3 signs you need to invest more in HR technology

There are many innovative and robust HRMS solutions on the market today to meet a variety of HR needs. Having recovered from the effects of recession, HR technology investment has been inching up since 2013. The effective delivery of HR technology requires a certain level of financial commitment. Read on for top reasons why you should be planning to increase rather than decrease your HRMS budget.

1. The trend toward increasing integration

The HR technology landscape is reflective of the general IT system landscape; companies are increasingly adopting a variety of technical solutions built on a number of IT platforms. Business users are expecting systems to talk to each other seamlessly in the background, regardless of coding or structure differences.

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It’s been acknowledged that integration efforts can be a major line item for any HR technology budget. In an implementation year it can be as much as 40% of the overall costs of implementation. While there are programming and coding challenges, costs can come also from the business side from user testing as well as the coordination of costs between vendors.

2. Expansion beyond core HRMS

The HRMS market has evolved over time from small, simple applications for core HR data to full-scale applications with a variety of modules as well as separate systems with niche specializations. HR users want the efficiency improvements provided by many of these tools delivered through a top notch user experience. The trade-off is the need for additional budget to support additional applications.

A trend to note is the increased interest in Business Intelligence as analytics has previously lagged behind other areas of HR tech for many years but is finally gaining attention as vendors have started to deliver robust, user-friendly products. A particular call out is the focus in HR on embedded analytics where interest levels have jumped from 30% under consideration to 70% of companies planning to implement.

3. Cloud, outsourcing and SaaS solutions licensing model

Many HRMS vendors are now offering cloud or ‘Software as a Service’ solutions. While your company may benefit from reduced or limited hardware costs, you may find spend increases on user licenses or costing based on system headcount volume. Also, keep in mind any incidental costs such as test or training databases. In the traditional HRMS world such costs were often internal and could be absorbed while an outside SaaS vendor may present a higher cost structure for add-ons.