PEO Software

Buyers guide

As a professional employer organization (PEO), HR isn't just an important facet of your business; it's your business, period. Client companies rely on you to handle all of their important employee management needs, and if you can't deliver a stress-free experience, they'll go to your competitor or hire staff to do their HR in-house.

You need to be able to execute efficiently on important HR tasks and keep clients happy at the same time. In other words, you need software. But maybe you're not sure what options are out there, or which system will best fit your needs.

We're here to help.

In this Buyer's Guide, we'll go over everything you need to know about PEO software to help you make a more informed purchase decision.

Here's what we'll cover:

What Is PEO Software?
Common PEO Software Features
How Much Does PEO Software Cost?
Key Considerations When Purchasing PEO Software
Additional PEO Software Resources

What Is PEO Software?

PEO software helps PEOs and administrative services organizations (ASOs) perform HR duties for client businesses. Along with functionality to manage your customers' core HR needs—things like payroll, benefits enrollment and compliance reporting, for example—PEO software systems also allow you to create custom invoices and bill clients for services rendered.

Being a PEO doesn't necessarily mean you need to buy a product solely dedicated to the PEO/ASO audience, though they do exist (e.g., PrismHR). Many popular HR systems offer the functionality PEOs need and cater to both in-house HR departments and outsourced HR service providers (e.g., Paylocity).

Common PEO Software Features

PEOs need to make sure that any software they adopt has the functionality to support the services they offer. Here are some common features buyers should look out for when evaluating different PEO software systems:

Some PEOs may elect to buy separate HR systems with all the functionality they need and integrate them together, but we recommend investing in one comprehensive solution, if possible.

A comprehensive solution mitigates the risk of data becoming lost or corrupted while transferring between applications, and provides a better experience for clients, who only have to learn and log in to one system.

How Much Does PEO Software Cost?

It would be great if all PEO software systems were priced the same way, but unfortunately that's not the case. Here are some common pricing structures you can expect to run into:

• Perpetual license. This is more common with on-premise systems that are hosted on your own server (as opposed to cloud-based software, which is hosted by the vendor and accessed through a web browser). You pay one large upfront cost to own the software indefinitely.
  
• Subscription (per employee, per month or per user, per month). Vendors may charge based on the number of employees in your organization or the number of employees total across all of your clients, so be sure to ask what they mean by "per employee."
  
• Freemium. Some vendors offer a basic version of their platform for free, then charge for extra functionality. Open source software is also "free" in the sense that it doesn't cost any money to get access to the code, but there is still a significant investment here in terms of IT deployment and maintenance.

Key Considerations When Purchasing PEO Software

Before you talk to a single PEO software vendor, you first have to ask important questions internally about your goals and constraints.

These include: Which features do you need and which ones do you merely want? What's your budget? If you're replacing an existing system, what have been the most significant pain points you want to remedy? What's your deadline to be up-and-running with new software?

Once you have answers to these important questions and pare down your options, it's time to do demos. Here are some key considerations to keep in mind when evaluating different PEO software systems:

• User interface is critical. With an in-house system, you might be able to get away with a clunky interface, if it gets the job done. Not so if you're a PEO. Clients are going to be using your system too, so it's vital that whatever software you choose be intuitive and easy to use.
  
• Will your software play nice with client systems? Clients may have their own accounting or time tracking systems they want to use. If they can't easily integrate with your software, that will lead to headaches down the road.
  
• Evaluate the support behind the software too. Talk to vendors extensively about the support options they offer and their associated cost. Also be sure to understand how they will handle updates. The last thing you need is a client being unexpectedly locked out of the system during maintenance.

Additional PEO Software Resources

A PEO software purchase isn't something that should be taken lightly. Whatever product you choose will have a profound effect on the quality of service you offer.

This guide offers basic advice, but if you want to learn more, here are some additional resources:

• How to Save Money While Buying HR Software - In this article, we show you ways to save money and stay within your budget when purchasing HR software.
  
• 3 Best Practices for Streamlined HR Service Delivery - Tired of responding to employee questions all day? Here, we detail three best practices to make your HR service delivery more automated and efficient.
  
• HRIS vs. HRMS vs. HCM: What's the Difference? - Shopping for HR software can leave new buyers drowning in alphabet soup. Learn the difference between an HRIS, an HRMS and HCM software.