Human Resources Software
UserView | 2014

Software Advice recently conducted a survey of almost 200 human resources (HR) professionals currently using some form of HR software to determine which solutions organizations currently use, what benefits and challenges they experience in the process and where they plan to invest in 2015.

This report is intended to help potential HR software buyers better understand how their peers are currently using, and plan to use, software in the HR space.

Key Findings:

  1. Over 40 percent of respondents plan to increase their investment in one particular HR software application in 2015: performance reviews.
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  3. The most common pain point, highlighted by 17 percent of HR professionals surveyed, is difficulty customizing their HR software to meet their needs.
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  5. Eighty-nine percent of respondents note that they are “somewhat” or “very satisfied” with their current HR software.

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Introduction

The human resources function exists in all organizations, no matter what their size. Using manual methods alone, such as spreadsheets and email, may be sufficient to track a small number of employees. As organizations grow, however, they often need to invest in software in order to more efficiently and accurately track and manage employee data.

HR software can enable a variety of different business functions—from recruiting to performance reviews to the basics of handling employee information. As such, potential software buyers may find it helpful to gain an understanding of how their colleagues are currently using HR systems, their satisfaction levels with these methods and their projected investments in HR technology.

Most Buyers Use HR Software Together With Manual Methods

We first wanted to learn how companies are currently managing their HR operations. A clear majority (68 percent) of respondents report using HR software along with manual methods, such as spreadsheets.

Users’ Current HR Methods

Users’ Current HR Methods

As far as business demographics, small businesses of between one and 50 employees are most represented in our sample, at 21 percent. Meanwhile, companies with fewer than 500 employees made up 72 percent of all respondents.

HR Users’ Company Size by Number of Employees

HR Users’ Company Size by Number of Employees

When we break down the data to determine what methods are most common by business size, we find that businesses with over 1,000 employees are much more likely to use HR software exclusively.

Meanwhile, most smaller businesses—those with fewer than 1,000 employees—report using a combination of HR software and manual methods. Thus, it’s apparent that many small-business buyers continue using some of these manual methods even after making a software purchase.

But why? Due to the aforementioned wide array of HR functions, businesses tend to purchase only the type of software that will have the greatest return on investment, generally in terms of time saved. This is especially true for small businesses, which typically have limited IT budgets.

For example, Software Advice’s 2014 Human Resources Software BuyerView report on the purchasing habits of HR software buyers found that applicant tracking software—a complicated and time-consuming function to handle by hand—is the most requested HR application. Thus, buyers may continue to use manual methods to complete other necessary HR functions even after purchasing software to handle applicant tracking.

Users’ Current HR Methods, by Number of Employees

Users’ Current HR Methods, by Number of Employees

44 Percent of Respondents Plan to Invest in Performance Review Applications

With 2015 just around the corner, we also asked respondents which HR applications they plan to invest in over the next year. Performance review applications top the list, with 44 percent citing a plan to increase their investment in this area.

Projected 2015 HR Application Spending

Projected 2015 HR Application Spending

Recently, Software Advice found that small-business HR software buyers most commonly request personnel tracking, performance review and applicant tracking system (ATS) applications. Despite this, the majority of HR software users in our sample for this report (66 percent) are looking to maintain their current level of spending on applicant tracking software—implying that they are satisfied with their current method of tracking applicants.

Meanwhile, it appears that many current software users are looking to either buy for the first time, or increase their current investment (i.e., upgrade or switch systems) in performance review and personnel tracking software. Thus, it appears that users are purchasing the three most commonly sought apps one or two at a time, in order of importance, before increasing their investment in other HR applications.

Small Businesses Plan to Decrease Investment in Payroll Software

On the other end of the spectrum, the highest percentage of respondents who say they are planning to decrease investment in some way plan to decrease spending on payroll software (7 percent).

Because a large portion of respondents to this survey represent small businesses of fewer than 500 employees, many of them likely do not have a dedicated payroll specialist. Instead, smaller businesses tend to outsource payroll, often due to having limited resources. Looking at those respondents who predict a decrease in their payroll software investment over the course of the next year, 90 percent are from businesses of 500 employees or fewer.

Employee Count of Companies Planning to Decrease Payroll Software Spending

Employee Count of Companies Planning to Decrease Payroll Software Spending

Nearly 90 Percent of Respondents Satisfied With HR Software

An important finding to note is that 89 percent of respondents are either “somewhat” or “very satisfied” with their software: Based on our sample, it seems that purchasing some form of HR software is worth the investment. Only 6 percent of respondents are either “somewhat” or “very unsatisfied” with their software.

User Satisfaction With HR Software

User Satisfaction With HR Software

Looking at how satisfied respondents are based on their current method for tracking employees, we find that 40 percent of those who use HR software exclusively are “extremely satisfied” with their current methods, whereas only 30 percent of respondents using HR software in conjunction with manual methods express the same level of satisfaction.

Therefore, it seems that using HR software is more satisfactory to end users when it is employed exclusively, without the addition of manual methods. This is likely due to the fact that, when users must still track employee data with manual methods, the software becomes less effective. There is the continuing need to cross-check two systems to make sure data matches, which decreases the time-savings associated with software use.

