So you’ve realized that spreadsheets are kind of a hassle for tracking and reporting on employee data, and HR software is your solution for improving human resources. But your budget is on your mind. How much should you expect to pay for a Human Resource Information System (HRIS)?
Because the answer is very much tied to the types of HRIS software solutions, the first step is to get to know the different deployment models offered by vendors.
On-premise HRIS system from the big, experienced guys.
- Installed on your company’s server, and HR data stored in a database (like SQL)
- aka “client-server” application
- one-time cost
- The software has a proven record
- High-end features
- Robust HR system
- High level of customization
- Quality support resources
- Quality training
- HR software developed for larger, enterprise businesses
- High cost
- Technical support may be somewhat heavy-handed, or outsourced
- May require expensive consultants for customization
The cost of a client-server HR solution can range anywhere from $1,000 to six figures, based on the size of your business and your needs. If you are a small business (10-50 employees), look to see if the vendor offers a small business solution, costing between $10 and $30 per employee at a one-time cost. If not, you are better off looking elsewhere. Growing midsize businesses (50-1,000 employees) can benefit greatly from the more advanced HR features offered by client-server software. They can expect to pay more for more features, ranging from $20 to $60 per employee. Also expect sizable implementation costs, ranging from $2,000-$20,000. Training costs range from $1,000-$3,000 per admin user.
Software-as-a-service solutions from the young, little guys.
- Accessed through the internet, and HR data is hosted on the vendor’s servers
- aka “cloud software,” or a “hosted solution”
- pay as you go, per month
- Access from anywhere with an internet connection
- May be necessary for companies with many locations
- Less IT involvement (though still needs implementation to move your data into the system)
- Usually designed to have a newer, fresher experience for users
- Less robust HRIS system, with fewer features
- Some basic tasks take longer over web applications than on server applications
- Less customizable
- Cloud computing is relatively new
- Sensitive data out on the cloud rather than stored in-house
- Less control over your data, and they may charge you when moving it. Integrating with your existing technology may present a problem
The cost of a hosted HRIS solution is usually priced per employee per month. (It may be advertised as $2/user, but every employee counts as a user!) Remember that the price starts this low for basic HR tracking of your data and basic reporting, and increases to $10-$20 per employee per month as you gain functionality. In this higher range, you get more strategic tools for things like recruiting and performance reviews. Also ask about additional costs for training and implementation.
Some combination of the two.
Some vendors offer a client-server application, then add on features that can be accessed through the internet. These features may include Employee/Manager Self-Service and a Career Center for hiring. (People-Trak HRIS falls here, so we like to say it’s the best of both worlds!)
You can expect to pay in pieces based on what you add on.
Free HR software from the nerds.
- aka “open source”
- “Free?! Awesome! Wait… so why are they giving it away?”
- Scrappy (this is a generalization, but hey, they’re giving it away…)
- Need the help of a software developer to customize
- Upgrades almost nonexistent
- No support (eek!)
- If they do support it, then they must be always trying to sell you something
Pricing: $0. In summary, don’t go with this unless you have to. Most companies don’t want their sensitive employee data running on unsupported, free software.
Making the Choice
The first step in choosing the right HR software solution for you is knowing your needs. What were the determining factors that lead you to search for HRIS software? Do you simply need more organization in your life, and to report easily on HR information? Or do you find yourself needing something more advanced than your current system?
Step two is to get out and get dirty. Browse websites and get tours of various software, and especially ask for demos, so you can see the HRIS system in action and ask questions.
Remember, technical support is critical.
Because you have so much on your plate, the training and technical support a company offers should be top-notch. Yes, vendors have slaved to make their HRIS software easier to use and more intuitive. But when you need last-minute help with a report or benefits open enrollment, the timely support you get makes all the difference.
HRIS – Worth the investment
Human Resources is known for having many administrative functions, and little time to focus on business strategy. Time spent on administrative tasks can be cut in half with the right HRIS system, so investing in it is always worth it if you have the budget. You’ll find yourself with more time to spend on strategic functions like hiring the right employees and retaining an active and engaged workforce.
All the best in choosing the right solution for you!