Tips for Hiring a Tech Vendor, or Not

By Pamela Babcock, November 2006
From the SHRM Online Technology Focus Area

Most HR organizations don’t buy software solutions frequently. But when the time comes, bringing in outside expertise can be the way to go. Or not.

Hiring a consultant can mean having someone on hand who follows the market and who can guide you through the decision-making process. A neutral third-party may also help move the selection process along by mediating when different customer constituencies disagree on priorities, requirements or solutions.

HR and information technology managers at the Bank of Oklahoma recently launched a search for outside expertise to conduct an HRIS needs analysis and to assist with the selection of a system that would serve six banks in 11 states.

“It's too big an investment to use a haphazard approach and assign it to whoever has time to work on it,” said Amber Merchant, who serves dual roles as senior vice president of corporate support services and as a relationship manager in operations and technology for the Tulsa-based financial institution.

"Our organization runs fairly lean, and we simply didn't have anyone with the specific skill set and bandwidth necessary to lead such an effort."

The Oklahoma Bank team wanted a consultant who would be objective and who "could lead a cross-functional team from all areas of our organization—not only HR and IT, but also our business units who ultimately would be using the new system," Merchant said.

In addition, while many consultants are loyal, or have expertise relating to particular vendors and software products, Merchant says, her team, which is now reviewing candidates, is bent on selecting a consultant who is product-neutral.

What They Do, How They Do It

Technology consultants can help you buy everything from a one-stop human resource information system (HRIS) to single -function solutions such as benefits administration, compensation and performance management, e-learning, applicant tracking and more.

Consultants sometimes charge hourly, but more often they charge a fixed fee based on projected time they’ll spend on the project. Unlike the cost of a software product, a consultant's price rarely is based on the size of the client's employee base, said Mark Mehler, a principal with CareerXroads, a Kendall Park, N.J., recruiting technology firm.

“Whether you buy an applicant tracking system for a small company or a large company, it doesn’t really matter the size of your organization,” Mehler explained.

Consultants typically help customers select software/services using a request for proposal (RFP) or more streamlined request for information (RFI) process.

Types of Agreements

A consultant can take on a variety of aspects of a project, from initially doing the due diligence with a needs assessment, which could impact your process, Mehler explained.

Or, they can do a process or vendor assessment, help you formulate a decision, do implementation, or provide continued consulting on configuration and customization, he added.

Many agreements spell out the vendor's responsibilities and clarify which duties the vendor will take on and what the hiring organization will do to make the project fly.

A vendor agreement should disclose whether the consultant has a financial interest in products he or she recommends. Does any member of the firm sit on the board of a software company they might be dealing with? Do they have any stock in the companies being recommended? A consultant with a financial relationship or fiduciary responsibility to a particular product could be swayed improperly toward that product and not necessarily have the best interests of the client in mind.

“The question really belies ‘where do they sleep at night and who with?’ ” Mehler said.

Merchant recommends that during the RFI or RFP process, you not only ask respondents to disclose financial arrangements with technology vendors, but also make their responses part of the eventual contract.

Due Diligence

Brian J. McIntyre, founder and CEO of WorkStrategy Inc., a Columbia, Md., HR management and technology consulting firm, recommends getting references from previous customers that are similar to your company when you are trying to evaluate consultants.

“If you’re a healthcare company, try to make sure your consultant has expertise in your industry,” said McIntyre, whose firm helps with vendor selection as well as implementing technology. Likewise for areas such as finance and manufacturing, he adds.

McIntyre recommends checking out list services from professional groups such as the Society for Human Resource Management and The International Association for Human Resource Information Management, and visiting vendor and consultant booths at professional trade shows.

“Do a little tire-kicking before you even engage a consultant,” McIntyre advised. Lastly, talk to HR professionals you respect about how their consultant has treated them, as well as other strategies.

“HR professionals are not shy about sharing data from good or bad experiences,” McIntyre said.

Jim Holincheck, research vice president for Gartner in Chicago, recommends looking at the firm’s reputation and asking which consultant will be assigned to your project.

“Do they have the right level of experience and expertise?” Holincheck said. “Talk to customers that have worked with these individuals, not just the firm in general.”

Evaluating What They Recommend

In general, expect a short list of vendors whom the consultant feels are a good fit for what your organization is looking for, rather than a single product name, McIntyre said.

Once you’ve whittled it down to finalists, said Mehler, make house calls to see the product “live,” and be wary of vendor-provided references, because they’re obviously going to be positive.

Again, call friends in HR and try to find companies where the product implementation has not been successful. Ask why.

“There are companies that buy technology and throw it out in 30 days,” Mehler said. “If you don’t know where the bodies are buried in the technology industry, you’re not the person to work for me.”

Lastly, ask your consultant for a list of all vendors contacted, and find out in “some detail” why some were selected and others nixed, Mehler advised.

Rocket Science or Not?

In the end, keep in mind you don’t have to hire a consultant to help select technology.

“It’s not rocket science if you have a strong IT department who will support you, if you have the time and if you can go to the major conferences and scout out the vendors,” Mehler said

But it's not a speedy process. Rather, selection of a single product or system can take as long as six months.

“It depends on your organization, how much time you have and the politics,” Mehler said.

But taking the time necessary to do the job right can be a make or break proposition for HR, Mehler notes.

“In some organizations, if you make the wrong technology decision, you’ve just fallen on your sword. I’ve seen people fired. In large corporations, these are very serious decisions that can run in the millions of dollars, so you really need to do your due diligence.”

Pamela Babcock is a New York City area freelance writer.

[sidebar] Pushing Solutions?

Some consultants might push specific vendors, but it’s the exception rather than the rule, said Jim Holincheck, research vice president for Gartner in Chicago.

How do the key players stay independent of vendors? Or do they?

“There are situations where a consultant may have a financial relationship with a vendor,” such as a referral fee, said Holincheck. Consultants should divulge such relationships to the client, he said. He adds that such relationships are not necessarily a bad thing, provided the customer owns the decision.

“The vendor with which the consultant has the relationship may be the best fit,” Holincheck said. But if the customer relies on the consultant to select the solution, that’s a problem.

Some areas have more shades of gray.

For example, some consultants are implementation partners for vendors and, through those programs, consultants invest in training of consultants to implement these solutions.

“Can it happen in certain situations that a consultant might steer a client to a vendor where they have trained consultants sitting on the bench to do the implementation?” Holincheck asked.

Yes, it can, he said.

“Again, the important thing for the customer is to make sure that they own the decision and make sure that they do the necessary due diligence to support the selection,” Holincheck said.

-PB