Staffing Success Magazine (November–December 2008)

Software Savvy

Time to Upgrade, Buy New, or Stick With What You Have?

By Jim McDermott

If your staffing company has used the same software for five or more years, you may be wondering if it's time to upgrade, buy new software, or stick with what you have. Powerful contact management features are now available, and in some cases, 100% return on investment can be achieved in just a few months. However, there are training and support challenges to consider, as well as potential disruptions to your business. Given these pros and cons, what do you need to know to make the best decision for your company?

Inefficiency: The Deciding Factor?

Staffing technology experts note that older software can do little to remove operational inefficiencies—time-consuming and otherwise wasteful processes. But upgrading or implementing new software can remove these inefficiencies by automating routine administrative tasks.

In some industries, this shift from manual to technology-enabled processes has already occurred. According to Tim Giehll of eEmpACT Software Inc. in Bloomington, MN, "The technology is now available to revolutionize the staffing industry by increasing automation, the way the banking industry, in just the past decade, has transformed business practices dating back 150 years."

Here are three inefficiencies experienced by staffing companies with older technology. Are you seeing any of these in your business? If so, upgraded or new software has the potential to make you more efficient.

Staff Tethered to the Office. Older systems don't allow employees to access candidate records from off-site. That can limit your staff's ability to respond to client requests at night or on weekends. By contrast, the latest software gives staffing professionals anytime, anywhere convenience. Carol Carroll of software company TalentSecure in Overland Park, KS, explains, "Whether they're on the road or working from home, using one of your computers or theirs, all they would need to access records is a Web address for your secure portal, a user name, and a password."
Entry of the Same Data Twice. With older software, the right hand doesn't always know what the left hand is doing. A salesperson may enter a new client's information one day, and someone else may waste time entering the same information the next. If you're looking for a single, authoritative, and up-to-date view of every client, the latest staffing systems incorporate customer relationship management features that give you just that.
Time Wasted on Routine Contacts. It used to be that every client or candidate contact required a call or e-mail in return. Now you can set up Web portals that allow clients and candidates to find the information they need and take action on their own. Explains Carroll, "Self-service lets designated users post or respond to job requests, review résumés or submit them, and check invoices or paychecks, at any time of day or night, without involving staff members in phone or e-mail tag. Without the limits placed on you by older technology, you can organize and run your business the way you want to."

Common Pitfalls

Upgraded or new technology may help you eliminate inefficiencies and create a competitive advantage. Giehll notes that automating the back office alone usually brings a 100% increase in staff productivity. But there's obviously a big difference between recognizing potential benefits like these and deciding it's worth it to move forward with a strategy for achieving them.

As you focus, at this early stage, on assessing your technology needs and evaluating software, there are several pitfalls to avoid.

One common error is to delegate the responsibility for making the decision to buy (or not) too far down in your company.

"It's best to have a senior person own the process, preferably someone at the C-level," advises Dan Campbell, CSP, of staffing firm Hire Dynamics in Suwanee, GA. "Before you make the decision, you need to have assurances that implementation will go smoothly and that there's enough training available."

According to Brad Sims of staffing firm United Talent in Charleston, WV, which purchased new software last year, it's also important to recognize that "fully integrated" can mean different things.

"When we went shopping for a fully integrated package, from head to toe, we found that some software billed that way doesn't include general ledger or accounts payable. It's best not to take the terminology for granted, and to ask plenty of questions to be sure of what you're actually buying," says Sims.

Another common mistake is to overlook the quality of support to be provided. "Tax preparation or another function may be sourced through a third party, and you may find that suppliers point fingers when there's a problem," Sims says. "It's not enough to assume that support will be an end-to-end, in-house service."

Campbell concurs on the need to ensure effective support. "The last thing you want to find out is that the company isn't stable enough to provide good support. It's a good idea to talk to other staffing professionals you respect to get a sense of which software companies have good reputations before you actually talk with software companies themselves."

As you're making your decision about whether to buy new software, a systematic needs assessment is a must. "You've really got to define what you're looking for and weight those criteria to make an objective decision," Campbell says. "You might add one or two more features as you move through the process, but you need a wish list up front." It's wise to take detailed notes during product demos, when you'll be shown numerous features at a rapid clip.

Adds Sims, "To make the best decision, look at your business as a whole, and don't forget about the back office when focusing on getting the right front-office features to help your core business."

Apples to Apples: Determining Your True Costs

So what's it going to cost?

Although your current system may be less expensive to maintain, a new software system could help you dramatically cut hidden costs. As a result, only an apples-to-apples comparison can guide you.

But that can be surprisingly difficult to get. One reason is that some software providers don't include upcharges on the initial agreement you sign. You may decide that the low monthly fee per user is a bargain, only to discover much later that you'll be paying extra, unannounced charges for critical services.

According to Giehll, there are three main areas of hidden costs:

Maintenance over the life of the system
Transfer of your data from the old to the new system
Purchases of third-party products to supplement the core features

"Signing up for a hosted service or buying a full software package of your own is like leasing a car or buying it," he explains. "To find the total cost of that car, you don't look just at the first year of the lease. You look at each year plus the buyout charge. And what's the cheapest up front may be the most expensive in the long run."

Carroll adds, "To get the big picture of what you're actually going to pay, be sure to ask for a detailed invoice that lists the base price plus all additional charges."

One way to avoid purchasing additional products to supplement the core features is to buy a single, integrated software package from one supplier. According to Art Papas of Boston-based Bullhorn Inc., an ASA corporate partner, "There's an iceberg effect when you piece together your system, with a lot of costs 'below the water' that you don't see when you look at the price tag. In terms of total cost of ownership, you'll save anywhere from 40% to 150% within the first year if you go with an integrated solution."

Ask a Lot of Questions

With a little digging, you should be able to make an apples-to-apples comparison that shows whether buying new software is a sound financial decision for your staffing company. Of course, cost savings are only part of the dollars-and-cents equation. Will new software help you generate additional revenue and grow your business while cutting costs?

Papas points to the increased productivity and competitive advantages made possible by avoiding manual résumé keying and by enabling sales and recruiting staff to collaborate better.

Echoes Sims, "Depending on how old your software is, if you're on a dated platform, it's a good idea to look at new software. Older software doesn't give you online time card approval, Web portals, and other features that may be selling points for your clients. But if you want to make the best decision, the bottom line is this: Be sure to ask a lot of questions."

Find a Technology Supplier

The individuals from technology companies who were interviewed for this article serve on the ASA technology advisory subcommittee. The group is composed of representatives from companies that supply technology products and services to the staffing industry who work together to help the staffing industry maximize its use of technology in day-to-day operations to save time and increase profits.

To find a technology supplier for your staffing firm, visit the ASA Web site at americanstaffing.net.

Jim McDermott is a freelance writer based in Vienna, VA. To comment on this article, e-mail success@americanstaffing.net.