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How To Break Up With Your HR Tech Vendor
Breaking up can be hard to do, but there are some actions you can take to make the process less painful.
It may have been Valentine’s Day, but one HR professional for a North Carolina software developer was not feeling the love for her applicant tracking system (ATS).
The employee relations and compliance manager typically spends February under intense pressure finalizing her company’s affirmative action plan. Failing to make a March 1 deadline could jeopardize her employer’s status as a federal contractor. So when her organization’s ATS started acting up a few years back, the HR professional found herself in hot water. Making matters worse, she says, her longtime customer service rep was no longer with the company; the vendor recently had supplanted much of its support staff with an online resource center and was encouraging clients to hunt down their own solutions. Support staff who remained appeared to be stretched thin and had no access to their predecessors’ client account records or system documentation.
After several heated conference calls with the vendor’s technicians, one member of the HR professional’s team began referring to his office as The War Room.
The HR professional ultimately produced the reports she needed with the help of her own company’s software designers, who were able to identify the problem and design a work-around program that pushed the needed data through the recalcitrant ATS. But the ordeal left her questioning whether her longtime tech provider was still up to the job. After much hand-wringing, she decided to terminate her contract early and find a replacement.
Certainly there are two sides to every vendor/client relationship. But even for those HR clients who have been harmed by vendor neglect or incompetence, breaking up can be hard to do. Those who have done it say the experience can trigger the same feelings as a divorce—anger and resentment, along with guilt and self-doubt. Nevertheless, clinging to a vendor that doesn’t meet your organization’s needs can take its toll on your psyche, your staff’s morale and your company’s pocketbook.
“At some point you have to say enough is enough,” says the HR professional described above. Her company’s new ATS has been churning out the needed reports without a hitch.
(Editor’s note: The above scenario, like others described in this article, reflects the experiences of actual HR professionals. Sources and the vendors they used are not named to preclude unfair generalizations based on individual perceptions.)
The relationship between HR and technology vendors is often rocky. Less than a third of respondents to the Society for Human Resource Management’s 2005 HR Technology Survey Report described their systems as “extremely successful.” More than a quarter said their HR systems required more maintenance than expected. Forty-three percent said they were not spending less time on administrative work as a result of new technology.
Like the HR professional above, many believe it’s best to dump an underperformer. In fact, Taleo, the San Francisco talent management firm her company switched to, reports that nearly half of its new business in 2006 came from companies that had given another vendor the boot.
“Companies switch [vendors] all the time,” says Daryl Spreiter, Taleo’s marketing manager. (Taleo enjoys a 95 percent annual customer retention rate, a company spokesperson notes.)
What’s behind the uneasy marriage between HR and technology?
Unrealistic expectations may be part of the problem, especially where customer service is concerned, according to Joseph Schmitt, SPHR, practice manager for Wise Consulting Associates, a Baltimore HR information systems (HRIS) consultancy. While many software providers may have fostered a cozy relationship with their customers in the past, the industry is changing. Some vendors are moving their help desks abroad and no longer match customers with a designated customer service representative. Others, like the one ousted by the company above, are streamlining their hands-on customer service operation in favor of a self-help model.
“Vendors are facing the same cost-cutting challenges as everyone else,” says Schmitt.
Love the One You’re With
But even with the promise of Something Better out there, moving on often is not an option. That’s what a newly hired HR coordinator at a 250-employee high-tech firm in Virginia found when she was put in charge of implementing an HRIS chosen by her predecessor. The software was supposed to integrate payroll and HR, allow for employee and manager self-service, and improve reporting. But getting the program up and running took longer than anyone expected. After working with two of the vendor’s implementation specialists in less than five months, the HR practitioner began questioning whether she was the problem.
“I wondered if I was being too demanding,” she says. “But getting the information right didn’t seem like too much to ask. They were putting the wrong rules with the wrong benefits, and we kept having to go in and check each employee’s account to make sure they were being credited for the right vacation and sick leave. It was just a disaster.” Despite these problems, the company was committed to making the arrangement work. In the end, that may have been for the best, some HR experts maintain.
Switching vendors frequently is not the silver bullet it’s perceived to be. On the contrary, introducing a new system has risks that often translate into new headaches and added costs for HR. Moreover, the same problems have a funny way of cropping up even after a new system is installed.
Instead of recommending a new system, software or vendor, Schmitt and others urge HR professionals to take steps that will give them a leg up regardless of the system they use. “Use customer support tools, read the case studies, attend user-group meetings and learn about ways you can use the system better,” Schmitt advises.
Ironically, some of HR’s dissatisfaction may stem from a lack of understanding about what their system can do. Brian Delphia of the Columbus, Ohio, HR tech firm Delphia Consulting often is asked to recommend a new product to clients who don’t realize that their existing software already has the functionality they want.
“HR users are not known to be the most tech-savvy,” he says. “But sometimes you have to set a stretch goal and make sure you’re living up to your end of the bargain.”
That, he says, means getting to know a system before deciding it’s not The One.
