If you watch the HR technology industry long enough, you see the tide ebb and flow from one popular recommendation to another. The latest popular wisdom is to invest in a SaaS model where best-in-breed solutions are combined in such a way that organizations can add all the elements of workforce management that they need.
But making technology decisions are more complex than going with the latest advice.
The pros and cons of having a fully integrated system versus a system with interfaces are many, and only you and your colleagues can know what is best for your organization. But we are here to help, so here are several factors to think about to make an informed choice based on critical business factors.
On one hand: Purchasing a system from one provider that incorporates solutions for HR, payroll and finance, automatically builds informational synergy. Having a sole platform where data is only entered once, then shared by all departments, creates a seamless approach to managing to business unit and organizational goals.
On the other hand: Using the best-in-breed approach may offer synergy between the modules a particular provider offers, but it will not necessarily tie all your HR and benefit needs to the payroll or financial side of the business without creating multiple interfaces that have to continuously be tested and managed. This may increase the amount of time needed and can negatively impact productivity of the team member and overall efficiency.
On one hand: A big benefit of purchasing a licensed product is the ability to cut implementation costs associated with development. However, each year you will continue to incur more costs for ongoing administration and support. You will also be paying for future upgrades.
On the other hand: With a SaaS solution, you’re purchasing the rights to use the software, not purchasing the software. While initial costs may be greater, over time these costs tend to diminish relative to the initial spend. You will also receive updates several times a year without the additional cost.
On one hand: One of the main reasons organizations explore new solutions is the need for improved reporting. In my experience, if you are in an organization that has a specific way of referring to your business from a financial standpoint and if you intend to track your people activities in this manner, having an integrated system will work well.
On the other hand: If your organization tends to have a more siloed approach, where each department tracks workforce management and talent management data differently using different criteria than the way you look at your financial metrics, an interfaced system may work well. With interfaced systems, you just have to be prepared to attempt to build customized reporting that will tie your HR, benefit, payroll and finance data together.
On one hand: An integrated system can be complex to implement and use. Why? First, before implementation you need to determine whether your processes are efficient and if you are going to keep doing things that way for years to come. Once you get past that hurdle, you can start working with a provider to build or customize the solution to work the way you need it to. This can often take a long time – perhaps as long as a year or two.
On the other hand: SaaS solutions can be implemented in a matter of months.
The complexity comes when you build the various interfaces and tie the information together for customized reporting. There is also additional complexity when it comes to communication and user adoption. Employees tend to be change-resistant, so throwing multiple provider solutions at them can be overwhelming. It can also be more challenging to measure which components are resonating and which are not.
And another thing: What happens if you need to change your approach? By putting all your eggs in one basket, it’s much harder to change providers. With SaaS solutions, you can change different modules of your workforce management as you need to and with much less disruption to the entire system.
On one hand: When you have an integrated system, you are only dealing with training your leaders and staff on one type of solution. This is a real benefit.
On the other hand: If you determine that best-in-breed approach to workforce management is best for your organization, you will need to determine which leader or staff member needs to be training on each provider’s solution. This can cause confusion and more difficulty in monitoring to ensure that the users have received the proper training needed to be effective.
So which approach is right for you? These are just a few considerations as you make that ultimate decision. Being able to compare all aspects of your business needs versus what the providers offer is the ultimate decision-maker. Just remember that there is no “right” answer, just the answer that works best for your needs at the time and for the foreseeable future.
Brandon Hall Group specializes in helping organizations make technology selections, so if you need help making this decision, contact me at Trish.McFarlane@brandonhall.com or on Twitter @Trishmcfarlane.