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How to Evaluate HR Software Vendors and Solutions Before Expanding Your HR Tech Stack

When it comes to expanding your HR Tech stack, the options are seemingly endless. With new software solutions popping up every day, how can HR professionals and business owners make sense of it all?

Choosing the right tools for your HR tech stack is like putting together the perfect playlist for a road trip - it takes time, research, and a clear understanding of your needs. In this guide, we'll walk you through the basic HR Tech stack and steps for evaluating people tools before making any additions to your HR arsenal. It's also a must-read if you're starting from zero and need to tech-up. 

Stick around as we share valuable insights and tips to help you find the software that will not only fit your business needs but also set your HR team up for success!

desk with a cup, monitor with graphs, and a potted plant

Defining and Understanding Your HR Needs

Before diving into the vast ocean of HR technology, it's crucial to first identify and understand your specific HR needs. It's like building a shopping list before hitting the stores, ensuring you don't get swayed by shiny gadgets and end up with a bloated HR tech stack. 

Start by assessing your current HR processes and systems (manual and digital), and ask yourself:

  • What's working?
  • What isn't?
  • Where can we improve?

This self-evaluation will help you pinpoint your organization's needs and prioritize them accordingly. 

Once you have a clear grasp of your needs, it's time to establish your goals. Do you want to streamline onboarding, enhance employee engagement, or optimize performance management? Setting clear objectives will help you stay focused as you evaluate potential tools and solutions.

The Basic HR Tech Stack 

Before diving into evaluating new people tools, let's take a step back and review the basic HR Tech stack. The core components of any HR software suite are essential to managing talent, streamlining processes, and ensuring compliance. 

  • Applicant Tracking System (ATS): A critical tool in the recruitment process, an ATS helps you manage job postings, track applicants, and streamline the interview process.
  • Human Resources Information System (HRIS): Your HRIS is the core HR system and the backbone of your HR department, providing a centralized database for employee information, time tracking, benefits administration, and more. You'll also find some vendors refer to a Human Resources Management System (HRMS) or Human Capital Management (HCM) software. These are not exactly the same, but all refer to a centralized information hub for storing, managing, and processing employee data.
  • Performance Management Software: This tool enables you to track employee performance, set goals, and conduct meaningful, data-driven performance reviews to facilitate employee growth and development.
  • Payroll and Benefits Software: To ensure accurate and timely compensation, payroll processing software automates the calculation, distribution, and reporting of employee pay. A separate or integrated benefits component manages the signup and allocation of various benefits. As mentioned above, benefits administration can also be native to your HRIS. 
  • Learning Management System (LMS): An LMS helps you deliver and track employee training, ensuring your team stays up-to-date on essential skills and industry knowledge.

Now that we've covered the basics, let's explore how to evaluate potential additions to your HR tech stack.

stack of books topped with glasses and a coffee cup

First questions first...

Do You Need a New People Tool?

So the requirements of your HR tech stack are growing, and you're wondering if it's time to add a new people tool to the mix. But how do you know if it's really necessary? Let's explore some key factors to consider before making that decision. 

Have You Done a Software Use Audit?

Before going through the considerable process of buying new people tools, assess your existing HR software. Are there any gaps or inefficiencies in how your team uses these tools? For example, are they doing manual inputs where imports can save time, or skipping critical data entry that skews your analytical output downstream? 

If the human component is working, but your current solutions still aren't addressing all your needs, take the time to investigate your use case. Perhaps you are not making use of some of the software's available modules, or integrations with your other tools are not set up properly. Perhaps the barrier in your workflow can be addressed with an upgrade of your current tool's plan instead of migrating to a new one. 

If you're using the tool optimally, and it's still not addressing your pain points, it's time to think about adding new technology or replacing your existing tools altogether. 

How and How Quickly Is Your Company Growing? 

Is your company expanding rapidly? If so, your HR information demands will grow too, and it might be time to invest in a new people tool to support that growth and streamline processes.

Think about your long-term goals. Will your current HR tech stack be sufficient as your business evolves if you just add users or upgrade your plan, or will its inherent functionality fall short? For example, you're probably able to stick with the same ATS as your hiring needs increase, but if the tool doesn't have a native automated onboarding component, or it doesn’t feed directly into your HRIS system, you're going to need a new solution once you're staffing up at scale.  

Planning for the future ensures you're making strategic decisions and investing in the right tools upstream.

Are You Seeing ROI from Using Your HR Software?

