Chatting with HR technology vendors

IHRIM sat down with three technology vendors to talk about the issues surrounding HR management systems for small- to medium-sized organizations
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|hrreporter.com|Last Updated: 11/12/2003

T

he International Association of Human Resource Information Management (IHRIM) recently held an education session to explore the issues surrounding human resource management systems for small to medium organizations. Ian Turnbull, of IHRIM, facilitated the panel of three: Eric Smith of HR Technologies Inc.; Gary Olynik of BEST Software; and Kathy Tuitt of HRWare. Here is a summary of the discussion:

IHRIM: We’re talking about small to medium firms and vendors. What do those terms mean?

Smith:

Small is less than 100 employees, medium up to 500, and large more than 500. Small can also be seen as one location, while medium means province-wide, and large equates to country-wide or international.

Olynik:

There are considerations other than size. Is it a start-up or is the organization mature. What is the size of HR and the level of HR program sophistication?

Tuitt:

It is more than just size, but I’d say that large is more than 2,500 employees.

IHRIM: Those are the prospective or client companies. What about your organizations and other vendors? Are there definable “tiers” of product?

Olynik:

Yes, tier one is typically off-the-shelf software at the low end of the cost spectrum. Tier two is off-the-shelf but scalable, and some services – such as implementation and training — are usually offered. Tier three software is high-end, complex and heavily tailored.

Tuitt:

Tier three is usually ERP (enterprise resource planning) and multinational or global software. When we talk about small to medium, as we are now, we’re really talking about tier one or tier two. Tier two software can also be thought of as “best-of-breed” and is where self-service comes in. Tier three software is usually software used only by HR departments.

Smith:

Another distinction is that consulting is always required to implement tier three and it may come from the vendor or third-party consulting firms. Tier two is normally implemented by the vendor’s staff, while tier one usually means that little or no consulting help is available.

IHRIM: Are there significant differences in functional requirements between small, medium, and large clients and, if yes, what are they?

Tuitt:

It depends. Size is not a predictor of complexity. Many large organizations are less complex than smaller ones. Complexities arise from multiple positions, absence policies, and mergers and acquisitions. Risk can be far greater for a smaller firm — a negative WHMIS (workplace hazardous materials information systems) or privacy decision for example. The impact of a system can be far greater for a small organization because every human resource represents a greater percentage of the whole.

Smith:

Medium-size organizations are often the most complex, particularly because they tend to be multi-national or have multiple currency or language issues.

IHRIM: In his book High Performance HR, David Weiss talks about the evolution of organizations from small and entrepreneurial, through to far more complex mid-size organizations, and then to large organizations. He contends that the middle group has the greatest number of issues.

Olynik:

I agree. In smaller organization each individual does more and everyone knows everyone. In medium-size organizations, there is a lot of effort put into separation of responsibilities and other issues, like multiple sites, arise.

IHRIM: Do technological requirements differ between small and large clients?

Smith:

The size and competence of the information technology (IT) shop is usually a lot less in smaller organizations. Really small groups may outsource several IT functions. Larger organizations have more complex security such as more separation of responsibility. IT in large organizations usually have lots of clout, so involve them as soon as possible.

Olynik:

Larger organizations want service around the clock and application availability. Small organizations usually have simpler networks while larger organizations are interested in more self-service and employees working at home – raising firewall and connectivity issues.

Tuitt:

Larger organizations have a more complex environment. Instead of a single instance of the software, a large organization can have three or four different instances running at once.

IHRIM: What about all of today’s techno buzzwords: Web, portal, self-service, thin versus fat clients and so on?

Smith:

All clients, regardless of size, expect self-service today. Fewer understand what it means. HR people just want results.

Olynik:

There are varying levels of awareness in HR, payroll and IT client resources. We have to do a lot of education and many clients are unable to pay for leading edge bells and whistles.

