19 January 2023

How should we integrate our HR systems?

8 minute read

Author

Jo Faragher

Jo Faragher

Jo Faragher is a writer and editor, specialising in HR and employment issues. She is a regular contributor to Personnel Today, People Management, First Voice (Federation of Small Businesses magazine) and Times Higher Education. She was awarded the Towers Watson HR Journalist of the Year prize in 2015 and was Highly Commended for the same award in 2019.

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The time for debating if HR systems should be integrated is over. The more pertinent questions are: how, and which systems, should be in your HR tech stack?

HR systems have evolved. While there will always be a requirement for a central hub of employee records, a shift to a more fragmented ‘stack’ of people-related applications has been going on for some time. As organisations look towards a future of work that is more about enhancing the employee experience and productivity of our workers; rather than just recording data, they’re looking at a host of specialised solutions that can help them do that. And employees’ expectations are high too: whether it’s onboarding or a digital performance management process, they expect this to happen seamlessly.

“Organisations are looking for ways they can increase productivity, but also enhance the employee journey and create a new employee experience,” says Matt Russell, former chief commercial officer at Ciphr. “So if you need to onboard someone virtually, how do you get them to feel part of something? If people are not in the office, how are you helping them understand the culture, engage them, and help them become productive team members as quickly as possible?” To create that seamless experience, HR systems need to be able to connect with other systems used across the organisation that rely on accurate and up-to-date information about the workforce.

A survey by Ciphr in 2018 found that more than half (51%) of HR professionals felt that there was no single piece of HR software that would be able to satisfy all of the HR requirements for their business. In addition to their central HR system, 44% said they used standalone payroll software, 23% a time and attendance or rostering system, and 21% a separate tool to manage expenses. Other systems in HR teams’ arsenal include performance management software, background checking systems, employee engagement tools and learning management systems (LMS). But how seamlessly those systems integrate is an important consideration. According to Sven Elbert, senior analyst in the HCM practice at Fosway, eight to ten integrations is typical for a medium-sized company, while very large organisations could have up to 700 connected to their central HR system.

Why is HR system integration so important? Connecting systems together is not only about having ‘one version of the truth’ to provide accurate data insights – it also has significant benefits in terms of efficiency. Seamless integration can streamline workflows for new starters and leavers, and when employment terms are altered, because applications will be automatically updated with this information; there is less admin work for the HR team; the risk of data duplication or mistakes in data is lessened and it makes compliance with data protection rules such as GDPR simpler because it’s easier to see who controls and processes the data. Beyond reducing admin, integrations can make people data available to other systems in real time, enabling managers to make better-informed decisions more quickly.

Read next: Five benefits of HR system integration

“It often starts off with an organisation looking for a system that does everything,” says Helen Armstrong, managing director of integration specialist Silver Cloud. “Perhaps they want to reduce the number of contractors they’re dealing with. But there’s not one software vendor that does it all: for example, if you do a lot of recruitment, we might advise a standalone system that would work well with your central HR system.”

 

Building the business case 

Research suggests that organisations are spending more on HR technology than ever before. A survey by consulting firm PwC found that 74% of companies planned to increase their spending on HR technology in 2020, on top of the around $310 they already spent on it per employee per year.

One of the reasons for this increased investment is that there is simply far more to choose from. Whereas a traditional HR tech stack might once have incorporated employee records, sickness absence tracking and an ATS for recruitment, organisations can now invest in anything from wellness trackers to employee sentiment mapping tools.

Furthermore, cloud computing has made investing in software both cheaper and easier because organisations no longer need to integrate with on-site hardware, but that doesn’t mean it’s easy or cheap in every case.

Identifying how the ‘ecosystem’ of HR and related software should look, and the type of integration between different systems will depend on a number of factors:

  • The nature of your business
  • How sensitive the data is to loss or exposure
  • How time sensitive the data is – do you need it in real time or just once a week?
  • How seamless the experience needs to be for the user
  • Budget
  • IT resource and the capacity of your internal tech support team
  • How the integration will be used. Is it just updating data, or will it be used to trigger workflows?
  • Which tasks are a priority
  • Future plans for expansion, including acquisitions and opening overseas locations

With so many considerations, opting to invest in the best application for its purpose and integrating it with your central HR system might seem counterintuitive, but there are good business reasons. Elbert from Fosway adds: “If you keep these systems separate you have more people doing admin work or keying in data more than once, which takes time and resource and leaves room for potential errors. The main differentiator between systems we see now is not functionality – the bells and whistles – but their capability to link to other systems.”

The market for employee-focused software is growing, but how well these tools connect to central HR systems varies widely. “With some connectors you can just click a button and have a connection, but less sophisticated ones may require more technical support. This is why many organisations approach companies that specialise in integration services, or invest in ‘middleware’ that can sit in between the two systems and connect them,” he explains.

The ability to ‘bolt on’ applications carries many positives, however. It means organisations can add tools and users more flexibly as their business grows (or contracts), and enables them to bring in specialist tools for ad-hoc projects. With employers relying on increasing numbers of contingent and freelance workers, the flexibility to bring them into the business and access tools securely will also become more important.

 

Managing vendor relationships 

Using multiple systems means managing multiple relationships and contracts with the vendors that make the software, and this can deter some HR teams from integrating best-of-breed systems. Megan Hope, product manager at Ciphr, notes: “Customers know that best of breed can have challenges; there are two sets of invoices and possibly two different subscription periods, or perhaps they’ve had a bad experience of having to use a particular system before. But they will accept the complexities associated with managing multiple suppliers if the systems solve a critical problem (or problems), or achieve the end result they want.”

