Over the past decades, the advance of technology has dramatically changed the talent management in enterprises. Today, more organizations recognize HR’s critical function, and start link the HR function with its strategic objectives of the company in order to achieve business goals. Enterprise use technology as a way to obtain its competitive edge in the market. As for HR function, the technology helps them better managing talents. For example, from recruiting, training, rewarding to other HR practices, it allows HR access to the data quickly and able to manage it in a strategic manner.
Human Resource Information System (HRIS) refers to the system and process at the intersection between human resource management and information technology. By integrating the HR activities with the information technology, the process data can be standardized into certain set of enterprise resource planning software, which enable the organization have higher administrative control over its talent management system. With the recent shift of HRM tools, organization tends to establish a solid relationship between the HR and IT function in order to increase the productivity through utilizing the value of the organization’s most valuable human capital- employees.
The economic gains from implementing the HRIS for an organization can be associated with both lower cost and enhanced value. From the prospective of cost saving, HRIS can turn the traditional paper works and documents into electrical files which save considerate amount of consumption on paper, print equipment. Moreover, with the help of HRIS, a job used to be done by 5 people might be done by 3, which lead to cost saving. The increased impact of technology has cut down the employee head counts, in turn achieving cost effectiveness. On the other hand, HRIS creates value by increasing operational efficiency, and providing systematic database which allow HR function focus on more strategic issues and align closely with business strategy to realize the company objectives.
The current HRIS compasses several modules, such as recruiting, training management, payroll, absence management, appraisal performance, benefits administration, employee self-service and so on. Because the cost of implementing HRIS various due to the complex of the system, therefore, the organization needs to conduct a comprehensive cost-benefit analysis based on the company’s strategy and the capabilities the organization needs, to pick the most suitable HRIS. This paper will illustrate the rationale and steps of how to use cost-benefit analysis before installing HRIS for an organization.
The potential cost
Implementing HRIS for an organization have certain costs which include fixed cost and other variable cost. For the fixed cost part, the cost of HRIS software can be very different; it depends on how many HR modules the organization chooses. Some HRIS providers offer the “total solution” package which includes most of the HR modules, such as payroll, recruitment, training, performance management, time management, etc. Others might offers base HRIS solution and the customers can add on modules based their needs. In addition, the cost also various based on organization’s scale such as the number of units and employees. This one-time cost of installing an HRIS solution can be estimated by consulting with the HRIS providers before purchasing it. Another fixed cost is the training of using HRIS; the related staffs need to receive specific training to understand how to operate the new system, so, the cost of those employees who are away from performing their job duty can be calculated from their average daily salary.
The maintenance fee of the HRIS and the expenses of related IT supports would be categorized as the variable cost. For example, with the implementation of HRIS, the organization might also need to expand its IT department to ensure that they have capabilities to support the...