The problem of HR technology debt within organizations is growing.
According to a recent SHRM article, most organizations are managing between 15 to 50 different HR technology products concurrently. For larger global businesses, the number can be more than twice that. Couple that with the fact that the number of new HR technology products released each year continues to grow and the pace of digital transformation within organizations shows no sign of slowing down. The result? Organizations with a lot of HR technology debt and no strategy for managing it.
We sat down with Educe Partner Jaci Riley to discuss this topic and what organizations can do to identify and get out from under HR technology debt.
What is HR technology debt and how does it differ from traditional technical debt?
Jaci: Traditional technical debt is the cost of future maintenance for a product accumulated by prioritizing time to market in the short-term, over long-term quality. When we talk about HR technology debt, we are really talking more about the ecosystem of HR software we have amassed within an organization and the communication, documentation, and HR business processes tied to those systems. The growing gap between these two sides is the HR technology debt we have within our organizations.
What factors contribute to growing HR technology debt?
Jaci: There are 4 factors that contribute to growing HR technology debt in organizations. The first is the common technology sales strategy employed by many HR technology vendors to bundle multiple products, often at a discount. Even if an organization does not have a strong vision for how the purchased product fits into the rest of their technology ecosystem, the default tends to be to add in the additional products, while the budget is there, and then figure it out later. The result is a business with multiple products that serve the same purpose and the reality that figuring it out later rarely comes.
The second factor is when organizations try to buy their way out of bad processes, resulting in what I like to call a “lift and shift” implementation. Instead of taking the time to evaluate overall business objectives and the drivers for what the organization is trying to fix and/or enhance moving into the future, the business simply moves outdated or bad processes (and problems) from one platform to another. This results in new technology not meeting the business’s needs, and the perception is that the technology must have gaps. By not assessing and aligning processes to the new platform, the organization misses out on the opportunity to truly meet the technology where it’s at, use it to its fullest capability, and in turn, perpetuates the continued cycle of purchasing and accumulating even more HR technology debt.
The third factor is something that we talk about with clients a lot – a lack of strong internal technology governance within an organization. Governance processes keep organizations from investing in new technologies when there isn’t a need or gap. Part of the governance committee’s responsibility is to understand the different capabilities of the technology that has been invested in and where the organization is or is not currently using those capabilities.
And finally, the last factor contributing to HR technology debt, FOMO. It’s the fear of missing out. Simply put, organizations do not want to appear to fall behind when it comes to technology. It’s important to their employee engagement, culture, and employee brand promise. But not evaluating new technology purchases against an organization’s technology roadmap leads to overspending and underutilized technology, just to have the latest ‘shiny object’ to keep up with current trends.
What can companies do to get started identifying areas where HR technology debt may exist in their organization?
Jaci: Identifying areas of HR technology debt in your ecosystem starts with building an HR technology roadmap and putting in place a functioning governance structure. In our consulting practice, we see businesses with no guardrails around the purchase and decommissioning of HR technology. This commonly results in one of two scenarios. Either the organization has several multi-function products that have essentially the same capabilities, or the opposite, they have multiple specialty niche products that do one thing particularly well, but don’t have the ability to easily integrate with anything else in the ecosystem. Neither of these situations is uncommon or ideal.
The key is to refocus on the bigger picture. Matching your organizational objectives and the capabilities of the different products in your HR technology ecosystem is a huge first step toward identifying areas of HR technology debt. Once you have your grid, then you can cross-reference spend considerations – spend on technology that isn’t supporting business objectives, spend on maintaining outdated technology, spend on multiple competing products that essentially do the same thing, spending your way out of bad business processes – the list goes on and on.
Let’s say an organization has a roadmap for their HR ecosystem, an understanding of their HR technology debt, and strong governance in place. How frequently should they be revisiting and re-evaluating these documents (and the assumptions within)?
Jaci: Businesses are not stagnant. Strategies change, priorities change, technology changes. And when they do, what was once a solid strategic decision in the past may not serve the organization’s needs in the future. When these changes occur evaluations should become second nature. Now, if an organization has strong governance in place, is keeping up with evaluating new functionality during release cycles, and there have been no major changes to the business, a cadence of reviewing their HR technology ecosystem and roadmap every 2-3 years is best practice. That said, for businesses that operate in a more dynamic environment where strategies shift often (i.e., mergers & acquisitions) a more frequent cadence of every 1-3 years may be more appropriate. This might sound like a high frequency, but the cost of quality review is cheaper than the cost of growing your HR technology debt.
