HR Technology, Outsourcing Can Benefit Small Companies

By Art Brooks Dec 10, 2008

Many small businesses cannot add personnel at the times when they most need it, while their businesses are rapidly growing. However, with advancements in human resources management technology and sometimes by outsourcing some HR functions, growing companies have more options.

With many small companies having one person to perform all HR tasks—dealing with strategic issues, hiring, managing paperwork and filing employee benefits changes—many have found relief in using technology to help manage the details.

Software vendors have stepped up to the plate with solutions to help HR professionals do more with less—from transforming antiquated paper-laden files into streamlined systems to enabling employees to help themselves with self-service systems. Programs housed and maintained by an Application Service Provider (ASP) provide the benefits of advanced software systems through a conventional Internet connection, without requiring the technical hassle of managing programs on-site.

With the ability to halve the time required to execute many tedious tasks, software can be a great help to individuals tasked with HR.

Here are important considerations for small businesses to evaluate in selecting software to help manage HR.


With so many start-ups and entrepreneurial ventures, the question to ask is not always “what size is my company now?” but rather “where will it be in five years?” The largest provider might not necessarily be the best if your company gets lost in the shuffle. Yet a tiny provider might not have the capacity to meet the needs of companies with aggressive growth plans.

“Turnkey” From Onset

Many businesses opt for a new benefits tracking program during open enrollment. Why not choose a product that requires only that you start the program, with your data already entered? This is a big time savings.

Ownership of Data

Organizations with full ownership of their data should be able to transport it to any ASP. If the data resides on a carrier’s proprietary server, often it is not transportable without additional charges should you or your client decide to switch carriers.


Established ASPs should have daily backups, backup servers, added protective layers and other systems and procedures in place to safeguard information from being lost or accessed by unauthorized personnel.

You should have exclusive authority to decide who will be allowed access data, and to what degree. Any data that is transmitted to carriers from your system should be transferred within a secure encrypted session or be encrypted prior to being sent.

Users should be authenticated, and have the ability to navigate, within a secure SSL Session (128-bit encryption), the strongest available.

You should ask questions about the network configuration. A classic three-zone system with the web and report servers being in the "DMZ" (the zone that allows web access and therefore must have ports 80 and 443 open) and database server in the "Trusted Zone" (the zone that has all inbound ports blocked) is considered the most secure, for instance. The firewall ensures that these network rules are enforced and that malicious attempts to supersede these rules are foiled.

Flexibility and Scalability

Given that you might be importing data from multiple Excel spreadsheets, databases and paper documents, the provider you partner with should be flexible—able to interface with all kinds of systems and data. To ensure the most relevant experience, the software should accommodate company-specific eligibility rules, employee classifications and so on.


Given the time and cost-savings possibilities, wide access to computers at home and at work (70 percent of the population has home access) and employee satisfaction at gaining complete access to their benefits plans, enabling individuals to access and manage benefits directly online is a natural extension.

Employees should be able to breeze through adding and deleting dependents, updating demographic information, changing plans at open enrollment, viewing plan designs, linking directly with online provider directories for doctor lookup, comparing plans and employee contribution options, printing documents related to their records and the like.

Robustness of Eligibility Engine

A truly capable enrollment engine will evaluate each enrollment activity and apply any necessary combination of rules, messages, prompts and options designed to meet eligibility requirements.Effective date calculations, waiting periods, age ranges, volume limits, group number assignment and product availability must be configurable for each employer group and benefit offered. Furthermore, you should not have to modify your eligibility rules to accommodate a piece of software.

Current Functionality

With software applications, far too many promises are based on wishful thinking on the part of developers. It’s important to know what the program can deliver now—and in the future.


Reporting is essential in helping small and medium businesses to stay on top of the needs of the company. Software should offer multiple views, big picture assessment and the ability to drill down.

Linking with Carriers

Connectivity should be judged not only by the number of carriers with which the software has relationships and can connect , but also by the type of connection that it enables. HR managers should look for providers that offer clean, validated transfers (ensuring the eligibility of the transaction), customized to each carrier’s needs, to avoid issues.

Technical Considerations

Where did the provider’s program originate? Did software programmers develop it? Did it emerge from the insurance industry? Is it associated with one provider? Is it dependent on a particular operating platform? Will it be as effective in a LAN environment as in an enterprise system? If you change providers, will all of your data have to be re-entered? What is the background and experience level of the development team? Do they have state-of-the-art developers, programs, customer service representatives and relationships with a broad group of providers? These are important technical considerations your IT department will want to weigh.

Customer Service

Don’t underestimate the importance of great customer service. As you enter into a partnership with your ASP provider, you will want to know if you will be able to talk to a human quickly or become a prisoner in voice mail “jail.” As a general guideline, businesses should be able to expect a response to inquiries within 24 hours from a direct contact that can help.

Implementation Timeline

Depending on the company’s size, most ASPs should be able to implement their solutions in a matter of weeks. If you have stringent deadlines or extenuating circumstances, you should disclose that information to the provider early in the process. Communicate your expectations in writing so there are no misunderstandings.


Wide pricing variations can exist in the same service, so buyers beware. Some providers charge a licensing fee for use of the program or charge per enrolled employee. Ask about monthly, implementation, maintenance and ancillary fees to assess the full cost of the system.

Costs vs. Benefit

A slightly more expensive system might more than pay for the difference with features that enable employees to maintain their records and offer greater convenience, time savings and accuracy. It is a convenient solution in decentralized organizations where employees telecommute, work in the field or reside in other states.

The business of being in business has grown more complicated.Ensuring employee satisfaction through good hiring, compensation and benefits management can play a pivotal role. Small and medium-sized businesses looking to expand HR capabilities often can find help and expand on existing resources with HR technology.

Art Brooks is vice president of sales for BeneTrac, a Paychex company and provider of web-based electronic enrollment and employee benefits administration software.


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