Everywhere we look there are cool new HR technology applications coming into the market place. Simple solution applications that solve one problem. Complex solutions that fix multiple challenges.
Apps that measure the likelihood of a candidate’s engagement once hired. Apps that measure the cultural fit of candidates.
Apps that validate resume claims. Apps that measure personality traits while checking references. New ATS approaches.
Validated selection assessments. Libraries of videos that explain every benefit permutation available. Social reward and recognition platforms.
Video interview platforms. Recruitment marketing suites. Collaboration apps.
You name it, some tech wizard in Toronto, or Lincoln, or Silicon Valley, or Boston, or Raleigh wants you to be an early adopter of their “just out of beta” HR technology solution.
And you think it looks good; it’s a novel solution that blows your legacy system out of the water – if it really works. And that’s a big risk, right? How can you know if it really works?
Actually, that’s the easiest risk to mitigate: you check references; you talk to the beta users; you visit companies who are deploying it now and talk to the users and the system managers. That’s easy. And if you don’t like what you learn, you move on to the next option.
What’s harder, in the land of HR technology early adoption, is to figure out if the company will be there next year or in the next few years, and if they will continue to support the product you’re buying. These are the harder questions to ask in order to measure your exposure and risk.
Ask before you buy
Is this the founder’s first rodeo? Or do they have a track record of previous successful start-ups? If it’s their first start-up you’ll want to get to know them pretty well before you buy. Understanding their motivation and how long they plan to be in the business before they execute their exit strategy might make or break your deal.
If they have a track record then these might be helpful points to know:
- How long they were with their previous business(es)
- Who their investors were
- How their role changed once the investors arrived
- The current ownership of that organization
- The founder’s exit – voluntary, involuntary or through acquisition
How is the company funded?
- Still funded primarily by the founder and insiders/friends?
- Has independent money been invested?
- How much?
- Venture capital? Private equity? Angel investors?
- Does the founder retain control?
- Are the investors represented on the board?
What’s the long term plan for the organization?
- Remain independent?
What investments in people have been made?
- Is the CFO also the COO (a common start-up model)?
- Have they invested in the recruitment of a strong sales leader?
- Where are the engineering staff – North America? India? China?
- Where are the customer service staff – on- or off-shore?
What investments in technology have been made?
- Compatible with your ERP?
- Compatible with your HR systems?
Have a conversation then negotiate
Conversations with the founder, investors and board will help you determine the probability of the organization being able to meet its service commitments.
If the provider has been out of beta for 2-3 years, has outside investors, has a growing customer list (organizations whose names you recognize), and has continued to invest in product upgrades and extensions, then the biggest risk to mitigate is the aftermath of its acquisition during your contract period.
There are billions of dollars being invested in the HR technology space – and more on the way. Perhaps the biggest risk as an early adopter is protecting your organization in the event the provider is acquired.
Some points to consider when negotiating the contract:
- Price guarantees
- Service level guarantees
- Early contract termination with no penalty
- Favorable contract extension terms
- Early notification of change-of-control
The risk of early adoption is not just the effectiveness of the product. That’s easy enough to determine. And you won’t sign a contract to buy a product that is shaky and unlikely to work.
No, the biggest risks occur after the contract is signed. As an early buyer/early adopter, you’ll have a large stake in the provider’s success. If it “goes south”, your reputation could take a hit and your employees might pay the price.
Is early adoption against HR’s nature?
The good news is that doing your homework, asking the right questions, talking with the right people, and analyzing the past, present and future of the founder as well as the provider, will help you know the size of the risk you’re contemplating, and help you decide if the potential cost savings, effectiveness and business impact are worth it.
It might be a more time-consuming process than you thought, but if you end up deploying a new technology solution that saves money, is more likely to be used and has a better user interface, solves the problems you need solved and moves your HR technology into the 21st century, everyone wins.
I’ll be speaking about talent strategy and the risk of early adoption of HR technology at the 8th Annual Halogen Customer Conference this September. My session will cover how HR can balance the need for engagement through innovation while balancing the responsibility to mitigate risk. If you’re a Halogen customer attending the conference I look forward to meeting you in person at the conference.
Related reading: You might also like to read Cloud-based talent management: Making it a reality in your organization.