| By Dave Foxall
Procuring A New HRMS – A Decision-Making Framework
According to the Towers Watson report New Horizons, No Boundaries, one in five organizations implemented new HRMS (Human Resource Management System) software in the last 18 months and a further 20% cited plans for upgrading existing HRMS technology as their top service delivery goal in the coming year. Unfortunately, from the large established software vendors such as SAP, Infor, and Oracle to the smaller best-of-breed solutions, the sheer volume of HR software choice can be overwhelming. The following questions offer an objective framework to make an informed decision and find the best fit HRMS software solution for your organization.
Human Resource Management System Question #1: What features are really needed?
HRMS software modules are available for almost any HR function, including payroll, succession planning, performance management, benefits administration, and so on. But the question is not only one of function but of method. A CompareHRIS.com survey found that some of the most popular HR system capabilities were the ability to import/export data (a required feature by 85%), ad hoc report writing (82%), email alerts (79%) and user-defined fields (73%). When deciding requirements, the focus should be not merely on what the system can do but also how it does it. It's also important to recognize that all needed features are not equal in importance. Once needed features are identified, they should be weighted and prioritized.
HRMS Question #2: Is it future-proof?
Can the HRMS handle the requirements of tomorrow? Change is a constant with many organizations and HR departments. Towers Watson found that 39% of organizations used HRMS as an opportunity to streamline business processes. Ideally, this streamlining takes place prior to HRMS purchase and the results inform the system requirements. However, given the never-ending evolution of HR service delivery, the right HRMS must be agile enough to meet future needs as well as current ones. HR systems will include flexible role-based configuration, visual-based software customization toolkits, Platform as a Service (PaaS) solutions, workflow engines, Business Process Management (BPM) frameworks and online ecosystems of pre-integrated third party add-on products bring extensibility and new options for new business requirements.
HRMS Question #3: SaaS or on-premises?
Software-as-a-Service (SaaS) solutions have been increasingly popular in recent years due to the emergence of faster to deploy, easier to use and less costly SaaS alternatives for HRMS. Gartner research shows inquiries (from large enterprises considering SaaS for core HRMS) have more than doubled in the last two years. With a still-shaky economy, potential functional and operability limitations, SaaS HRMS applications are not without risk. However, the SaaS benefits can be material—and include reduced costs, less hardware headaches, fewer IT resources, more flexibility, mobile access and easier updating. Key considerations when reviewing SaaS HR software solutions include information security, uptime assurance, service level agreements (SLA), PaaS tools and cloud ubiquity (that is, can your SaaS HR application run on any public cloud such as Amazon's EC2 or Microsoft's Azure, or is limited to the software vendors cloud?)
HRMS Question #4: How secure is the data?
Of particular concern to many organizations are the HRMS security questions that come with the territory of handling sensitive employee information. The vendor's systems should be compliant with security standards such as ISO 27001 and Safe Harbor Compliance (for US-EU interfacing). Writing for hreonline.com, Kimberly L. Seals and Michael H. Martin of Mercer recommend, "a vendor's approach to data security, privacy and disaster recovery be scrutinized carefully during the evaluation period. This should include a site visit to the SaaS provider's data center, and a request for an SAS 70 (an internationally recognized auditing standard)." On-demand HR systems should be hosted from Tier IV colocation facilities—and not the software vendor's IT room.
HRMS Question #5: How flexible are the reports?
Easy and on-demand access to data is a key requirement for new HR systems. HR and other staff improve their decision making when they receive the right information at the right time. Comprehensive management dashboards and the ability to produce unique reports cross-referencing identified metrics can be crucial to future day-to-day and strategic BI (business intelligence) needs. Additionally, as the Society for HR Management warned in their report Transforming HR Through Technology, there are state and federal data reporting requirements to consider: "Firms increasingly will need to adapt their HRIS in order to remain compliant. Pending changes in tax codes, financial reports, equal employment opportunity compliance and health care all suggest that compliance and reporting demands will increase." Add to these compliance issues the ever-increasing complexity of global rules and regulations and the need for strong reporting functionality becomes even more evident.
HRMS Question #6: How reliable is the software?
To a large extent, this question depends on the 'maturity' of the HRMS and the longevity of the vendor. As Clay Scroggin of CompareHRIS states, "…no software application is going to be 100% free of bugs. But the more installs they have and the longer they have been in business provides a greater opportunity to correct as many issues as possible. And the size of an HR software company can offer helpful insight as to the stability of the company. Generally speaking, the more employees a company has and the longer they've had their products on the market, the cleaner their applications will be." SaaS HR applications many also have an advantage in reliability—as unlike on-premise HR software, the hosted systems generally run on only one platform (and not a combination of hardware, operating systems, databases, etc) and fixes can be installed in real-time (instead of having to schedule patch releases or wait for the next version).
HRMS Question #7: What is the total cost of ownership (TCO)?
More than just the software license fee, the costs of the HR software (often referred to as Total Cost of Ownership or TCO) includes a variety of factors such as hardware, infrastructure, personnel, platform, software lifespan and constant technical support. Many IT analysts suggest that an on-premise HR software license makes up about 20 percent of the TCO. An accurate picture of the TCO demands due diligence and a clear and detailed grasp of how the HRMS will be leveraged to meet the organization's strategic goals.
HRMS Question #8: Why is an HRMS needed by the business?
This final and fundamental question is perhaps the one to ask first. What specific business and strategic benefits do you expect the HRMS to contribute to? The answer should inform the specifications of the intended purchase. Only when HR systems are directly aligned with supporting business objectives are they considered strategic by the C-suite. Furthermore, the slated objectives for the HR software must be measurable—in order to demonstrate progress and ROI. Many veteran HR leaders state their HR objectives and expected benefits using the SMART (Specific, Measurable, Achievable, Real and Time-bound) method.
The HRMS Bottom Line
In order to choose the right technological support, a framework of standard questions – tailored to the individual company – are essential to making balanced comparisons between the sometimes bewildering array of HRMS software on the market. Indeed, as a recent Towers Watson's report points out, "technology has evolved to become a critical strategic support for HR today"—a fact that suggests a healthy amount of due diligence is integral to the process and outcome when selecting an HR software solution.
Categories: HR Software Selection Projects
Tags: Software selection
Author: Dave Foxall