There are literally thousands of HR tech products on the market today, and new vendors are continually emerging. With so many options available, how should HR leaders effectively evaluate vendors? Who should be involved? What questions should be asked? What red flags and best practices should HR decision-makers be aware of?
These are important questions that countless HR leaders grapple with. In fact, Gartner research indicates that:
- HR leaders selected HR technology as the No. 1 area of investment in 2023.
- More than 95 percent of HR leaders planned to increase or maintain their HR technology budgets in 2023.
- 63 percent of HR leaders in 2023 reported “high regret” with their HR technology purchases.
“Most HR professionals have used different technology platforms, and many times, we pick our favorites based on the system’s ease of use,” said Mary Ann Haskins, SHRM-SCP, senior HR consultant for Flex HR, an HR consulting, payroll and recruiting services firm based in Johns Creek, Ga. Good HR leaders, she said, “stay abreast of developments in technology through professional organizations’ trade shows, websites, newsletters and more.”
There are a number of considerations that must go into making a selection, Haskins said.
“We need to know that the systems we are using provide us with the needed compliance, reporting, self-service for employees, dashboards with analytics for management, integration with other financial and operational systems, and more at a fair price,” she said. HR leaders “have an obligation to wisely select the technology needed to do their jobs without overspending.”
The first step, though, is gaining clarity on needs and expected performance outcomes.
Critical First Steps
Andrea Couto is vice president of solutions engineering and sales readiness at Betterworks, a performance management solution company based in Menlo Park, Calif. “The first step in evaluating any HR technology involves pinpointing the most pressing issues it should address,” Couto said. “Review your three- to five-year transformation timelines and HR transformation goals. Also, consider which initiatives and processes could most benefit and be improved by the technology you’re seeking.” Doing this, she said, will allow you to enter the evaluation process “with a clearer picture of what will help move your specific objectives forward.”
Next, it’s important to ensure your vision aligns with the organization’s—and with key organizational leaders and stakeholders.
Bringing IT—and Others—into the Loop
It’s important, according to Gartner researchers, for HR leaders to partner with IT leaders when considering HR technology adoption. “HR leaders have a big opportunity to engage and collaborate with IT leaders by incorporating HR business capability modeling as part of their technology strategy creation,” the researchers said.
“The head of HR should lead the selection team when evaluating HR technology, and HR should be in regular communication with all departments during the evaluation and implementation phases,” Haskins said.
She points to IT and finance as two important partners in the evaluation process.
“Whatever HR system is selected must run on your company’s computer equipment and will likely be integrated through file transfers or other means with the financial software,” she said. However, she cautioned, “do not let IT and finance dictate what HR technology is needed—HR needs to select what is best for the department and the employees’ needs.”
In truth, though, HR technology belongs to the organization at large, so widespread input is important, Couto said.
“A design thinking approach is essential for decision-makers to capture and prioritize the requirements of end users, which in some cases go beyond HR to managers and employees themselves,” she said. “Gathering perspectives across the organization this way ensures that the solution you choose will both meet your specific business needs and successfully be adopted across your company.”
External input—especially from prior users and current customers of the technology you’re considering—also provides critical insights.
Conducting Due Diligence
“Many websites provide side-by-side comparisons of platforms’ features, which is helpful,” Haskins said. “I also recommend requesting a demo of a new or updated system. Many times, the current vendor will update their system to match what the competition offers.”
Haskins recommended finding someone who is currently using the technology you’re considering and who will speak to you honestly about their experiences. Ask questions like:
- How is their customer service responsiveness?
- What problems has your company had with the vendor?
- Were the problems resolved in a satisfactory way?
- Are there unexpected charges for doing business with this vendor, such as added costs to create custom reports?
- Is the price fixed based on headcount at the start of the year, or does it fluctuate based on certain factors throughout the year?
- If headcount significantly increases or decreases, is there a minimum charge or maximum charge?
- Will the vendor train the end-users or provide a train-the-trainer class?
In addition, Couto recommended: “Before adopting new HR technology, ask to see past releases and a product road map. With this information, you can assess both how innovative a vendor’s road map is as well as gain an understanding of the timing of new releases and updates. If the innovation frequency does not fit your needs, this can be known before deployment begins.”
Look for a partner who not only provides a solution but also serves as a trusted advisor, possessing deep expertise in the space, said Vicki Marsh, senior vice president of global client success at Equus Software, a global mobility technology company based in Denver.
In addition, she said, “consider vendors who actively collaborate with other platforms, enabling seamless integration within your existing ecosystem.”
During the vetting process, it’s important to be on top of known red flags such as poor response times or unclear pricing structures, Marsh cautioned. “Look for over-optimistic implementation timelines and cool functionality that looks great but can’t be demoed—as it likely hasn’t actually been released yet,” she said.
Iliya Rybchin, partner at Elixirr, a management consulting firm based in London, offered what may seem like contrary advice, but which can yield critical insights: Ask about the company’s failures.
“These implementations have high failure rates, and a vendor who says they don’t have failures is simply lying, and this is a massive red flag,” he said. “A vendor should feel confident in their capabilities to discuss failures and be open about what they learned and how they will mitigate in your organization.”
And, of course, don’t skimp on seeking input and advice from HR colleagues in other companies that have used or considered using the technology you’re evaluating.
HR’s responsibilities don’t end once a decision has been made and a system is in place, Haskins pointed out. It’s important to stay up-to-date on the system through ongoing training and customer events offered by the vendor.
She said to be sure “to take advantage of new features when they are rolled out, to learn tips and best practices from other users, and to submit suggestions to your vendor on ways to make the product better.”
Users must also be trained and provided with resources like reference guides for infrequently used features, Haskins said.
Finally, she recommended, “unless you are certain that the current vendor has serious shortcomings and cannot meet your needs, be honest with your vendor and negotiate upgrades and pricing.” That may allow you to improve the technology without a full-blown, costly and time-consuming replacement, she said.
Ultimately, the vendor selection process should be an inclusive and collaborative process.
HR should take the lead and be the final decision-maker, but “when evaluating HR technology, it is best practice to take a collaborative and strategic approach,” Couto said. “Having leaders across your organization aligned on priorities when it comes to assessing the technology and knowing what your goals are going into conversations with vendors will help to more effectively assess solutions based on your organization’s needs.”
Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.