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Human Resource Management Software Selection

Requirements Analysis

The project team needs to understand all the processes and requirements for the HR system. What does your organization need the application to do? What business processes are involved? What type of information does the system need to capture, manage, report and distribute? Business and software requirements can be categorized into six main areas: systems and technology, software functionality, data, reports, security and performance. The team should also ask the stakeholders what type of support they need. Is 24/7 coverage required or is business hours sufficient?

Requirements Prioritization

Although this activity could probably be included in the above topic, prioritization is singled out to give it special consideration. Not all business and software requirements have equal importance. There are some that are critical and should be identified as must-have capabilities. Others may not be show stoppers but need to be recognized and addressed. Then there are the nice to haves. HRMS solutions are powerful systems and many have all the bells and whistles that you may or may not need. However, sometimes, even with all the available functionality, some organizations have special needs such as localization or industry specific requirements that may go beyond the capabilities of many HR systems.

Enterprise software vendors tend to focus more heavily in certain areas, such as benefits administration or talent management, and less in other areas, such as payroll processing or employee self-service. So if the ability to calculate payroll taxes for multiple states or define complex garnishments is important to your company, you will need look at select payroll systems that meet those specific needs. No payroll or HR software vendor is equally versed in all HR and payroll areas so it's important to categorize and weight your requirements so that they can later be aligned with best fit business software solutions.

Software Delivery: On-Premise or On-Demand HR?

Should you install the human resources application in-house or host it at a data center? Should you go the route of a Software as a Service (SaaS) or cloud HR delivery? In comparing software delivery (on-premise or cloud), pricing (purchase or subscription) and system administration (in-house or outsourced) you'll need to understand your company's propensity to outsource, experience with cloud applications and availability of IT resources.

For on-premise HR applications, you need internal IT and support resources, including system administrators, database administrators (DBAs), network engineers and possibly software programmers. There are also some risks associated with on-premise implementations as well as much higher acquisition costs. However, the flexibility, total cost of ownership (TCO) and sense of true ownership may be what the organization prefers. SaaS or cloud HR systems reduce the acquisition costs, generally deploy more quickly, often offer better support for business agility and offload all or most of the IT support requirements, as well as related tasks such as information security, data redundancy, disaster recovery and business continuity. Some HR software vendors only offer on-premise systems, some only offer cloud systems and some offer both—although recognize that even those that support both delivery models don't support them both equally well. Therefore, it's important to determine your preferred HR software delivery model before you determine your vendor short list.

Identify Vendor Shortlist

Knowing what you want and how you want it will help you to weed through a very large number of HRMS vendors. In today’s enterprise software market, there are a variety of human resource software vendors that serve different industries, sectors, geographies and delivery models. There are many websites that list these vendors and do a fairly good job of identifying their key differentiators, although be aware that many times this information may be written by the vendor’s marketing department. The vendors’ website is a good place to start. Referrals and references from customers who are in your industry or like sized company are also good fodder for research. Social media offers another candid and generally independent source for identifying great HR vendors. Your goal is to filter from a universe of vendor candidates to a short list of three, or no more than four. If you find yourself considering a longer list, you probably haven't refined your requirements enough.

Establish Clear Selection Criteria

Many first-time HR software selection teams make the mistake of identifying vague objectives. To objectively determine the best HR software solution, your objectives should be prioritized and SMART (Specific, Measurable, Achievable, Realistic and Time-bound).

With SMART objectives, it's then much easier to create a meaningful RFP, effective demo scripts and compare specific feature set requirements against each HR vendor software solution.

Another common mistake is creating vague RFPs which consume a lot of time, but deliver no real value in the decision making process. RFPs are a very good idea, but if you're going to do one, do it right - by focusing on the software features truly important (rather than creating a voluminous RFP where much of the requests are not important) and by using the responses to stack rank the vendors. Also, for RFPs, make sure you communicate when the responses are due, in what manner the response should be submitted (email or hard copy), and who to submit it to. You may want to consider a vendor briefing so that vendors have a chance to ask questions and get clarifications.

If the HR software vendors were truthful in their RFP responses, you can work with each vendor in the demo to understand short comings and brainstorm workarounds or other alternatives. The key is to understand the shortcoming before you purchase the software, and certainly before you begin a software implementation. Uncovering the shortcoming during the software deployment will most certainly cause delay, shake user confidence and increase costs.

Apply this same specificty to HR software demonstrations. Don’t just settle for a slide show and generic HR demo. Provide a demo script which shows what's most important to you. Have your vendors demonstrate complete business processes and create real transactions. Select processes that may be unique to your company or that you may be automating for the first time.

Next: HRMS Vendors and Contract Negotiation >>

HRMS SelectionHRMS RequirementsHRMS Negotiation



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No payroll or HR software vendor is equally versed in all HR and payroll areas so it's important to categorize and weight your requirements so that they can later be aligned with best fit business software solutions.


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