Why the benefits of HRMS outweigh the costs

Recent research from Software Path, based on an analysis of over 1,000 HR technology projects, suggests that the average cost per user is $6,125. That’s based on the budget for the new HRMS, a five-year lifespan for the technology, and a definition of “user” as an employee with administrative privileges, usually an employee in the HR department, responsible for the HRIS system records and maintenance. 

That’s a not-insignificant amount and includes the license fee or regular subscription paid to the vendor, plus the cost of any maintenance or upgrade packages, and a variety of additional or indirect costs, such as consultancy fees or the time taken with stakeholder groups.

So, you want some bang for that buck. It’s important to be clear on the benefits you’re receiving in return for that cost and while your ‘mileage’ may vary according to the nature of your organization, the following broad benefits offer a clear return on investment.

More efficient HR services 

When you gather stakeholder requirements for the new system, you are beginning a process of improvement in which your new HRMS technology will be used to provide HR services more quickly and accurately. If you include a process review and redesign stage in the project (you should) then such changes may constitute a digital transformation for HR. In a 2016 study by Statista, 36% of respondents had experienced improved processes and process management workflow as a result of their HRMS.

Employee engagement 

In general, people prefer not to go through gatekeepers. In the Statista study, 41% of respondents noted an increase in the usage of self-service functions. With self-service functionality, they have control over their own data, direct access to automated HR services, and more accurate results (e.g. fewer payroll errors). All of which can result in an uptick in employee satisfaction and engagement.

More useful data 

Or to be more precise, an HRMS collects data (certainly more than a paper system of record) and its reporting and analytics functions enable you to put that data to new uses, gaining new insights into the ‘people side’ of your operation and putting those to good use in the business strategy. In the Statista research, 43% of respondents cited improved availability of management information as a benefit.

More secure data 

The more data you collect and keep, the more data security is a pressing issue. As an employer, you are responsible for safe storage, including preventing personal data from being misused or stolen.

Lower HR costs and overheads

With the automation of HR processes and a transformed recordkeeping setup, your HRMS should reduce the cost of running your HR team. Of course, rather than save the money, you may choose to continue to put it into HR, enabling the team to tackle more strategic, higher priority matters.

Saving the planet 

An HRMS is paperless, saving the trees and the space in your offices that would otherwise be used to store paper records. Furthermore, a cloud HRMS means no on-site hardware with its attendant use of electricity.

Naturally, this is just a brief snapshot of the headline benefits of investing in a new HRMS. For more details on HRMS budgeting and costs, check out this guide to setting an HRMS budget.

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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall

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