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A question that regularly pops up as the technology environment evolves is: Which is the better approach for HR — to put all of its eggs in one basket by focusing on a single, comprehensive tech suite, or to address each requirement with a focused point solution, such as an ATS developed by one company, a performance management platform offered by another and a payroll system provided by a third?
Point solutions and suites will always need to coexist, said Ward Christman, founder of HR Tech Advisor, an HR technology advisory firm in West Chester, Pa. “No suite will ever be sufficient for all customers, and will probably be insufficient for any customer,” he said.
The Advantages of HR Software Suites
At the same time, more vendors are seeking to join forces with others. “The trend across the entire industry is now toward consolidation,” said Dylan Teggart, principal analyst at Boston-based consulting firm 3Sixty Insights. “Companies are spending less, and interest rates are higher, so everyone is being more mindful about their spending or avoiding it altogether until the macroeconomic landscape stabilizes.”
Large vendors, whose solutions often target the complete organization, lean toward offering comprehensive suites that allow customers to address multiple areas. SAP, for example, is developing a single, cross-platform interface as it continues to expand the use of its generative AI agent, Joule. The company is also improving its ability to take advantage of real-time data across systems and lines of business.
Such an approach can be useful for large organizations because it addresses all of a company’s needs under one umbrella, Teggart said. Enterprises use a lot of data, from sales results to workforce intelligence to customer service records. Often, that data is siloed, meaning it must be compiled, scrubbed and managed multiple times to be usable for functions such as artificial intelligence.
When one solution draws its data from System A while another relies on data from System B, an organization’s functions can find themselves working at cross-purposes. Different datasets can result in different conclusions, leading to confused decision-making. In theory, suites minimize such issues by connecting their capabilities to one set of data and making it more accessible by offering a common user interface.
On the other hand, the strength of point solutions is their focus. Their developers claim to have deeper knowledge of one particular area of HR, simplifying implementation and support, being easier for people to use and improving compliance. “[Point] solutions can be very useful when you have a team that has the time or experience to handle a platform with a great deal of nuance and depth, or if you … need to have a great deal of depth on a particular subject or with a great deal of data,” Teggart said.
Choosing Between Suite and Point Solution HR Software
Whether a suite or point solution is best suited for a particular company depends on the company itself. Even a large enterprise must consider a range of details based on its own vision, goals and performance. “I challenge anyone to prove that any company is only using a single vendor’s solution for all their HR needs,” said Christman. “We track 60,000 HR tech solutions [globally]. How can there be that many? Simple. Everyone wants something different.”
For example, a global organization may sell a specific product in multiple markets, each one tweaked to address local customer preferences. Think about Coca-Cola and the variations in its formula between the U.S. and Mexico. The brand and basic messaging behind the product may be common, but its actual taste differs to meet each market’s preferences.
Similarly, employment regulations and reporting requirements vary between jurisdictions. A company-wide platform can more easily use data from across the organization to produce tailored reports on operations and performance. Rather than compile and process data from multiple systems, suites work with a common set of data and rules, tuning them to meet the requirements of each jurisdiction. In that case, the customer implements and maintains one system, as opposed to several, to achieve the same result.
Still, Christman’s point that a single suite is unlikely to serve the needs of every customer is worth bearing in mind. Companies must consider a broad range of issues when developing their approach, Teggert said. “Most often, price is a key one,” he said. “Can they afford multiple solutions? Do they even have enough people on staff to learn and handle each one of these platforms? Is it really useful enough to justify a separate cost?”
Christman suggests companies find a platform that covers about 70% of their HR technology needs, then work with the developer and consultants to identify vendor partners who can help fill the 30% gap. Once that’s done, they should begin to explore options “outside of that ecosystem to fill any remaining holes.” The trend “is 100% moving toward ecosystem collaboration,” he said.
Why HR and IT Should Collaborate on HR Software Purchasing Decisions
With all that said, the question remains: Who decides which approach, and platform, provides the right solution? The answer isn’t always simple.
HR should lead the purchasing process and due diligence for its own technology, Teggart said, for an obvious reason: “They are the ones using it.” That said, IT will often have to sign off on the purchase. “We usually advise people to develop a good relationship with IT so they can involve them in the decision-making process,” Teggart said. “But whoever is using the tool should be the one to assess its value.”
The decision-maker must consider a number of issues besides workforce-related needs when selecting technology. This brings us back to the idea of evaluating the organization’s specific challenges: The company’s size and organizational complexity, budget constraints, strategic goals and existing infrastructure all have to be evaluated.
“[HR and IT] have to work together, along with experts at their chosen software and service vendors, to best serve their current and future employees, customers, investors and even alumni,” Christman said.
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Editor's Note: Read more thoughts on HR software purchasing decisions:
- If We Want AI to Help HR, HR Has to Join the Conversation — Engineers are designing AI systems to address problems that are rooted in the very systems HR understands best.
- When HR Procures AI, It's About More Than Just the Technology — Selecting an AI vendor is as much about ethics and approach as it is about upfront costs, subscription fees and hardware requirements.
- How Generative AI Tools Are Shaping Employee Capacity — Generative AI tools can boost or drain employee energy — it's up to leaders to create the conditions for one or the other.
