If you have read any articles on selecting an HRIS, HRMS or HR software programs, they all say you first have to determine your needs. The phrase is used so often it's almost a cliché. I am not saying that people who say this are wrong; far from it. I am just amazed at how little depth is behind the words. Determining your needs for a human resource program is extremely important and it's no easy task. In order to find a system matching your needs, you need to be as detailed as possible with creating them. The better the job you do on this step of the process, the more successful you will be with your final decision.

Why is determining needs so important for HR Software?

In my research, there are over 60 US or Canada based companies that offer an HRIS, or HRMS software application. If we include human resource outsourcing and service bureau companies in this list, you might very well be talking about over two or three hundred companies. Your job with determining your needs, as I see it, is to narrow this list from several hundred companies to a handful and then, following your evaluations and research, find the system that offers the closest match to your needs, requirements and budget. When you look at "determining your needs" in this way, it sure sounds like more than a simple cliché.

As someone who has sold HR software for more than fifteen years, my first meeting with a prospect was to determine what their needs were for an HRIS application. Most had something written down but rarely provided enough detail. Following, is a typical needs list from one of my customers.

Looking for an In house or hosted HRIS application that meets the following needs:

1. Tie to our outsourced payroll application

2. Windows based

3. Easy to use

4. Salary History

5. Track dates for review, birthdays, and anniversaries

6. Salary Grade Analysis

7. Benefits information

8. Custom fields or custom screen options

9. Affirmative action tracking

10. Track training information

11. Employee Self Service Option

12. Easy to use report writing with the following standard reports:

• Turn over reports

• Birthday reports

• Anniversary Reports

• New Hire Reports

• EEO Reports

• OSHA compliance reports

Does this list look familiar? I am willing to bet that this list is very similar to your own. I'm going to let you in on a little industry secret. All of the vendors who have sold HR software systems have heard this exact list of needs hundreds, if not thousands, of times before. So it's not surprising that almost all of them offer these exact capabilities. Some meet each need easier or in greater detail but on the surface they meet all of these capabilities. Your list of sixty HRIS vendors is still pretty much at sixty vendors.

Going to an HR software vendor with the list above is sort of like going to a car dealership and saying you want a car with an engine, seats, four tires, and that runs on gas. They all do it.

So how do we narrow down the list?

Step One - Determine if you are looking for hosted HRIS solutions or in-house HRIS programs. Actually, under hosted HRIS there are really two options, subscription and hosted HRIS.

Subscription Service solutions (also referred to SaaS or PEPM) are sometimes referred to as multi-tenanted, as many companies share a system that has been configured for general use. The software and the data reside on servers in a secure facility, managed by the Vendor, where you access it from a Web browser. These solutions do not require IT support on your part. They usually require a set-up fee and you typically subscribe to this service on a month-to-month basis based on your employee population for a minimum term.

Licensed/Purchased solutions are sometimes referred to as In-House or On-Premise solutions. You pay a one-time license fee and your IT department installs and maintains the solution on your hardware using your network. Licensed software is configured to your particular needs. There are implementation fees to set up the software. Ongoing annual Support fees are a percentage of the original license cost.

Licensed/Hosted solutions are the same as Licensed/Purchased with the software being configured to your particular needs. The difference is, however, the Vendor hosts your software in its secure facility and provides the back office IT support. There are still implementation and Support fees. There is usually no minimum term as you own a license.

Step Two - How much money do you have to spend? HR systems vary widely in price. You need to determine how much budget money you have to spend before arriving at your short list of vendors to review. You will waste your time if you have People Soft needs on a Microsoft Excel budget.

Determining how much you can spend is, not surprisingly, a little tricky. With the hosted or subscription vendors you are going to spend less up front but so much per month or per payroll cycle. In this case, you would need to find out how much you can spend per month or year. With a licensed in house application, most of your investment will be up front but you will have annual support costs going forward. Even with licensed options, you can spread the payments over a period of time by leasing the software.

Step Three - Increase your HRIS or HRMS IQ. Before deciding exactly what capabilities you are looking for with an HR software application, it's obviously important to understand what your options are.