The long view?
John Greer, IHRIM chairman, provides a snapshot from across the Atlantic on the views of US HR leaders on investment in HR IT during 2009
While corporate layoffs and budget cutbacks plague today’s news, many human resources (HR) leaders are hesitant to make drastic changes to their talent or information technology (IT) investments until they can get a better sense of where the economy is headed, according to a survey conducted in November 2008 by the International Association for Human Resource Information Management (IHRIM) .
Although the respondents were mainly based in the US, the global nature of this professional association does make the findings relevant for HR departments in the UK reviewing their investment in technology – particularly as developments in the US are often indicators of trends to come in the UK.
Over half of respondents anticipated no cut in IT investment
Nearly 210 company HR leaders primarily from North America responded to the survey and nearly half of the respondents (42.2%) reported their HR IT budgets would remain the same in 2009 as it did in 2008. Another 20.6 percent of participants said budgets will increase by an average of 23%, while 37.3% said their budgets will decrease by a median of 15%.
‘For companies in a good financial and cash position, they should take this opportunity to extend their market share and make long-term investments,’ said John Greer, chairman of IHRIM and senior vice-president for HR and Development at Smart Financial Credit Union. ‘Those without as much cash are waiting to see what happens. There is still a lot of uncertainty right now.’
Across the board, budgets for software, hardware, outsourced services, staffing costs, and training and development are projected to remain the same as 2008. 30% of respondents plan to spend the most on software purchases in 2009, followed by outsourced services, staffing and development (20% each respectively). Conversely, 40% of those surveyed plan to make the most budget cuts in the area of training and professional development. A quick poll of webinar participants revealed that 45% expected to spend all of their 2008 budgets; 23% did not.
The survey also found that companies making software investments will spend the most on talent acquisition/recruitment tools (28 %) and benefits management solutions (25%), and less on core HR management systems (12%).
Solutions for core needs
‘The talent acquisition and recruiting technology markets are still strong,’ said John Hinojos, director of Consulting Services for HRchitect. ‘Many companies are investing in these solutions because they have a better opportunity today to recruit the best and the brightest. In economic downturns, companies should invest in talent management solutions to keep their key players. I also expect companies will rely more on consultants, who can quickly share their specialised expertise.’
Greer agreed, and believed those companies that reduce their training and development budgets, or drastically reduce headcounts, will be making a big mistake.
‘This (slumping economy) is a relatively short-term phenomenon that will last six to 18 months,’ he said. “If companies don’t invest in their talent now, their employees will look for those that will. For people working in the technology field, their skills will quickly become out of date. Companies are likely to lose their competitive advantage if they cut development budgets. I am hopeful that companies do not make dramatic headcount reductions until they have a better feel of where economy is going.’
Lisa Rowan, program director, HR and Talent Management for IDC, concurred, but still expects to see an increase in outsourcing. ‘While budgets are being cut, the work still has to be done,’ she said. ‘However, I believe more discretionary IT projects will likely be postponed.’
According to the survey, more than one-third of companies (38%) planned to postpone discretionary projects. Additionally, the survey found more companies are not investing in new HR information management systems, but instead are purchasing solutions that address core needs.
‘Companies are investing in technology that supports core business processes and are looking less at its bells and whistles,’ Hinojos said. ‘Price is becoming a bigger issue than before. Most HRIM solutions provide similar functionalities, but more companies are going with the least expensive option.’ Rowan observed that she was seeing a lot of renegotiation of vendor contracts behind the scenes and that it was becoming a buyers market.
Before any purchases are made, these experts felt HR leaders had to build a stronger business case to demonstrate how a technology will benefit the entire company as much as it does the HR department. Already, HRIT purchasing decisions are being pushed up higher within companies, according to 44.3% of those surveyed.
When asked what organisations and HRIM professionals can due to weather the economy, panelists suggested working closely with vendors to create a compelling business case for technological investments, and ensure risk and compliance capabilities are adequate to keep up with changing regulations and legislation.
John Greer
John Greer has more than 30 years of HR management experience and more than 25 years of HR management systems experience. Greer has been an active member of IHRIM since 1987and currently, he is chairman of the IHRIM board of directors.
