4 things you need to know about leaving an HRMS vendor

Are you thinking about leaving your vendor for a new HRMS? A fit-for-purpose HRMS will reward you in the long term, but these four points will show what types of challenges will you face in the short term as you leave your current HRMS provider?

Leaving an HRMS vendor 1: Contract issues

In a perfect world, you would transition to a new HRMS as your current HRMS contract is finishing. In many instances, however, this ideal timing is not feasible from a business perspective, and you could face expensive penalties for breaking the contract or paying until the contract is up for functionality you’re no longer using. Poor timing for HR to break a contract would be during peak system usage, such as open enrollment or at year end. In some instances, vendors will allow you to exit early under the condition that you not speak about your experiences with their product if your experience was negative. If you have such a stipulation, it is crucial that this requirement is communicated throughout your HR department.

Leaving an HRMS vendor 2: Change management

While your HR department may be excited to move to a new HRMS, it will create a lot of work internally. Business processes, training materials, integrations to downstream systems, and links in your portal or in workflows may need to change based on the new HRMS functionality.

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As your HR department presents the change to your employees and managers, it is essential to stay objective about the reasons for the change and neutral toward your current vendor. As we’ve seen over the past 10 years, HRMS vendors often purchase their competitors, so you may find yourself indirectly acquired as a customer. For cases in which your organization has the same vendor in another area, such as finance, it’s important not to taint the overall business relationship.

Leaving an HRMS vendor 3: Data access

Your HRMS data is an asset, and historical data can provide many benefits through data mining. Therefore, your company may want to bring over some history. In particular, when you have a hosted solution and data is not as readily acceptable in mass quantities, it can become costly when you need to purchase the needed files from your vendor. I’ve heard of companies that felt that their HR data was being held hostage to exorbitant vendor fees due to the vendor’s disappointment at losing the customer.

Leaving an HRMS vendor 4: Support

Once you submit the request to terminate or not renew a contract, it sometimes seems that you’re no longer a vendor’s highest priority. While contractual obligations will still exist for support, a vendor will often go the extra mile for a top customer. In these changing circumstances, it is relevant to review the support-level agreements to ensure that your HR team is aware of them and that the vendor is meeting the requirements of the contract.