Buying HR Technology in 5 Steps

Tim Sackett, SHRM-SCP By Tim Sackett, SHRM-SCP October 17, 2022
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Editor's Note: Today we launch a new column: "Making HR Tech Easy." Work tech expert Tim Sackett, SHRM-SCP, will make complex HR technology understandable for all HR professionals, because having a high competency in HR technology is critical to moving your HR career forward.

If you are an HR or talent acquisition leader, the biggest budget purchase you'll ever make in your position will likely involve technology. What I find is that even though this will be one of the most important leadership decisions you'll ever make, most leaders really have no idea how to buy the technology that runs their business. By the way, almost no functional leader outside of IT knows how to buy technology, so we aren't alone!

Because we lack this knowledge, most of us will either let our IT department make this purchase for us (a super bad idea!) or pay a giant consulting firm a giant fee to help us make this decision (not as bad of an idea, but not great). Your IT department doesn't know HR, talent acquisition, benefits, wellness, employee services, etc. You do. That should be enough said about IT choosing your functional technology. The giant consulting firms are paid millions of dollars by certain vendors for "research." So, guess who they will recommend you buy?

Because I get to do a lot of demos and briefings (over a hundred every year), I like to think I have some insight into how to do this work. Wait, what the heck is a "briefing" with an HR technology company? Basically, a "briefing" is analyst-speak for speed dating with a tech vendor. In 30 minutes, they'll tell you why they're awesome, what they have built recently and what they plan on building in the future. Then I get to ask them what their favorite movie is, where they've traveled, etc. You know, all the normal dating questions. If they really know what they're doing, they'll bring Diet Mountain Dew to butter me up!

How Should You Buy HR Technology?

Step 1. Use your current software fully and figure out what it can't do that you desperately need it to do. I find almost no one does this first step. They just want something better even though, when asked, they struggle to verbalize what "better" is.

Step 2. Once you know what you need, you can figure out who the best players are in the market who do that thing. This takes some research and a heck of a lot of demos. For anything you need, figure that there will be at least 20 vendors selling that type of solution. Your company size will limit your selections, but at least five or six will always be in play. Think about enterprise-level human capital management alone: You have Workday, Oracle, SAP, Infor, Ceridian, ADP, UKG and I'm sure others that I've missed. This is one reason I go to big HR gatherings like the SHRM Annual Conference & Expo—I want to learn what's on the market.

Step 3. Depending on the size of your company, you'll have to file requests for proposals with the vendors you want to try out. For many small and midsize business buyers of point solutions, you'll just be on your own trying to find a partner. In this case, step 2 becomes super important for you because I find that most HR and talent acquisition shops buy what is "sold" to them, not what is available. It turns out HR tech companies are skilled at marketing and advertising to potential buyers. Those companies marketing to you might be the right choice if you're lucky, or it could be an awful choice. You need to know your options!

Step 4. Talk with users of the technology before you decide to buy it, including:

  • Users who are currently going through implementation with that specific technology.
  • Users who have been going through implementation for at least one year.
  • A user who has left that technology within the past year.

If the vendor doesn't give you these references, walk away! You need to know how much pain you'll be in and the realistic timing of implementation, you need to know what learnings others had during their ramp-up of the technology, and you need to know what could go very wrong as a worst-case scenario.

Step 5. Network in the community for other companies that use the same technology you want to buy, and find out what they are paying. I find tech vendors charge as much as they can, and some buyers are better at negotiating than you'll be. If you can come back with some hard numbers, the vendor will work with you. If you have no idea, you'll pay a much higher rate than another company using the exact same solution. Also, if the big giant consulting firm that you're paying six figures for can't give you these introductions, you're paying them too much! SHRMConnect is a great venue in which to post these questions!

There are obviously a bunch of steps within these steps, but this framework will give you a good start and make sure you don't make a bad purchase. Also, remember the old technology-buying saying that "no one ever got fired for buying IBM." That was said because, at the time, IBM was the gold standard and the most expensive. So, while you might be able to find a good technology cheaper, you also have more risk of it failing.

Tim Sackett, SHRM-SCP, is the CEO of HRUTech.com, the author of The Talent Fix (SHRM, 2018) and a popular speaker at HR conferences. You can read his daily newsletter at timsackett.com.

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