1. JANUARY 2016
HR TECH OUTLOOK 1
January -­ 2016
HRTECHOUTLOOK.COM
In My Opinion
Insights
Laurie Zaucha,
VP HR & Organizational
Development, Paychex
Kristen Goodell,
Co Owner,
HR Resource Force
Madison:
Alex M. Alaminos,
Managing Director
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2. JANUARY 2016
HR TECH OUTLOOK 17
CXO Insights
cross the spectrum of industries,
software has become the backbone
that powers the success of modern
businesses. From the sales process to
inventory management to tracking
training and human resources,
utilizing software is in every part of
doing business.
Companies, both small and large, struggle to select the key
software products that best fit their needs. Even within the same
industry, the unique nuances of an individual business’s needs
could mean adopting a platform that just doesn’t quite fit.
Six Key Considerations:
Cost
For many companies cost is the primary consideration in
acquiring software. A small business often does not have the
luxury to act strategically and take a long view on projects that
will scale as their business needs change. Off-the-shelf software
has traditionally been fast and cheap. However, many software
companies have shifted away from offering free trial versions,
no-cost implementations, and cheap support plans.
Return on investment calculations typically include:
subscription cost, implementation fees, your growth plans,
integration requirements, internal capabilities, hosting costs,
tax implications of a capital versus operating expense, reduced
data entry errors, and operations efficiency. And there are
many more. Custom-built software can be seen as out of reach
for many small to mid-sized companies but has become more
affordable. Nonetheless, it is important to accurately calculate
and objectively compare the ROI of all options.
Growth
Hockey great Wayne Gretzky is credited as saying “I skate
to where the puck is going to be, not where it has been.”
Successful businesses
should think no differently
when they select their
technology tools. If you
have outgrown any of
the common ready-built
accounting systems, you
know that balancing today’s
needs with tomorrow’s
plans is an essential
consideration. It doesn’t
take long before migrating
your data and integrations
into a new platform becomes too difficult to be practical. What
fits today will often not scale to work tomorrow.
Growth and industry alignment are important
considerations if you are preparing your company for sale or
if you are planning to acquire a company and plan to integrate
systems.
Core Functions
In every industry, companies have key functions that must
perform well in order to remain in business. Off-the- shelf
software, even if it is very configurable, may cause inefficiency
or create risk. On the other hand, a custom-built solution may
waste resources if its purpose is to replace functionality that
existing vendors have perfected in existing platforms. Only
consider the more expensive alternative if the value to your
company outweighs the cost. Businesses that rely on accurate
data and or have high turnover find value in eliminating human
intensive manual processes with custom built systems.
Competitive Advantage
In cut throat industries it becomes more attractive to build
custom solutions. This is particularly true if the providers of
A
6By Kristen Goodell, Co Owner, HR Resource Force
Point Guide
for Software
Selection
Kristen Goodell
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3. JANUARY 2016
HR TECH OUTLOOK18
In regulated industries with unique
processes and layers of compliance, the
advantages of agile, custom-built solutions
often outweigh the benefits of using
commercially available solutions
off-the-shelf solutions do not really understand your industry
and the capabilities of existing service providers. Software
companies are attracted to entering into large markets to the
detriment of their customers after realizing the real needs in
these large markets are often complex and specific.
In regulated industries with unique processes and layers
of compliance, the advantages of agile, custom-built solutions
often outweigh the benefits of using commercially available
solutions. Companies that get this right dominate their
industry. Off the shelf products can be slow and expensive to
update because development costs are often only justified when
it benefits enough customers.
Integration
The ability to manage end-to-end processes with efficiency can
save tremendous money and time while ensuring accuracy.
Consider how much functionality is needed across the
company for a particular task and what other products would
need to integrate to fully complete a task. As a company grows,
their manual functions become frustratingly difficult to manage
when their tools are not built to scale. Off-the-shelf software is
sometimes limited in its ability to integrate because the vendor
that supplies it has not maintained good relationships with
other vendors. This is more pronounced when the vendor does
not understand the industry they are serving.
Internal Capabilities
Understanding your technical expertise and limits are
critical. For small companies with limited staff the option
to buy software has attractive cost and delivery benefits
because it often comes with technical support and expertise
that is not available internally. Off-the-shelf software is
more attractive in industries where functional requirements
change frequently that would require constant, ongoing
development. An alternative is shared development
software—technology that a vendor develops to address a
core need for a large client whose base platform is then used
to reduce the development time and costs to build software
for another client.
Conclusion
It is likely your company has faced, or will face, the decision
to buy versus build software. Before your company chooses
a solution, carefully weigh the pros and cons of buying an
off-the-shelf solution or developing a custom solution. What
makes the most sense for your business, your goals, and
your bottom line is unique to your industry and company.
Common Traps Where Companies Fall
• Relying on their vendors to show what products are
available in the market to address their core problems.
• Looking at a narrow view of the project goals versus how
it is a critical piece to the holistic process.
• Using vendors who don’t understand your industry.
Quick, easy to deploy.
Less expensive. May
already integrate. Support
and development teams.
Large user base.
Takes advantage of
investment and resources
of larger companies.
Integrates to complete
functional areas.
Matches your needs.
Integrates to complete
adapts to changes.
Limited functionality. No
competitive advantages.
Core platform may not match
your existing technology.
Ongoing resources needed
for support and development.
Cost, development time.
Software expertise not core
strength. Ongoing resources
needed for support and
development.
Delivered and supported
by vendors as SAS.
Advantages
Advantages
Advantages
Off-the-Shelf
Semi-Custom
Custom
Disadvantages
Disadvantages
Disadvantages
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