Denis Barnard, director of HRmeansbusiness, a consultancy, says it’s important to define how investment in multiple tools will align with the wider goals of the business. “You don’t start off with ‘let’s buy an HR system’: organisations should build a shopping list of features that they need. This might be payroll, time and attendance, and self-service apps for employees,” he says.

If you decide to integrate a mix of best-of-breed software from multiple providers, it’s important to interrogate suppliers on their integration claims. Some will say their connectors are ‘plug and play’ but actually require extra work behind the scenes to make the systems interact as you want, or perhaps you need a level of customisation, but the integration will only work in a certain way. Armstrong adds: “Integration can mean many things; it could mean you get an upload of data once a month or once a week, and so this should be part of the conversation. And when vendors say they can integrate [their software], they might just mean doing so by importing an Excel file.” Many vendors will have a list of trusted partners that integrate more readily with their system: Ciphr Connect, for example, has a partner marketplace where customers can see applications that have two-way integrations to Ciphr’s central HR, recruitment, payroll and learning systems.

HR professionals do not require deep technical knowledge to manage these relationships as the technical aspect will best be managed by the IT team. The key thing is that HR should be able to map out why and where different systems should talk to each other. What is the benefit in exchanging data between these systems? Does it have to be every single piece of data or just one aspect? How often should this happen? Hope adds that external implementation partners can help make those connections a reality, as well as discuss potential scenarios with customers and how these might help users do their jobs more efficiently.

 

User experience and expectations 

There is more of a focus than ever on user experience when it comes to workplace technology. Employees expect that the technology they use at work should be far more advanced than what they use at home, but this is not always the case. At the very least, they expect a system to be easy to sign in to, or not to have to switch between multiple applications, so they can get on with their core work tasks.

Their experiences as consumers inform this, says Armstrong from Silver Cloud. “Many workers are from a generation that’s used to doing everything from banking to booking a holiday online and expect the same sort of experience at work,” she says. “The company’s drivers for investing in integration may be to reduce paper processes or make things quicker, but you also need to think about the user experience.”

These expectations have only accelerated during the pandemic, when employees became more used to performing tasks online that they used to do in the office. “From an employee experience perspective, the organisations that thrive will be those that are really clear about what it means to work there, so it’s not just about streamlining processes but what the experience feels like,” says Russell.

 

Looking forward 

A 2020 survey conducted by the World Economic Forum found that 80% of organisations plan to increase digitisation of operations and expand their use of remote work, with 50% intending to accelerate the automation of certain tasks. The UK’s Office for National Statistics, meanwhile, found that employees that were able to pivot to remote working during the pandemic actually drove up productivity levels in 2021, suggesting there are productivity gains to be had from effective digitisation of processes.

At the same time, however, we have seen a shift towards more employee-led decision making and an increased focus on smoothing the user experience – whether that’s while working remotely or in the workplace. As this continues, the market for potential ‘add-ons’ to central HR systems will grow and grow. If your HR team wants to get the most out of its technology ecosystem, invest wisely and ask the right questions to reap the benefits.

 

How does integration work?

Many organisations have multiple systems that feed into HR operations and decision making, often meaning the same data is kept in multiple locations. A typical mix might be a central HR system linked to a payroll system; there might be an ATS feeding in recruitment data; and potentially ‘peripheral’ tools such as employee feedback. But how does this ‘ecosystem’ link together?

Sven Elbert, senior analyst in the HCM and talent management practice at analyst group Fosway, says there are four types of integration:

Importing – where adjacent systems send batches of data via Excel, CSV or text files, perhaps on a nightly basis.

API (application programming interface) – where systems from different vendors offer interfaces that can ‘talk’ to other systems. In short, this is a series of rules and protocols that help applications fetch data from other systems. Many vendors will create APIs that are unique to your organisation, or, if you have in-house technical expertise, it’s possible to customise how systems communicate.

Standard connectors – where vendors have built adaptors between different systems that mean organisations can, in theory, ‘plug and play’ a connection between them.

White-label partnerships – where vendors have coded in data flows already so the interaction between systems is invisible to the user.

The type of integration that works best will depend on the reason for connecting each system. Some activities will require real-time connectivity between the tools, while for others a nightly dispatch of data will be perfectly adequate. There may also be considerations around data security and GDPR, where minimising the number of systems or people that handle the data is crucial.

 

Five key takeaways

  • Understand the business benefits of integrating other systems with your central HR software, such as data security, less duplication, improved efficiency and a ‘single view of the truth’, all of which ultimately provides you with more robust and accurate data and business intelligence
  • You don’t need to be a tech expert – but you need a clear idea of what HR wants and needs to achieve from linking systems to each other
  • Decide why systems need to talk to each other and the level of data they need to exchange, and how often
  • Challenge vendors on claims of ‘plug and play’ integration – is this a line of code or will it require extensive customisation by your IT department?
  • User experience should be the priority – employees increasingly expect a seamless transfer between systems to help them be productive

 

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This is an extract from Good Work, Great Technology: Enabling strategic success through digital tools, published by leading UK HR software provider Ciphr. For more insight into how technology can change work for the better, download the complete book for free, now.