Needs analysis

Once the committee members are assigned, the actual work can begin. Before short-listing vendors, the committee must analyze the organization's needs.

Paton says that HR departments tend to think too conservatively when analyzing their software needs. He urges managers to consider " 'What do we need?' instead of 'What can be done?' Have confidence and say 'whatever we need we can get' and then compare your needs with what's available."

One key question to ask at this point, Paton says, is "What are the functional requirements for our new HRIT system?" He recommends choosing five non-negotiable requirements. These aspects should be ones that would be cost-prohibitive to have customized. That way, if a vendor doesn't provide them on the base system, that vendor can be stricken off the list. For example, if your company requires bilingual capability on its HR software and one vendor doesn't include that, that vendor can be dropped from consideration.

To accomplish this, Paton recommends creating a priorities chart listing such crucial HR functions as salary administration, performance evaluation, labor relations, time and attendance, leave administration, vacation administration and ranking them as to their importance and potential cost-savings if they were built into the new system.

What is the matrix?

After ranking functional priority, consult a matrix of HR software -- a chart that shows vendors, systems and applications of the software. Paton's company, HRMS Directions, offers a chart of hundreds of software, and compares capabilities of the available systems. The matrix also includes details on the levels of customization available, the software's compatibility with other common office technologies and information on the vendor. Paton recommends working with a consulting firm such as his company that does not sell software and can thus objectively help an organization compare software vendors. Match your company's needs to the software specifications in an HRIT matrix, narrow down your list to four likely vendors, and move on the evaluation step.

Evaluation

Reading about software specifications will enable you to narrow down your list of potential vendors, but there's nothing like seeing software in action to help make the final decision. Product demonstrations are critical, Paton says. The demonstration will allow the vendor to display the features of his software, of course, but the evaluation and selection team has to tightly control the process so the system can be measured against the company's needs. "The committee should provide the vendor with the agenda for the meeting/demonstration at least two weeks in advance so the company sees what it needs to see and not what the vendor wants them to see," Paton says.

The demonstration should be a half-day meeting, so that four vendors can be evaluated in two days of non-stop meetings without the committee losing focus. Each vendor should give a technical overview and a product overview to begin. Then, Paton says, the committee should request the vendor to demonstrate at least two processes and two functional areas of the system.

Two reports should be created during the demonstration so the committee can evaluate the ease of reporting, using various sets of data. The vendor should also describe their software support services during the meeting.

Recommendation and selection

The recommendation team needs to rank the vendors and their products and prepare a report of their findings. "It is essential to analyze each system immediately after the demonstration," Paton notes. "Under no circumstances, view two vendor demonstrations before debriefing the first. It becomes impossible to distinguish and separate one system from another."

No factors should be overlooked during the process of choosing the appropriate vendor, Paton says. "Consider objective factors, such as the customization possibilities of each software, and subjective factors such as the vendor's attitude. Everyone's observation is important," he emphasizes, "but the project manager must facilitate the process and avoid confrontation by considering all opinions."

Assessing the cost of the software is another major factor in choosing from the final candidates. There are indirect costs to consider, Paton says. "I recommend rejecting vendors who charge by the number of total users," he says. "Also, don't get hung up on the difference between vendors in terms of the cost of the licensing agreement. It's a small percentage of the total cost." Costs of the service agreement (ongoing system maintenance) and estimates for customizing the software are also critical.

Pre-implementation

A vendor has finally been chosen. The next step is to update the business case you wrote earlier to gain approval for the selection process -- modifying it to request money for the implementation of the chosen system. According to Paton, the following elements are necessary to obtain management approval and funding:

• Document the tangible and intangible business implications that are expected to result from the project.
• Identify specific objectives and deliverables against which progress and success can be measured.
• Cost-justify the project.