Guide to Choosing a New HCM System

February 28, 2022
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​There's no technology-buying decision more consequential for HR departments than choosing a new human capital management (HCM) platform. These digital systems of record are the nerve center for employee data and have evolved to play a far broader role in supporting HR and talent management strategies.

Modern HCM suites increasingly function as a hub connecting a core HR, benefits and payroll platform to a constellation of other apps and systems that can help human resources quickly adapt to changing business conditions.

Next-generation HCM platforms are designed as much for the employee experience as the HR administrator experience, featuring artificial intelligence-driven personalized journeys through technologies; chatbots that answer pressing HR-related queries; and self-service tools designed to speed customer service and relieve administrative burdens. 

Many newer HCM platforms also are equipped to manage the contingent workforce and feature a host of automated tools that can make it easier for HR to handle everything from regulatory compliance and document management to paid-time-off administration.

Finding the Right Vendor

HR professionals who are seeking a new HCM platform can choose from an ever-growing number of established and newer vendors. To aid in that buying decision, we've compiled a list of tips and recommendations from HR technology experts to help ensure you find the right provider for your needs.

Take the Reins During Product Demonstrations

Experts say it's essential for HR to take control when finalist vendors demonstrate their products. "If you let the vendor drive the demo, you'll only hear what they think is best about their systems versus those factors that meet your specific requirements," said Ron Hanscome, a research vice president for Gartner who specializes in the HCM application market. "Recognizing that there will be a certain amount of marketing from vendors and being able to cut through it is critical for HR."

Hanscome recommends asking HCM vendors to show how their platform manages six to 10 of your key use cases. For example, one use case might be the system's ability to handle a workforce management scenario where a retail worker, using his phone, is looking to swap work shifts with a colleague.

"You need to determine if a vendor has to stand their system on its head to address a specific use case or whether the solution was designed from the get-go to address that need," Hanscome said.

Focus on the Three I's: Industry, Integration and Intuitiveness

Rebecca Wettemann, principal at Valoir, a technology analyst firm in Arlington, Va., said buyers should focus on three key factors when evaluating HCM vendors. The first is identifying a provider with a history of serving your industry.

"Vendors with pre-built capabilities that reflect your industry will provide faster time to value, will be quicker to deploy and usually will be less expensive to support on an ongoing basis," Wettemann said. "They also tend to have industry best practices baked into their systems so you don't have to recreate the wheel."

The second criterion is how well the platform integrates with other workplace technologies. "Whether it's integrating with other HR systems or apps, with Slack, or with office applications, those connections are increasingly important to getting the most out of an HCM platform," she said.

The third factor is ensuring an HCM platform is intuitive to use, an important criterion given that many employees only use HR technologies infrequently.

"The average worker doesn't live inside HR software like they do Slack, Teams or even Excel," Wettemann said. "So you need to ensure the platform is as intuitive as possible so employees don't have to retrain themselves every time they go in to use it."

Assess Agility

HR technology analysts say choosing an HCM platform that's built for agility or "composability"—systems that feature an open architecture and are constructed to accommodate interchangeable building blocks or modules—is increasingly important given how often organizations must pivot to adapt to changing business conditions.

"HR technology needs to be more agile to support things like merger and acquisition or shifts in business strategy," Hanscome said. "That means an HCM suite should act more like a hub where you can plug and play additional capabilities and point solutions as the needs arise. That experience also should be harmonized so employees don't experience jarring changes in the user experience when moving from one point solution to another."

Determine How the System Manages Contingent Workers

Given that contingent workers are a growing part of the workforce, a modern HCM suite should be equipped to manage contract or gig workers—or be easily integrated with a vendor management system that can handle that task.

"In viewing HCM technology through the COVID-19 lens, the ability to manage a hybrid workforce comprising full-time, contingent, contract, field, in-office and remote workers is paramount," said Conner Forrest, a senior research analyst with S&P Global Market Intelligence's 451 Research, a technology advisory and research firm in New York City.

When asked in a 2021 survey by 451 Research what missing features they'd like to see added to the HR software their organization uses, 46 percent of respondents said workforce visibility was the No. 1 absent feature they sought. "A modern HCM system cannot be as narrowly focused as it might have been in the past when it comes to different employee populations," Forrest said.

Buy for the Future

Evaluate platforms based not only on your current technology needs but how those needs may change, experts say.

"You don't want to buy something that's a great fit for you now but that you will outgrow in the next three to five years," Hanscome said. "For example, you might be operating only in North America today but there's a strong probability you'll move into Europe or Asia Pacific in the next three years and perhaps double your employee size. That should factor into your technology-buying decision."

Don't Overlook Post-Sale Customer Support

Companies often make buying decisions based on a technology vendor's cutting-edge features and functions but stay committed to a provider beyond the first contract based on the quality of their customer service and technical support.

One way to evaluate how a vendor will support you after the sale is to check the online communities where clients interact with vendor product managers. These forums typically provide insight into client requests to enhance products and commentary about system functionality or customer service issues. 

"Ask vendors about how their customer communities work and how client feedback gets implemented," Hanscome said. "And when you ask for customer recommendations from a vendor, ask those customers how often they've seen their feedback incorporated into vendor products and how long it took."

Forrest said prospective vendors also should provide a detailed service level agreement that explains system uptime requirements and support availability.

"It's also worth understanding the technology the vendor has invested in on the service side in areas such as AI, machine learning and automated chat, as those tools can streamline support instances," he said.

Dave Zielinski is principal of Skiwood Communications, a business writing and editing company in Minneapolis.

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