The cost of a new HRIS implementation is considered one of the first questions asked by the finance team or senior management when you are proposing an HR technology project. Indeed, a new HRIS is a significant investment and before even evaluating different vendors it is essential to understand what the cost will be. It might sound too obvious but, HRIS implementation includes much more than just subscription and implementation cost and the total cost of ownership of an HRIS can be higher than what you have expected.
These are the main things you should account for:
- Subscription cost – usually HRIS vendors charge a per employee per month cost. The price can average depending on selected modules and features.
- Implementation cost – this is typically a one-time cost. The price ranges depend on the selected modules, functionalities, level of complexity of the configuration, number of languages, time allocation
Now, let’s review the “hidden costs” of the implementation:
- Labor cost during the selection process – your team will have to spend time on gathering specific requirements, researching different options, participating in demos, building a business case, evaluating different systems and keeping up with all the communication
- Labor cost during the implementation process – even if will be using the services of the implementation partner, your team will still require participating in the implementation. Your team will be providing requirements, engaging in weekly meetings and workshops, reviewing deliverables, participating in data migration and testing. You also must remember to allocate or hire a dedicated internal Project Manager.
- Data migration cost – depending on the vendor you have selected; data migration can be included in the implementation or be billed separately. The cost also depends on the amount of data needed to be transferred.
- Integration – this cost also can be already included in the implementation cost, however, if you require additional or complex integrations it can be charged additionally. Also, integration may require changes to existing integrations which wouldn’t be covered in the vendor’s integration costs
- Training – while initial setup usually includes training your team, it is important to specify what type of training is offered and which users will be trained. Also, a good thing to keep in mind that systems are updated on a regular basis so you might need an ongoing training support
- System maintenance and upgrades – this includes system upgrades, patches/fixes and overall maintenance of the system. Typically, the system releases new upgrades and functionalities, and you might need an expert to enable these new functionalities.
- Change Management – every introduction of changes within the organization might bring a decrease of efficiency, so to minimize the duration and magnitude of this decrease change management is important. The company will need to allocate or hire someone who can address the change to ensure successful user acceptance, understand gaps, develop a communication plan etc.
To summarize, when allocating the budget for a new HR technology, the internal costs related to the project should not be overlooked and you must ensure that there are no hidden costs that the implementation fee doesn’t account for.