Much is expected from HRIS projects, sometimes to a utopian extent. Be that as it may, an HRIS project can require a significant financial investment, as well as affect the workload of the concerned teams. It is therefore normal that each organisation embarking on this adventure address the issue of its R.O.I. beforehand.
How should return on investment be measured?
Evaluating the ROI is complex and requires the structured reasoning in order to mitigate the subjectivity of such an estimation.
Several types of gains can be identified:
- Quantitative gains, which can be evaluated in terms of saved time or reduced costs of tools.
- Qualitative gains, more difficult to evaluate quantitatively, such as the improvement of HR data quality or the will to showcase a more modern image of HR.
Furthermore, it is useful for an organisation to seek potential gains in the following categories:
- HR efficiency:
- E.g.: Reduction of time spent by HR managing compensation campaigns
- Business efficiency (for the company as a whole):
- E.g.: Reduction of time spent by managers on administrative HR tasks
- E.g.: Improvement of employee commitment
- IT Gains:
- E.g.: Reduction of the current tools’ administrative costs
Lastly, in order to measure potential with the most objective perspective possible, it is recommended to take example on external benchmarks and to challenge data with HR experts pertaining to your own organisation.
What kind of return on investment can we expect?
The main, most quoted expectations are:
- Administrative productivity: Reducing the administrative workload of human resources and manager services in order to free up some time for more strategic activities.
- Access to reliable information at any place and any time, facilitating reporting and decision-making.
- The decentralisation of HR: Making HR applications accessible to managers and employees.
There are as many effective gains as there are existing organisation and tool templates.
These observations do not absolve us from a genuine reflection on the project beforehand, ROI being intimately linked to the studied organisation in terms of its profession, history, culture, as well as the maturity of its tools and HR function. Above all, the project must serve the HR strategy that has been defined by the company.
The tool is not enough in itself!
These gains are not the result of a single tool. The tool must work alongside the implementation of a strong-willed HR policy based on performance and the search of synergies between the various processes. It must be noted that the definition and implementation of such an HR-transforming policy can be subject to extra costs. Furthermore, intense management commitment will also be vital to optimise gains. The HRIS tool is a vital medium for implementing this policy, but will not generate the expected gains if implemented independently from the associated governance.