Three reasons why companies decide to replace their HRMS

It’s a wise person who knows when it’s time to change, and that applies to an HRMS as much as any other of life’s arenas. The difficulty is, many organizations are change-averse and when it comes to software, there’s a common reluctance because let’s face it, a change of system (or even just a significant upgrade - it doesn’t have to be a full ‘rip & replace’) effectively raises the level of incompetence as users grapple with new screens, processes and whole functions.

But, vending machines aside, change is inevitable and ideally you should drive it instead of being driven. So, what are the signs you might need to replace your HRMS?

Change indicator #1: you’re changing your business

Is your organization exactly the same as just five years ago? Probably not. Strategic priorities change. Product lines begin, diversify and end. Reorganizations are carried out. Whatever the rationale, most businesses change over time, either the goods and services they produce or the client list, or perhaps mobile workers and workers-from-home become more common. Whatever the change, the question is, can your HRMS keep up? Is your current functionality giving your users all the support they need? Would the average employee benefit from better self-service options? Is your C-suite demanding fancier reports and analytics?

Recommended reading: get information on HRMS replacement with our in-depth HRMS software buyer’s guide

Similarly, a new HRMS might not be operationally necessary, but it might provide enhanced automation of, for example, payroll that is all part of an efficiency and cost-cutting drive.

Change indicator #2: you’ve changed your people

Interestingly, even if what you do remains the same, if there are changes to who does it, then that can prompt you to replace your HRMS.

Firstly, as the saying goes, new brooms sweep clean. A new postholder in a key position (e.g. the board with either HR, finance or IT responsibilities) may have new ideas or experience of a system that has worked in a previous job and that might be all that’s needed to start the HRMS replacement project rolling.

Also, on a more organization-wide level, mergers & acquisitions, downsizing, upsizing, workforce restructuring exercises, changes of offices or premise can all include a review of current systems. An M&A, for example, will almost always trigger some kind of system change because the joining of two businesses usually involves picking and choosing the better of the two systems and applying it across the new, improved organization.

Change indicator #3: obsolescence

Finally, an obvious but inescapable factor: stuff wears out.

All software has an expected lifespan, even if the vendor was a little cagey about that when you bought it. The reality is that no system lasts forever. Vendors and developers move on to fresh products and after a while will cease to support your current HRMS. Software that is old and unsupported is a disaster waiting to happen. Change is now inevitable, it’s just a question of when.

Equally, there may be external factors causing a degree of obsolescence; for example, changes to legislation and labor law compliance requirements may leave your old system unable to cope. Just like businesses, software must move with the times.

In a nutshell, once your current HRMS cannot do what your organization needs it to do, it’s time to start looking for a replacement.