Tuitt:

Most organizations know the buzz words and that means they have questions. But most organizations use less than 30 per cent of the functionality our system offers and buzz words appear a couple of years before the functionality they describe are widely available. IT often wants to over-engineer the solution.

IHRIM: Can small- or medium-sized clients afford a full range of HR functionality?

Olynik:

Yes, and even if they can’t, they should acquire a system that offers a full range of functionality, gradually adding modules as the ability to pay is there.

Tuitt:

The real question is can organizations afford not to have a full range of functionality? There are affordable systems, and the return-on-investment is enormous if they are properly implemented and used.

Smith:

For larger firms, the challenge is significant customization and the costs associated with that.

IHRIM: How do you determine pricing? Is it number of users, size of company and so on?

Tuitt:

We use the number of modules and the number of concurrent users. Small organizations change their business practices to suit the software, and large organizations modify the software.

Smith:

The number of employees doesn’t matter. We use concurrent users, or all users. Maintenance runs from 15 to 25 per cent.

Olynik:

Concurrent users and modularization.

IHRIM: There are consulting firms that specialize in software selection. Do you prefer being approached directly by the client, or through one of these consulting firms? And why?

Smith:

Either. We find organizations that use consultants are usually better prepared, and the entire process goes more smoothly. Consultants eat up some resources, but they also make sure the right things are being done. And using a consultant means the level of commitment is higher.

Olynik:

The use of consultants increases with the size of the organization. Consultants can’t substitute for client involvement. It’s an investment decision — are you prepared to make a serious investment in the quality of the process?

Tuitt:

It’s important to select your consultant. You don’t want junior consultants learning on your project while you pay them. There are very knowledgeable consultants out there who know HR, payroll and, most importantly, the systems. They produce quality results, including requests for proposals that vendors can work with.

IHRIM: We are always hearing about huge implementation projects – often PeopleSoft or SAP — that run into the millions of dollars. Is there a correct ratio between the cost of acquisition and the cost of implementation?

Olynik:

There is no magic ratio, but tier two software can usually be implemented at a 1:1 ratio, (acquisition to implementation). Success depends on client-readiness, the use of a good project manager, an internal champion, and so on.

Tuitt:

Tier one or two are usually 1:1 or 1:2. Consultants drive the cost up, but also ensure a better chance of success.

Smith:

There is no correct ratio. It can run 1:1/2 – 1:2.

IHRIM: How do you manage version control and customization?

Tuitt:

We have one new release a year that has bug fixes, new functionality and new technology. We encourage clients to stay current so that it is an easy process. Wait too long and it become daunting.

Smith:

Major technological changes are pretty important and we encourage immediate upgrades. We have a new release every eight to 12 months and it’s usually not a big deal.

Olynik:

We have a release every six months and don’t customize for any one client. New functionality goes into the core product for all to use. We discontinue older versions and require a maintenance contract.

IHRIM: What kind of interfaces or integration are offered?

Smith:

Clients are looking for integrated solutions. We offer payroll and some time and attendance on top of HR.

Olynik:

People are fed up trying to make disparate software work so we partner to make a complete offering. Our sister company offers financials with the same look and feel. We don’t have a performance evaluation partner.

Tuitt: We’re part of the Microsoft family now so we offer a single supplier perspective. Clients clearly prefer integration to interfaces. Our biggest interface is to payroll service bureaus.

IHRIM: What functionality is hot? What’s not?

Olynik:

Performance review is the most requested, followed by health and safety and time and attendance.

Tuitt:

Staffing, competency management and self-service.

Smith:

I agree with my colleagues.

Ian Turnbull is managing partner of Laird & Greer Management Consultants, specializing in the selection, implementation and strategic and operational integration of HRMS systems within organizations. He is past-president of the Canadian Council of Human Resource Association (CCHRA) and the International Association for Human Resource Information Management (IHRIM). He can be reached at iturnbull@lairdandgree.com or (416) 618-0052.

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