User Satisfaction With HR Software, by Method

User Satisfaction With HR Software, by Method

Improved Access to Employee Records Is Primary Benefit of HR Software Use

In our previously referenced report analyzing the preferences of HR software buyers, Software Advice found that the primary motivator for purchasing new HR software is the need to improve efficiency and accuracy. Here, our data indicates that once businesses purchase software, these benefits are indeed realized.

For example, when asked how their system delivers on key benefits of HR software, 92 percent say their software does “well” to “extremely well” when storing and organizing key documents. This is, of course, an important process for HR to perform successfully, as the delivery of important documents to employees—such as payroll checks and W2 forms—depends on having this data up-to-date and easy to access.

The next best-performing benefit is improved payroll accuracy: 88 percent of respondents say their software delivers “well” or “extremely well” on this function. Calculating and distributing payroll for any size business is a complicated process, and if done incorrectly, the consequences can be serious—resulting in a government audit or legal action on the part of employees.

For instance, common mistakes include the misclassification of employees, miscalculating overtime and missing tax deadlines. However, users note that software can help avoid these types of complications altogether by improving the accuracy of payroll.

Finally, reduced paperwork is another top benefit cited by HR software users (83 percent say their software delivers on this “well” or “extremely well”). This is one of the primary reasons cited by buyers in past research for purchasing software—and it appears that current HR software users are, in fact, able to reduce the amount of time they spend processing paperwork.

User Opinions on Performance Level of HR Software Capabilities

User Opinions on Performance Level of HR Software Capabilities

Difficulty Customizing HR Software Is Users’ Primary Challenge

We then asked respondents to rate how challenging certain aspects of their software are to use. The primary challenge (cited by 17 percent) is trying to customize their system to fit their specific needs.

Software Advice has found in past HR BuyerView reports that many software buyers choose to buy a stand-alone, best-of-breed product for each HR function, but this buying behavior may lead to issues down the road, as getting these separate best-of-breed systems to communicate with one another can prove challenging.

In fact, the next most challenging aspect the software users in this survey cite is integration with other software systems: approximately 15 percent say they find integrating multiple software systems to be either “extremely” or “somewhat challenging.”

Top Challenges of HR Software Use

Top Challenges of HR Software Use

On the other hand, respondents report that accessing records (also listed as one of the top benefits in the chart above) and end-user adoption are some of the least challenging components of using software. In fact, over one-third of users note that getting end users to adopt their software system is “not at all challenging.”

Many respondents in our previous report on HR software buyers were seeking new systems in order to more accurately track employee data and records. As such, these findings are encouraging: Software is effectively helping buyers solve some of their most common problems.

Use of Mobile Devices to Access HR Software Is Limited

Despite Gartner’s prediction that mobile applications for human resources software will proliferate at the enterprise level, in our sample of primarily small businesses, most users were accessing their HR software from a desktop (92 percent) or laptop computer (56 percent). Only 16 percent of users were accessing their HR solution from a tablet, while 12 percent were using a smartphone. (Users were allowed to select multiple devices, so responses were non-exclusive.)

HR has historically been slow to adopt new technologies. One reason for this is that HR is often viewed as a support role, and thus is often understaffed, with many employees who lack technical skills. These issues are often exacerbated when a business is small, with a few people handling all HR functions and a limited IT budget to work with. Given that most of the respondents in our sample are from small to midsize businesses, investment in new mobile hardware is likely not necessary or possible.

Devices Used to Access HR Software

Devices Used to Access HR Software

No Single Vendor Dominates the HR Software Market

Moving onto which products companies currently use, we find that our sample employs a wide variety of HR software solutions, with no single vendor taking the lion’s share of the market. The most common solution, Oracle Fusion, is used by only 15 percent of respondents. The next most common vendors were used by between 5 and 10 percent of respondents.

Top 10 Most Used HR Software Products

Top 10 Most Used HR Software Products

Finally, retail is the most highly represented industry, cited by 16 percent of respondents. The next most common industries are software (13 percent) and health care (11 percent). The prevalence of these particular industries is likely a result of the means used to collect survey responses: mTurk. The survey platform consists of online workers, many of whom work in retail, software and health care.

HR Users by Industry

HR Users by Industry

Conclusions

Small-business users in our sample are highly satisfied with their HR software, so others currently looking to buy can infer that their purchase will likely be worth the investment. In fact, most current HR software users anticipate either maintaining or increasing their current level of spending on software.

Given the high level of difficulty respondents note when attempting to customize their HR system, current buyers should make sure to inquire how easy it is to adjust each solution to their company’s unique needs during the demo and trial phases of software selection.

However, when it comes to accessing records, improving payroll accuracy and tracking employee performance, the majority of users express high levels of satisfaction. As such, if your company is seeking software for these purposes, it is likely that the software will effectively perform the functions you need.

Methodology

We conducted an online survey of 10 questions, and gathered 172 responses from randomly selected HR professionals who currently use some form of human resources software to manage their employees. This resulted in a 7.43 confidence interval, with less than a 4 percent margin of error. We worded the questions to ensure that each respondent fully understood their meaning and the topic at hand.

Chart values are rounded to the nearest whole number. If you’d like to further discuss this report or obtain access to any of the charts above, please contact erin@softwareadvice.com.


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