How to Evaluate Vendors

When do companies start to take initiatives in strategic HCM? That depends on their specific business goals and resident abilities to manage change. Some of the key features to look for when evaluating and selecting HCM software include:

• Customization: The way each business runs its human resources department is unique; therefore, the one-size-fits-all approach to Human Capital Management simply won’t work well. Be sure to choose an application that can be custom-tailored to your HR-specific workflows and procedures.
• Analytics: HCM is about much more than automating administrative procedures. At its core, it needs to take into consideration the trends and patterns that impact a workforce; then, it uses that insight to develop the most successful employee acquisition and retention strategies possible. Look for a solution that incorporates in-depth analytical capabilities, so critical metrics such as turnover rates and average length of service can be tracked, strengths and weaknesses in the employee base can be identified and corrected, and return on recruitment and retention dollars can be accurately assessed.
• Integration with third-party payroll systems: Today, many businesses outsource the management of payroll functions to third-party providers. If this is the case with your company, the HCM solution you choose must be able to seamlessly share data with the systems maintained by your payroll processing partner.²⁶

The steps and considerations organizations need to take in the evaluation and implementation processes are straightforward.²⁷

• Investigate your incumbent software supplier. Consolidation in the HCM space is likely to continue. See what functionality you have in existing software that can be leveraged as part of an HCM solution. If you are working with a software vendor that participates in the HCM space (but not for HCM), see what an incremental investment might deliver in terms of value for an HCM initiative.
• Focus first on the processes, not the providers. Prioritize what can be done today, and make sure you understand how you need HCM to work before trying to automate. Look at enterprise processes, what needs to change, and why change is needed. You can’t do all of the HCM initiative at once.
• Establish personnel competencies at the core of the HCM initiative. Competencies are the backbone of sophisticated strategic HCM, but often they are one of the last things companies consider. For enterprises coming to HCM with a blank slate, starting with competencies makes sense because they can inform every other HCM business process undertaken.
• Don’t expect hard ROI or an ironclad business case for strategic HCM. It may be difficult, but if you’re driving an HCM initiative, try to gain C-level attention for investments in strategic HCM as a competitive differentiator and cultural imperative to help move it to a place of priority and get cross-functional cooperation.
• Drive strategic HCM from the bottom up. If C-level attention is proving difficult to attain, try to get help from everybody else. Younger generations of workers are going to be much more demanding in the workplace, and that includes wanting systems that provide visibility into career development options, either with your company or somewhere else.
• SaaS isn’t everything, but sometimes it may be the only thing. Many of the best-of-breed vendors in strategic HCM have come to the market since the advent of the Internet and believe the future of IT delivery is software as a service (SaaS). Many companies choose providers in some measure because of delivery model flexibility. Some that have been “forced” to choose SaaS because it was the only option for the most sophisticated functionality have voiced frustration over the configuration-versus-customization options during deployment.²⁸
• See in-depth demonstrations to ensure that functionality will work as expected. Give vendors scenarios of how your processes will work in the system, and ask to see them. If they don’t work, or the vendors promise that your processes will be entered onto the development wish list, keep looking or be prepared to compromise.
• Commit to core HR integration as a key enabler of success. Implementations can be hindered by poor core personnel information. They can be scattered in different systems and formats, inconsistent, or simply not exist. Trying to clean up these problems is a huge undertaking that is typically not factored into the strategic HCM implementation and can set things back considerably. Of note, enterprises that have strategic HCM from a solution provider that also provided core HR have noted integration as a benefit during reviews of their vendors. This is another indicator that core HR and strategic HCM will ultimately be delivered as a single system.
• ERP can do HCM, but can you do HCM in ERP? With huge investments made in ERP systems, everyone wants to know if strategic HCM can be done in these suites. While much functionality exists, the usability and lack of componentization in these traditionally transactional systems can make it challenging to execute and interrelate processes. Today’s best of breeds have the benefit of being able to take advantage of newer technologies to make it easier to visualize information and workflows, but ERP is working hard to catch up.²⁹

Apply these steps and considerations with the standard practices used in any software purchase evaluation process: define the objective of your selection process, form a selection committee for carrying out the evaluation process, develop pre-evaluation criteria to permit the evaluation of available packages on the same parameters, shortlist to four or five vendors or packages, do extensive research on the shortlisted concerns, formulate the final selection criteria, evaluate based on selection criteria and product demonstrations, and check for successful HCM implementations by the vendor. Throughout the selection process, conclude each step with the consensus of all members of the selection committee, including end-users, to gather enterprise-wide acceptance for the HCM package.