Today’s vendor marketplace can seem infinite, especially in HR tech. Our industry encompasses a multitude of categories: from complex HRIS systems to specific point solutions for talent acquisition, employee engagement, pulse surveys and more. Add in frequent outsourcing options for specific HR functions such as recruiting, benefits administration or FMLA management, and the marketplace becomes even more confusing as people and technology intermix into different configurations of offerings.
I’m in the leave and accommodations space, and even in our corner of the HR world, the complexity is real. Solutions in this space include everything from point solutions for just leave or accommodations, to simple workflow automation platforms, all the way to combined platforms with extensive configurability and built-in compliance engines. And that’s not even taking into account all the different options for co-sourcing and third-party administration. It’s enough to overwhelm even the most savvy HR leaders.
The stakes are particularly high for functions like leave and accommodations management. The wrong choice between a module add-on and a dedicated platform can mean the difference between compliance and costly litigation. Even when vetting a third-party provider, it’s critical to ask about their own technology foundation.
However, today’s technology can deliver real benefits for many HR roles drowning in administrative tasks, so it’s worth looking for a better, more efficient way to work. But to make the best choice, it helps to take a step back before diving into solution options, feature lists and AI-powered “everything.” Use a process that starts with goal mapping and includes a comprehensive look at investment return, not just cost. Then, you can map the right solution that solves not only your challenges now, but also in the future.
See also: Why the talent marketplace will be ‘central to HR tech’
Let’s look at four steps to help you navigate a complex marketplace, from defining goals to making the business case. We’ll learn how to calculate both return on investment (ROI) and total cost of ownership (TCO) to help you make and advocate for the right solutions for your workforce.
Step 1: Define your business goals and desired outcomes
According to Gartner, only 35% of HR leaders are confident their approach to technology is helping them achieve business objectives. With a complex marketplace and proliferation of solutions, it’s easy to go from identifying a problem to comparing vendors too quickly.
What’s lacking is the most important first step: defining the departmental and business goals the solution is driving. It helps to take the time to truly understand the day-to-day of employee stakeholders and where challenges exist. Interview team members and understand what an ideal state could look like with the technology available today. Ask stakeholders what future challenges you could address with the right solution, so you don’t outgrow something quickly as your business and workforce evolve.
With your business goals and ideal state firmly in mind, navigating the marketplace becomes far easier. You’ll start seeing which solutions will be a good fit for your workforce size, culture, and operations.
Step 2: Build your evaluation team
Too often, the full scope of impacted stakeholders is not included when solutions are evaluated and implemented. But in a marketplace as complex as HR tech, it helps to have different perspectives as you weigh different approaches and options to solving complex challenges. Include a mix of impacted HR team members, IT and HR leaders.
Sometimes it can even help to include a “typical” employee and manager to see how the solution might impact them. This resource mix is especially critical to properly assess how emerging HR technology solutions—such as applied AI, HR virtual assistants and automation—might impact different parts of the business. They can also help you understand what a new, tech-based workflow might look like in practice.
Step 3: Evaluate vendors with ROI and TCO in mind
Once you start talking to vendors, they will make a lot of claims. Sales cycles often become high-pressure, with vendors wanting to jump right into showing you features, demos and pushing you “across the finish line.” During that time, don’t be afraid to step back and take the time you need to understand the true impact of a solution.
Start by calculating return on investment (ROI). For HR, these calculations can be challenging as employee experience and other people-centered metrics can be hard to quantify. But there is usually a number or metric underneath it all.
For example, calculating the ROI of leave management technology can include:
- employer and supervisor time saved
- administrator time saved
- reduction in replacement worker hours
- increases in team productivity
- legal risk mitigation
- employee retention through lower turnover
Improving practically any part of HR, from payroll to recruitment to benefits administration, will positively impact the business. Calculating ROI requires naming and understanding the costs behind those improvements and comparing them to the cost of the technology.
Another critical part of evaluating HR technology is understanding total cost of ownership (TCO). Too often, the cost of technology is measured only in licensing and implementation costs. But for HR tech, opportunity cost is an important measure that TCO should include. When HR teams are drowning in paperwork and open browser tabs, employee experience suffers.
Giving HR time back to spend supporting employees can immediately improve employee satisfaction and retention. The right technology can even act as a force multiplier for HR, enabling them to do mundane work more efficiently as workforces scale and evolve.
This matters particularly for benefits professionals. When your team has bandwidth to engage meaningfully with employees during open enrollment, life events or benefits questions, it directly impacts utilization, satisfaction and ultimately the ROI of your benefits spend itself.
Step 4: Build your business case
Once you have your ROI and TCO in hand, it becomes easier to speak the language of executives like CEOs and CFOs. With the backing of a full team, a recommendation for a solution carries more weight. A successful business case doesn’t have to be complex. It simply needs to answer four questions:
- Where are we today?: Include current challenges driving your search for technology, such as negative feedback, too much administrative work, errors and delays, and other challenges.
- What are we investing in?: Share the key capabilities of the solution and how they align and enable business goals, including streamlined processes, improved operations, efficiency gains and more.
- What do we get back?: This is where you share the “return” on your investment, such as HR time back, better employee experiences and retention boosts.
- What happens if we wait?: With many HR challenges, there is what’s called a “cost of inaction.” This is the cost of not addressing the issues at all and keeping business as usual. Share what will happen if nothing is improved after six months or a year.
These four steps provide a framework for any HR leader navigating a marketplace of technology solutions as diverse and varied as any workforce. The key is to remain grounded in your business objectives, involve the right stakeholders and use data to make informed decisions.
As HR technology continues to evolve with AI, automation and increasingly sophisticated platforms, the most successful implementations will be those that solve real problems for real people in ways that create measurable value. When you approach vendor selection with an ROI-first mindset, you elevate the buying process, better understand your investment and align your transformation to business goals. Even better, your investments improve your team’s capacity to focus on strategic work that moves the business forward.
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