This HR system, HRIS or HRMS selection advice is based directly on my more than fifteen years of experience as a Human Resources software value added reseller. Between me and others who work for my firm, we have sold, implemented and supported hundreds of HR software application installs. Over those years, I have seen people do a great job of selecting an HRIS application and I have seen the result when a poor decision is made. If you follow the steps I laid out, I won’t guarantee a successful HRIS, HRMS or HR system purchase decision, of course, but I assure you it will help tremendously. At the very least, you now have a game plan.

For many of the steps associated with the process of selecting an HRIS application, I directly suggest using CompareHRIS.com for assistance. We created the web site with these ten steps in mind. Most of the functionality of our site won’t be found anywhere else. That, of course, is why we created CompareHRIS.com in the first place.

The Ten Steps to making a wise HRIS, HRMS or HR Software purchasing Decision

1. Improve your HR Software IQ

Before you are able to determine what your needs are for an HR system, you need to know what type of capabilities HR software, HRIS or HRMS applications provide. Allow me to save you a great deal of time with this step. Go to our HRIS Selector Tool and run through the questions. These questions are based on perhaps the most comprehensive list of options and features available for today’s HRIS applications. Under many of the questions we have included subsets of questions, as well. So make sure to look at all when doing your research. We initially created a comprehensive list for HRIS options and features based on what prospects indicated to us were most important to fill their HR system needs. After adding the numerous HR software vendors to our site, we asked those HRIS vendors to review our questions and add additional questions related to features and options that were unique to their HR systems. Run through the survey and I assure you that you will be far more knowledgeable about the options available than you are now. If you want to see a short list of features and options that are available, access our products page and you will see a list of core features we have identified by which users may filter HR products. Below, we provide additional basic detail on the HRIS options that are available and what system capabilities they typically contain.

2. Define your HR software needs

Anything you read on selecting any software application including human resource software, HRIS, or HRMS applications is going to tell you to define your needs first; but I am going to define what this means and why it is important. You need to be highly detailed with defining your needs. The more detail you put into what I consider the most important step of the process of selecting an HR software application, the more likely you will make the right decision in the end.

For example, a typical company might determine their needs for an HR software application to include the following:

• Windows based

• Integrated Payroll

• Training Management

• Turnover Reports

• ESS

• Salary Grades

• Job and Pay History

• Attendance and Accrual tracking

• Report Writing

• Ease of use

This is a start but not nearly enough detail. According to my research, there are over 60 companies offering HRIS software vendors in North America. If you take this list to all of those HR software vendors, more than half are going to meet your HR software "needs." If you remove payroll from the list above, almost all of these vendors will meet your needs. Your short HR software needs list has not narrowed down your search much, that’s for sure.

When I undertook the task of creating CompareHRIS.com, I believed I had a firm grasp on the overall capabilities of HRIS applications. After 15 years of experience in the HR Software industry, I was even surprised at how similar the various systems were at first glance. This was actually a huge issue as we were creating our site. At first, we were not detailed enough with our HRIS Selection tool or our core product page filters to show the differences between the various HR systems. The result was that all, or most, of the HR software applications showed the same capabilities. Our comparison screens showed far more checks than N/A’s. A web site for HR systems that says all the HR systems on the market do the same thing is not going to provide any benefit to HR vendors or to HR professionals seeking an HR software application. We had to offer more detail to differentiate the various HRIS applications. You will have to do the same.

In order to resolve the issue, we asked our participating HR Software, HRIS, or HRMS vendors to assist us with showing the unique features of their systems. On our products page, we expanded our core feature list and on our compare pages, added the term third party for those vendors who did not meet a certain feature with their core product. For the HRIS selection tool, we asked participating vendors for questions and categories that would show the unique capabilities of their systems. After all of these efforts, we were able to provide a free service to HR professionals that showcased the unique capabilities of each participating vendor and provided HR professionals with an application that assisted with their HR software selection needs.

If you want to create a more detailed HR software needs assessment, ask questions on each of the above items to determine the detail you need from a Human Resources application. Also, make sure to ask others who will be using the application. If you involve your training, payroll, or risk management departments, you will likely find they may have specific needs to assist you with this task. Make sure to ask those who will be approving the purchase if there are features and options of an HRIS application that could benefit them in their jobs. Ask, as well, what business objectives with which they are looking HR to assist. This will become important later when you ask for the approval. The more people you involve with your HR software needs analysis and selection process, the more likely you will be to find a system that meets the entire organization’s needs.

An example of a better needs assessment might include the following:

• Windows based

o Does application need to be SQL?

o Is HR Application Vista compliant and will it work with our current network applications?

o Do you need a hosted solution or will you purchase and install on your existing network?

• Integrated Payroll

o Do you have any special payroll requirements?

o Do you need to import time records from a current time collection system or do you want to select a time system that integrates to the new payroll application?

o Will you need to export payroll data to a GL application?

o How will you want to handle tax filing requirements?

o Do you have any difficult to handle garnishment or levy issues and does that vendor handle these items?

