HR system users don’t formally measure ROI
PMP Research study reveal investment in HR and payroll systems is driven more by instinct than precise metrics
Nearly half (45%) of companies do not formally measure return on investment (ROI) on any of their HR and payroll system initiatives, according to the most recent survey from PMP Research. Although one in five (21%) claim to measure ROI for ‘some’ major HR system implementations, only 14% routinely do so for all HR and payroll purchases.
Despite this lack of formal measurement, however, a third of those who took part rate HR technology as either ‘very effective’ (4%) or ‘effective’ (32%) at delivering ROI within their organisation.
Only 8% report that their existing HR and payroll applications meet their current requirements ‘very well’, but the proportion who believe their systems ‘adequately’ meet requirements continues to grow, up from 42% 12 months ago to 50% this year.
Companies are determined to improve the performance of their HR and payroll systems, with 46% indicating they intend to replace some or all of their applications over the coming year and 63% planning an upgrade. The most popular course of action is to unlock existing functionality which is not currently being used, cited by 24%.
Two-thirds intend to add additional applications such as performance measurement or benefits administration to their existing portfolio, while 62% plan to replace some of their HR administration systems and half (48%) plan to replace their payroll systems.
Three key ‘total resourcing’ applications are also attracting interest, since 22% intend to buy employee absence management software, 22% are looking at learning management packages and 20% are opting for recruitment applications.
There is little enthusiasm for outsourcing HR applications, however, with companies preferring to retain control of their systems inhouse. Only 6% say they outsource all their HR IT functions, while 28% outsource some applications.
But 54% declare they have no plans to take this route, even though 64% recognise outsourcing offers a way to reduce the cost of services and 46% feel it frees the HR function to concentrate on strategic issues rather than operational concerns.
Instead, companies are enthusiastic about the potential that internet and web-based technology offers in the HR area. The majority (88%) provide a company portal for employees to access HR and corporate information and 28% already offer employees ‘self-service’ facilities to make inquiries and update personal information, with 56% planning to do this in the future.
PMP Research spoke to a broad cross-section of companies from a variety of industry sectors, ranging from the smaller end of the spectrum - 2% have a turnover of £5 million to £10 million - up to the very largest, with 10% falling into the £1 billion to £5 billion range and 4% topping the £5 billion mark.
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