Buying software: an informed decision


The right software can increase efficiency and make your work easier. But
how do you find the right package for your company? Angel Perez reports

During my 20 years in HR Systems, I’ve been involved in the acquisition of
several HR software purchases. As these software packages have become more
sophisticated (and more expensive), extra care must be taken in choosing the
right system for your organisation’s needs, both now and in the future.

Systems have a ‘shelf life’ of three to five years in their original state.
With regular updates, these systems can serve a company’s needs for at least 10
years, so choosing wisely can save even more. By following these steps, you can
optimise the process of choosing the right software.

Clarify your needs

Before you begin your research to find the appropriate system, make sure you
have a solid idea of what you require. Hundreds of systems are out there. By
having a thorough idea of what your organisation is looking to do, both now and
in the future, you can focus on a set of packages to investigate further.

Business drivers

What has prompted the search? Is it the replacement of an ageing system? If
so, what does the current system have that has worked well? What is lacking
that you wish it to do?

Are you looking to automate processes? In terms of additional functionality,
are you concentrating on a specific area, such as recruitment, or are you
looking for a complete remake of all the HR areas and are looking for an ERP
(Enterprise Resource Planning) system such as PeopleSoft, Oracle or SAP?

Many of these ERP providers also specialise in software for other parts of
the organisation, such as finance and manufacturing. Are there other areas,
such as finance, looking at a system investment? If so, by teaming up in your
search, you may find a system that meets both needs, and this will give you
additional leverage in your price negotiations.

Business Processes

As part of your research, you should document your existing processes. This
will allow you to determine which systemsmore closely meet your needs, as well
as give you an initial blueprint for determining which functional areas will
require re-engineering of the processes to better match system capabilities.
This can also allow you to determine which parts of the system will require
customisation, if needed.

It is always preferable to change the way a functional process is done,
rather than customise the software, as changes to a system will add additional
cost for development, as well as additional maintenance for the organisation as
these, for the most part, would not be covered in future upgrades.


Do your homework. Having thorough knowledge of what is available prior to
meeting with a software representative will put you on a better footing. You
will know the questions to ask.

Once you have a list of software vendors you are interested in, pay
attention to the following elements:

– How long has the provider been in business? Unfortunately, the software
business can be very difficult, with software vendors being here today, and
gone tomorrow. An investment in software that ceases to exist is money down the
drain. Usually, if a company has been around for a few years, it has a better
chance of being around for a few more. A new company may have more ‘cutting
edge’ technology, which may be what you are looking for, but may not be around
to update it further in the future

– Financial research – another indicator of a company’s viability is its
financial footing. Get your company’s finance department to analyse the
company’s annual report

– Hardware/software requirements – if the company uses technology that is
not part of your standard suite of products supported by your IT area, then you
would have to take that additional investment into account

– Degree of integration – does the product work well with other products? If
it does not, this may hamper any future purchases of products to enhance your
investment, as your organisation would bear the brunt of making the necessary
interfaces to exchange data

– Future flexibility – what are the types of things the company is in the
process of developing? What are its long-term plans for the product?


As mentioned earlier, talking with peers who have purchased the system you
are interested in will give you a more realistic view of what you are getting
yourself into.

A sales pitch is going to tell you all the good things that can be accomplished
with the system. It won’t give you a ‘warts and all’ view of the implementation
and the limitations of the product. Talking with users who have already
invested and lived with the product will give you lots of valuable information.


If you have no networking options, by all means, do talk to the references
provided. For the most part, they will be customers that are happy with the
product, but they will probably be very honest in terms of what problems they
encountered. Do not assume they are paid advocates for the company.

In particular, ask about the following:

– Implementation time

Ask how long it took to implement, how that differed from the original
estimates and the reason they think the difference occurred. This will give you
some good ideas for calculating your contingency time to be built into your
project plan

– Users’ reaction to the system

How quickly did the users take to the system? What helped the process? This
will give you some ideas for determining how to plan for user acceptance

– Lessons learned

What could have gone better if certain other things had been done?

Cost/Benefit Analysis

The software companies that are on the shortlist should have some standard
financial worksheets to help in figuring out such things as return on
investment By all means use them, but also enlist your financial department in
figuring out other costs. These include:

‘As Is’ versus ‘To Be’ – what are you current costs, what will be your new
costs. Items such as:

 – Start-up costs
These can be broken down further into:

– Capital costs
– Application software
– Web and application servers
– Network connections
– Personal computers (also workstations, kiosks, if applicable)

– Other costs:

– Design and development
– Training
– Ongoing costs
– Upgrades
– Maintenance
– Continued development – will you have to hire a developer to continue
administering changes to your system?
– Training needs – will these classes be included as part of the package price
or will that be an additional expense? Can future training also be budgeted for
as part of the negotiation?

Don’t forget the people part of the equation

Lastly, and most important, are the people involved in the purchase of a
system? Involve other stakeholders in the decision – IT, payroll, line
managers, and so on. Involve them up front, and get their input – this will
help to fully quantify the organisation’s needs. Also, keep the executive in
charge of the project thoroughly involved in the process.

A system that has been bought for all the right reasons, that has been
adopted by the organisation and driven from the top, will have the greatest
chance for success.

Angel Perez is a member of IHRIM, and is assisting in the development of
its latest subsidiary, IHRIM Europe. He is director of HR Systems – Europe, for
Lehman Brothers (ticker symbol NYSE:LEH), an innovator in global finance,
serving the financial needs of corporations, governments and municipalities,
institutional clients, and high-net-worth individuals worldwide.

Research on the worldwide web

Find out what systems are out there

The internet is a great place to begin your research. If you
already have some software companies that you wish to take a look at, go to
their website for some general information.

There are also the following sites:

This site is maintained by the Nottingham Business School and contains
various links on the topic of HR management, including a list of computer
software providers.
is a general HR topic site, this also provides links to software vendors.

For a more extensive list of what is
available, an excellent website to investigate is the IHRIM (International
Association for Human Resource Information Management) website at

It publishes an annual Online Products and Services Directory, which
contains a brief description of the product, software/hardware platforms used,
as well as links to the company site. Unfortunately, this is not free and
requires a fee or purchase of membership to IHRIM. This may be a reasonable
investment as IHRIM is an organisation dedicated to serve as a central network
for its members to gain access and in-depth knowledge about HR information
management and systems issues, trends, and technology.

The organisation hosts annual conferences in North America and
Europe and has regular meetings. By talking with other members about their
experiences, both good and bad, regarding the software you are interested in,
you may make your initial investment in a membership worthwhile.

(Quest) (HK Chinese
(EM Lyon)

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