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How to buy HR software

Like any other element of your business, HR is getting more and more automated. It may be lagging behind Finance, Payroll, and Sales & Marketing but HR is definitely on the software bandwagon. In fact, it has been for some years and given the huge number of packages on the market – offering anything from gamified recruitment via social media, to sophisticated talent management, to just straightforward staff databases – finding the right one can be a bit of a nightmare.

The following checklist is an attempt at an overall roadmap for the process of finding the right software for your business. Yes, almost certainly every one of the checklist items indicates a fair bit of work and/or a number of ‘sub-items’ but as an overview, what follows is fairly comprehensive and works especially well for more complicated systems such as a full-blown HRMS (human resources management system)

Specific requirements

  • Consider your business goals for the next 5 years.
  • What do you need in terms of HR capabilities to support those goals?
  • List the software features that will provide that support; decide which are ‘essential’ and which are ‘desirable’.
  • Think about how you’ll demonstrate a return on the investment, including deciding on KPIs, measures and other metrics.

Stakeholders

  • Categorise your stakeholders according to the influence and/or interest they have in your new HR software.
  • Invite key stakeholders to help in selecting the new system.

Software vendors

  • Put together a request for proposal (RFP); a document with a detailed summary of your HR software requirements that is sent to software vendors and resellers, inviting them to pitch their wares.
  • Ask your business network for any vendor or system recommendations.
  • Check specialist content (analyst reports, reviews, articles with objective advice, comparisons of the latest systems) and pick out the vendors who appear to be selling what you want.

Demos & looking at systems

  • Yes, you’re looking for something that fits your requirements but also ask about important side issues, such as:
    • Data security provisions and disaster recovery arrangements.
    • An SSAE 16 audit certification or similar that endorses the vendor’s internal systems and controls?
    • Likely speed on installation/implementation.
    • Pricing model – is the software licensed or pay as you go? What are the maintenance and updating costs? What about ‘hidden’ costs, such as:
      • System installation
      • System upgrade - regular costs of staying up to date
      • Direct labour costs – cost of staff necessary to support the system
      • Outsourcing costs – costs of any outsourced services
      • Direct non-labour costs – cost of any consultants, vendor fees and facilities, or any related corporate overheads
  • Think about putting together your own demo script (scenarios that you can put to all shortlisted vendors and their system, allowing you to compare how they handle the same task or tasks.
  • How stable is the vendor’s business, including years in business, number of clients, and references or testimonials from client businesses similar to yours?

Choosing your software

Finally, having chosen your software…

  • Follow up references and testimonials. Ask referees how smooth the implementation process was, how the vendor reacted to problems, how the software is performing once installed, and how did they measure the return on their investment (and did they get it)?
  • Check over the contract, or better yet, have a lawyer do it.
  • Before you sign, think about what you might be needing, HR software-wise, in five years’ time. Will your chosen software and/or vendor still be able to meet your needs?
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