How To Upgrade Your HR Software: Complete Guide
Do you frequently find yourself carrying out boring, repetitive tasks prone to human error? Is your current HR software raising your blood pressure more often than you’d like? Do you dream of a piece of functionality that would help your team operate more efficiently?
Not all HR software is made equal, and sometimes you simply outgrow what you have. Upgrading your HR software can help you save time, money, and sanity. Use this guide to identify if it might be time to upgrade and how to do so.
10 Signs It’s Time To Upgrade Your HR Software
Besides tearing your hair out, here are some key indicators that it might be time to look for something new:
1. Too much manual work
If your HR team is spending too much time on repetitive tasks (e.g., data entry, reporting, payroll processing), then automation features can save time and reduce errors.
2. Limited functionality and feature gaps
Your current software doesn’t meet the growing needs of your HR team, such as handling complex workflows, advanced reporting, or even the number of users.
3. Limited integrations
For your HR software to be useful, it normally requires integrations between systems such as your ATS, HRMS/HRIS, performance management software, etc.
If your current system(s) doesn’t integrate well with others, an upgrade(s) can improve data flow and efficiency.
4. Poor user experience (UX)
Does your HR software do inexplicable things? Do people frequently report difficulty navigating the system and completing simple tasks like logging hours or submitting time-off requests?
Poor UX is stressful!
No doubt people will complain, but you can also find out from usage data i.e. if no one’s using the software, or they’re using it but there are a lot of errors, then this could indicate poor UX design.
5. Data security concerns
Your current system doesn’t offer robust data security measures, increasing the risk of breaches, data loss, or non-compliance with regulations like GDPR or HIPAA.
If your software doesn’t provide encryption, multi-factor authentication, or audit trails, it might be putting sensitive employee data at risk.
6. Compliance gaps
HR software, especially payroll software, has to be up to date with changing labor laws and regulations. If your software isn’t offering regular updates to accommodate these changes, you risk non-compliance and legal complications.
7. Limited customization
The system doesn’t allow you to customize workflows, processes, or reports to match your company’s unique needs.
Instead, you’re stuck using rigid, pre-set processes and cannot easily adapt the system to reflect changes in your organization’s structure, policies, or goals.
8. High support and maintenance costs
Your current software requires frequent support, costly updates, or manual fixes, increasing maintenance costs.
You’re paying for regular system updates or external support services because the system frequently encounters bugs or compatibility issues, diverting resources away from core HR functions.
9. System downtime or instability
Frequent system outages, slow performance, or technical issues are disrupting your operations. For example, the software crashes during peak usage periods, such as payroll processing or employee performance review cycles, causing delays and frustration for both HR staff and employees.
10. Vendor is no longer innovating or offering updates
Your HR software vendor is no longer releasing regular updates, meaning the software is falling behind in terms of features, security, or performance.
What To Look For In Replacement HR Software
The specifics of what you need will depend on your requirements, but here are some general features to look out for:
Automation
The ability to set specific processes, such as onboarding payroll, benefits, or performance review cadences, to run automatically.
Customization
Likely one of the main gripes with your current HR software is the need for more customizability. Even if it isn’t, this will likely be useful in the future as your processes evolve.
Employee self-service
HR software can virtually eliminate the need to provide financial, benefits, or tax paperwork to workers by providing them access to online self-service portals that allow them to access and update this information at their convenience.
Integrations
The ability to integrate your HR software with your wider HR tech stack and other common tools such as your accounting software or enterprise resource planning software.
Many tools will have integrations as standard, but if they don’t then this is something to ask about in the discovery call.
Scalability
Having scalable features means companies can remain with the HR platform they’re used to while adding or removing features and functions as their business priorities change.
Reporting and analytics
By consolidating employee data in one place, HR software can provide you with data and reports to enact change in areas needing improvement.
Nice interface and intuitive UX
How clean and modern does the software look? Of course, you can’t just judge a book but it’s cover, so try and get a live demo to get a feel for the UX and read reviews
How To Upgrade Your HR Software
Follow this process to help ensure your next HR software selection has the best possible outcome.
1. Assess your current HR software
- Identify pain points: Determine the limitations of your current system (e.g., performance issues, lack of features, scalability concerns).
- Gather feedback: Engage key stakeholders like HR team members, managers, and employees to gather feedback about the current system and what features they’d like.
- Assess usage: Review how effectively the current software is being used, including which modules or features are underutilized or redundant.
