From its administrative origins to its strategic present, the HR profession has evolved alongside the burgeoning demands of employers and employees alike—and so too has the technology to support the vastly expanded and specialized aspects of HR. However, the HR budget has always been held to a higher degree of scrutiny, burdened by its historical representation as every business’ primary cost centre. We sit down with Jafar Owainati, co-founder and CEO of Barley, to talk about what HR really needs to consider when building out an HR tech stack and, perhaps even more importantly, how to communicate its value in building the business case.

Key Takeaways:

• Both all-in-one and specialized a la carte HR tech solutions have the ability to elevate and evolve HR’s role from functional administration to strategic business partner.
• When building out technology solutions for HR, the key to prioritization and selection hinges around aligning software purchase to business purpose;
• As with other functions, specialized HR software holds the edge from a solution standpoint with an obsessive focus on a key area of HR; and
• When building the business case for HR tech, put purpose first, draw on key metrics and bring in key shareholders and vendors for input and presentation.

“The HR tech stack has evolved in the same way the HR mandate has evolved,” said Jafar. “Historically, HR was looked at as more of a compliance-based, administrative, ‘back-office’ type role, but it has really shifted to be more of a strategic role that is enabling the objectives of the business through its people. We now have things like performance management, learning and development, talent acquisition and compensation management, which are all aspects of HR that have changed a lot over the years.”

Moreover, those needs and challenges are marked by the evolution of expectations of employees and employers alike.

“I’d say that as companies have evolved and gotten bigger, there’s been more specialization in HR. As an example, we have HR roles that are focused on diversity, equity and inclusion. We also have total rewards and compensation functions and employee onboarding and employee experience,” said Jafar. “But I think it’s also a matter of companies having shifted to being more people-centric and people-first and needing to do things like institute better learning and development programs or have more formalized performance management and employee engagement initiatives.”

The Down Low on HR Tech Uptake 

That said, while those tools, systems and software have evolved to meet present and future HR demands alike, in the words of sci-fi writer William Gibson “The future is already here—it’s just not evenly distributed.”

“What’s interesting is that HR’s technology maturity is less predictable than other categories. You can have cases where you have a 500 person company and it still doesn’t even have an HRIS. That can happen. It can be related to the industry. It can be related to the experience of the HR team,” said Jafar. “Then you can see the flip side with a company of 50 or fewer people, but with a seasoned HR leader who brings a technology first approach and they have all the tools and systems already implemented.”

“When it comes to HR tech, and HR as a department specifically, I think there has always been this view of wanting to have everything in one place because that perspective is grounded in trying to keep things simple. However, the challenge with that, as with any software solution, is that there are going to be parts of that platform that have more of a focus than others,” said Jafar.

Solutions Evolve From Silo to Sandbox

And this is where point solutions have stepped in to revolutionize the evolution of HR tech options that exist today.

“Let’s go back into this idea of why point solutions even exist. They exist because a need is identified that is not being solved well enough within the market with an existing solution. In order to support any big component of HR in a lot of depth, it actually requires a dedicated level of focus and that’s where you see the emergence of solutions like performance management software, learning and development software and compensation software among others,” said Jafar.

Moreover, Jafar notes, point solutions are no longer stand alone solutions.

“I would say the key detriment in the past was that point solutions operated in a silo,” said Jafar. “Today, with SaaS or subscription platforms evolving, everyone has recognized the importance of playing nice in the sandbox. What that translates into are HRIS systems, whether they’re Workday or UKG or BambooHR, all having open APIs (allowing for integrations) with partner marketplaces where they include integrated point solutions.”

“It’s the recognition that for those large HR systems that no one can be all things to all people,” said Jafar.  “We all recognize that everyone has to do what they can to build the best solution possible to solve their specific problems, but actually, integrated point solutions are proven to increase customer retention and increase customer growth.”

That often boils down to point solution providers simply being that much more obsessive about both their area of industry focus and the end user experience. The end user experience is that much more critical to the HR function, Jafar notes, since it is not just HR or administrator , but managers and employees that will be relied upon to fulfill its potential returns.

That said, the strengths of those core all-in-one solutions—from their inherent centralization of everything to having fewer vendors to manage—Jafar notes, has only continued to grow in a more inclusive solutions environment.

Factoring The Cost of Indecision

Regardless of the shape those tools and systems may take, Jafar notes that the primary impediment to most company’s moving forward is all too human—indecision.

"That’s because in a lot of cases, keeping the status quo is a lot easier for most people than making that change,” said Jafar. “As they used to say 20 years ago in this business: ‘No one should get fired for buying IBM…but they should.’ When I first heard it back then it really spoke to going with the safe bet, but really, the safe bet for most people is doing nothing.”

Key Considerations: All-in-One Vs. Point Solutions

All of the above said, there are a few decision factors Jafar encourages you to consider when deciding to opt for the all-in-one versus a point solution.

1. Figure out what you really need to solve your problem. Your number one consideration is to document the problem that needs to be solved and evaluate both the HRIS and point solutions to determine which of the two best solves for their business need.
   
   Cost is always an important consideration but a company needs to first start with their business needs and current cost to their business of "inaction". Then, when evaluating costs, it needs to be framed on how much value the business is capturing from a solution. The problem is that sometimes organizations start cost first. Before diving into price, first take the time to solve your business problem.
   
