Why HR Tech Implementations Fail? Reasons + 2 Case Studies
Only 46% of organizations have achieved clear business value by adopting HR tech products, which means more than half of the companies are struggling to extract tangible value from their HR tech investments. This is a common problem, and if you look closely enough, you’ll see a clear pattern. More often than not, poor planning and improper implementation are the culprits.
When an HR tech implementation doesn’t yield value, it ends up exacting a heavy toll of its own – requiring more tools to complement or replace the newly implemented tool, operational disruption, and loss of trust amongst internal stakeholders, escalating costs, and so much more.
HR delivery technology and experience suite ranks consistently as the highest priority for investment for enterprises over the next 2 years, and it makes sense for HR leaders to ensure the investment delivers the promised value, is foolproof and reduces their efforts considerably.
We are experts at implementing HR Tech systems at scale, and from our learnings, we’ve put together 10 common reasons why HR tech implementations fail. Avoid these pitfalls, and get true value from your HR tech stack.
📜 Suggested E-book: The Ultimate HR Tech Stack Implementation Checklist
What Goes Wrong When Implementing HR Tech?
Here’s a snapshot from a study conducted by Unleash.ai on HR tech projects, spending and subsequent results, to show you why you need to avoid the following pitfalls:
Strategic Oversight
1. Not Vetting the Product Thoroughly
This is a problem of putting a square peg in a round hole. Familiarity is a common reason for choosing a tool. Say you or another important decision maker has had a good experience with a specific tool, it is likely that you may opt for this tool again. It is important to remember that context is important. Maybe the tool in question worked great for a particular organizational context. There’s no guarantee that it will work for a different context.
It’s important to look at each tool in isolation and assess it’s strengths and weaknesses for a particular context. Instead of seeing what the tool can actually do, imposing huge requirementswithout this understanding can bog down your implementation on many levels.
Steven M. Stone, author of Digitally Deaf observes, “A purpose-built solution can be easily extended. A solution, built in a specific manner, for a specific purpose can’t be extended any way you need.”
This problem can be easily sidestepped if the tool is properly assessed by not only the HR team but with functional experts, technology experts, and procurement experts.
2. Colossal Time and Budget Overruns
Most companies take too long to finalize the software that caters to their multi-faceted requirements but expect the implementation to make up for the lost time. This levies undue pressure on all stakeholders, and the project is likely to take at least twice the time than anticipated.
HR tech implementations need to be deliberate, with proper planning and consultation with various important stakeholders. One common theme among most successful tech implementations both from the HR Tech world and beyond tells us that the more time you spend planning and testing, the better the results are. Implementation is not just the job of the HR Tech vendor or the implementation partner. Internal stakeholders have to stay on top of it too.
Lack of governance and internal oversight at every stage can lead to missed deadlines, cost overruns, and half-baked results.
3. No Business and Transformation Goal Alignment
When everyone, from the CEO to the junior executive, to the vendor knows the end goal and takes steps in the same direction, it can make the implementation unbelievably simple. This may seem trivial, but this is what can make or break the implementation. It’s like assembling furniture, unless you start with the big picture, you’re going to have to dissemble and reassemble the furniture all over again.
ISG study states that one of the main reasons for HR tech implementation to fail is businesses not aligning their technology strategy to their business strategy, and not budgeting for ongoing improvements. Depending on which level each stakeholder is, they may have a macro or micro view of the organization, and have different perspectives, when it comes to setting the goals for the digital transformation.
When sub-teams who are a part of the implementation don’t get a full picture of what’s happening, they will work behind the scenes to gather resources to complete their portion of the workflow, which gives room for one-off solutions that don’t fit in well with the big picture. For example, if the recruitment team isn’t aware of what process improvement is in the pipeline for the larger HR function, their process flows on the HR tech system may not work well with the larger HR process, causing disruptions and delays in execution or adoption.
This mistake leaves a chasm of daylight between present and future needs and renders the tool useless when the company evolves with the course of time.
4. Lack of the Right Talent to Handle Critical Roles in the Implementation
Having the right talent is vital for decision-making roles in the project implementation team. These are the following questions that should be asked, but aren’t asked in instances where HR tech implementations fail:
- Do we have the skills needed to meet all deliverables from the company’s end?
- Do we have them in the right quantities?
- Do we have them available at the right time (are they spread thin working on competing projects?)
- When are their PTO and other commitments planned, and have we incorporated them into our schedule?
Having part-time resources, or people who have low bandwidth working for 4-8 projects at once aren’t going to be very helpful for the implementation project and are more likely to delay their decisions and deliverables.
Not building contingency plans, succession plans, and escalation matrices based on various dependencies leaves organizations vulnerable to halted, delayed, or failed implementations.
