5 Ways to Overspend on Your Next HRMS Software Deployment

How to Unnecessarily Overspend on HRMS Software Implementation

When deploying human resource management system (HRMS) software, it is practically a given that cost issues will be a factor. In fact, a 2010 Aberdeen Group report found that cost issues were at the top of 65+% of respondents' lists when it came to dealing with HR technology solutions—hands down the highest rated criterion listed in the study. Yet with myriad interrelated technical, people, and project issues that come with the territory of HRMS automation, nailing down how to account for these costs and stay within budget is an ever-present challenge. Prudent organizations need to be cognizant that there are countless ways in which a budget can spiral out of control and undermine an HRMS project—of which the following 5 points are just a sampling. However, follow these tips and it's all but guaranteed that you'll overspend on your next HR software implementation.

HRMS Software Implementation Tip #1: Go over budget with poor planning

Defining the scope of your HRMS project in as much detail as possible is critical to staying under a budget ceiling. Unfortunately, countless organizations choose the "wait and see" approach to these projects, neglecting the planning phase in lieu of starting implementation quickly. While most HR software vendors (and best practice-driven HRMS consultants) will provide a ceiling estimate, it should be noted that without thorough planning, that estimate is based on limited services and is little more than a flimsy guideline. Indeed, according to CompareHRIS.com's Clay Scroggin, "Some vendors may provide fixed cost project costing, but even these projects can run over budget if the scope of the project [is] not fully defined". To avoid this potential pitfall, make sure that your project scope documentation at minimum includes specific HR software modules, use cases, data conversion, interfaces, reports, customizations, numbers for training and an estimated time for normal project management and the inevitable issues that will need attention and resolution.

HRMS Software Tip #2: Increase costs via poor personnel

Anytime an HR system is being implemented, either the vendor will appoint an installation manager or the organization may engage an HRMS consultant to provide some independent and specialized expertise (and in many projects both actions will take place). Regardless of which option is employed though, a major question that should be asked is: how many times have they installed this particular HR system in the past? The answer to this will shed light on just how much personnel experience you're getting for your investment—an answer that could potentially cause you to re-evaluate your implementation approach. Implementation consultant Clay Scroggin recommends not using anyone with less than five installs under their belt, citing that "until they have performed a large number of installs they won't be able to handle all the pitfalls and issues that inevitably arise". And each one of those pitfalls can wind up costing significant time and money.

Further, if an organization is paying for external consultant expertise to handle a successful implementation it can be tempting to 'leave things to the experts'. Depending on the size of the organization, it may be advisable to appoint a full-time project manager from HR or IT for the duration of the implementation. Either way, an experienced manager should take responsibility not just for liaison but for internal management of the project plan, ensuring that costs stay within (or at least close to) estimates.

HRMS Software Tip #3: Drive costs up through poor training

Perhaps no other aspect of HR system implementation is as under-valued or misunderstood as training. Yet, the absence of a detailed training strategy (or misaligned training content) can absolutely negatively affect implementation—resulting in a lack of user readiness for go-live, procrastinated user adoption, a drain on company resources, and a rapidly foregone budget. Organizations are then left with a choice between a) delaying the HR system go-live and/or b) putting additional support in place to compensate—of which neither option is optimal. As such, it is crucial that organizations put serious thought into the granular structure of the HR software training strategy if costs are to be contained.

HRMS Software Tip #4: Overspend with insufficient testing

PSC Group's Mary Ellen O'Neill identifies the HRMS testing stage as, "the most time intensive aspect of the system implementation." Indeed, without proper testing of the system, configuration, integration, and any customized routines that have been added, the system will go-live with issues and faults unidentified—faults that only wind up emerging later when the HRMS is in live use and therefore far too "business critical" to put a stoppage to. Testing should start with existing HR software data sampling. The data conversion to the new HR system is all too frequently one of the first project delays encountered—and thereby pushes back many subsequent project plan activities early in the implementation process. Few implementors recognize the quality of their data, and when they do ultimately recognize that the data is dirty (i.e. incomplete data, inaccurate data, duplicate data, data missing required fields, etc.), it can be a tedious, time consuming and costly exercise to cleanse it before it goes into the new system.

HRMS Software Tip #5: Isolate the system to up-end your budget

It may seem premature to talk of system integration, as quite often an HRMS is the foundation on which other systems are built; but some best-of-breed point applications may already be in place, (e.g. certainly payroll is likely to be already automated) or will be added in the near future. In these cases, seamless integration is paramount to realizing end to end business process automation and the planned-for cost savings. In fact, CedarCrestone's 2011 HR Systems Survey concluded that "in order to use technology to truly optimize the workforce contribution to the organization, it is important that all functionality needs to be unified end to end and integrated within an ecosystem that provides: access to other information sources at the lowest total cost of ownership." Indeed, falling into the short-sighted trap of seeing an HRMS as a standalone system is one of the more common (and costly) HR software mistakes that an organization can make.

The Bottom Line on HRMS Budget Overspend

While there are some major cost decisions present at the HR software selection stage, such as whether to go with Software-as-a-Service (SaaS) or on-site deployment (it is worth noting that SaaS avoids some of the above overspend pitfalls), as CompareHRIS.com's Clay Scroggin says, "The only variable cost associated with an [HRM] system install is going to be the implementation." In any HRMS implementation a tight rein is needed, on both the project and the people involved, in order to avoid an unexpected impact on the dollar count.

  Categories: HRMS Implementations

  Tags: HRMS Training

  Permalink: www.hrlab.com/hr-implementation-costs.php

 Author: Dave Foxall

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