At first glance, integrated Software-as-a-Service (SaaS) or ‘out-of-the-box’ solutions might appear to have high appeal offering rapid implementation, low cost and tried-and-tested functionality. What could be better?

And yes, such standard all-singing, all-dancing solutions can initially offer implementation speed, sometimes lower cost, and tested functionality. However, they also come at a cost with downsides that can make them poor solutions for the discriminating buyer. As the adage goes, ‘you get what you pay for’ and these are some of the tradeoffs you should be aware of when considering an ‘out-of-the-box’ HR technology solution.

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Compromises and limitations
Typically, standard solutions provide the majority of functionality that customers seek. This functionality is typically hailed as ‘best practice’ when, in fact, it is what the 80% majority of a large sample want – as a statistician I find that closer to ‘stunning mediocrity’ than ‘best practice’. For the latter, I look to organisations at the cutting edge; those who will become known for their ‘best practice’ when everyone else catches up. So, typically ‘out-of-the-box’ solutions fail to deliver the unique functionality that is so critical to each individual organisation. Even the extensive range of options that they do offer is limited to the provider’s knowledge and expertise. The resulting shortcomings can, sooner or later, create frustrations for the users and, ultimately, the buyer.

Prescriptive solutions and imposed changes
Equally frustrating are the prescriptive processes that clients are constrained to. Integrated SaaS solutions often offer a primary underpinning process concept (e.g. cascaded objectives, mid-year and annual appraisals or position-based succession planning) that force the client to adopt that process rather than their own.

Many SaaS solutions also require that clients adopt new releases within a minimum time – so clients have to change their processes at the vendor’s discretion not their own.

These standard solutions rarely produce the added value initially sought by the actual users. Because of this, user acceptance severely wanes after the initial excitement of implementation has worn off and executive attention has moved on to a new initiative.

Lack of evolution
Unlike transaction-based software (e.g. payroll and recruitment), Talent Management, Development Management and Performance Management software applications seek to change the way that individuals behave. Consequently, they need to evolve as their users’ behaviours evolve and usage  becomes more sophisticated. Standard solutions can rarely do this without significant fees and time. This counters contemporary behavioural engineering thought – which argues that organisations need to develop processes that directly support their business strategy, are driven and sustained by the organisation’s culture and seize on (but are not dictated by) the power of contemporary technology.

Superficial added-value
Functionality in ‘out-of-the-box’ applications is typically focused on the popular wants of front-line users and superficial or even cosmetic features such as ‘apparent simplicity’ and ‘look and feel’. In turn, the sophisticated demands, concerns and true needs of senior management are rarely met (e.g. impact on productivity, effectiveness on an individual and organisational level and ROI). Satisfaction is only initial and at a low level. Executives find themselves increasingly dissatisfied once they find their demands cannot be met even when extensive data has been accumulated.

Single platform
Market forces, including each vendor’s drive to maximise sales and minimise sales cost, has led most vendors to attempt to offer the full range of functionality. IT departments have welcome and encouraged this ‘single platform’ approach.  But, ‘buyer-beware!’ – this has led to many less than optimal solutions with:

• Modules from different sources and even different underpinning architectures being bolted together in ways that will inevitably lead to maintenance issues
• Different technologies being used on later modules and no retrofitting of this technology to earlier modules
• Vendors building solutions without the depth of specialist process or data expertise that enabled them to be successful with their first application i.e. they become a ‘jacks of all trades but master of few.’

With the substantial vendor consolidations and extensions of each solution into full blown integrated solutions, we are on the verge of seeing a new breed of vendor and going round the cycle again. We are about to see a new selection of ‘best of breed’, even more innovative and unique solutions. I wonder what we are going to call those? As many will operate in the cloud, perhaps ‘Angel Solutions?’

ERP systems
Another common option is to have a core HRIS or ERP system customised. While such approaches offer almost limitless functionality, they come with a much higher price tag, have extended implementation times, potential bugs, lack of upward compatibility and the risk of limited on-going support and maintenance.

However, ERP systems provide excellent backbone infrastructures for high volume transaction-based processes. But, they rarely offer the flexibility that processes like Performance Management and Success Planning demand.

They also typically do not support the more contemporary user-experience focused functionality such as dynamic interface skins, multi-media support, etc. ERP systems suppliers, such as those selling the major HRIS applications, argue that ‘single platform’ solutions are the most appropriate. They will typically wrap multiple modules into the very large overall license fee. Customers then feel obliged to use these apparently free modules rather than buy a ‘best of breed’ solution that better fits their needs. While there is an appearance of a free license, the costs associated with implementation are often substantial and expensive customisation often has to be reworked with each upgrade.

Avoiding the pitfalls
Many organisations approach the acquisition of Performance Management or Talent Management as a ‘software implementation’ project. Invariably, such projects do not produce the desired results because implementing any software that is designed to produce behavioural change is, in actuality, a change management process and a behavioural issue.

