Monday, August 1, 2016

3 Critical but Often Overlooked Factors in HR Technology Selection

In my recent white paper "Cracking the Rubik's Cube on HR Technology Selection" an effort was made to give various selection considerations the attention they deserve. Factors such as each vendor's product investment patterns, range of personalization capabilities in the solution, partner ecosystem dynamics and several others were explored, along with associated implications for end-customers.

The impetus for writing that paper was the recent Sierra Cedar finding that roughly 40% of organizations with deployed HR Technology are looking to make a vendor/solution change; and the distinct possibility that HR Tech selection practices -- like some HCM solutions themselves -- were in need of modernization.

For one thing, the era of SaaS or cloud-delivered HCM offerings has arguably made feature / functionality checklists less important, as more frequent product releases and updates are now the norm. Why should an organization select technology that will power their talent management agenda and HR operations for years to come based on a handful of functionality items that, if the vendor is generally responsive, might show up in the product before that customer goes "live" or shortly thereafter?

In the few weeks since writing the paper, other important but perhaps similarly overlooked selection decision factors have come to mind. Three such considerations that organizations should keep on their radar during an HR Tech evaluation process are:

(1) How does the vendor's sophisticated HCM functionality impact downstream systems within the organization: As HCM solution vendors endeavor to bring innovative and often impactful capabilities to market to help bolster their differentiation claims, buying organizations should be cognizant of the fact that sophisticated capabilities have to co-exist or inter-operate with the design and behavior of other enterprise systems. As one example, a leading HR Tech solution allows for matrix and even transitional reporting structures (e.g., an overlap in reporting managers due to an impending retirement) so all relevant managers can participate in reviews, approvals, etc. These useful capabilities will likely be marginalized or potentially cause serious operational problems if other systems within the organization (e.g., financial systems) cannot handle such organizational structure nuances. One could speculate that the solution vendor that introduced these innovative capabilities knew exactly what they were doing ... i.e., giving customers a reason to replace their existing financial system with that vendor's new, unified HCM/Financial platform.

(2) Be careful not to over-emphasize certain selection factors based on disappointments with a past HCM vendor: When customers have had a disappointing experience with any solution or services provider, it often relates to issues such as a lack of responsiveness, having negative surprises in total cost of ownership or other perceived instances of misrepresentation. These experiences or lessons learned should remain on the radar when choosing a replacement system, but they are rarely as important as whether capabilities exist in the prospective new technology that will predictably drive business value and competitive advantage for the end-customer. The prioritization task is as important as any in the HR Tech selection process. Weights must be assigned objectively and without being unduly influenced by bad experiences or emotionality. Also keep in mind that these type of concerns can be brought into the contracting phase's resulting service level agreement.

(3) Degree of organizational readiness relative to degree of system sophistication: As more industry studies highlight the critical role that change management plays in realizing HR Tech business cases and achieving ROI targets, organizational readiness is being considered more often. This is clearly a major step forward. To progress even further toward positive outcomes, however, customer organizations are well advised to systematically relate readiness (e.g., new competencies needed, other initiatives contending for the same resources, whether process optimization should be addressed first, more support needed for the "case for change", etc.) to the sophistication of the solutions under consideration. Greater sophistication in a solution is certainly not a bad thing, but it often elongates the implementation and adoption cycle. Another consideration, therefore, is to not just define and frame roll-out phases by solution module or region, but also (or alternatively) by groups of system functionality having different "readiness dependencies."

Steve Goldberg, HR Technology Industry Advisor

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