Like many early technologies, the first generation of human resource management systems (HRMSs) didn’t do a whole lot beyond transforming paper filing systems into virtual ones. They saved space but not necessarily time by storing employee records, benefits data and compensation structures within a single digital framework.
Moreover, because they were initially built for system specialists and select administrators, it wasn’t unusual for managers, employees and even HR professionals to feel far removed from whatever add-ons and benefits HRMSs provided. And the high cost kept many smaller companies away; they opted instead to stick with their filing cabinets or become experts in using Excel to capture employee data.
Fortunately, HRMS platforms have come a long way. As the technology has gotten smarter—and more affordable—it has enabled HR leaders to make more-intelligent workforce decisions. Indeed, today’s systems include such key features as workforce management, performance monitoring of the recruiting process, e-mail alert systems and predictive analytics. And they were built with everyday employees and managers in mind—in other words, people who will use the self-service tools with the expectation of having intuitive, user-friendly experiences like they have on their smartphones or other consumer technologies.
As a result, today’s HRMS market is ripe for HR professionals in organizations of all sizes looking to upgrade their technology. That includes larger companies eager to replace their aging on-premises systems with software-as-a-service (SAAS) successors, as well as small employers that are finally upgrading after years of using spreadsheets. Buyers in both scenarios will need to be savvy consumers in order to select the right option from among the wide array of HRMS platforms on the market. Here are six tips on how to do that, along with an extensive comparison of leading HRMS providers.
1. Figure Out the Basics
Job one of any HRMS is to securely house sensitive employee records, benefits information and payroll data. Any system HR chooses should be equipped to address complex compliance issues, the challenges raised by the growing contingent workforce and shifting organizational structures.
Many of today’s platforms offer payroll services as part of an integrated package. HR professionals who already have a payroll application should make sure their HRMS vendor can provide an interface to import and export the relevant data, experts recommend.
"When you replace an HRMS, not only do you have to make sure the software is user-friendly for employees as well as HR staff, it needs the right linkages to payroll providers around the world," says Josh Bersin, principal of research and advisory firm Bersin by Deloitte in Oakland, Calif.
While some companies continue to use on-premises systems, which are platforms housed in privately controlled data centers, public cloud services are quickly becoming the default HRMS deployment model. In fact, according to the Sierra-Cedar 2015-2016 HR Systems Survey White Paper, 18th Annual Edition, the market recently hit a tipping point: More than 50 percent of purchased core HRMS systems are now SAAS solutions—in other words, they are cloud-based.
The SAAS approach allows users to implement new processes faster, update software with greater ease and remove tech support burdens from HR. On the other hand, some professionals find that private on-premises systems offer more control in determining how to use, store and locate data.
2. Compare Vendor Performance
When comparing vendor systems, start by identifying a small number of use cases to test how each platform responds to your most critical needs, says Michael Rochelle, HCM principal analyst for the Brandon Hall Group in Delray Beach, Fla. "Traditionally, HR buyers bring eight to 10 use cases, but I find most organizations have three to four base ways they use an HRMS 80 percent of the time," he says. "If the vendor can’t perform well in those instances, you have to move on."
Having strong vendor support for each use case can be especially important for HR managers at smaller companies with limited internal staff and resources to draw on for support. When Kathryn Goodick, director of HR for SwervePoint, a promotional merchandising company in Danvers, Mass., was looking to move her 50-person company from using Excel spreadsheets to keep track of employee data to an HRMS, one of her key criteria was to ensure that the vendor would provide a strong implementation and customer support team.
In choosing Namely, Goodick found a support team that was highly responsive to her needs. When she asked the vendor to create custom reports for auditing employees’ paid time off, for example, as well as an ad hoc report showing any changes since the last payroll run, an account rep gladly complied.
In addition, "instead of having to send e-mail back and forth, Namely’s system has a secure private portal so I can upload my confidential information to it on my own," Goodick says.
The use-case approach is just as helpful for larger employers with complicated needs. Imtiaz Shaikh, senior vice president of HR at multinational conglomerate Hitachi’s San Francisco office, didn’t want to settle for vendors’ stock system demonstrations.
"We gave a small number of very complex scenarios to the vendor and said, ‘Show us how this will work in your system,’ " Shaikh says. He wanted to see, for example, how an HRMS could handle new organizational structures, as well as what would happen in situations where employees are loaned to other divisions in Hitachi, in some cases in different countries. It was through this rigorous evaluation process that he came to choose vendor Workday’s HRMS.
3. Match Technology to Need
Today’s sophisticated HRMS platforms vary widely and offer an increasing amount of specialization. That’s why experts advise HR professionals to research what each HRMS brings to the table.
"Some systems are focused more tightly on workforce management tools, which can be a good fit for organizations with a lot of hourly workers," says Ron Hanscome, research vice president for HCM technologies at Stamford, Conn.-based Gartner Inc. "Others emphasize core HR administrative services or specific talent management areas."
If your company manages a large number of contingent workers, for example, look for an HRMS equipped to handle that situation. Several modern systems can easily track and separate full-time staff from contingent workers, with onboarding features tailored to the different needs of those two groups. Oftentimes, any buyer’s remorse that HR leaders feel after purchasing an HRMS results from mismatched expectations. "In many cases, the system does what a vendor said it will do, but it doesn’t match up with the client’s expectations or culture," Hanscome says. "You need to examine the how as well as the what."
4. Assess User Experience
It’s also crucial to weigh the end-user experience when comparing systems. For example, is your system mainly intended for use by your HR department or will some or all employees need to rely on it as well? "There’s a difference between someone in HR using the system for process automation and efficiency and an end-user who spends most of their time in PowerPoint, Excel or calendar software," says Mollie Lombardi, co-founder of Aptitude Research Partners, an HR technology research firm in Boston.
"You have to meet end-users where they are today," Lombardi says. There is a high expectation for a consumer-grade technology experience when employees use HR’s self-service tools for open enrollment, she explains, or when managers use them to modify or approve time sheets or performance reviews.
5. Assess Companies, Not Just Products
Assessing the vendor company is as critical as evaluating its products. Spend time investigating how many HRMS installations the vendor has completed, the company’s approach to customer service, its system implementation practices and its future plans.
With a new technology purchase, an organization is buying more than just a new piece of software. It’s also purchasing that vendor’s future possibilities," says Stacey Harris, Sierra-Cedar’s vice president of research and analytics, in the company’s 2015-2016 survey white paper.
High rates of dissatisfaction are often due to buyers not taking enough time to determine if the vendor is a good fit, Rochelle says.
"These people will be your partners for three years or more, so you have to elevate the process beyond HRMS product selection to company selection," he says. "For example, I’d almost rather see people spend less money on the product and more to ensure a rock-star implementation because, in the end, success is all about user adoption."
6. Don't Overlook Finance or IT
Whether your organization is small or large, Rochelle advises including someone with information technology expertise, as well as your CFO or a high-ranking finance person, on your vendor selection task force.
"A big mistake occurs when HR views [IT and finance] only as slowing down the process and brings them in after the fact," Rochelle says. "You need them in the beginning because your choices will depend in part on what IT is willing to support," as well as what finance is willing to pay for.
Dave Zielinski is a freelance writer specializing in HR technology, talent acquisition and leadership development issues.
Illustration by Daniel Hertzberg for HR Magazine.