Here are four steps organisations must take to ensure an effective HR technology implementation:

First, the organisation must determine its business goals and the results it expects to see from the change. They should know up front how progress and achievements will be measured and by whom. Risks to progress (e.g. interacting systems) should be accounted for and mitigated.

Second, the organisation must design its desired processes; taking into consideration what contemporary technology can offer, while not letting it dictate the decision. A reasonable place to begin is by measuring the elements of the existing processes and identifying the aspects that need enhancement with a process audit (e.g. Performance Management, Talent Management). The results from these audits can inform the decision-making process, educate the project team on the intricacies of the processes and potential options and commence the OD dimension of the project by engaging a substantial number of employees early-on.

Third, the organisation needs to determine the extent of change that senior management will actively support – and put in place controls, rewards and consequences that ensure the change will happen. Establishing accountability from leadership is paramount to the success of any change management initiative.

Lastly, the organisation needs to manage the culture change, bring people on-board, while equipping them with the process skills needed to be successful and ensure that appropriate leadership and management are used. Software is not always a solution. Implemented badly, it can even be a problem!

How to find the best-fit solution
So, how do you find the best-fit solution to implement? Firstly, divide the procurement into six phases.

Phase 1 – Research
Research all the possibilities and what those at the forefront (not merely those included in general ‘best practice’ reports) are doing. Be wary of superficial applications that only appear to simplify processes. While researching, it is important to ask vendors for what is innovative, the business impact of the features and what makes them different.

For example, did you know that:

• Applications can now detect appraisal rater bias the instant an appraisal is submitted and trigger a review of rating standards immediately, rather than waiting for a later calibration meeting?
• Some organisations now collect real-time assessments of performance (evidence-based performance management), eliminating the writing of annual performance appraisals – which are then a mere snapshot and archiving step?
• By combining goals that are aligned with the competencies needed to produce them and the current assessments of competency, a predictive index of the probability of departmental goal achievement over the year can be created?

Phase 2 – Assess internal needs and state of readiness
Be careful to differentiate between needs and wants. If employees don’t believe something is effective, they often state that it needs to be ‘simpler’. Such simplification (or ‘trivialisation’) often reduces utility and thus makes things worse. The priority (the need) is to make things effective and then to simplify as much as practical. Readiness also needs to be assessed in organisational terms (e.g. “are we ready to move to a truly open multi-input rolling performance management process” or “are we ready to allow individuals to bid for jobs, recommend their successors and to take their own HiPo assessment test?”) and in terms of the implementation (e.g. “do you have the skills to design the process, develop the communications and manage the OD/Change-Management programme?”).

Phase 3 – Identify potential solutions/vendors
Now, invite a number of potential vendors to present their solutions, guiding them with the recently defined needs and explaining the state of readiness. Do not script the demos. Allow them to show what they can do and would recommend. Your choice of vendor is as important, if not more so, than your choice of technology – can you work with them when the going gets tough?

Phase 4 – Re-appraise and define true needs
Re-visit needs. Specify what is needed for the application to achieve short-term and long-term: make sure it is clearly articulated the extent to which usage will evolve over time.

Phase 5 – Shortlist solutions
Use the redefined needs in a pre-qualification process to narrow down the list of vendors.

Phase 6 – Standard Procurement Process
Execute a robust process on the shortlisted candidates. Focus on the issues that are most important and don’t waste time on things that often get included in RFPs but are not decision critical.

In the review, include the following:

• Solution fit – the extent to which it definitively meets the specified needs
• Sustainability/adaptability – the extent to which it will be able to adapt to future demands
• Internal support demands – how much resource will be consumed to keep it operational
• Net investment – are there hidden costs? Lowest upfront cost is not always the lowest net investment
• Vendor support – availability of on-going vendor support for urgent and planned changes
• What support, if needed, is available to get the process embedded, not merely installed (e.g., it is used by those for whom it was designed)
• Chemistry – do you like the vendor; could you work with them when the going gets tough; do you trust their advice enough to follow it if you were unsure?

A final word
Out-of-the-box is not automatically the ‘best-fit’ solution for all organisations; and nor is an ERP, a tailored solution or a fully custom solution. For an organisation to find their ideal solution, they must undertake sufficient research that helps define their needs and state of readiness. At the same time, they must take into account contemporary process and technology options and keep in mind that software is a tool and not the absolute answer to the real issue they may have originally sought to resolve. It is the buyer’s critical responsibility to balance at least HR, line, IS/IT and finance needs and to take a long hard look at the potential impact on its workforce and culture as a whole. Ultimately, organisations must come to terms with the fact that there are no quick and easy fixes when it comes to managing human capital. But now, more than ever, contemporary technology and methodologies acquired and utilised judiciously are making positive impact on today’s workforce and on business outcomes.

Clinton Wingrove is EVP and Principal Consultant at Pilat HR Solutions

• If you want to find out more about HR technology then take advantage of the free pass for members to our Business Cloud Summit. It's happening in London on 30 November – just click here to register.