general idea of the product and whether it’s a potential fit for the business industry or company size. However, feature evaluation is only one aspect of the vendor selection process.
Once the company reduces the choice to a few final options, the decision-maker should turn to a more honest assessment approach – talking to someone who is already an existing customer.
President & CEO at Bswift, Sanjiv Anand, agrees with the notion to gather intelligence by word of mouth: “Talk to existing customers. Are they raving fans of the technology? Are they seeing a return in time and money for their outsourcing investment? Or are they still dealing with the same problems repeatedly (or simply traded them for new problems)?
On the surface, many benefits administration providers‘ technology and service capabilities appear similar.
The promises of flexibility and making things easier are ubiquitous.
The best way to evaluate and understand who actually delivers is to talk with existing customers”.
Consulting existing customers gives valuable insight beyond features and technology. It demonstrates the company’s values and its quality.
2) Treat All Candidates Equally
Anne Burkett, the national HR technology practice leader for USI Insurance Services, says that one must effectively manage communications with all solution providers throughout the process during vendor evaluation.
“It is in your best interest for the solution providers to be well informed and able to put their best foot forward,“ says Burkett.
An even more crucial aspect is to treat all candidates equally and get a real insight into what they offer and whether it fits the company.
To this, Anne Burkett adds: “Keep the playing field level; provide the exact details to all participating solution providers. If you are allowing one solution to come on-site, they should all be on-site and for the same amount of time, etc.
This will add structure and make it easier for your teams to manage, but also to provide an equally competitive environment.”
3) Go Beyond Software
As technology progresses, businesses should keep up with the trends. But not at all costs. Above all else, a vendor should offer solutions that align with the company’s strategy.
Strategic Advisory Services VPs at Adp, LLC, Eileen McCormick, and Mary Schafer, say that managing a workplace goes beyond having the latest technology.
Their advice regarding the vendor selection process is to consider how technology, the business environment, regulatory legislation, and changing trends will impact the company’s own HR processes, challenge the status quo and drive change where it’s needed.
“Does your HCM partner have resources for ongoing insights, techniques, and strategies to help you solve your biggest HCM challenges? An HCM partner that can help you drive growth and meet your critical business issues will offer end-to-end knowledge beyond the technology and help maximize your investment.
By understanding where your organization is today and aligning processes to suit your organization, your HCM partner should serve as a trusted advisor, effectively delivering the insights, actionable advice, service, and support your need to meet your business objectives and accelerate results”.
4) Dig Beneath the Surface
Michelle Jukoski, Senior Vice President of Benefits Technology for HUB International, believes that the vendor evaluation process is critical in finding the right partner.
But to find one, Jukoski says that one must be attentive.
“When shopping for HR and benefits administration technology — beware of the “shiny new thing.” The market is flooded with start-ups that have very attractive user interfaces and great salespeople. However, when you peek behind the curtain, you realize the technology might not be fully developed”.
The market growth and demand introduced many new HR products and services. Yet, despite the numerous benefits, not all of them or what they offer is the right fit for one’s business.
Michelle Jukoski adds: “As the saying goes, “pay no attention to the man behind the curtain!” When considering a solution, it’s important that the potential solution provider truly understand employee benefits and the complexities that can exist, whether it be employee eligibility, benefit rules, contribution strategies, wellness credits, and even ACA compliance”.
5) Get out And Meet New People
Jeremy Ames, President & Founder of HiveTech HR, gives valuable advice to those who don’t know where to start with their HR technology assessment and vendor selection by pointing out the importance of networking.
“Shopping for new HR software is not something you do every day or even every year. Maybe you’ve never done it, so there should be no expectation that you’d even know where to start!
It’s best not to simply dive into the few solutions you may have heard of or go directly to the one you used at a previous company. One possible starting point would be to check out industry conferences.
Not only will you gain insight from the content, but you’ll also meet many people who work in HR software every day, whether it be vendors, consultants, advisors, or other thought leaders.
You’ll also network with buyers like you and share ideas and challenges”.
According to Ames, social media can also be a helpful tool for detailed insights into the market. But only if one knows how to filter through biased opinions.
“In the end, it’s always best to gain a broad understanding of the market before you limit yourself to an incomplete set of options.”
6) Consider the People Just as Much as the Technology
The HR software is as good as the team behind it. Regardless of how advanced the technology is, businesses doing a vendor evaluation should also consider the workplace efficiency and the team value of a potential partner.
Josh Trent, Chief Growth Officer at Benefitexpress, advises businesses to partner up with a good team.
“Technology is so important when choosing a long-term benefits administration provider, but it is secondary and only as good as the team accountable for the configuration, support, and delivery.
Look for an easily referenceable partner that offers a “benefits-wise” team with a highly trained, low-turnover staff that can address the most complex benefits issues and advise on best practices, providing unique solutions to the challenges.
Always hire a partner for the culture and accountability they bring to the solution”.
7) Be Aware of the Time Commitment
Finally, it’s helpful to acknowledge that choosing, integrating, and managing the HR software can be time-consuming. Before the organization decides on an HR software and vendor, it should also consider its toll on the current employees and HR team.
Kerry Vineyard, a Benefits Consultant at Truss LLC, suggests that companies consider hiring someone to oversee the whole project.
“Selecting a new HR software provider requires many internal resources such as HR, Benefits, Payroll, IT, and identifying executive support.
The amount of time needed by these resources varies by department and stage of the selection process but nevertheless increases workload responsibilities. If time commitment is a concern – specifically for HR/Benefit team members – organizations could consider bringing on a consultant or project manager to oversee the project.
This person will “own” the project and oversee the various client resources to ensure client deliverables and decisions are meeting deadlines. The organization’s team will remain engaged in the project, but it may benefit busy teams if a dedicated resource does the heavy lifting.
You have one chance to get it right, don’t risk it by overextending your staff who already have full-time jobs”!
On a Final Note
While there is no one-size-fits-all or best provider, there are ways to identify the best HR software for the company’s specific needs.
One should take time and go through a thorough HR technology assessment and vendor selection.
Finding the right HR software can bring countless rewards such as improved productivity and efficiency, increased business insights, and enhanced employee engagement.