Investing in new HR software is no small decision, so it's crucial to evaluate the need for it based on whether your current HR tech stack is delivering a solid return on investment (ROI). Without a positive ROI, you may be throwing money at a resource that isn't adding value to your business or improving your HR processes. 

When assessing the ROI of your current HR Tech stack, consider both quantitative and qualitative factors.

Quantitative aspects include time and cost savings, reduced error rates, and increased productivity that translates into dollars saved. Qualitative factors encompass improved employee engagement, better decision-making, higher retention rates, and enhanced communication within the team. 

To get a clear picture, gather feedback from your HR team and other employees who interact with the software regularly. Compare this to the projected ROI from buying new HR Tech to see where your returns will be optimal. This comparative exercise will help you identify any gaps or areas for improvement and determine whether expanding your HR tech stack is the right move for your organization.

If the consensus is that you need a new system or tool, it's time to roll up your sleeves and do some software vendor research. 

hand writing on a checklist with a pen

The Process of Buying a New HR Tech Solution

1. Defining and Understanding Your HR Tech Needs

Before diving into the vast ocean of HR tech solutions, it's crucial to first identify and understand your organization's specific needs. This process involves evaluating your current HR processes, identifying gaps that any existing tools may not address, and establishing clear objectives for your tech stack expansion. 

Once you've identified your needs, establish a clear set of metrics and objectives for your HR tech stack expansion. For example:

  • If the new tool does not offer X,Y, and Z, we will be no better off than we are now. 
  • A new tool must have an ROI of $X to justify a spend any higher than $Y. 
  • If we get a tool that costs more than $X, its functionality must be comprehensive enough that we can remove [other tool(s)] from our existing tech stack. 

2. Narrowing Down the Search

Now that you've identified your HR needs, it's time to narrow down the search for the perfect people tools to enhance your HR tech stack. Scary huh? Don't worry, we've got you covered

Here's how you get started:

Create a list of essential features that align with your HR goals and objectives. This will help you focus on the tools that truly meet your needs. 

Research multiple vendors to see which ones offer the best solutions for your organization. Browse their websites, read reviews, and ask for recommendations from industry peers. Consider the vendor's reputation, customer support, and scalability as your company grows.

3. Comparing Your Shortlisted HR Tech Options

Once your evaluation process has narrowed your search down to a shortlist of potential tools, it's time to compare their features, pricing, and ease of use. This will help you determine which software will provide the most value for your investment. To get a sense of a tool's user experience and value, you'll need to do some in-depth research. This is important stuff, so let's take a closer look...

three people comparing options on a board

Comparing HR Tech Vendors and Solutions

There's a veritable web of micro factors that go into choosing the right HR Tech vendor. But fear not, we come with provisions.

Great Resources for Vendor Research 

HR Tech review sites: There's no better place to start than websites dedicated to reviewing and comparing HR software. Sites like G2, Capterra, SelectSoftware Reviews, and Software Advice offer user-generated and expert reviews to help you find the best solutions for your organization. Review sites typically provide in-depth feature comparisons and pricing information that the vendor wouldn't tell you in a sales call, so it's a  great source of impartial information. 

Industry blogs and publications: HR industry blogs and publications often publish detailed articles on the latest trends, technologies, and case studies. HR Technologist, HR Dive, HR Zone, and HR Chief are just a few examples of the wealth of knowledge you can tap into. 

Peer networks and professional associations: Don't underestimate the value of connecting with your peers. Reach out to your network of HR professionals and business leaders for recommendations and insights. You can connect to like-minded individuals by joining HR professional associations like SHRM or HRPA, or signing up for digital communities like PeoplePeople or People Geeks. The people in these channels readily offer real-world experiences and provide invaluable guidance as you navigate the HR tech landscape.

Advice for Meeting HR Tech Vendors and Doing demos

Finding the perfect HR tech tool is like dating: you have to meet a few before you find "the one." And with so many options out there, it's crucial to make your demo meetings as efficient as possible. Here are some tips to help you get the most out of your HR tech vendor meetings. 

Pro-tip: Regardless of what your intentions are for the demo/meeting, always bear in mind that the vendor considers it a sales call. You will probably not get objective answers to questions like, "Are you a better solution for my company than [competitor]?" or, "Can I expect a high level of customer support after signing up for this plan?"

Prepare a Die-Hard List of Must-Haves (and Another List of Nice-to-Haves)

Go into each demo with a list of features that are absolutely essential to your organization. If the vendor can't show that they offer all of your must-haves, don't let them bedazzle you with other features or talk you into compromising. You've no use for scatter cushions if you don't have a couch. 

