Response to HR Magazine's February 2009 Cover Story

 Here’s the section with which I have a serious concern.  

“Technology and Contract Management” 

Your mailbox probably overflows with ads for software that vendors say you can’t afford not to buy. But unless a vital system hovers on the brink of meltdown, hold out. 

Three options to tide you over and limit costs on new purchases:

Open up. Cut back on software license fees by switching to free “open source” alternatives. For instance, Google Docs allows users to create documents and spreadsheets, store them and collaborate online for free.

No Special Request. Think twice before asking a vendor to customize an off-the-shelf product to fit your existing processes. It raises cost at the front end and could cause glitches that will compromise service later on.

Bargain hard. Establish a policy of rebidding all vendor contracts and leases. During a recession, prices, as well as payment terms and schedules, become negotiable. Take care in designing an all-inclusive proposal: Add-ons can cost you. And involve vendors in proposal development – they may offer money-saving tips.” 

February 2009 HR Magazine

My overall concern with this segment of the article is that it is completely lacking in any detail, substance, or value.  The article is about 8 pages long and barely two paragraphs are dedicated to saving money on technology. I think the author grossly miscalculates the importance of technology for HR. Has the author ever worked in HR? I wonder if they have ever gone from a company that provided HR with needed technology to one that did not. If you have, I am sure you know what I am talking about.  

“Open up?” Can you please provide me with a list of free “open source” software alternatives for companies that process time and attendance, handle recruiting, process reviews, handle benefits administration, or process payroll? Wait; there aren’t any. I am not sure how any HR department is going to meet any of these mandatory needs using Google Docs. I have also written several other posts presenting arguments against open source HRIS solutions.

“No Special Request”? Sorry, but I was laughing for a second and could not type. Okay, I agree that customizing does increase the cost at the front end of the project but truthfully, with my prior business, most of the time we customized systems it was to create interfaces between various systems. This type of customization is likely going to significantly decrease manual input hours and decrease the likelihood of manual entry errors. As far as customization causing “glitches that will compromise service later on,” I am not sure what this really means. I would be interested to hear a real life example from the author.

 “Bargain Hard”? On the surface, this is good advice but highly unlikely to succeed since terms for support or leased contracts are exactly that, contracts. If you are buying a new system, which the author says you should hold out on, you may be able to bargain for a slightly lower cost but I would not expect it to work with existing contracts. “Take care in designing an all-inclusive proposal: Add-ons can cost you. And involve vendors in proposal development – they may offer money-saving tips.” I would comment on this statement but I have no clue what it means.  

Look, if you want to save money on HR technology, it can be done. Frankly, books could be written on this exact topic. If your company is laying off employees, including those in HR, it might be important to add technology to allow your department to run more efficiently. There have also been a number of articles and studies showing how HR software does, in fact, save companies money. Here’s one good example.  

I wrote a post recently about saving money by looking for alternatives to the national payroll companies. In a real life example, my prior consulting company saved a 1,200 employee manufacturing company over $250,000 off their payroll processing cost for the next five years. At the same time, we provided the company increased functionality such as Employee Self Service and custom interfaces between various applications. We did it all without having to use Google Docs. The point I made in that post was that you can increase functionality and decrease cost by looking for alternatives to the national payroll processing companies. For this company, it was wise for them not to “hold off.”