A guide to choosing HR software
The task of selecting a HR software solution that will be lean and fit for purpose will vary greatly depending on company requirements. Roger Moore, General Manager at Bond Teamspirit, offers guidelines for successful selection.
In order to select a system that will be the best option for the business and create set of processes that can adapt and flex to the needs of the business for many years to come, certain questions and considerations need to be answered and addressed in advance.
No-one would employ a highly capable person, invest heavily in them but then make use of only a fraction of their talents. But this is repeatedly what happens when it comes to HR software. In a bid to have the latest technology available, it is easy to choose a product, install it but then find it is vastly too complicated for your current needs. The upshot: the majority of its functionality, which you have paid for, remains dormant. Despite the HR software market being a relatively mature one, it is astonishing how often this scenario is seen across human resource departments.
Remove the blinkers
In most cases, it occurs because those involved in the decision-making process haven’t looked at HR software in the wider context. The purpose of technology is to bring change for the better, not change for the sake of it. It should increase efficiency, improve productivity and boost performance. Many HR departments are still heavily reliant on paper-based systems and by automating tasks they can drastically reduce time spent on administration and free up HR teams to do more value added and strategic work. Cost-savings come not just from more streamlined processes but by using the software to address specific issues in the business such as absence or high attrition rates.
There is no doubt that software can deliver on all of these counts and provide a return on investment sooner rather than later. These benefits will only be realised, however, if organisations go through a rigorous software selection process and establish a specific criteria on which to base their purchasing decision. A ‘big bang’ approach to installing technology seldom works. History has taught us that a structured and phased approach which addresses specific areas and builds up to a fuller-scale HR solution stands a far greater chance of success. HR directors, therefore, need to know the right questions to ask, ensure due diligence is applied throughout selection processes and most of all be unflinching in their aim to find a software solution that will be fit for purpose today and which will also evolve with the needs of the business tomorrow.
Bring the team together
The starting point in the research process is to appoint a project team which should include HR and IT and also takes into account board-level sponsorship and support. A robust business case must be made for the software and the best way to do this is to show how it can positively impact the bottom line. Feedback should be gathered from heads of department and line managers across the organisation to establish the business imperatives.
For instance, absence costs UK organisations in the region of £600 per employee per year (2011 CIPD figure). If an organisation suspects it has above average absenteeism, implementation of an absence management module which will help to pinpoint the problem should be prioritised, providing insight into why it is happening and helping line managers to resolve the problem. This can potentially deliver massive cost-savings to the organisation.
Similarly, if line managers report high levels of staff turnover in certain departments, a performance management and appraisal module can help lower such attrition rates. Having put together a business case, the definition of software requirements must be tightly based on this.
Future-proof the project
Ensuring the right features and functionality are specified is a top priority, but cannot be the only consideration – there are some broad criteria that should be applied. It is imperative that the software is sufficiently flexible and configurable to grow with the needs of the business. The pace of technological advancement dictates that what is purchased today will become quickly out of date within two years or even less. Quiz vendors on their product roadmaps and find out how many upgrades can be expected within a specific timeframe. Also ask about their strategy for adapting software for regulatory and legislative changes which are increasingly impacting HR departments. At the end of the discussion, the project team must be totally convinced that the vendor can continue to develop a product that will keep pace with developments and also move with the needs of the business.
Next it should be decided whether the HR software will be a standalone system or whether it will be integrated with other systems such as payroll, time & attendance or recruitment software. Historically, organisations have tended to buy separate payroll and HR products. This has meant much of the same information was input twice into two different databases, which can create a data silo effect and corresponding mentality within an organisation when it comes to workflow and processes.
It makes far more sense, therefore, to run such systems from a single database. As well as saving time, eliminating the duplication of data entry reduces the margin for error and preserves data integrity. Integrating with existing payroll and HR systems shouldn’t pose any great challenges with modern systems. Also bear in mind that the most streamlined and efficient workflow will come from being able to capture data, such as an employee’s personal details, as early as during the recruitment stage via an applicant tracking system (ATS) or other system and feeding it through to HR and payroll systems.
