HR and payroll systems
Half the system you want to replace has never been switched on
And four other things worth establishing before you speak to a single supplier.
Most organisations arrive at a system replacement the same way. Something has been irritating for years, a contract renewal appears on the horizon, somebody says we should look at what else is out there, and four suppliers are invited in to demonstrate.
By the time those demonstrations happen, the decision is usually already lost. Not because the wrong supplier gets chosen, but because nobody in the room can say precisely what they need, what they are currently paying for, or what they are already entitled to and have never used.
Here are five things worth establishing first. None of them require a supplier. All of them change what you end up buying.
1. Find out how much of your current system you are actually using
This is the uncomfortable one, so it goes first.
Go through your existing platform module by module, with the people who use it, and mark each function as in use, partly used, or never switched on. Not what the contract says you have. What people actually do.
It is common to find a system well short of fully implemented. More interesting than the number is the pattern. The functions that were never turned on tend to be the fiddly ones: the areas with the most configuration, the most edge cases and the least obvious owner. Those are also, reliably, the areas generating the manual work everybody is now complaining about. They were deferred during the implementation because they were hard, and deferred quietly became permanent.
This matters for two reasons. Some of the gaps you are planning to spend money solving may be solvable inside the contract you already have. And if you half implemented the last system, you will half implement the next one, unless you understand why it happened. Usually the reason is not the software. It is that nobody owned the configuration after go live and the project team had already moved on.
That does not mean you should stay. It means you should know what you are actually comparing against, which is not the system you have but the system you could have had.
2. Read your contract properly before you read any brochures
This is where the money is, and almost nobody starts here. Find the answers to these, in writing, from the contract rather than from memory.
When does it actually end, and how much notice is required? Not the renewal date somebody remembers. The date in the agreement, and the notice period attached to it.
How must notice be served? Some agreements require a specific mechanism, an online form or a named address, and will not accept an email to your account manager. Miss the method and you have rolled over for another year regardless of your intentions.
Is there a cap on annual increases, and when does it stop applying? This is the single most overlooked clause in the market. Many agreements cap uplifts during the initial term and then revert to list price at renewal. If your rates were negotiated several years ago and list prices have moved since, the increase waiting for you at renewal can be very large indeed. Knowing that number before the conversation starts changes who is negotiating with whom.
Does what you are being invoiced match what you contracted? Pull several years of invoices and reconcile them line by line against the agreement. Discrepancies are more common than people expect, and so are charges with no identifiable contractual basis at all. The amounts are often modest. The effect on a negotiation is not.
3. Be able to state the problem precisely
Everybody knows what annoys them. Very few organisations can describe it in a way a supplier could actually solve.
“Reporting is terrible” is a feeling. It is also, in my experience, the single most common complaint about any people system, and it is almost never accompanied by a definition of what good would look like.
Before you ask anyone to demonstrate reporting, write down which reports you need, who needs them, how often, and what decision each one supports. Until that exists, no supplier can honestly promise to solve it, and you have no way of scoring one demonstration against another. You will be shown a beautiful dashboard built on somebody else’s data and you will have no basis on which to judge it.
The same discipline applies to everything else. Not “the system is slow”, but which process, how many times a month, taking how long.
4. Put a number on the manual work
Every organisation running an under implemented system has built a layer of workarounds on top of it. Spreadsheets between two modules. Paper forms that get rekeyed. A report that takes days to assemble by hand.
Nobody counts this, because it has become normal, and because it is spread across several people who each absorb a bit of it.
Count it. Ask each team how long the workarounds take, and add it up. It is not unusual for it to come to the equivalent of a full time post, buried in other people’s jobs and visible in nobody’s budget.
That number is usually the strongest line in a business case, for two reasons. It is a real cost that is already being paid, which makes it more persuasive than a projected saving. And it is the part a finance director recognises immediately, because it explains why the team is stretched without anybody having asked for more headcount.
5. Know what you want to keep, and where the savings actually are
Two things get missed at this point.
What is working. There is usually one part of the current platform that people genuinely rate. That matters twice over. It is a hard filter on alternatives, because any replacement has to integrate with it or match it. And it is leverage with your incumbent, because you are a continuing customer of that piece whatever happens to the rest.
Where the savings are, honestly. A business case built only on service improvement struggles, because improvement is subjective and the person approving it was not in the discovery sessions. A business case built only on licence savings is usually wrong, because implementation, integration and internal time rarely get costed properly. You need both, stated separately, with the implementation costs included rather than assumed away.
Be careful with any headline figure that looks too clean, whether that is a licence saving or an upgrade offered at no extra cost. Ask for the professional services schedule alongside it. Scoping, configuration, integration and training are where the real cost of a change usually sits, and a number that excludes them is not a price, it is a starting point.
Then, and only then, go to the market
When you do, go properly. A short questionnaire of a few dozen functional questions gives you market intelligence and a cost benchmark. It does not give you a decision you can defend, and it will not surface the one requirement that eliminates half the market, because you will not have thought to ask about it.
An organisation with any real complexity needs a structured requirements document, scored by priority, with the things that are genuinely non negotiable marked as such. That document is the output of the four steps above. It is also, incidentally, the thing that makes supplier responses comparable, which is the only way a board can be shown why one option was chosen over another.
One last thing. Do not signal which way you are leaning until you have decided. Your incumbent’s best offer tends to arrive at precisely the moment their revenue looks credibly at risk, and not before. That is not cynicism, it is how the market works, and it is worth knowing before you tell anybody what you are thinking.
LitE Consulting runs independent reviews of HR and payroll platforms, including contract and invoice analysis, requirements definition and business case development. We are an Employment Hero partner and can resell their software, so where Employment Hero is a candidate we say so at the outset. We hold no commercial relationship with any other supplier we assess. On larger programmes we work alongside a network of specialist consultants.
If you have a renewal coming and a feeling you are not ready for it, twenty minutes on the phone will usually tell us whether there is work worth doing.
There is a workbook version of this. Eleven pages, A4, with the tables and questions laid out to fill in, and a scorecard at the end that tells you whether you are ready to go to the market. No form and no email address required. Get the guide.