5 Challenges You Will Face When Buying A New HCM System

Updated on
July 4, 2023
Brett Ungashick
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Buying a new HCM system requires a wide range of skills and knowledge. Buyers need to have the technology literacy to understand features, functionality and integrations. They need to have the project management skills to keep the project team moving forward with the evaluations without disrupting their day-to-day. And, buyers need to have the internal communications skills to make the business case for their new system.

If you are starting an HCM buying process, here are some of the key challenges you'll face and the ways that OutSail can ease those challenges:

1.)  Identifying your needs, wants and buying priorities

When buying a new HCM system, it is important to start your search internally rather than rushing out to the market and immediately talking to vendors.

A software salesperson will give you a biased impression of what your wants and needs should be, so it is important that you build those requirements ahead of time.

For many people, this can be a challenge as they may not know what functionality exists in modern HCM systems.

Solution: An OutSail advisor can build an RFP for you within 24 hours. We also publicly offer a step-by-step guide for building your HCM requirements, starting with your high-level priorities and getting all the way down to the required features.

2.) Selecting the right vendors to evaluate

If you visit a software review website, such as G2 or Capterra, you will find over 50 HRIS vendors listed in their directories. No one has time to evaluate that many solutions and, even if you did, it would be impossible to remember which solutions offered what functionality.

A good evaluation is one where a company looks at 3-5 vendors, all of which have been pre-screened to have a high potential of successfully winning the buyers' business. The challenge for buyers is how to get from 50 options to 4.

You can reach out to your network, but what works for others might not work for you. You can read software reviews, but the information you see will be heavily influenced by which vendors pay the most money to the review websites. You can look at the software vendors' websites, but they like to keep things vague so you'll reach out and schedule a demo.

Solution: Or, you can work with an OutSail advisor who will build a detailed shortlist report for you. OutSail's shortlist reports compare the most relevant vendors across their size, ease-of-use, pricing and integration capabilities. OutSail also shared red flags to expect with each option (since there's no perfect solution available).

3.) Asking the right questions during your evaluations

Once you've started talking to the right HCM vendors, you'll want to make sure that you're the one driving the evaluations.

Software sales people know the highlights and the low lights of their HCM systems better than anyone. If you're too passive in your evaluations, it's likely that the salesperson will be able to skip right over the weak points of their offering.

It's important for buyers to come into those demos with the attitude of "trust, but verify." Most vendors and salespeople are high quality and it's important to start your working relationship off with respect. But it's also important to have a discerning eye and skeptical mindset

Coming up with the right questions to ask can be challenging, however. Most problems with HCM systems are things that you only find out about after it's been bought and implemented. How do you know ahead of time what to ask and what to watch out for?

Solution: OutSail builds a demo guide for each of our clients. In the demo guide is a list of questions that we recommend they ask during their demos. Additionally, a scorecard tool is provided to help buyers keep track of what they liked, didn't like and need more information on.

4.) Securing budget and buy-in

Once you've met with your vendor finalists, asked them the hard questions and started zero-ing in on your preferred HCM partner, it is important to ensure that the rest of your organization is bought in, especially those who make the budgetary decisions.

Building a business case is the type of work that requires smart internal communication skills. It is critical to know your audience, what they care about and how they like to be talked to.

Rather than talking about features and functionality, talk to your executive audience about the high-level outcomes that the business can achieve with this investment. Additionally, make sure to back up your claims with verifiable data and to anticipate objections and come prepared with rebuttals.

Solution: OutSail provides all of our clients with a business case template. This PowerPoint template can help clients understand the organization and key points that they should hit on in their presentation. Additionally, you can lean on your vendor-of-choice to help with the presentation too.

5.) Negotiating the right deal

Once you've gotten budget approval to move forward with your vendor-of-choice, the final step is to make sure that the contract that you sign is going to be a beneficial long-term partnership for your team.

In order to negotiate effectively, you'll first need an understanding of your goals. Do you want to limit your upfront costs, your annual fees, or payment terms?

It's also important to understand how much leverage you have with the vendor. Are you a drop in the bucket for their team, or a trophy fish? Is there business cruising right now, or are they in need of a win?

All of these factors can be tough to know from the outside, but an OutSail advisor can help.

Solution: OutSail has published a high-level negotiation guide, specifically designed for companies buying new HCM systems. We also work with each of our clients to point out specific areas where they have extra leverage and can negotiate a better deal.

All images are provided by the wonderful work at Undraw.co