Nearly 70 percent of respondents polled during a webinar on HR technology spending plans sponsored by the International Association for Human Resource Information Management (IHRIM) said that although they were “cautiously optimistic” about the economy, they can do more with less in 2010.
The survey was conducted in September 2009 among 150 HR leaders representing the health care, manufacturing, banking/finance and education/nonprofit industries. Most of the respondents (93.4 percent) were from North America; the rest were from Africa, Asia, Eastern Europe and the European Union.
When asked what measures HR and HR information technology (HRIT) operations are considering for 2010, 26 percent responded that they plan to “optimize currently implemented systems to get more return from their investments,” according to a release about the study. Another 24 percent plan to implement previously purchased modules, and 19 percent plan to consolidate multiple systems under one vendor.
“This shows that people are taking a look at what they have purchased and trying to get more out of what they already bought rather than looking at postponing projects,” IHRIM President and CEO Lynne Mealy stated in the release.
The study found that budgets might spring back. When asked to compare overall 2009 HRIT budgets to those for 2010, 51 percent of respondents said their spending would remain the same, 30 percent expect an increase and 19 percent expect a decrease.
“I think the 30 percent increase is more optimistic than what will bear out in 2010,” Lisa Rowan, program director of HR and talent management services for global advisory services provider IDC, predicted in the release. “Unemployment will be slow to rebound, and I expect budgets will largely remain at 2009 levels.
Among the survey’s other key findings:
*About 40 percent said they plan to move forward in 2010 with new HR system project implementation, 28.7 percent said they don’t, and 31.6 percent were undecided or unsure.
*Specific to essential HR software investments, leading categories where 2010 budgets are expected to increase are performance management (31.1 percent), business intelligence (22.4 percent), e-recruiting and applicant tracking (21.3 percent), and core HR management systems and onboarding programs (both at 20 percent).
*The average 2009 budget declined by 30 percent—more than the 20 percent projected. Of budgets that rose, they did so by 20 percent (less than the 36 percent projected).
*To reign in expenses, 72 percent of companies limited travel. Others delayed optional HRIT projects (52.9 percent) and reduced headcount in HRIT departments (22 percent), while almost half implemented hiring freezes.
*In 2010, most companies plan to allot the same budget to training and staff development. The study found that nearly 11 percent plan to spend more on HRIT hiring, 19.7 percent plan to spend more on consultants and contractors, and 18.2 percent plan to invest more in HRIT staff training.
*About 44.9 percent of those surveyed said current economic conditions did not force HRIT purchase decisions higher within their organizations.
“What we’ve seen in terms of declines may be less about budgets and more about process,” Rowan continued. “I’ve seen an increase in the size of project selection teams, which adds complexity to the process and lengthens sales cycles around new capabilities being brought on board.”
In 2008, onboarding, benefits management, business intelligence, succession planning and workforce management applications topped the purchasing list. Workforce management and benefits management were at the bottom of the list in 2009.
“Onboarding continues to remain strong with the clients I’m seeing,” said John Hinojos, vice president of consulting services for HRchitect. “In talking to some vendors, they have backlogs of implementations.”
“Performance management has been hot for the last few years and continues to be so,” Rowan added. “We’ve lost a lot of jobs this year, we’ve seen reductions in the workforce, and those are tough to do without good visibility. This has driven home the need for good performance management.”
“The fact that performance management and business intelligence are at the top of the list is consistent with companies’ discovery that they have to make decisions on the future of their employees,” said John Greer, senior vice president for HR and development at Smart Financial Credit Union and chairman of the IHRIM. “They don’t know who their top performers are, so they need to get the systems in place to generate and analyze the data to make good business decisions.”
But why are companies hesitant to invest in professional development and training?
“Because this is what companies have traditionally done in the past when the economy has declined,” Greer noted. “The risk these companies run is that when the economy turns around, which it eventually will, the employees they need and want to retain are going to be the people who quickly leave.”
Aliah D. Wright is an online editor/manager for SHRM.