Four steps everyone forgets when projecting HRMS costs
When you are selecting a new HRMS it is essential to create a solid business case with robust cost projections. Missing steps or information can derail future benefits and expected savings. As you create your HRMS cost projections, be mindful of these often forgotten but value-added steps.
1. Planning for worst-case HRMS cost scenarios
Many companies create cost projections and add a 10% buffer of plus or minus to the numbers. What happens when your internally-hosted solution suddenly requires new hardware to continue? How will you function if your initial SaaS contract rate ends and the price is doubled? I recently assisted with a company whose HRMS vendor discontinued support for their core browser, so it required a major project to upgrade the entire company’s browser settings along with testing all other applications.
Once you have developed your numbers, take an additional walk-through to determine the worst case scenario cost to decide if your HRMS is truly feasible.
2. Accounting for staff turnover
Initial training costs are usually included in HRMS projections as management recognizes the knowledge needed to implement and support a new system. Often training in subsequent years is missing as it is assumed that current staff will continue on ad infinitum or will train any new hires. When you are implementing an HRMS that gives employees a strong skillset, they become flight risks. Your HRMS cost projection should address this possible issue through funding retention bonuses for a future date after your project goes live or by allocating a percentage of implementation training costs as on-going expenditures due to employees leaving.
3. Lost HRMS data costs
When you are implementing a new HRMS there are questions about conversion and archiving and these costs are usually included in most projections. Low cost options may be chosen for what is deemed at the time to be a low risk data set. Working in an HR back office operational role, lost data can lead to hours or days of research and potentially legal or compliance issues.
4. HRMS upgrade costs
Upgrades are expected but the new generation of SaaS (software as a service) cloud based solutions are changing the landscape on this front. Upgrades are now a task that needs to occur two to three times per year rather than once every few years. Many companies assume that upgrades are owned by a vendor, but someone needs to test the new version and its impact to employees and downstream systems. Unfortunately cost projections still seem to reflect the legacy model instead of the more labor intensive current state.
Featured white papers
HRMS Software Pricing Guide
Get your comprehensive guide to the cost of HRMS software in 2017Download
A seven step guide to planning your HR software budget
A process-focused approach to calculating an HRMS budget for new software
Three ongoing HRMS costs you haven't added to your budget
These ongoing HRMS costs can be a drain on your software budget if you don't forecast accurately
What I wish I knew while planning my first HRMS budget
Real world advice on HRMS budget planning from an experienced HRMS project manager