When It Makes Sense to Augment HCM Suites with Best-of-Breed Systems

When HR and information technology leaders at energy company Marathon Petroleum decided to invest in a new core HR technology platform, they were quick to determine that an all-inclusive human capital management (HCM) suite would meet many but not all of their most pressing needs.

An evaluation of top suites revealed that, while these multipurpose platforms could support a variety of HR functions—including payroll, benefits, and recruiting—they couldn’t adequately address the unique needs of Marathon Petroleum’s large hourly workforce.

“We recognized the complexity we were facing in the hourly space wasn’t going to be addressed in the core HCM platform we would choose,” said Jean Pal-Freeman, senior director and IT business partner with corporate services at Marathon Petroleum, which is based in Findlay, Ohio. “We needed to be able to address complex union bargaining rules in combination with evolving pay policies and more efficient time capture for our hourly population.”

Rather than simply accepting the workforce management functionality that comes packaged in an all-in-one software suite from a single HR technology vendor, Pal-Freeman and her team sought out a best-of-breed provider to augment the suite they would eventually purchase with more sophisticated capabilities. They partnered with Workforce Software, a Livonia, Mich.-based workforce management system expressly designed to address the unique pay rules, regulatory requirements, and employee scheduling needs of a variety of organizations.

The decision by Marathon Petroleum to augment an HR suite with a best-of-breed technology ran counter to a trend. Many HR functions continue to purchase one-stop-shopping HCM technology suites for a handful of reasons. The ability to consolidate all HR systems on a single platform from just one vendor creates a consistent user experience and improved data flow between disparate systems. There’s the additional advantage of having only one vendor relationship to manage.

Rather than adding new technology platforms, many HR leaders also are working with their IT partners to address growing “app sprawl” in the organization by consolidating systems, with the goal of reducing redundancies and cutting costs.

But some companies, including Marathon Petroleum, continue to see value in selectively augmenting suites with best-of-breed systems. Experts say making that decision goes beyond merely considering additional software costs or complexities that may arise from integrating a new standalone system with an existing suite.

Innovative Solutions

Evelyn McMullen, a research manager specializing in HCM technologies with Miami-based Nucleus Research, said that while there can be a higher total cost of operation (TCO) associated with best-of-breed deployments, HR can benefit from the fact that those specialized vendors often dedicate more research and development dollars to product innovation in their respective niches. That translates to HR having access to more modern, innovative, and feature-rich solutions.

“Meanwhile, full-suite providers must spread their investments over multiple modules,” McMullen said. “When baseline suite functionality isn’t meeting complex requirements across such areas as workforce management, recruiting, or learning and development, implementing a standalone solution could deliver a range of benefits that justify its additional costs.”

For example, McMullen said retailers may need more advanced labor demand forecasting capabilities than are offered by their HCM suite provider, validating investment in a niche solution.

“Even if the upfront cost of bringing on a best-of-breed solution in that scenario is higher, organizations should consider the true cost of not bringing on that solution, whether that be costs to configure the existing suite solution or low adoption of suite features that requires creating manual workarounds,” McMullen said.

Considering Additional Criteria

Deciding to augment a suite with a best-of-breed solution also requires consideration of internal IT capacities, McMullen said.

“The IT group will need to help implement, integrate, and manage deployment of that system on an ongoing basis,” she said.

Rebecca Wettemann, CEO and principal analyst of Valoir, a HR technology analyst firm in Arlington, Va., said HR and IT leaders also need to weigh additional criteria beyond software costs when deciding whether to supplement a HCM suite with a best-of-breed system.

“When your existing HCM suite does have some of the capabilities you need, the incremental benefits of adding a best-of-breed application need to outweigh the additional software licensing costs as well as the cost of employee time to learn another application,” Wettemann said. “The benefits also need to outweigh the IT effort and resources to integrate, deploy, and support the new best-of-breed system.”

Wettemann points to people analytics as one area where investing in best-of-breed solutions increasingly makes sense for many organizations.

“Even though many HCM suites have analytics capabilities, the additional investment can be worth it if best-of-breed applications deliver greater or more timely insights that enable HR to increase employee retention or reduce costs,” Wettemann said.

HR leaders also should consider stand-alone solutions in emerging technology areas where core HCM capabilities are limited or nonexistent, she believes. “Technology-enabled coaching is one example,” Wettemann said.

Addressing the Integration Challenge

Although software licensing costs or employee training needs can be barriers to adding a best-of-breed system to an HCM suite, experts say the biggest obstacle remains the oldest one: system integration.

“The challenge with adding best-of-breed applications is additional friction,” Wettemann said. “That’s either for users who now have to swivel between different apps or for IT that has to ensure data can flow between the new and the existing suite applications.”

Creating seamless integration between disparate technologies has taken on new importance today, Wettemann said, given the growing need for real-time data analysis and decision-making.

“Although advances in application programming interfaces (APIs) as well as increases in computing power have made that less of an issue than it used to be, it’s still a consideration when data in different systems needs to be integrated for real- or near-real-time analysis,” Wettemann said.

Pal-Freeman of Marathon Petroleum said effective integration was a concern when her organization decided to augment its core HCM platform with a stand-alone workforce management system.

“There is still some complexity in making sure the data flows seamlessly between the best-of-breed system and our core HCM system,” Pal-Freeman said. “It’s been a challenge, but there are changes coming that will enable us to improve integration through improved APIs and other capabilities.”

McMullen said that even in light of advances in tools like APIs, organizations need to carefully think through integration issues before investing in best-of-breed systems.

“Integration remains a challenge even though vendors have worked to address those issues through increased partnerships and additions to things like app marketplaces,” McMullen said. “Lasting apprehension from past experiences with poorly connected technology infrastructures will make the ability of vendors to demonstrate ease of integration even more pressing.”

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