2. Define your business needs and objectives
- Set clear goals: Identify what you want to achieve with the upgrade (e.g., improved analytics, better user interface, automated processes).
- Prioritize features: List the features and HR software requirements that are must-haves versus nice-to-haves. These may include:
- Payroll
- Employee onboarding
- Performance management
- Time tracking
- Recruitment and ATS (Applicant Tracking System)
- Benefits management.
- Scalability and integration: Consider future growth and whether the new system should integrate with other software like onboarding software, CRM, finance, or ERP systems.
3. Research potential solutions
- Explore vendors: Research and compile a list of HR software vendors that align with your needs. Our pick of the best HR software and best HR software for small businesses are good places to start.
- Check reviews: Look at customer reviews, case studies, and expert opinions to ensure credibility and performance.
4. Make a shortlist and reach out
Now you’ve identified some likely vendors, it's time to go a bit deeper and book some demo calls.
- Send each vendor a request for information (RFI) so you can compare your options point for point
- If you want to be really thorough, send each of your shortlisted vendors a request for proposal (RFP). This will include key information about your company, your specific needs, a vendor questionnaire, and any specific proposal submission rules they should follow, such as submission deadlines.
- Schedule a meeting with their sales rep and go through your questions.
These calls, which should ideally include live demonstrations of the product in action, will also help you get a feel for the vendor and whether you can form a good partnership.
To help compare vendors, use this handy evaluation template.
5. Make the business case
With all the above data gathered, it's time to put together your business case for HR software.
This doesn't have to be a 10-page document, it can be as simple as a one-page memo (because who has time to read 10 pages anyway).
Decision-makers are looking for answers to the following questions:
- How much does the HR software cost?
- What pain points will the software solve?
- If we didn’t invest in the software, then what?
- How long will it take to implement?
- Why do we need to invest now?
- What is the ROI of implementing HR software? Dan George’s article on HR financial literacy is a useful resource here.
You may not know the answers to the cost question; however, seeking approval at this stage will set you up for success.
Here's a business case template you can use for HR Software:
- Executive summary: Brief overview of the proposal, key benefits, and conclusions.
- Current situation and problem statement: Description of the current state and specific challenges or problems being addressed.
- Proposed solution and benefits: Detailed description of the proposed solution and its expected benefits, including a cost-benefit analysis.
- Implementation plan and risk assessment: Step-by-step implementation strategy, timeframe, and a summary of potential risks with mitigation plans.
- Conclusion and recommendations: A concise summary of the business case with final recommendations for decision-makers.
6. Implement and onboard
Make sure stakeholders are aware of your new solution and feel confident using it.
The main reason companies fail to see ROI on software purchases is failing to follow through on implementation and properly integrate their shiny new tool into day-to-day operations.
Effective change management is crucial. For employees to use your new software, they need to understand how it benefits them (e.g. it saves them time/their PTO requests get approved faster) and know how to use it.
Here are some tips to help with this.
- Clearly communicate that you’re adopting new HR software and what this will mean for employees. Invite employees to come forward with questions.
- Take advantage of any onboarding and training offered by the vendor and make it mandatory for employees to complete this training within a realistic timeframe.
- Charge someone with the responsibility of spearheading implementation and being a point of contact for any questions (and feedback) employees might have.
- Make employees aware of any self-service resources available and make sure they know how to log a support ticket if they run into difficulties.
Best Practices For Upgrading HR Software
Follow these best practices when upgrading your HR software to avoid common mistakes that can lead to inefficiencies, wasted resources, or frustration.
- Define clear objectives: Define your business objectives and specific HR needs before starting the process. This will help guide your software selection and ensure it aligns with your goals.
- Collect user feedback: Look at usage data and conduct surveys, focus groups, or interviews to understand the pain points of your current system and desired features in a new one.
- Consider future growth: Constantly changing vendors can be a pain, so look for a solution that can scale your business, whether through adding users, expanding features, or integrating with other systems.
- Look at the full ROI: Costs are important, so consider both short-term and long-term costs (implementation, maintenance, upgrades) and focus on value for money. Make sure the software meets your needs and provides a good return on investment (ROI).
- Don’t underestimate the complexity of data migration: Plan for data migration early, and involve both HR and IT teams in mapping out what data will be migrated, how, and when.
Here’s To New Beginnings
Hopefully, the above has been an objective guide to help you upgrade your HR software. While it can be easy to get shiny object syndrome, sometimes a new tool is worth the effort.
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