Odds are that a few vendors will check your must-have boxes. That's where your nice-to-have list comes in. What can they offer that would make you and your HR team happier or more efficient than if you went for a different vendor? From here you can prioritize what's most important for your organization, and how each vendor's offering compares to their price tag. 

Ask the Right Questions

During demos, don't be afraid to ask tough questions. Inquire about the vendor's experience with companies similar to yours and how their tool has helped solve HR challenges. Also, explore their customer support options and any potential hidden costs that may arise post-purchase. The more you know, the better equipped you'll be to make an informed decision. 

Test Drive the Software

It's essential to get hands-on experience with the HR Tech tools you're considering. Many vendors offer free trials or limited access to their platforms, allowing you to test out the features and see how user-friendly they are. Take advantage of this opportunity to ensure the software meets your needs and expectations before committing to a purchase. Here are some pointers for getting the best value from using a trial version. 

person looking through binoculars

Putting an HR Tech Trial Version to the Test

When it comes to selecting the right HR tools, there's no better way to evaluate their potential than by putting a trial version through its paces. A hands-on experience with the software can give you valuable insights into its features, ease of use, and compatibility with your current systems (as well as your staff). 

To make the most of your trial period, involve relevant team members and stakeholders and encourage them to provide structured feedback on the software. This collaborative approach will help you gauge whether the tool is a good fit for your company's needs and culture. Here are a few tips to make the time you have with a trial version count.

Import  "Real" Data

Clicking around a user dashboard is fun and all, but a trial version of a software tool is limiting if it has no data to sort through or report on. Naturally, you don't want to import your real company information for employee privacy reasons. You can ask your vendor for a dummy set of employee data, or you can use an AI tool to write a data set. 

This allows you to properly test aggregate sorting tools, reporting functions, and search tools. 

Design Matters 

The people who will spend the most time using your new tool (HR managers and hiring teams) should be front of mind at all times while you're testing it. If the interface is confusing, the buttons and menus are not accessible, or the workflows are overly complex, it doesn't matter how "smart" the HR system is— it's not built for users. 

Ask members of your team to complete a set list of tasks in the trial version. If all of them trip on the same step, it's likely due to a lack of intuitive UX design on the vendor's part. Of course, your team will overcome this as they learn how to use the software, but the more intuitive it is, the shorter your implementation and onboarding process will be. 

Try to Break It

In terms of testing, it's not just about what the software can do, it's also about figuring out what it can't do. Spend some time in the tools sorting, search, reporting, and integration features to see where its limits in functionality lie. Maybe it takes forever to pull a 12-month report, or you can only import a small number of employee records at a time. Whether or not these things are deal breakers for you, your vendor won't highlight the tool's limitations, so stress testing the trial version is your best chance of identifying them. 

After putting your shortlist of vendors through the demo and trail filter, you're almost ready to make a commitment, provided you can get a great deal.

three people holding hands up triumphantly

Negotiating the Best Possible Deal on HR Tech

Armed with your final list of vendors still under consideration and a deeper understanding of their offerings, it's time to negotiate the best possible deal. Approach vendors with confidence, sharing your organization's unique needs and budget constraints. 

If your spending power falls short of what the vendor is prepared to take, be prepared with some value-adds that you can offer them:

A longer commitment: Vendors will likely compromise on price if they can lock you into a longer commitment. Be wary of what this means though. If your company has unprecedented growth beyond the tool's functionality or a RIF that makes you fall into a lower-tier user plan, you'll be locked in. 

User referrals: Offer to be a brand ambassador for companies similar to yours who are considering the tool. You might have to take a few calls to answer questions, but it can easily validate a monthly saving. 

Case studies: Sign up to be a case study the vendor may refer to in their marketing efforts. This offers a double benefit because you can ask for a reduced subscription fee and, as a poster child for the tool, you're sure to get great service. 

Why Evaluating People Tools is Important for Your Business

When it comes to growing your business, one of the most crucial components is having the right people tools in place. A robust HR Tech stack can streamline processes, improve efficiency, and ultimately contribute to your company's overall success. 

The right HR Tech solution for your organization is one that solves your specific challenges, fits within your budget, and can grow with you as your needs evolve. Happy hunting!

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Frieda-Marié de Jager

Frieda-Marié de Jager is the Melbourne-based Senior Content Marketing Editor for SelectSoftware Reviews— the authority on top solutions and vendors in the HR Tech space. She writes about technical subjects including corporate compliance, workplace issues, and customs law.