HR Software Selection: How to Select HR Software For Your Company

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When it’s time to shop for and select HR software solutions, hang on to your hat.  The sheer number of options in the HR software market is mind-boggling.  There’s HRIS, HRMS, HCM, and then some that vendors simply tout as “HR software”.  How refreshingly quaint.  Yet it doesn’t help much if you’re trying to weed out unacceptable systems.  But, with some careful analysis of what your enterprise actually needs to be able to do and how you prefer to do it, the HR software selection (or rather, elimination) process becomes much simpler.

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The General Functionality of the HR Software

First, consider what genre of HR software solutions is designed with the same perspective your HR department operates.  For example, do you need software that provides functionality in:

• Payroll management and benefit administration
• Recruiting new employees
• Performance management and employee training
• Employee self-service
Talent management
Workforce management (such as scheduling, time tracking and attendance, etc.)

There are software packages that offer features in more than one of these areas.  There are even HR software solutions that provide some functionality in all of these areas.  But you need to determine the best focus for your system and to understand what general functionalities you’re looking for in an HR solution.

Cloud Versus On-Premise

You can considerably narrow your search by deciding whether you prefer cloud-based (SaaS) or on-premise HR software solutions. The most likely determining factor is whether your HR management leaders are sold on cloud computing or are still taking a conservative, wait-and-see approach. Here are a few of the benefits of each:

• SaaS is far cheaper, especially upfront
• SaaS doesn’t require a lengthy, troublesome installation process
• SaaS can be listed as an operational expense (OpEx) instead of capital expense (CapEx)
• SaaS requires little or no help or intervention by the IT department
• SaaS is maintained and secured by the cloud service provider, not your internal IT staff

The Benefits of On-Premise HR Software Solutions

• On-prem software is wholly owned and maintained by your own personnel
• On-prem software doesn’t usually carry an ongoing cost
• On-prem software assures that you’re in compliance with any data regulations that govern where consumer data can be stored
• On-prem software can actually be cheaper if you have more than a certain number of employees who need access privileges. SaaS usually charges per user.

The Step-by-Step Process for Selecting HR Software

After you’ve determined what genre of HR software solutions you need and whether you want a cloud-based or on-premise system, it’s time to narrow down your selections even further.

1. Learn what features the HR software market offers. Then determine which are essential, which would be nice but aren’t deal-breakers, and which aren’t necessary or aren’t desired by your human resources team. A spreadsheet is ideal for categorizing features and comparing systems head-to-head.
2. Set a budget. This has to be done after step one, because you can’t set a budget until you know what kind of software you want and how feature-packed it needs to be.
3. Write an RFP (Request for Proposal). This is the typical document used by enterprises to gather information from multiple vendors in a quick, standardized fashion. You can determine how little or how much detail to ask for. Companies usually ask for a general overview of the vendor’s company, a description of their software product, the specified tech environment (such as what operating system and what version is required), a breakdown of their pricing structure, what the initial price includes (number of users, amount of support, level of training, etc.), and a request for a product demo and/or trial of the product. Typically, businesses give vendors four to six weeks to complete and submit the RFPs.
4. Do your own research on the companies as the RFPs are submitted by the vendors. Look for independent reviews of the software (such as those offered by the tech blogs and in the human resource trade journals) and customer reviews provided offsite, such as by review websites. Don’t depend wholly on what their website has to say. Does your business post its uglies on the company website? Neither do they!

By the time your demos and free trials are completed, you’ll have nailed down the HR software solution that’s right for you and your business.

Get our Top HRM Software Analyst Report.

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