Buying Strategies

How a Data-Centric Mindset Can Improve Your HR Software

February 15, 2021
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Brett Ungashick
Founder

Many buyers shop from the top-down. They look at user interfaces, buttons and features, hoping the things below the surface 'just work.' A more successful framework is to build upward from the database-level. Here's how:

When evaluating new HR systems, it is easy to get caught up in the features and packaging, the look and feel, the analytics and insights.

However, when you strip away the window dressing, what you are left with is actually very simple. You are buying an accessible database that is capable of organizing, centralizing, manipulating and (at times) enhancing your data.

To paraphrase Rippling's CEO, Parker Conrad, at the end of the day all HR software is just "reports, alerts, workflow, permissions and approvals all the way down."

Thinking about your HR software as a system of rules and logic to manipulate your data may not seem fun and exciting, but this framework can be very useful for helping you make the most of your HR software investments.

Data at The Core

Why do companies purchase HR software (or any type of enterprise software)?

They do so because they want to organize their business data, they want to make it more accessible and they want to make it easier to utilize.

The data that is housed in HR systems, is primarily people data. And this data has great value to businesses.

Your people data can tell the history of the organization's workforce. Your people data can help you predict the future - such as who will leave, what skills you'll need to develop, and how many hires you expect to make. Your people data can also make your present operations more effective, allowing employees to be paid fairly and on-time.

Although there is immense value to be found in a business's people data, very few companies think about that data as a protectable asset worth investing in.

Data Ownership

As Sunil Vatave, founder of Canopy Workforce Solutions pointed out, "It used to be HR controlled the company's employee data. It was right there in a locked file cabinet. Every employee had a master file... If you needed the data, it was easy to get. Today we put data in various cloud applications with no thought as to how we may get it back."

Nowadays businesses are trading in those old, static filing cabinets for dynamic, cloud-based HR systems. And the upside of that trade-off is obvious, especially in our COVID-19, remote work world. Being able to access your people data from anywhere in the world is a huge advantage.

However, this cloud migration has come at a hidden, but significant cost for many businesses: Most companies no longer own their people data.

You may think that you own that data, but a closer look at your HRIS contract might prove otherwise. Here are a just a few examples from the contracts of major HRIS vendors (via Vatave):

  • “Upon Client’s request and to the extent possible, [Vendor] will assist client to restore any lost data caused by [Vendor].”
  • "[Vendor] is not and shall not be Client’s official record keeper, Client shall keep copies of all information and Personal Data it deems necessary.”
  • “We shall not be liable to you … for ...any damage or corruption of data.”

When you sign on with an HRIS vendor, your data is no longer fully yours.

And this is not some minor technicality either. We've had multiple clients tell us stories about how their current vendor wouldn't let them download their data when they signed on with a new provider.

So why are businesses willing to give up their ownership of such a valuable asset?

Data Enhancements (or Lack Thereof)

The reason that businesses move away from their traditional, paper-based data systems to dynamic, online software environments is so they can do more with their data.

Specifically, businesses want to make their people data more available (cloud-based) to the people who need it (permissions) and easier to gather (self-service and workflows) and draw trends from (reporting).

In theory, that trade-off seems like a fair one: The company shares ownership of their data with the vendor. In return, the vendor makes their data even more valuable.

However, there still exists a fundamental gap between the potential heights of HR software and the day-to-day experience of most users.

For people data to be truly unlocked and HR software to reach it's promise, four data enhancement principles are required

  1. Businesses need a clean, fully-owned master dataset of all of their people data. Few companies have this
  2. That data needs to be uploaded to an HR application that is built on a single database. This is relatively rare in the HRIS space, even though salespeople will swear it isn't
  3. Workflows, permissions and approvals need to be configured in a way that makes use of the data at the right place and time for it to be valuable. Many HRIS systems aren't very configurable
  4. Your master data needs to be shared with other applications that require use of the same data. Many HRIS vendors don't like sharing data with other platforms

It is exceedingly rare for businesses to have clean and comprehensive historical people data. And it is additionally rare that they are then matched with an HRIS provider that operates on a single database, is configurable to their business processes and is extensible with other systems.

Side note: The fact that Workday can do all three is why they charge 3x more than the rest of the market for their software

Freeing Data

If that is the path to a better experience with HR software, then how does one get started?

The first step in the process is creating a master dataset of your people data. But, as we mentioned, building that master dataset in your HRIS system can be challenging because (1) the data is often fragmented and (2) the vendor can always claim ownership over parts of the data.

A better approach is, instead, to build your dataset in an open, independent database. Using a solution like Canopy, or their peers, allows businesses to bring all of their people data from disparate databases together in one source of truth.

Once you have a master dataset, you can then start to build your HR application stack on top of that data. For some HR functions, you might only need basic database functionality - in those cases, Canopy's tools can meet your needs at a minimal cost.

All images are courtesy of the great work of Undraw

But for other HR functions, businesses desire 3rd party point solutions that can drive additional value, more functionality and a better user experience. In those cases, any software application can be layered on top of your database. The data from your master dataset can populate these new tools and changes in the 3rd party systems can be synced back down to your master dataset.

By taking this approach, your team fulfills two out of the four data enhancement principles: You own your master data and it is shareable across any system.

To fulfill the final two principles, OutSail can help you layer in point solutions that are built on single databases and configurable enough to meet your organizations needs.

Thinking about your HR infrastructure from the database upwards may not be as fun as looking at platforms from the user experience down, but this approach can solve many of the challenges plaguing HR operations today

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Brett Ungashick
Founder
Brett is the founder of OutSail. He spent the early part of his career selling HR software before switching sides and going to work for the people buying the software.

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