Change Management Issues
5. Improper Change Management
Different demographics and generations of employees view technology differently. Surprisingly, a large chunk of companies taking up HR tech implementations think the transformation is done when the project goes live. Employees need to be prepped before the release, handheld during, and supported extensively after, for them to form opinions and break their initial resistance. This is possible only if the HR team, management, and leadership advocate for the tool, introduce incentives for regular usage, and make the transition easier.
Lack of change management initiatives is an alarmingly common cause for 37% of all HR tech implementations, which causes a cascading effect of user non-adoption, and escalating costs.
Organizations with higher work involvement in designing and implementing organizational change experience greater and positive outcomes afterwards.
When this doesn’t happen, employees go one of two ways – they cling to the old system, not allowing you to decommission it, or they start doing it manually, without using the automation you worked so hard to create. This further complicates your workflow.
6. Lack of Training and Support After the Go-live Stage
Even if companies manage to give the right foundation for employees to get acclimated to the new tool, employees will have a ton of questions when they start using it. They may be reluctant to go through technical product documentation and would want instant, personal assistance with their issues. When it’s not given to those trying out the tool first at least for 30-40 days as part of hypercare, word spreads within the organization, and user adoption declines.
Operational and Execution Issues
7. Disruption in Day-to-Day Operations
More often than not, an improperly implemented tool disrupts your workflow, makes day-to-day work tedious, and causes leaks in the system. Only 87% of companies see 10% of savings in HR administrative costs, and 20% of companies witness 40% or more administrative costs. When it comes to IT costs, 77% of companies state they witness at least 10% of cost savings in IT/tech operations. Most others see a rise in issues and related costs.
8. Poor Program Management and Controls
Another common pattern we see in failed HR tech implementations is that it doesn’t have a program manager. Project managers appointed often have a myopic view of the workflow they take up within the program (data migration, testing, business requirement gathering, etc), but don’t look at the entire picture. This delays their decision-making, and slows down the project, leaving them little to no bandwidth to manage important priorities for the implementation.
That’s why there needs to be multi-level checks and balances to ensure no one is unreasonably burdened, and that if any issues come up, they are sorted instantly, without waiting for anyone else. If this control system is not mapped correctly,
📜 Suggested E-book: The Ultimate HR Tech Stack Implementation Checklist
What Can You Learn From HR Tech Failed Implementations?
There have been several instances of huge enterprises being stuck with an HCM implementation or any ERP implementation for that matter. Here are a couple of failures that show why constantly zooming in and zooming out of an HR tech digital transformation project will get you better returns.
Case Study 1: Incomplete Implementation for the School District of Sacramento, California
The School District of Sacramento, California sued a legacy HCM provider for failed HCM implementation, amounting to millions of dollars. The school system had 4,200 employees across multiple schools. As per their original agreement, they planned for a one-year implementation, with a budget of more or less than 5 Million USD.
❌It went off track, and when the project was about to go live, the school administrators found that only 70% of the payroll processes had passed the testing phase.
❌ A loss of knowledge transfer between the school, and the HCM provider, since all process information was communicated over meetings without proper documentation.
❌ The HCM provider didn’t have prior experience working with the education industry, and couldn’t visualize the potential challenges the workflows might have, which further prolonged the fiasco
❌ The HCM provider also didn’t have qualified personnel who would oversee the implementation, cost, and effectiveness of the entire project.
❌ No proper succession planning was done on both sides. When the school saw executive turnover, it lost its vision for the implementation, and alignment with the vendor, and forewent important stages to identify inefficiencies.
Case Study 2: Several Million Budget Overrun for National Grid, a US-based Utility Organization
The organization planned for a reasonable period for the implementation of a legacy HCM system, but it extended to 3 years. It ran several million dollars over budget but still didn’t get the job done.
When they went live, they were neither able to pay promptly nor the proper amounts.
❌ Thousands of employees were overpaid, and thousands of others were underpaid month on month, which resulted in utter chaos in the company as a whole.
❌ They also had 15,000 vendor invoices they couldn’t pay, and this tanked the organization’s credibility severely.
❌ For a long period after they went live, they weren’t able to run payroll successfully, which further only worsens the pain of having a failed HR tech implementation.
📜 Suggested E-book: The Ultimate HR Tech Stack Implementation Checklist
Conclusion
For sustainable results and great value from your investments, you need a seasoned team of experts working with you in your HR tech implementation program from start to finish. Your best bet is a team with experience across industries and organization types with a foolproof framework to ensure that nothing is left to chance and each stage is taken care of thoroughly.
That’s exactly what we do at PeopleStrong. Every enterprise project we’ve worked on has seen a remarkable user adoption rate, short timelines, and agile working methodology. There’s a reason why we’re trusted by global brands like Larsen & Toubro, Tata, PayTM, and ShadowFax to name a few.
If you want a sneak peek at what we can accomplish for you, here’s a case study of our work with a huge enterprise client.
To get an in-depth view of our product, contact us now.
