Outlining the key factors to consider when crafting a request for proposal to identify potential HR information system vendors.
Most organizations look to human resources information system (HRIS) software to help achieve greater efficiency − doing things right with the minimal amount of resources − in their people processes. In addition, these systems are also intended to be used as a platform to improve on the effectiveness (doing the right and required things) of both HR and the organization.
Management guru, Peter Drucker, was quoted as saying, "Nothing is quite so useless as doing with great efficiency what should not be done at all." So while your organization may be looking at new systems to help address the efficiency and effectiveness of your HR function and people processes, it is important to remember that technology alone is not the answer. Even though the implementation of HR technology has the potential to automate many of the manual HR processes that does not necessarily mean an organization will become more efficient or effective.
While achieving greater efficiency and effectiveness are important to most organizations, these factors alone are not sufficient to help guide decisions concerning the right HR vendor or vendors for your organization.
The typical request for proposal (RFP) and system selection process is sufficient for determining whether a vendor can check off all the boxes for the technical and functional requirements your organization needs, but that is only one small part of the decision-making process. But it's important to remember Peter Drucker's quote – just because a vendor can deliver all the functionality you need does not necessarily mean you need one vendor to meet all your needs.
In addition to the features and functionality requirements your organization may have, other factors are important as you consider multiple choices. These include vendor viability, technical fit, process and support, and cost. Just as important is vendor fit. What most organizations tend to miss in their selection criteria is the importance of finding a partner, not just a solution. This means assessing the vendor for cultural fit, its willingness to partner with you on finding solutions to your systems and even-people related problems. Does the vendor just provide technical consulting and support or does it also provide true subject matter consultants and advisors to help you get the most out of your investments?
Below are some of the basic criteria to consider:
- Product — general product capabilities
- Cost — initial and ongoing investments
- Services and support — implementation, professional services and ongoing support capabilities
- Viability — financial and organizational viability
- Vision — assessment of vendors' products as well as corporate and marketplace direction
- Compatibility — vendor as partner, cultural fit
Full-suite vs. Best of Breed
Ultimately, the HR applications an organization deploys, as well as the processes and workflows within those applications, should facilitate HR's ability to focus on the things that really matter and provide managers tools to make better people decisions.
Guidance and recommendations in the HR technology space on whether full-system integration and the use of a unified bundled solution is the better route to go have continuously changed in the last 15 years. In the 1990s it was all about best-of-breed on-premise solutions, then with the rise of software as a service (SaaS) and companies like Salesforce, which developed its flagship product as a cloud-based platform. We started to see a shift to vendors pushing HR toward full HR technology suites. The thought was that a unified system could help streamline processes, reduce errors, and increase productivity because of real-time visibility into all activities happening in their organization. While these are all great things to achieve, there are pros and cons to consider when choosing between a full HCM suite versus using multiple vendors who are best-of-breed.
For smaller companies, especially those new to using HR technology, an integrated suite might make sense. You have to walk before you can run and having everything under one roof is especially good for smaller organizations that are usually operating with a team of one. There are fewer systems to learn and troubleshoot. However, for mid-sized and larger organizations, having one provider may actually result in those organizations having to choose a system that meets most of their needs so they can have one integrated system. The problem is that while most vendors say they are fully integrated, few truly are. Behind the scenes there are commonly different databases connected to each other using different data structures.
Your team should consider the above factors as you craft your RFP.
Follow along to part two of this series which explores how to maximize the evaluation process once the RFP responses are in, through to the implementation phase.
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