How to Budget for a New HCM

December 8, 2021

2021 is quickly coming to a close, and for a lot of us it came too fast. Organizations are still getting a handle on potential OSHA mandates, managing an increasingly hybrid workforce, wrapping up their annual open enrollment for benefits, and tackling end-of-year reporting. Underneath it all, there is a growing appetite for new and improved HR technology. The employment and compliance landscape refuses to sit still, and organizations are realizing the true business impacts solid HR tech can have.

The real question employers have is how do you budget for a new tech purchase? According to BTR’s 2020 Annual HR Technology Survey, nearly 40% of organizations are unsure what they are currently spending on their HR technology. This percentage is a little high, and it’s a good inflection point for starting a budget.

Where To Start

Obtaining copies of current vendors’ invoices and saving them in a centralized location will give employers a good sense of budgeting objectives. Most technologies on the market base their rates on average employee headcount. Looking over the last three months’ invoices (at least) can be used to project annual costs by compiling the data into an easy-to-understand chart and totaling up the annual amounts for each vendor. Employers should also include vendors that provide a learning management system, an applicant tracking system, or any other point solutions being leveraged (even if only used at a portion of the organization). Including all vendors will provide a realistic sense of current spend as well as a baseline for a new budget.

Benchmark Your Data

Determining if what you’re currently paying is market-standard is vital. BTR helps employers benchmark their current spend. Investing in a trusted advisor helps employers see the bigger picture. Employers can also ask industry colleagues, peers, or other trusted business leaders what their annual tech spend looks like in organizations with a similar employee count or in a similar industry. This feedback can be helpful when validating spend but, keep in mind, your organizations’ needs or vendor mix may differ drastically, which ultimately impacts the fees you pay. Employers can also request general proposals from outside vendors to further benchmark against their current fees (and BTR is happy to help with this piece, too).

Tie It All Together

Once the data has been gathered, employers should consider the organization’s overall people goals. The most successful business cases for an investment in HR Technology tie into the specific objectives of key stakeholders and business leadership. When leaders understand the current expenditures as well as learn about how gaps or inefficiencies in a company’s current landscape are affecting the organization’s people strategy, decisions will come more easily. Additional investment or evaluating new tech may be the answer, and a budget creation exercise is always the first step.

BTR is here to help you with your HR Technology needs. Want to know more? Email us at BTRProjects@bentechre.com.

 


About the Author

Corrina Nation fosters relationships with employers and insurance brokers to support their HR technology strategies. She also manages key national partnerships, provides guidance to the greater BTR network on emerging trends, and delivers thought leadership on how employers can leverage technology to better support their people. Corrina resides outside of Washington D.C.