No matter how much you're spending on new HR software, nobody likes to think they are paying more than they need to. We provide four steps to avoiding an overspend.
Most organisations could reduce what they spend on software by as much as 20% without changing suppliers, says Andy Kyte, a research fellow with technology research organisation Gartner Group.
"We're spending more than ever on technology, but we're not paying attention to where that money goes," he says.
1. Only pay for what you need
The first step in reducing the cost of software implementation is to pay for only minimum functionality.
"Have a list of what you need the software to do, and don't be dazzled in demonstrations," advises Brian Bennyworth, group HR director at housing association LHA-ASRA.
"I worked in a department once that spent a fortune on a huge PeopleSoft application, and we never used 90% of the features."
2. Work out what you already have
When buying any software, conduct a thorough audit of what's already owned. It may be that another department has software licenses that are not being used, for example. Or you might find that the new software application will make an existing application redundant, in which case you can save money by not renewing those licenses.
3. Try your existing supplier
Buying software from an existing supplier may generate substantial savings in some cases, adds David Bradshaw, a principal analyst with technology research organisation IDC.
"If it means one less service level agreement, one less set of due diligence and one less relationship to manage, it might be worth looking at paying slightly more for software to get that saving," he says.
4. Embrace the new
Kyte advises creating policies that will prevent what Gartner terms 'software hugging' – users keeping applications that are familiar when there are newer alternatives available.
"Every application and platform you have to pay for, support and maintain costs money," he says. "So make clear which application is to be used for each core HR process, and don't pay for anything else."
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