• Training Management

o Do I need to simply track training as to when an employee took a class and perhaps when they have to get retrained or do I need to track CEU’s and credits for those needing a certain number to meet the requirements for a certification?

• Turnover Reports

o Are these reports standard or do they have to be custom written and how easy or hard and comprehensive is the process.

• Job and Pay History

o How much detail do you need to track?

o Are you looking for unlimited history?

o How will you report on this information?

• Attendance and Accrual tracking

o How will this data be input?

o Will system work with our attendance plans?

• Report Writing

o Exactly what type of reports do you need?

o Create a list

• Ease of use

o Setup time and Support

If you find an HR product that answers all of the example HR software needs presented above, you will have made a better informed decision than if you simply went with the original list of needs. Again, our HRIS Selector Tool can be enormously beneficial at this stage because you see a comprehensive list of available HR software features from which you can determine most closely meet your needs. Once you complete the questions, you will be presented with a ranked list of the products meeting your needs.

As a final note on determining your needs, allow me to suggest adding to your needs list interfaces or integration you may want for tying your existing systems to your new HR software application. Let’s say, for example, you are looking for an integrated HR Payroll software application. If that’s the case, you may want to transfer data from the payroll system to your GL application or you may want to import time records from a time collection system. If you are going to tie your HR software application to an existing payroll application, add at least an interface to your needs list between the two systems. You will also want some capability for populating your data base from whatever source you can provide for the data. The alternative is manual entry.

I hope that the amount of detail I provided on the subject of establishing your HR software needs list, stresses how important this step is in the process. Whether you make a good decision or a poor one with selecting an HR application, that result will largely rest on how good a job you did with determining your needs.

3. Create a detailed HR Software requirements spreadsheet

Now that you have a highly detailed HRIS, HRMS or HR software needs list, the next thing to create is an Excel spreadsheet with these needs which you will use during your evaluation process. List the needs down the left side and across the top you will add the various vendors as you determine which you will look at. You might want to add rows for the price, purchase options, and implementation time lines and costs to further aid with keeping all the systems separate. As you evaluate each system, simply check off which meets each of your Human Resource software needs. At the end of the evaluation process you won’t have to struggle to remember which product did what. Again, take a look at our HRIS selection tool as a starting guide of the features and options that are available.

You may want to do as we have done on the product page comparisons and show which products meet a certain need using third party applications in addition to the core system. You may have to work with third parties to meet all your needs or you may select to work with only companies that provide your requirements with their base systems. The issue with meeting needs using third party applications is how tight the integration is between the systems. If the systems are not integrated, you may have to work with interfaces or double input data into each application. If a vendor offers a third party product to meet a need or requirement, make sure to ask how the two applications will speak to each other.

Here’s an HRIS Software Requirements Spreadsheet example:

Vendor A Vendor B

Integrated HR & Payroll Yes Third Party

Attendance Tracking Yes Yes

Training Management Yes No

Training requirements Yes No

Turnover Reports Yes Yes

Standard or Custom Standard Standard

Job and Pay history Unlimited Unlimited

Interfaces

To GL custom created Third Party

From Time Clock No Yes

Prices

Software

Annual Support

Implementation days

Implementation cost

Total Costs

Monthly Costs Option Cost

4. Determine your HR Software budget

Before you waste your time searching for an HRIS, HRMS or HR software application you need to determine how much you will be able to spend on a system. Over the years I have performed close to a thousand demos of HR software applications. Of those, maybe at most 30% ended up getting the approval for a system. The other 70% were often, and incorrectly, seen as a cost center by management unworthy of a large investment needed to make HR run smoother.

If you involve other departments such as risk management, training, and accounting in your HR selection process and list of needs, it may be possible that their budgets can add to the amount you will be able to spend for an HR software application. At the very least, involving other departments will showcase how an HRIS application will meet more organizational goals.

When you determine how much you will be able to spend, include a total as well as a monthly amount. Management may be more inclined to purchase an HR software application if the payment for such is not made all at the front end of the project. There are a number of HR software solutions that offer hosted options. You pay so much per month per employee and they host the application on the web. I have seen the prices from the $2 to $10 per employee per month and above. If hosting is not an option, you can always lease the software for up to five years. In this case, you spread the initial payment over that time frame and at the end of the lease term only owe on annual support.

5. Pick four or five HR Software vendors to review

Now that you have defined your needs, requirements, and budget, you are ready to select the short list of HRIS, HRMS or HR software vendors to evaluate. You only need to evaluate those products you have the budget for and that meet your needs and requirements. This is not an easy task. As I mentioned before, I have personally found there are over 60 companies HRIS software vendors just in North America. Now that’s just companies offering HRIS. If you want to add all HR software, outsourcing companies and companies offering add-ons, multiply the above number by 100. There are a few ways you could go about picking these companies. You can start the time consuming process of searching the web, ask fellow HR personnel, speak with fellow SHRM members, or post for recommendations on various HR message boards, forums, or blogs.

