Traditionally, introducing an HR system to an organization was based primarily on the need to improve efficiencies.  Eliminating duplicate data entry, improving legislative compliance, and reducing litigation risk are all customary factors in selecting an HR application. Organizations tend to see a dramatic ROI when purchasing HR technology, because they can tie hard and soft cost reductions, as well as tactical benefits, to the bottom line.

But over the past few years, statistics show that the real reasons for owning HR technology have changed. While any HR technology worth its salt will provide greater efficiencies, today’s HR team is thrust into analytical world of business strategy, employee-based metrics, and corporate goal-setting. HR needs to align its internal goals with the organization, and HR technology needs to be able to measure the right things to accomplish this.

For many, this task is not easy. Antiquated HR technology, coupled with the inability to integrate with the rest of corporate data, makes it difficult for the HR professional to produce the right metrics to align strategically with the business. In a recent article in Forbes magazine that outlined the top seven drivers of growth in the HR Technology market, four of the top seven drivers were tied in some way to these two issues (the number one reason –  aging of HR technology in organizations). Simply put, analytics that drive talent strategies and retain “BigData” are not typically found in old HR architecture. In an attempt to remedy this, organizations have purchased siloed applications over the years, and many companies now average 3-4 different applications for their total HR solution. This has been a band aid approach, but most organizations realize a single, modern, HR system that provides the right analytics, is critical.

In addition, talent management has become one of the most important issues for CEOs in companies today. HR needs to do more to measure the right things to be able to make the right decisions on talent. Collecting the right data and choosing the right key performance indicators are critical. Measuring the value of an initiative or strategy and finding associated correlations among workforce data is necessary to achieve this. For example, when employees go through training, many times metrics like “number of employees trained” and “no-shows vs. trainees” are tracked. But these statistics provide little to no value to the organization, because they are measuring activity. Instead, metrics that track the effectiveness of training (Did staff learn anything? Did quality improve? Did we improve customer loyalty because of the training?) help provide insight to senior management. These types of measurements are not normally retained in traditional HR solutions.

While improving efficiencies is important, HR Professionals are rapidly realizing that this is not the real reason to purchase HR technology today. Transforming the HR department to a strategic business partner with modern solutions, combined with changing talent strategies to improve employee engagement and retention, are driving forces to recommend and substantiate an HR technology purchase. 

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