   
2. Frame the cost in terms of capture and business value. When evaluating costs, it needs to be framed on how much value the business is capturing from a solution. So, if a point solution costs more, is it creating substantially more value for the company and aligning more closely to their needs. Reframe the conversation from cost to business value and impact. That’s when you need to check whether your HRIS platform even has a module to address each problem, because it might not have anything at all or it might have an add-on. In evaluating the add-on, there are a couple of questions you need to ask: How much more does the add-on cost? Does it actually solve all my business problems fully? How does it compare what a point or dedicated solution might do?
   
   Start with the impact first and then look deeper to truly understand the costs.
   
   
3. Factor the user experience. As an HR head, you might be comfortable with cumbersome tools, but if your end users are your people managers and employees, what is the user experience they are getting? In many cases, the user experience in an HRIS system was built more for an administrator than a broad-based audience.
   
   
4. Value and cost may differ. When you are looking at anything, it should always be a cost/benefit analysis.
   
   There are cases where a dedicated point solution, just from a price point, may be cheaper, but in some cases they may be more expensive. Alternatively, you may find something that is a point solution that actually has less capability than your HR platform, but is substantially cheaper, so you’re willing to take that rather than paying for the add-on or expanding your HRIS system.
   
   On the flip side, you might have a points solution that is extremely robust, complex and meets a bunch of different needs that your HR platform cannot support in any way— and you may pay a bit of a premium. It think it really depends on the pricing models of the companies and that comes back to the cost benefit analysis.

“The selection of which you go with is something that is unique, depending on the business problem and the business area affected. In some cases, it just makes more sense to use to the all-in-one, HCM or HRIS,” said Jafar. “Or you might find that is not going to meet all your needs and you need to explore something different.”

Building a Better Business Case for HR Tech 

Regardless of which way you choose to build, the challenge of presenting the case for either solution, most often resides in outdated notions of HR—and the challenge HR faces in quantitatively capturing the value they deliver.

“There has not been enough emphasis on how to build the case or evaluate things for value well enough—the reason being it can be challenging at times to document and measure the value of your HR tools in a way that connects directly to dollars and cents,” said Jafar. “That’s why the most important thing in building the HR business case is to look at the jobs that need to be done. What is the current state of how that job is being completed and what does the future state look like with implementation of the solution—whether it is a point solution or an all-in-one platform?”

With that focus in mind, when building the business case, Jafar encourages you to:

1. First look at your current state and what the business metrics are that are impacted by that current state. Look at typical HR metrics that exist like employee turnover and retention, which can be broken down further into voluntary and involuntary turnover. Then look at things like total payroll and total spend and how they can be impacted. For example, if you are able to make more informed decisions about the offers you are putting out or more informed decisions on salary increases, you can show that spend can be controlled more adequately versus going off the rails. That has dollar impacts as well.
2. Then look at the cost to the business from an administrative standpoint. Track how many people are involved in the process today along with the hours they are investing, then compare that to the potential time savings in the future state. Time savings and reallocating that spend is a real key and what is interesting there in that business case analysis is that people only tend to look at the cost of that person’s salary rather than thinking about how that spend can be reallocated. The reality is that an individual’s time being taken away from other high value activities is actually more valuable than their salary. So, there is almost a position/business case here that it is not their salary or pay per hour, but their value per hour that is lost in taking them away from that primary business.
3. Consider the business and compliance risks. These are things that are actually hard to measure because what you need to think about is what is the probability that that risk would occur and then, what would be the cost to the business if that risk did occur. The way you can do this mathematically when building a business case is like this. Say the probability of a risk is two percent and the cost of it happening is one million dollars. If implementing a new solution can reduce that probability of risk down to one per cent or even eliminate it, then you can multiply those numbers out to show the impact on the reduction of the potential or probability of risk.
4. Work with the vendors that you are evaluating and ask them how they can help you build the business case. If you have an internal process on how the business case is to be presented—sometimes there are templates or forms that need to be submitted or maybe it’s even an informal meeting with CFO and CEO—share those details with your preferred vendor. Your vendors are intended to be your future partners and you should use them to can help empower you and help you build that business case. That’s their job!

Own True HR Impact to Build Better Business Cases

Above all else, Jafar encourages HR to think both boldly and broadly in terms of business impact.

“When it comes to spend, HR is more scrutinized than any other part of the business, but the budget where HR creates an impact is not owned by HR. Your people across the organization are budgeted under individual departments like engineering, sales and marketing. Each of those department leaders has their headcount budget and if you are implementing an HR tool that can help impact those people, those impacts need to accounted for as HR victories,” said Jafar. “Too often HR does not get that credit.”

Moreover, while whether an all-in-one or point solution brings better value can only be decided on a case-by-case basis, Jafar notes that the demands of the HR profession will only continue to drive the evolution of the HR tech stack.

“An organization is going to place its focus on the overall strategic priorities, so there is always going to be a focus on the all-in-one platforms to focus on their core—and their core is always going to be serving as their system of record and supporting things like payroll and the fundamental needs from a system perspective for HR. Everything else that touches that is a specialization,” said Jafar.
“The way you can think about that is this. You have people with dedicated roles in learning and development, total rewards and compensation—and each of those roles and functions within HR need dedicated and specialized tools. Similarly, each software vendor that provides those tools needs a level of obsession in those areas—that’s how you get to innovation, the right value and depth.“Those vendors are also where HR will find keen advocates for building the business case for tech stack solutions that can not only speak to the bottom line, but reframe HR’s true contribution to the bigger picture.