What’s the best HR technology solution: core HRIS or best-of-breed?

As organisations shift their HR technology to cloud platforms and reduce their IT costs, they’re increasingly finding budget to spend on other solutions and modules including analytics, on-boarding, succession planning and wellness, according to a recent report.

In the process, organisations are adopting a mixed approach to new HR technology adoption, with most opting for their core HRIS system to handle the key function of payroll followed by a range of best of breed solutions across functions including recruitment, performance, workforce management and learning.

The research report, which was conducted by HR solutions company Navigo, found that the uptake of additional modules and best of breed solutions beyond payroll and recruitment continues to accelerate, according to Andrew Rees, general manager of Navigo, which recently conducted its 6th HR Technology Survey.

HR technology in Australia: core HR vs best of breed

“Over the eight years that Navigo has run the Australian HR Technology Survey we’ve seen a lot of change in the HR tech space,” he said.

The survey, which took in 175 Australian organisations representing more than 296,000 employees, revealed a growing preference to migrate from on-premise HR technology to Software as a Service (SaaS) and increased complications associated with data security.

The rapid expansion of HR technology brings with it a new challenge for organisations around the ideal HRIS strategy.

“Determining that covers a lot of ground, including an understanding of your own organisation, assessment of the different HR technology categories and how they apply to your business, who are the best individual vendors available and what has been the experience implementing their products – not to mention budget, timeline and internal resource availability,” said Rees.

“With most global HR technology vendors expanding in Australia, it’s a crowded and rapidly changing landscape.”

All of this adds up to a more complex HR technology space with the focus continuing to shift from keeping the payroll lights on to operational efficiency, process optimisation and delivering clear outcomes across business units, he explained.

Top HR technology gaps and challenges
2018 has been a big year in data security for both vendors and organisations, according to Rees.

Following the introduction in February of the Notifiable Data Breaches Scheme, he said organisations are paying close attention to how their internal HR data and external recruitment data is stored, shared and managed.

The survey found that while organisations may want to adopt a cloud solution, nearly half of all companies have concerns about security and data privacy.

“What makes or breaks a system implementation is the expertise and stability of an HR team”

As such, vendors have also moved quickly to harden their security protocols to match: “Having clear processes to respond to a potential data breach in a calm, measured approach is a must,” said Rees.

The survey also examined key HR technology motivations and roadblocks, and it found that business requirements remain firmly focused on delivering measurable value.

The top motivations for increased HR technology investments included improving operational efficiency and meeting business objectives/strategy, while the leading roadblocks were (predictably) cost and budget, followed by time and resource.

“It’s a common frustration for HR departments attempting to square these competing factors, more so when they’re charged with implementing business-wide process change,” said Rees.

“Once a platform is selected, the challenges with HR technology are often not the system; it’s how an organisation approaches the implementation and rollout.”

Rees said this continues to be a problem for Australian organisations, in particular, because it relies on a new type of HR department.

“The growing need is for a team that includes HRIS expertise, business analysts and HR experts who are leaders within their organisation,” he said.

“We often see what makes or breaks a system implementation is the expertise and stability of an HR team.”

Key HR technology trends
Predictive analytics and big data are the newest “must-haves” in the HR technology space, according to Rees, who explained that the ongoing development of tools such as LinkedIn’s Insights, where employees provide the data, will continue to lower the cost of adding data analytics to an organisation.

Self-service, process automation and predictive analytics topped the list of what was considered very important to HR technology strategy, while the top two (self-service and process automation) are primarily about reducing HR overheads.

“It can be easy to underestimate the time and resources required to make a new system stick”

The growing importance of HRIS strategies by organisations which have identified a need in this area has also been a theme through the year, Rees explained.

“The recruitment of experienced HR transformation and technology managers is allowing organisations to put in place resources that understand the current technology landscape and build their knowledge of the organisation,” he said.

There is also a clear trend to a cloud-first HRIS strategy, and while this approach is not always right for every organisation, he said it is one that allows many to reduce IT overheads and system complexity.

“With faster, lower cost implementations, organisations are building their portfolio of HR tech solutions and an increasingly sophisticated HRIS strategy,” he said.

Improving the HR technology skillset within HR
With a lot of change occurring in organisations, developing and maintaining a skilled HR team can have a significant impact on the ROI of a new HR technology platform.

Recent industry examples highlight that when poorly managed or staff turnover occurs, implementation fatigue can set into an organisation, and this can quickly burn through a project team who then fail to implement successfully.

“Early engagement of those knowledgeable in the business processes is important, as is keeping them engaged until roll-out is complete,” said Rees.

“The big wins in improving operational efficiency for organisations are tied to how willing the organisation is to change and how wide the changes reach.

“Best of breed HR tech solutions are often simpler for organisations to digest and deliver against”

“It can be easy to underestimate the time and resources required to make a new system stick.”

How to create the optimal HR technology strategy
Australia has a great mix of home-grown HR platforms and global vendors, according to Rees, who observed that many have skilled, knowledgeable practitioners that have worked on both sides of the fence.

“For those expanding beyond payroll and recruitment, engaging with a vendor shortlist is a good way to get up to speed on the platforms and the quality of their customer success teams,” he said.

“We often see consistent themes emerge from organisations that effectively implement a new HR tech solution [so] understanding how your organisation experiences and manages change is always a good starting point.”

To build on that HR leaders can add some key steps to their strategies:

  • Work closely with vendors to understand their products, advantages and limitations prior to signing a contract. This will feed directly into your business case and how you determine the ultimate measures of success.
  • Beyond the sales/senior team, time spent on developing a relationship with the vendor by those in the implementation team early in the project will have a big impact.
  • Develop a project team that includes cross-company stakeholders and sponsorship from the executive team.
  • Identify the low hanging fruit on your organisation’s HR technology wishlist. How quickly can you implement a solution in this space and show tangible benefits? Can this be tackled by a low footprint best of breed solution in a known area of the business?

“Take this opportunity to build your organisation IQ, develop credibility with stakeholders and relationships with process champions across the business – also a great way to identify key gatekeepers and potential roadblocks,” said Rees.

“Best of breed HR tech solutions are often simpler for organisations to digest and deliver against.

“By breaking HR optimisation into a staged approach focused on specific business requirements, it’s easier to develop a fully formed business case and get the system in the business within a six to 12-month process.”