When 'free' can be very expensive
SteveYou are a mid to large size company. You bought and deployed a big ERP solution for your HRMS, Payroll, maybe your Accounting and Procurement as well. ;)
Flickr - JeffChristiansen
It was crazy expensive, likely took longer and cost way more to implement than you figured, and you ended up making lots more customizations than you had planned for (despite the initial desire for a 'plain vanilla' project). Aside - you know your Project Manager used that expression at least 10 times in the beginning.
You finally have the ERP running relatively smoothly, to the point where it's time for other long put off projects to get considered. More 'strategic', high value-add type projects. Things like a new Applicant Tracking System, an automated Performance Management tool, or perhaps Succession Planning.
But in these tough economic times, do you even have any funds for new software?
After all, you are locked in to some hefty annual maintenance/support fees for the big ERP system. But wait, the ERP system can support all these 'strategic' processes. And five years ago, when you hammered out the ERP license contract, you made sure that you would have the right to use all those modules at any time in the future at no additional cost.
It's a no-brainer then, right? You will simply use whatever functionality that is inherent in the ERP package for your new ATS or Performance Management solution. It is already paid for, it integrates with the rest of the system, and you have functional and technical staff who know the technology. Slam-dunk.
But wait a second, five years ago when you did your due diligence in the ERP purchase process, did the modules for ATS, Performance, or Succession even factor in to the discussion? Did you even consider them at all? If you approached ERP selection like most organizations, you spent 95% of your energy on things like integration, technology, and 'core' business processes. These are all important, and it was altogether fitting and proper that they were the priority.
But now, when you are ready to deploy some of these 'strategic' modules, are you realizing that while your ERP package supports them, they are difficult to use, don't offer most of the latest advances in the technology, and are not well-received by your end users? ERP packages are developed and sold from the 'inside-out'. The tight integration, the unified database, the ability to leverage tools like workflow and security management across a wide swath of the enterprise is what 'sells' ERP.
No one, I mean no one, ever bought an ERP solution for the wonderful E-recruitment capability, or for the fantastic Performance Management module.
It is a concept that has been repeated for 20 years, it is almost a cliche, but it usually bears true. The big ERP packages simply cannot be as good at all the ancillary strategic capabilities as the best-of-breed vendors.
And when you implement ERP-based, sub-standard capabilities for ATS, Performance, or Succession, areas that impact a much, much wider audience than your core HRMS, you had best be prepared to justify and support that decision.
When the candidates, hiring managers, line managers, and executives start complaining and griping about the solutions that you have implemented, and adoption rates are slower than you would have liked, is your primary response going to be, 'Hey it was free'?
'Free' can be very expensive. Implementing software just because you have already paid for it can be a very costly mistake in the long run.
Reader Comments (4)
Steve,
Great post! In my dealings with my clients I find that IT consistently believes that the ERP can meet the functional requirements that HR defines - and usually it can. Unfortunately the discussion never seems to transition to how the software enables the desired business outcomes, which is where the ERP tends to fail. The result more often than not is a battle between IT and HR over what direction to go from a technology perspective.
If you're looking to automate performance reviews, using the Performance module of your ERP will accomplish that task. If you're looking to fully enable the business value from this process, the ERP might fall short of expectations. The core ERP data model was designed 20 years ago to support the transactional aspects of the business, not the strategic ones. The needs of a strategic HR application vary greatly from those of a transactional system - different data models, different user expectations/experiences, and different measures of success. ERP applications are complex and nearly impossible for the casual user to easily understand. These two points are the biggest barriers to adoption of ERP capabilities for strategic HR processes.
Big ERP vendors gladly gave away self-service applications and other modules to keep niche vendors from encroaching on their territory 5-7 years ago. One of the most obvious outcomes of this was enabling the IT vs HR battle. If companies had to pay for the applications that they received for free, they would question the return on that investment.
The end result is a generation of CIOs who believe that they should leverage the ERP because it's infrastructure that is bought and paid for. While technically correctly, it tends to be a bit short sighted.
Thanks for the excellent and insightful comments, I believe you stated the arguments way better than I did in the original post! Of course you hit the nail on the head, HR departments (who I am chiefly concerned for) are totally powerless in these discussions. They are consistently outvoted by IT and Finance, who can't usually be convinced that the 'free' software should not always be utilized in all circumstances. I think you made some great points and I appreciate you sharing them here.
My (admittedly biased) view on this topic is that while I agree 100% people need to be smarter about how they evaluate their solutions the problem isn't exactly "20 year old data models". The problem is one of consumption, solution maturity and overall strategy. It's possible your ERP provider has an excellent solution to your business needs but it might be on a different version (or platform) than you are currently using.
Talent solutions are rapidly evolving. This is both good and bad for consumers. Simllar to the advances from DVD to BluRay a buyer cannot just guess around this stuff. They need to know. They need to know what they need, what they want and what they can afford. The solution, as always, is being better informed.
I would suggest that companies who are looking at solving these problems today educate themselves on what they are trying to accomplish and where their long term vision would take them. Without this you are going to waste money and opportunity (even going the free route).
Great conversation Steve!
Hi Meg, thanks very much for reading and commenting. I appreciate your point of view and your insights. As a former consultant deploying ERP in many places, I have a strong understanding of the sheer power and depth of the big ERP packages. Truly, for many organizations extending their ERP footprint truly is the best decision after all. I just wanted to try and point out, as you also suggest, that organizations evaluate more than just the fact that the software they have already licensed is 'free'.
I think you and Mark and the rest of the team at Talented Apps are great, and I am a big admirer of the work you are doing.