Data, data, data
The introduction of pension auto-enrolment in October 2012, as well as the switch to Real-Time Information (RTI) by HM Revenue & Customs for PAYE data, is forcing organisations to place greater emphasis on the quality of their data. In the light of this, when installing new HR software, it is vital to pay great attention to areas such as data entry and workflow. For instance, RTI demands that employers file far more personal information than previously, and the earlier in the process these details are collected, the better in terms of efficiency and accuracy. When discussing integration and workflows with potential vendors, find out what they offer in the way of payroll or time and attendance modules. Even if the organisation isn’t ready to upgrade these systems yet, it will be a far more seamless approach when the decision is made.
Having met with possible vendors, be clear on what features come as standard and what might incur additional costs. Most have a base product which will offer a suite of modules and this may be more than enough to meet an organisation’s needs, but they also need to find out how much and how easy it would be to expand the system’s functionality.
Similarly, research any upgrade costs or annual maintenance fees. Drill down on areas such as technical support and training to discover exactly what you will get for your investment and to be certain that the business will be properly supported throughout the implementation and beyond. For instance, if an organisation operates 24 hours per day, can the provider offer 24-7 support? And, if a key member of your team leaves a year down the line, what is the cost and timeframe involved of training up a new person?
In the clouds?
Taking a hosted or Cloud-based approach can make upgrading software and switching on future modules far easier and cheaper than the traditional client-server implementation and is a key consideration these days. Ever greater numbers of businesses are turning to the Cloud and Software-as-a-Service because they reduce the need for expensive in-house servers and other hardware since the software resides within the supplier’s machines and is accessed via the web. Implementation is also simpler and faster, meaning that users are up and running with the software far more quickly.
Previous concerns about data residing on someone else’s servers are starting to dissipate as more people accept that Cloud software vendors invest large sums of money and effort in security and back-up, since they know they live or die by their data and service reliability.
Having arrived at a shortlist of vendors whose product meet your requirements, ask to visit – not just call – client reference sites. We live in an era when every product and service is reviewed or rated by a consumer somewhere so seek the same user insight for software. Expect the client to be candid as they’ll have been through the exact same process you’re going through themselves, but come up with a thorough list of questions to ensure you get maximum value from the exercise. Focus on everything from product development and implementation to support and hidden costs and find out if anything went wrong. Don’t be too shocked or surprised if there have been problems as the nature of a software implementation means there will inevitably be challenges. In such instances, it is more important to learn how the vendor overcame any problems.
Here today, gone tomorrow?
The advent of the Cloud combined with reduced cost of software development means that there are many more software vendors around, some of which are relatively small companies. As well as making sure a software developer has solid technical credentials, it is critical to check out its financial stability. It may have produced a great product, but if the firm isn’t around to support or further develop it in 12 months’ time, it could mark the end of the line for your purchase too – and a huge waste of time and funds.
Such an exercise can be difficult because submitted accounts and other information available in the public domain won’t necessarily tell the full story. A company could be deemed stable but a small developer with cash flow problems could also be teetering on the brink on administration. Taking out escrow on the software so that you have the source code if anything goes wrong is advisable and gives more control over future changes which may be necessary.
Having reached a decision, the next stage is to work with the supplier to put together an implementation plan and build a team. This is something that doesn’t always receive the attention it deserves from the purchaser. While the vendor will do a lot of the hard work, make sure everyone in the organisation whom it affects knows when it will happen and understands what it will mean for them. Key questions for the project team include: is it necessary to pilot the system first or run the new system in parallel with the old one? What extra workload will be involved for those operating it and how much time do you need to build in for system training?
Keep in mind that your HR team may already be working to capacity so it might be necessary to second people or recruit temporary staff for a period before and after the system goes live. Yes, this involves extra cost but will be a worthwhile investment since poor implementation is in no-one’s interest and could sour an otherwise well thought-out project.
The benefits of upgrading or investing in new software are plentiful as they bring not only financial, time and resource savings but also provide an opportunity to address issues that might exist in the business. Excessive administration has always been the bane of HR’s life, but by automating routine tasks, the team is given space and time to be far more strategic. Instead of recruiting people to cover for absent members of staff, for instance, they can provide valuable data and management reporting information to help treat the cause of the problem and not just the symptoms. HR software – when chosen and installed correctly – has the power to transform and elevate the HR function and help it align its activity more closely to the wider aims of the business. It can only achieve this though if the right criteria are used to select it in the first place and those involved in the process make informed business decisions.