6 Mistakes HR Leaders Make When Buying Software

The marketplace for HR software is more than $14 billion, which means you have more choice than ever. But choice presents challenges in determining the best option for your company.

The mandate to select new HR software may come from leadership or observed inefficiencies in the HR team’s workflow. Either way, the choice can be costly and waste valuable resources if not done well.

I have been working with companies in the HCM space to evaluate, choose and implement enterprise applications for over 20 years.

With all of the changes in technology, it is surprising that the mistakes I see HR buyers make have not evolved over this time.

Here are the top six mistakes that I feel have adverse impact on evaluations.

1. Not Setting the Objectives of the Solution First

I cannot tell you how many times I have had the following conversation with an HR leader:

Everything from the vendors you evaluate, to the criteria for selection, should be centered around supporting the core objectives or business case for making the change or addition. 

If the objectives are not the guiding principle for every step of the evaluation, there is a high probability of selecting the wrong solution and not ever getting the project approved.

2. Not Getting Pre-Approval For the Project Objective

Getting the right buy-in is especially critical in the HCM space. Like it or not, many operations executives view HR solutions as cost centers — time and money wasters. It is key to get executive support for transformation prior to engaging vendors. This goes beyond budget.

True buy-in is identifying a set of current problems in the business, that if rectified, would have a salient and positive effect on something that the executive team can get behind. Classically, these are profits, market share, or cost reduction.  

In the HCM space,  employee surveys can help add a quantifiable measure (even if a bit squishy). In today’s market, if a company doing the traditional annual performance reviews surveys its knowledge workers, it will find quite low approval ratings for the current process — as low as 20%. 

Companies with newer, more continuous processes can experience approval ratings from employees well over 80%.  These numbers can be translated for executive teams pretty easily into attrition, goal attainment, and productivity which drive profitability and market share.

[bctt tweet=”In the HCM space,  employee surveys can help add a quantifiable measure.” username=”@reflektive”]

3. Blending Democracy With Software Selection

Although it is important to get buy-in from teams on the chosen vendor — a vote will never support the first tenet of software buying, which is having clear objectives for the solution. Pure consensus almost always invites politics and turns the decision into a subjective process, regardless of the vendor’s ability to meet the business objectives.

The best approach I have seen? Companies that assemble a small group of HR, business, and IT members who agree on criteria and a process for the selection.

Pick a quick, short list of vendors who proclaim to meet your business objectives and provide them with a script of what you want to see from them. The script is key. Without a script, vendors will show you what they want to show you without a tie to the business objective. This can create great difficulty comparing offerings from disparate systems.

Once this small group makes the decision, it is important to socialize it with influencers in the business to ensure a smooth rollout. Consensus decisions typically result in extremely long drawn out processes that can lead to the wrong results. Don’t make this mistake!

4. Hiding the Evaluation From IT

Here’s the deal. HR has a tendency to try to “go-it-alone” on what they deem as departmental purchases. I have seen extreme examples where there is an active effort to hide the evaluation from IT.

The truth is, most of these processes end up going nowhere. When a project goes from evaluation to procurement, there will almost always be steps that include IT. These range from technology stack specifications to security.

When IT gets brought in late, they come in with a bad attitude. You will get responses like, “We can do that in the core HR system” or “We have already licensed an application that does this” — which can end up blocking your project. Regardless of the truth of statements like this, it almost always throws the evaluation back to the beginning where HR is forced to evaluate existing systems.

[bctt tweet=”When IT gets brought in late, they come in with a bad attitude.” username=”@reflektive”]

If you have clear objectives for the project (#1 above) that existing systems are not accomplishing, this can be a very easy conversation and IT can be helpful in weeding through vendors that will best achieve the objectives.

Net net: Rely on — don’t avoid — your IT experts.

5. Creating a “Frankenware” RFP

Looking at RFPs as a vendor can be humorous. There are times when it is obvious that the selection team surveyed a market of 10 vendors and picked the best features from each one. The resulting RFP is a Frankenstein version of the market that no vendor supports.

The result is typically a very polarized selection team around the features that either resonated with them, or that best fit their day-to-day activities, with little focus on the overarching objectives of the project.

There will always be some of this in every evaluation. Almost all of these pitfalls can be avoided by a stringent focus on prioritized objectives for the project. Then, simply put the vendors through paces that exhibit their value to this objective.

6. Secretive vs. Collaborative Relationships With Vendors

There is a wide spectrum of evaluation styles of vendors, from militaristically closed and secretive, to outright collaboration.

Once you narrow down to a short list of two or three vendors who appear to be able to help you meet your business objectives, I would argue that collaborative is better than secretive.

Let’s say you have three vendors do a scripted demonstration focused on the things that get you to your objective. You have your team keep a scorecard on those things that are important to you. There are a couple ways this can play out.

A secretive evaluation style would be pushing the vendors through a closed bid process without letting them know how you viewed their solution. A collaborative evaluation style would be sharing the scorecard with vendors to ensure that you got it right.

Over the years I have seen many examples when we did not communicate well or skipped something that we actually do very well when key information was not shared. If the ultimate goal is to get the best solution for your business for the best price, then start with an accurate assessment. Follow that by sharing guidance on things such as pricing.

No one is served well by a closed bid process – the vendor that is most desperate or the lowest-end vendor will always be lowest price. Is this the partner you ultimately want?

[bctt tweet=”No one is served well by a closed bid process.” username=”@reflektive”]

Summary

If a solution evaluation is focused around the “What” – what we are trying to accomplish rather than the “How” – how does the solution get there, it is much easier to weed through vendor messaging and demonstrations. Applying how well the “How” a vendor  shows you will aid your organization in achieving the objective.

Decision by committee and subjective insights don’t do this. Only a structured evaluation with prioritized criteria — all of which support one or more key, approved objectives for the project — will result reliably with the right decision.

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