Picking the Right Provider
Presenter at this year's HR Tech Conference discusses key steps toward ensuring your vendor-selection process, including product demonstrations, delivers the value you're after.
By George Larocque
[Editor's Note: Well-known HR-technology expert
George LaRocque will be leading a panel discussion, titled "Getting the Most Value from the Vendor Demo," on Oct. 6 at 4 p.m. at the HR Tech Conference in Chicago. He and his panel of veteran HR-tech-solution advisers will address properly preparing for and structuring vendor demonstrations, what questions to ask, what to look for, and how to ensure you're getting the insight and information you need. His piece below delves into these and other critical steps of a successful vendor-selection process.]
"After months of evaluating a software product, our project team decided to move forward with one. We made the decision to commit to the vendor and license its technology. We notified [the vendor reps] and started planning our implementation while we sent their contract to legal. It was high-fives all around. The vendor agreed to do some work on the implementation for us in good faith. Then our counsel and procurement team called a few weeks later to tell me that we couldn't move forward. The vendor couldn't meet some of our required terms. I felt terrible. What a lesson to learn."
This is a story no one ever wants to tell. I could feel her pain as this director of HR for a Fortune 100 consumer-products company recounted the story of her HR-tech-buying process gone wrong. She felt as bad for the vendor as she did for the fact that her team was going to have to restart the process of evaluating products and push back expectations for when they could expect to "go-live" with a new talent-management application -- albeit this time with a better understanding of their internal requirements and process.
It seems like licensing software should be the easy part. Licensing is the equivalent of what buying software was before the cloud. In fact, very few employers actually buy software in this cloud-based world. We pay for the right to access and use the software that is usually hosted by someone else. One of the promises of cloud software is that it's easier -- easier to use, easier to implement and easier to switch products when we need to. It's that easier-to-switch part that makes us think it should be easier to evaluate and buy.
But HR-technology struggles and buyer horror stories are just as prevalent as they've always been. As I interview HR executives in companies of all sizes and across myriad industries, I often hear about the features promised that never appeared. Or the data integration that was supposed to be easy, but ended up taking forever and costing far more than expected. Or the licensing decision that gets undermined because the HR customer didn't know to evaluate certain technical requirements or contractual terms mandated by the employer's legal or procurement teams.
It's no wonder that evaluating and licensing software is one of the least-favorite things to do in HR. And yet it's unavoidable in these days of rapid innovation. The status quo in all HR processes is being challenged with new approaches and new technologies to support them. From performance management to benefits administration and core HRIS, HR leaders are calling on their teams to re-evaluate and replace what won't fit in a new world of work. The 2015-2016 Sierra-Cedar HR Systems Survey reports that 45 percent of employers expect to replace technology in 2016. Our own #hrwins survey finds that as many as 20 percent of employers in the middle market (fewer than 5,000 employees) plan to buy new HR technology in at least one product category.
If you're in HR, you'll probably find yourself leading or participating in a technology vendor evaluation at some point soon. But it's not all bad news. Plenty of HR-technology implementations go well. There is no shortage of raving fans for vendors in all categories. When I talk to both those raving fans and those "less than raving," they all point to steps in the vendor-selection process as the keys to getting it right. So I've scoured my notes from interviews with HR professionals who've gotten it very right, and those who've gotten it very wrong, and have developed this list of seven keys to avoiding the biggest HR-technology buying mistakes.
* Understand your firm's policies before you do anything. Consult with your procurement and IT teams to understand what their roles are in your process, and what contractual terms vendors are required to agree to. Do this before you waste your time with a vendor you can't move forward with. If your company doesn't have a procurement team, or well-defined requirements for all technology investments, spend some time with your CFO and IT leaders to understand what is expected from technology, financial and contractual perspectives in order to get everyone's buy-in at contract-signing time. Larger employers may have a sample contract, or examples of contract language, that you can send to vendors up front. Most IT departments have security standards in mind for all systems accessed by employees. Security comes up again and again with HR leaders as something they wished they'd addressed before wasting time evaluating a product they couldn't use.
* Research vendors before engaging them. The HR leaders who felt best about their buying decisions all spent time researching vendors on their own before ever talking to a salesperson or doing a product demonstration. Leverage your own personal networks on social sites such as LinkedIn and Facebook. Look for groups of users of the products you'd like to evaluate, or the category of product. You'll find many peers have lived through similar evaluations and can share their experiences. Explore sites such as Quora, G2Crowd or SoftwareAdvice to find user articles and product reviews. Take a look at industry publications for pieces on technologies and trends in HR. Use Google to search for content and articles about the categories and vendors you're considering. Seek out perspectives from HR-technology analysts.