Like many marriages, some promising HR/vendor relationships break down over money. But like a prenuptial agreement, a carefully crafted service agreement can clarify expectations and go a long way toward protecting your company’s coffers before costs begin to spiral.
“I’m a firm believer in getting everything in writing,” says Schmitt. “You need to have a clear understanding of what the vendor’s role will be.”
As a rule, implementation is only a fraction of the cost of getting a system, says Delphia. To avoid being blindsided by add-on fees for such things as training and post-implementation maintenance, be sure to plan for those expenses and be specific in addressing which services will be covered throughout the life of your contract.
But if you think you can buy the system and change it later through customization, beware: Often the rules begin to change once you, or the vendor, begin to tinker with a basic product.
Most vendors offer a limited number of options to their software. If you have specific requirements that go beyond the basic product, make sure you know whether your system can support the software and if the software can support the changes. “Customization is a double-edged sword,” says Schmitt. “You may think you’re getting enhancements. But customized software is known for being quirky and unpredictable, not to mention pricey.”
If you must have a customized product, be sure your contract addresses who is responsible should the system not perform as expected. It’s also important to nail down whether your vendor will upgrade a customized product and whether you’ll pay more for upgrades than you would otherwise.
Help, I Need Somebody
Most vendors have a structure in place for addressing customer complaints and ensuring that those who encounter problems aren’t left on their own. Working within that system is key to getting your problems resolved.
Customers disappointed in their vendor “shouldn’t just walk away,” says Tom Tillman, director of product marketing for Sage Software in Herndon, Va. “If you walk away, you will lose a lot of the investment you’ve already made.”
You can help your vendor resolve system problems by being specific with your complaints. General gripes, such as “It never works,” don’t help customer service or tech support make a diagnosis. It’s far more productive to document problems as they happen so a technician can construct a case history and do a more thorough diagnosis, Tillman says.
In addition, customers should listen to and follow advice they receive from customer service and tech support, according to Tillman. Help staff is trained to follow a set of proven procedures for diagnosing and resolving problems. Let those folks do their job before dismissing them.
Tillman says he pays close attention to a quarterly survey in which customers are asked if they would recommend his company’s products to another customer. The company contacts those who answer “no” to find out why.
Still, there are some instances when switching vendors is almost always prudent, such as when you have outgrown a product’s capacity, or if your company has downsized and you no longer need a heavy-duty product.
A breakup might also be in order when a vendor can’t provide a desired level of security. Two common benchmarks for evaluating tech vendors are whether the system can safeguard your company’s confidential data and if it can help your business meet compliance mandates, including those required by federal and state enforcement agencies and laws such as the Sarbanes-Oxley Act and the Health Insurance Portability and Accountability Act.
You also don’t want to find yourself at the tail end of a mass customer exodus. Loyalty is fine up to a point, but make a break if your vendor appears to be floundering financially. Don’t rely on a firm that can’t afford to update its materials or upgrade its products to reflect new laws or technological advancements.
“Keep your ear to the ground and take note if the company begins to scale back services or cancels major events like a user-group meeting,” warns the longtime recruiting director of a large New Jersey employer. “What is a company actually saying when it won’t get up in front of a group of its own customers?” Clients with doubts about their vendor’s solvency should check its financial reports and Dun & Bradstreet ratings, he says.
Once you’ve decided to move on, line up a replacement system. Engage that company in making the transition—particularly if you have to move data from your old system to the new one, advises Delphia.
And don’t be shaken if you encounter some pushback from the vendor you’ve just left.
Sometimes, HR tries to make the break with a vendor a no-fault divorce. One HRIS and payroll manager for a Nashville, Tenn., health care provider says she had no complaints with her payroll service provider when she opted not to renew her contract; her company simply made a business decision to change how it did payroll.
But during the final months of her contract, service dropped dramatically, she says. The trouble began within hours of giving notice when the vendor called to cancel a long-scheduled visit.
The final straw came when the vendor billed the HR customer $27,000 for a data conversion that should have cost under $400. In the end, the company was able to bargain the price down to $2,000.
The HR professional says she wasn’t surprised by the snub—she’d broken up with vendors before and received similar treatment. Thus she was careful to minimize her exposure by waiting until the last possible time to give notice to her vendor and by having her new payroll system in place before her outgoing agreement ended.
“I know these vendors get ornery when they lose an account,” the HR professional says in hindsight. “But I’m sure they’ll get over it, just like I got over losing them.”
Rita Zeidner manages and edits the SHRM Online HR Technology Focus Area.
SHRM report: 2005 HR Technology Survey
SHRM articles: Seeking Full Partnership (HR Magazine)
When Good Outsourcing Goes Bad: Can This Relationship Be Saved? (HR Outsourcing Focus Area)
'Second-Generation' and 'Transformational' HR Outsourcing: Successes and Challenges Shared at Conference Board Summit (HR Outsourcing Focus Area)
Back to the Bargaining: Renegotiating HR Outsourcing Deal (HR Outsourcing Focus Area)
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