Chapter 4 — Do I want a point solution or a module?
Apologies to those who are well-versed in this debate already. For those that aren’t, here’s a little background.
Nearly every organisation we speak to has an existing HR Information System (HRIS) in place. And nearly every HRIS has an appraisal or performance management module that can be bolted on for an additional fee. If you’re looking to transform your performance management systems, you may be looking at using a bolt-on module rather than buying a “new” piece of software. As you’ll see, there are advantages to both options.
Suite Solutions vs Point Solutions
We’ve picked a side — we’re very much a point solution — but, speaking personally, I’ve worked on the other side of the fence for many years. It’s an ongoing debate and we’ll try to break it down as impartially as possible.
What is a Suite Solution?
In short, it’s software that offers various elements or ‘modules’ which cover different disciplines. These modules often include: Core HR administration; Payroll; Learning; Recruitment; Succession Planning; and Performance Management. Naturally, we’re talking about HR software here. There are suite and point solutions for almost any software category.
- You manage a single contract.
- You have a single data source.
- You (often) pay a lower price. The cost of several modules from a single provider may well be less than the combined cost of several ‘point solutions’ from different vendors.
What is a Point Solution?
A point solution simply refers to software that has been designed to do one thing. For the purposes of our conversation, that means performance management or, even more specifically, continuous performance management. Even in the continuous performance management software category, there are specific areas of focus and competency.
- You get a solution designed to support a specific purpose, so you should expect it to be more effective and easier to use.
- You should expect the vendor to update and refine the product more regularly.
- You get thinking and design from specialists rather than generalists, so you should expect a better pedigree of thought.
- You get a product which may cost more, but which should show a better ROI thanks to increased uptake and usage.
It’s useful to get an understanding of what the thinking has been in the past and how the landscape is changing.
The all-important question is: what you are looking to achieve from performance management? We’re pleased to see increasingly clarity in this right across the HR, Talent and leadership communities: performance management should improve performance. If you want to measure your people, fit them into nine-box grids and so on, that’s fine, but then you’re not really developing performance.
The legacy problem is adoption. People don’t engage with the old way of thinking. Software built to support those old, broken models will carry over all those bad behaviours we’ve talked about: a poor user experience, clunky interfaces and laborious workstreams.
So how does this apply to the suite vs point debate?
Our experience is that good intentions are not enough. Managers and employees often desire more frequent and meaningful communication, but it’s easy to derail that. Think of it like any digital experience. Let’s say you navigate to a site someone has recommended and find that, before you can even start browsing through the good stuff, you need to register your name, email address, phone number and inside leg measurement. You might choose to jump through the flaming hoops to get there. More likely, you won’t.
Performance management modules for suite solutions are nearly always rooted in the old thinking of annual appraisals and data collection. On top of that, they’re often buried away within this larger system, which means the user has to click their way through those flaming hoops just to get there. There’s also a cognitive barrier: as the user, why am I facilitating performance conversations through the same system I use to log my expenses and book annual leave? Either of these factors can send someone back to their email (probably muttering darkly about HR and their “processes”). Together, they can be a roadblock.
We feel that the tool you give your people should a) require minimal clicks and b) drop them straight into the environment they were expecting. The user journey should be geared towards feedback and dialogue, not datacapture or ratings. A software tool’s salespeople may tell you it’s a performance management solution, but if it doesn’t tick those boxes then it’s not solving the real problem.
We see the attraction, though. Bolt-on modules are cheaper. All we’d say is that ROI is every bit as important — if not more so — as cost. Your performance management evolution may come at that lower price point, but if you find that 30% of users are engaging with it after six months, you’re getting neither the evolution you wanted nor the data you need.
The Three Tiers of Performance Management Software
There’s another way to split up the market of software solutions out there: size. What works for 500 may not work for 50,000, and vice versa. Let’s take a look at the options:
- Enterprise Software: These providers cater mostly to large and multinational organisations. They’re nearly always suite vendors, with performance management being just a part of their wider HR tech offering. The key players are Workday, Oracle, SAP SuccessFactors, Ultipro and Cornerstone. The pros are that they are able to handle complex global set-ups, are usually highly configurable, offer a wider portfolio and are robust providers who should be around for some time. Cons are that they are by far the most expensive (contract value can run from the hundreds of thousands well into the millions), tend to lack agility and responsiveness, and tend to have a clunkier user experience. Sales cycles often run to 1 – 3 years.
- Mid-Market Software: Mid-market is a disputed term, but broadly speaking the average is 500 employees with a range of roughly 100−5,000 employees. There has been a significant increase in mid-market HR technology solutions as the digital revolution has trickled down from the enterprise level. Their business and commercial models are appropriately scaled and in sales, cycles are shorter: often between 6 months and a year. Similar to the enterprise model, most of these providers offer a suite of modules with performance management being an optional element. There are, however, more and more performance management point solutions entering the market, mostly from the US. These providers usually have a specific take on the performance management world and their websites and content should help you understand their focus.
- Apps for Small Businesses: For small businesses (less than 100 people) there is an increasing number of reasonably easy to deploy apps. Often, the sales process is geared toward an automated approach — for example, video demos and automatically set-up free trials — as opposed to a more consultative sales approach. The challenges facing small businesses often differ in key ways: for example, adoption can be less of an issue as business leaders can push and monitor usage in a more hands-on way. Also, smaller businesses are often looking for hybrid systems that might incorporate some kind of task management or KPI tracking element (something we would strongly advise against, as it comes back to that old measurement over performance debate). Examples of vendors in this space might be Small Improvements or PeopleGoal.
Bear in mind that there’s plenty of crossover here, with enterprise-level vendors offering scaled solutions to the mid-market and smaller suppliers making a play for larger customers.
What Does ‘Continuous Performance Software’ really mean?
Continuous performance management is here to stay, and we’ve seen a strong consensus on this over the past couple of years. While major corporations like GE, Adobe and Microsoft get the headlines for their pioneering decisions to ditch annual appraisals, most HR and Talent leaders now realise that this is simply the sensible way to approach performance.
But as the approach has gained traction, plenty of vendors have been quick to adapt their content and messaging to hit the right notes around this. And yet they’re still selling the same product. So the question then becomes: what should a modern continuous performance management system look like?
Our view is that it should be built around supporting high-quality performance conversations. The current performance management revolution we are experiencing can be boiled down to this fact: conversation and timely performance feedback are the only things that make a genuine impact.
Bear that in mind as you assess software solutions. Ask yourself (and the vendor): is this system all about unlocking dialogue and feedback? Is it easy to set a conversation up, capture the salient points and move on? Is the system asking me to fill things out rather than actually speak to another human?
Yes, you need to be able to understand your talent population. You need to be able to see potential talent and identify poor performers, for example. But it should not be the core focus. The user journey towards better performance is the game changer. Get it right and you’ll be on your way to an improved performance culture. The alternative is a return to the status quo: disengaged users and poor data.