Social networks aside, the most valuable resources cited again and again by HR leaders are their own personal off-line networks. "Before evaluating systems for core HR and payroll, I reached out to my friends and colleagues in HR with an email or phone call, asking what they were using and how it was working," said one vice president of HR for an emerging B2B technology firm. "I also contacted our investors, who always have perspective in their portfolio companies. These were the most valuable perspectives I got in all of my research."
* Take initial vendor briefings before you create your formal requirements or short list of vendors. Many vendors deliver products that cross HR functions -- for instance, core HR and talent management, talent acquisition and onboarding, and performance management and learning. It's a good idea to create a basic list of what you are trying to replace and improve. Include requirements that you don't currently have in your existing workflow and processes. Put all these details in an initial document to share with vendors. Include some vital statistics about your company and team -- size, location, business lines you're in, etc. Take vendor briefings, including product demonstrations, from a cross-section of the vendors you've found.
These initial briefings allow vendors to show you how they address your initial requirements. Some vendors may also show you some new capabilities or features that you haven't considered.
"The really good tech vendors didn't just show me how they could meet my needs, they educated me on some things I didn't know were possible while I was using older technology," said one vice president of technology strategy at a large global consulting firm.
* Define your requirements and process up front. Most large employers have access to request-for-proposal templates or tools that streamline the definition of requirements and the process used for making a buying decision. Even in less-bureaucratic environments, it's important to have well-defined requirements and a process for evaluating the vendor's fit.
Whether buying or selling technology, we've all come to dislike the RFP process, but it doesn't have to be that way. Organizing and prioritizing your requirements up front allows for your team to get on the same page as products are considered. It also levels the playing field as you compare vendors that all position themselves a little differently. For vendors, it illuminates a potential new customer's expectations and helps them prepare their presentations and product demonstrations accordingly.
"The key to a good RFP is that we don't use it as a rigid form to fit every vendor into a box; rather, we look for how each vendor addresses the issue defined in the box. Our RFP is also a fairly good representation of our culture and what it's like to do business with us. Vendors that struggle with that process never make it far in the evaluation," said one vice president of HR information systems.
* Remember that you're selecting a partner, not just a product. Regardless of the amount of support you receive internally from IT, when you're selecting cloud-based HR technology for your enterprise, you're selecting a partner you'll be working with for a long while, not just a product.
HR leaders and their teams are deeply involved in the technology evaluation process and they remain deeply involved after the product is licensed and implemented. The involved teams on the vendor side are generally not the people filling out the RFIs and RFPs, or giving the presentations and product demonstrations. Once a license is signed, vendors pass the baton to professional services, support, customer success and product teams.
One of the most critical pieces of advice that has emerged in my research, for all technology buyers: Demand access to these teams up front and throughout the process. The savviest technology buyers all do this.
Whether determining how a feature really works, or whether data integration is possible, or when to go live, or when key features should be introduced, get your answers directly validated by the resources that will be delivering on these commitments. You should have unfettered access to these resources throughout your vendor-selection process. Given the partnership you are embarking on, failure to provide this access should immediately disqualify a vendor.
* Handle the product before you sign the license. Validate your decision by getting hands-on with the product interface before you sign a license. In this world of cloud-based technology, most vendors can implement their products quickly, and with a higher level of configurability and customization than we've ever seen before. Whether you run a pilot for a department or your entire enterprise, make sure you're getting what you expect
* Demand your data up front. The No. 1 frustration I hear regarding technology is that the systems don't "talk to each other." HR leaders are demanding the kind of data fluidity that they experience in systems found in other parts of the enterprise, or even in financial and banking systems at home. "Our marketing, sales and financial systems talk to each other," said one vice president of HR at a large manufacturer. "My banking technology and credit cards talk to each other. Why can't my HRIS, talent management and learning systems?"
Technology vendors have responded by developing application-programming interfaces that promise to be open to transfer data between systems. This is definitely the future of enterprise technology.
In this API world, as a customer of technology, you have the ability to demand that the data you need flows as you need it -- regardless of the platform. You also have the ability to demand validation on the integrations you need from the vendors participating in your selection process and any incumbent vendors. The ability to deliver on this requirement should be a pass/fail for new and incumbent vendors alike. The onus is on you to capture these integration points during your selection process.
George LaRocque is the principal analyst and founder of New Providence, N.J.-based #hrwins, and a presenter at this year's HR Tech Conference.
For more information on the 19th Annual HR Technology® Conference and Expo, to be held Oct. 4 through 7 at McCormick Place in Chicago, visit www.hrtechconference.com.