Recover your ROI on HR Technology, in 2024, with our key strategies

To recover the return on investment (ROI) on your HR SaaS technology investment has been a great concern of many of our clients and prospects.

After 10+ years working with clients in deploying HR SaaS Technology, we quickly realised one tool didn’t make the cut, and various integrations were required to design the ideal employee experience, cover all processes and export the right metrics.

We have also found in time, how team setup, roles, and processes that became outdated, as well as ‘bad habits’ formed in how the teams serve the business were generating costs for HR leadership and IT.

To justify the investment, it's essential to demonstrate the tangible and intangible returns of the HR technology, taking into account both direct and indirect returns.

Key problems we see often with the client’s strategy that impact the ROI

• Vendor selection: lack of clarity on how HR is finding and choosing systems leaving IT uncertain if to support the project or not
• Change Management and adoption: the previous point has a great impact on adoption and consequently ROI, since not everyone is aligned on the WHY we are deploying this system and WHAT is in it for me
• Measuring results: having KPIs to measure in time is typically absent, so it is not uncommon to receive a request from a prospect claiming that they only found a low adoption rate after 18 months of deploying a new HRIs for example

What is your HR technology and administration really costing your Organisation?

The average HR technology cost

A study by Software Path in 2022, reveals that the average budget per user for HRIS software is $12,625. The study also reveals that on average, companies are spending 15 weeks selecting HRIS.

Gartner found that the yearly spend on HR administration increased from $155 per employee in 2021 to $194 per employee in 2022. “This is alarming considering HR functions have been trying to reduce the burden of administrative tasks through the use of technology,” said Berger-B?cker.

Can AI help HR Reduce costs?

New research shows that high-performing HR departments leverage tech and have 40% fewer HR staff. But one expert advised caution when adopting 'shiny, new' capabilities.

With HR costs increasing 6% in 2023, according to TechTarget’s research, companies are leveraging AI to reduce costs by automating and cutting staff but not all are ready for this automation and AI requires governance and maintenance as much as SaaS.

From experience, though this may not be the case immediately, it will become evident in the medium-long term, as data and metrics require input, analysis and structuring.

Equally, to upskill staff to use AI tools, requires time, money and effort.

How can you ensure you will see true ROI for HR technology in 2024?

How to measure the ROI for your HR systems

Another approach is to calculate the ROI of your HR software by determining the money saved or gained divided by the software cost, multiplied by 100.

ROI = (Net Profit / Cost of Investment) x100

One significant method is by evaluating the enhancement in workforce productivity, operational efficiency, and cost-effectiveness, through metrics such as:

• Productivity - have you successfully reduced HR admin costs, increased engagement with career pathing, upskilling, and training?
• Cost of Package - do you regularly run reports on all licenses used/unused to renegotiate vendor contracts?
• Number of hires and time to hire - is your HRIS or ATS attracting more and higher quality candidates and reducing the time to hire?
• Turnover cost - Has your employee experience increased and successfully impacted employee feedback, and reduced turnover?

The impact of not setting goals for the HR technology investment impacts the ROI measurement and makes HR teams lose credibility with IT and Finance.

The biggest challenges HR leadership will face in 2024, will be the buy-in from IT and Finance for new systems, even if AI-related.

Bullet-Proof Strategy for Technology ROI in 2024: Optimisation

According to the feedback we found by a survey respondent to the HR Executive Magazine in 2023:

“We stopped investing in improvements in technology, training, processes, etc. during COVID and are now seeing the ramifications—so much to catch up on,”?

HRIS, external recruitment and performance management ranked as the top HR tech tools most useful for HR teams, with onboarding and core HR also high on the list. Many respondents shared that their organizations need solutions for compensation planning, upskilling/reskilling, compensation planning and people analytics.?

The two areas of focus for ensuring ROI of HR technology are:?

• Systems optimisation
• Service Model

What to consider for HR systems optimisation

Especially around your HRIS, you may not be using all modules or full functionality for processes that are not essential but are becoming impactful in time, such as skills scoring or performance check-ins

We often see clients not use functionality that serves these processes or have the same functionality overlap across systems, creating employee (confusion) experience and not producing the expected results, meanwhile, the vendor is still billing for the licenses.

It is key to consider integrating systems before buying new ones and ensuring the right reporting and governance to measure if the HR technology goals are on track.

Reviewing your HRIS service model

I cannot stress enough the importance of periodically reviewing the Service Model as part of an overall governance model for HR technology.

A great deal of cost-reducing opportunities lie here and this is what we typically look out for:

• Start the optimisation review by delving into the current Service Model
• Review team members and RACI
• Review high-level processes and discuss gaps with the team
• Review service tickets, identify top and repetitive issues, and automate responses or address them with enhancements
• Produce a technology optimisation as a product backlog to drive the project

#hr #technology #hrtech #innovation #servicemodel #ai

About the Author:

Carla Serra is the Founder of Futturwork a boutique consultancy working with global organisations in HR transformation, vendor assessment & and selection, HR technology optimisation and adoption

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