Over the last 2 years as a SuccessFactors Value Added Reseller, I have had the opportunity to participate in numerous cloud HCM evaluations/selections with small and mid-size businesses (SMBs). As I look back and assess them, a few common themes emerge:
- The HR team tends to focus on specific features in a particular module of the cloud application, at the expense of overlooking the benefit of the integrated nature of the suite of modules.
- The IT team tends to focus on how the cloud application will integrate with legacy 3rd party applications, versus focusing on the cloud vendor’s framework for quickly establishing integration with 3rd party “partner applications” and non-partner applications.
- The key stakeholders and economic buyers focus too much on the initial cost for the subscription and implementation, versus a longer term analysis of the Total Cost of Ownership (TCO), which includes the cost of customization, ongoing enhancements, and building unique integrations to 3rd party applications.
When advising SMBs, I begin with the following guidance:
- Take a long-term view. While today’s priority might be, for example, a Learning Management solution, what will be the next 5 HR priorities and related initiatives over 3-5 years? How will your vendor of choice be capable of delivering on those priorities?
- Focus on suite integration versus modular feature set. The AltaFlux Team recently worked with a Healthcare company whose immediate priority was Recruiting and Onboarding. They said they had a roadmap of future HR initiatives that covered the entire Talent Management Suite of processes. Nevertheless, they picked a niche Recruiting vendor that offered nothing beyond just Recruiting, saying they liked the UI better and the initial implementation was cheaper. The 3 year TCO was roughly equal to SuccessFactors for Recruiting, but they still chose the niche vendor. Unfortunately,this short-term tactical decision will cost them dearly over the next 3 years as they begin to focus on initiatives beyond Recruiting.
- The vendor/ecosystem is paramount. When a company chooses a cloud application, they are also choosing a product vendor and ecosystem of partners that will serve their needs well into the future. Smaller, niche vendors are less likely to have the R&D capacity to continuously enhance their applications over time. Similarly, vendor with large partner ecosystems include partner firms that “step into the void” and build/support complementary solutions to address any gaps that the primary vendor doesn’t want to focus on.
Evaluating, selecting, and implementing cloud applications is the future for all SMBs. They would serve themselves well if they focused less on features and more on strategic success criteria based on TCO.