The Easy way

We have an easier way and it’s why we created CompareHRIS.com. We provide visitors with a free service for assisting with this exact process. You have two options with our site, go to either the Products Page and filter the various products we have listed by common features and options or access the HRIS selection tool and run through a detailed needs analysis to arrive at a short list of products to evaluate in additional detail.

6. Time to View HR Software Demos

You will want to setup either online or on-site demos with each HR software vendor you plan on evaluating. Have your needs spreadsheet in hand and score each product on how well they meet your needs. Each vendor is going to show you where they HR software is the strongest. Where their strengths lie may, or may not, match up to your needs. Make sure that in the demo you are seeing exactly the capabilities you need or require. You might want to create a brief set of questions for the vendor to provide answers to further assist you with completing your spreadsheet; since it is unlikely you will be able to cover all of the needs you have identified.

7. Research each HR Software company

At this point, you should have arrived at a shorter list of HRIS, HRMS or HR software applications meeting your needs and requirements. If you started out viewing four or five systems, you will likely have it narrowed down to two or three at this point. Price will certainly be a determining factor in your final decision but there are other questions you should ask before considering the price.

How long have they been in business?

How many installs do they have?

I have included the answer to both of these questions on our Products Page for each of our participating vendors. The answer to these questions goes a long way toward establishing how stable the vendor and the product are. I would never recommend purchasing any business software application from any organization with a small number of years in business and a small number of installs. You don’t know if that company will be in business a year from now or if they have actually had their product on the market long enough to have worked out the bugs. When you visit our Products Page, you will notice that we don’t offer any products that have been in business for less than ten years or have fewer than 300 active installs.

References

Ask around at your local SHRM chapter or via on-line forums, message boards or blogs if anyone is using the product and has an opinion? You can always ask the vendor for references but they will, of course, only be supplying you with customers who have agreed to speak with you and are pleased with the application. If you are going to seek references and plan to contact them, realize that the reference was hand picked.

8. HR software implementation expectations & Price

When you decide on an HRIS, HRMS or HR software application, you will want to know what it’s going to cost you. The cost for software and support are all going to be fixed costs. You will know exactly what you are paying and those amounts won’t change. The only variable cost associated with an HRIS system install is going to be the implementation costs. Some vendors may provide fixed cost project costing but even these projects can run over budget if the scope of the project was not fully defined. It is extremely important that you define the scope of the project in as much detail as possible.

9. Make your decision

At this point, you have become an expert in selecting an HRIS, HRMS or HR software application. You defined your needs, you selected the vendors meeting those needs and continued to shorten your list based on price, capabilities and company strength. Now it is time to make the final decision. Based on everything you have done up to this point, and added, with your handy spreadsheet this is the easy part.

Let me give you a tip. Those who don’t ask for HR Software discounts don’t get HR Software discounts.

10. Getting management approval for your HR Software

Just when you thought the whole process was over, the next step can be the toughest for many. I hope getting management approval ends up being your easy task. If it’s not, see if the advice below helps with the process.

Involving others in the process

I mentioned earlier that you should involve as many people as possible in the HRIS, HRMS or HR software selection process and needs assessment. When you go seeking approval, you can make a stronger case for an HRIS if it’s benefiting more than only the human resource department. A product that benefits two or three departments, and current employees, offers greater value than a system that only benefits an HR department that, sadly, by many companies is still seen as a cost department. If the application benefits the training department, risk management, accounting and HR departments and offers greater service to managers and employees, it has more benefit to the company on the whole. It may also be possible to have those other departments chip in budget dollars for the project.

Cost justifying

There are many articles on the web relating to cost justifying an HRIS, HRMS or HR software application. I have yet to find any that do a good job with the difficult process of cost justifying an HR application. There are certain HR options that are easier to cost justify than others. Online recruiting options, for example, may directly reduce the need to use outside recruiters or temp services. This product can offer a direct hard cost savings. Payroll is the same way. If you are paying X dollars for your existing payroll only, outsourced option and you bring it in for less and offer an HR application there is a direct savings that can be shown.

With an HR employee database, it is far more difficult to show hard cost savings. Yes, it will save HR tremendous amounts of time but does that savings of time equate to hard cost savings? Yes, an HR ESS product will provide greater service to managers and employees but again does it provide direct hard cost savings? It’s easy to understand the difficulty of creating an ROI statement for an HR application.

What is the value add or your HR Software?

Since we have shown it is difficult to show hard cost savings with the implementation of an HRIS application, it is important instead to focus on the value add of the application.

This approach requires your HR department to think about business objectives, issues and problems and show how an HR application will help the overall organization provide solutions to these objectives, issues and problems. How will an HR system assist the organization with doing a better job of reaching critical business objectives is the question that needs to be answered. The degree of success you have with this answer will likely determine your success or failure in gaining the approval you seek.