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A HR leader needs (or wants) to purchase a tool, platform, or other piece of enterprise software. The software is crucial to delivering core HR and business KPIs, be it an ATS that can cut time-to-hire or an AI-enabled LMS that can help sales executives improve their conversion rates on product demos.
There’s just one problem. Or rather, there are several problems.
The platform cost stretches beyond the department budget. It doesn’t plug into the existing enterprise software. There’s already a legacy system in place that can perform a similar task. The technology ecosystem is already overly complex and saturated. Other platforms are more urgent to other departments. And so on.
These problems will be all too familiar to any HR leader working in a large-scale organization with the responsibility of acquiring new technology. There is undeniable friction in the HR technology procurement process.
What’s more, the end-to-end journey of implementing new HR software is already challenging.
Any HR Director or VP will tell you the volume of marketing, sales pitches, and communication from vendors is relentless. From LinkedIn inboxes to conference floors, it can feel overwhelming and confusing.
Each solution purports to be the holy grail for the HR department – the perfect fit for the specific frustration of the L&D VP or Talent Director before they truly know what the frustration is. Overhyped sales pitches and underperforming products are, unfortunately, the norm.
Consider also the persistent pain of adoption. A 2022 study by the Josh Bersin company found that 42% of 700 global HR professionals stated their HR technology implementations have failed or not been fully successful two years after installation.
HR needs allies to successfully acquire and adopt strategically critical software, and procurement teams are the best place to start.
Friction points between HR and procurement
Analyzing vendor stability. Structuring RFPs (Request for proposals). Developing TCO (Total cost of ownership) models. These are all responsibilities plucked from a sample procurement job description.
Whether technology procurement or purchasing teams sit in finance, accounting, operations, or technology, they are usually siloed off from the world of HR.
Friction arises between HR and procurement teams when communication falls short. For example, HR leaders may bring the procurement teams into the picture at the last step of the process in the hope of a rubber stamp, ignoring the typical due process a procurement team would follow.
Alternatively, an HR team may bring a procurement representative into conversations with prospective vendors at the early stage, only to find their preferred vendors are not within budget or do not meet stability requirements or other standards for suppliers.
Although understanding the day-to-day work of procurement and acronyms du jour may be a tough ask for HR to get to grips with, HR leaders can start to build a closer relationship by agreeing on a common language and objectives.
Creating a mutual understanding of how each group can best help each other is the beginning of more beneficial interactions. This has certainly been the experience of Pattie Egan, Vice President, Total Rewards, People Ops, Technology & Analytics, Gitlab, who shares a concise summary of the division of responsibilities.
“HR has the responsibility of choosing tools to solve business goals/requirements,” says Egan. “Procurement is a critical partner who provides necessary contract negotiations, and that allows HR to achieve the price points needed while also preserving the vendor relationship desired.”
Framing the relationship around clear, mutually beneficial goals is a vital first step in a better HR and tech procurement partnership.
Building a long-term relationship
There are plenty of other steps HR can take to ensure a long-term relationship with procurement teams. Gartner has predicted that 2024 will see HR buying cycles elongate as organizations look to take a more measured, long-term approach to their investment.
This is perhaps in part due to the complexity of HR ecosystems. The Josh Bersin company has previously estimated average large-scale companies to have over 80 HR tools, doubling in global companies.
Moreover, vendors are increasingly expanding their platforms to offer multiple solutions. This trend may well see HR companies rolling back on the number of vendors, rather than adding a new supplier altogether.
As HR leaders take a longer-term view of investment decisions, bringing procurement into the process early can help create consensus and cement the partnership.
“HR can continue to support a long-term relationship with their peers in procurement by bringing them early into the contract review and negotiation process and by making procurement processes easy to navigate,” explains Egan.
Good procurement relationships helps HR achieve goals
Investing in a close partnership with tech procurement teams pays dividends for HR. Taking the time to build the relationship early, before its needed, ensures the help is in place when needed.
For starters, it can keep HR as close to budget as possible. “A close relationship between HR and technology procurement teams helps HR achieve it's goals by obtaining tools at the necessary price point and allowing HR to maintain positive vendor relationships along the way,” says Egan.
HR technology, particularly emerging innovations in areas such as AI-enabled platforms, will also be crucial in driving strategic success for HR in 2024. According to Gartner, more than two-thirds of HR leaders believe that their organization will lag in organizational success if they do not adopt and implement AI solutions.
But before HR rushes off to invest in a shiny new toy, replace an ill-adopted piece of software, or renew a contract with a legacy partner, leaders should first address the relationship they have with procurement teams.
