Following on from our previous blog in which we talked about how to select the right systems implementation partner (SI), as well as how you should approach building out a request for proposal (RFP), in addition to the launch of our five step process you need to think about to get less stress from your HRIS project, we thought we’d talk through another question we have often been asked when working with HR teams:

Should we be self-sufficient in managing our own HR technology or consider an application-managed service (AMS) provider?

An HR technology system geared for the future is indispensable for companies looking to empower their People function digitally. It’s no longer a perk; it’s a must-have. Establishing a business-as-usual cloud support model (CSM) is pivotal to the success of your HR technology deployment and the continuous support services for the business. This entails setting up the necessary people capabilities, defining roles, establishing processes, implementing a governance framework, and agreeing upon a roadmap to enable the team to fully leverage the return on investment from new and regular upcoming HR products and capabilities.

Companies must decide whether to build their HR technology support model in-house or whether to outsource post-implementation. This decision marks the beginning of the journey and must be considered upfront in the value case to secure the necessary budget and make key decisions like recruiting new experienced capability in-house to be ‘in the project’ so they build up their knowledge of the solution they will support.

Today, we delve into the pros and cons of becoming self-sufficient with a DIY approach versus relying on an external Application Managed Service (AMS) provider.

In-house support: Building expertise for the future

If you have the internal capability, knowledge and IT infrastructure, configuring your HR technology in-house offers several advantages:

• Flexibility and control: In-house development allows for greater flexibility in the delivery of your roadmap. You’re free from the constraints of the external provider ticket prioritisation models, and the back and forth due to miscommunications in needs or priorities.
• Cost-effectiveness (long-term): While the initial investment in building your HR technology may be higher, in-house development can positively impact your total cost of ownership in the long run.
• Internal expertise: Developing your technology in-house fosters internal expertise for the future. Your team already has your business knowledge. They also gain a deeper understanding of the technology’s functionalities, enabling them to maximise their business potential and become self-sufficient, removing the need to depend on external providers.

The challenges of In-house support

Despite its advantages, in-house support comes with its own set of challenges:

• Resource investment: Building and maintaining any HR technology requires a significant investment in personnel with the necessary technical skills. Recruiting, training, and retaining these resources can be difficult and expensive.
• Priority management: While handling HR technology internally fosters skills development within your organisation, there’s a risk that resources may get redirected to other business priorities. This diversion could limit the time allocated for ongoing capacity for your HR technology.
• Talent retention: The specialised skills needed internally are highly sought after in the job market, often commanding lucrative compensation packages. Although these skills can be cultivated over time, there’s a risk that once employees become proficient, they become highly desirable to other employers, increasing the likelihood of them seeking opportunities elsewhere.

Outsource your HR technology support: Leveraging expertise

Whilst it’s great to be self-sufficient, it’s not always feasible (in particular in the short term) and outsourcing your HR technology support to an AMS provider can offer several benefits:

• Scalability: By partnering with an AMS provider, you can easily adjust resource allocation according to your roadmap and prioritise projects. This ensures a consistent delivery of improvements, aligning with your evolving business needs.
• Cost savings (upfront): Outsourcing usually entails a lower initial investment than an in-house support team. You sidestep expenses related to recruiting, training and retaining internal staff.
• Service level agreements (SLAs): Strong SLAs ensure the AMS provider maintains consistent response times and can employ a ‘follow-the-sun’ support model, ensuring uninterrupted business continuity.
• Vendor expertise: AMS providers have extensive experience in HR technology and can provide ongoing support and maintenance. They stay up-to-date on the latest industry trends and can support with regular mandatory product updates.

Potential drawbacks of an external AMS partner

While partnering with an external AMS provider offers advantages, there are also potential drawbacks to consider:

• Service provider dependency: Once you outsource your HR technology support model, you may become reliant on the provider’s expertise which can also pose risks around availability and alignment to your strategy.
• Innovation constraints: Whilst AMS providers keep up to date with the latest functionality and roadmap items for the products, they often need to prioritise keeping the lights on over proactive continuous improvement and enhancements.
• Uniform service approach: While an AMS provider can facilitate resource scalability, they cannot always assure the consistent allocation of specific resources for your requested services.
• Costs: While AMS contracts typically require a lower initial investment, they often operate on a drawdown of hours from a monthly allocation. This can conflict with your business needs and priorities, posing a risk that additional hours may be required to meet the overall demand.

Key questions to guide your decision on self-sufficiency

Here are some key questions to ask yourself when deciding between becoming self-sufficient in managing your HR technology or using an AMS provider:

• Talent strategy: How important is it to your business to build internal capability to manage your HR technology?
• Strategic ownership: Do you want to take full ownership of your HR technology strategy and roadmap?
• Total cost of ownership: What is the overall return on investment (ROI) of outsourcing the support model, what are the cost-saving opportunities and efficiency gains, and what are your operational expenditure constraints?
• Service delivery model: How important is scalability in resources, service quality and geographical coverage?
• Timing: What is the most important thing at go-live and how do I assure quality and consistency of knowledge?

By carefully considering these factors for each approach, you can make an informed decision about the support model that works best for you. Remember, the ideal solution will depend on your unique circumstances, resources, and strategic objectives (and may change over time).

Alternative models: What other options are available?

While managing HR technology support in-house has long been an option, and external AMS providers have been available for years, there’s been a recent shift. AMS providers are re-evaluating organisational needs based on feedback, defining alternative options beyond the traditional AMS model.

The alternative models have evolved from some of the challenges of an AMS provider and are focused on helping organisations with the following:

• Collaborative model: A blend of in-house technology support bolstered by external expertise when required, a collaborative, more consulting-led method for shaping and executing the technology strategy and roadmap.
• Costs: Instead of committing to a 12-month contract with monthly allocated hours upfront, consider an alternative cost model. This approach prioritises driving value and continuous improvement, rather than merely maintaining the status quo.
• Proactive Service: Embracing a proactive service model geared towards delivering value-added services to optimise HR technology. This entails a personalised approach that avoids reactive, one-size-fits-all methods, reducing ticketing back-and-forth cycles.

Who can help you make the decision: The value of a strategic advisor

Partnering with a strategic HR technology advisor can be invaluable throughout this decision-making process (check out our blog on the importance of this here). An advisor can help you:

• Evaluate your needs: Assess your organisation’s specific HR challenges and technology requirements.
• Develop a strategy: Co-create a comprehensive HR technology strategy aligned with your business goals.
• Define the costs: Identify hidden expenses, evaluate the impacts on CapEx and OpEx, and compare the costs of in-house solutions versus external AMS provider options.
• Design your support model: Provide expertise in designing your fit-for-purpose support model to enable effective continuous improvement and ROI from your HR technology.
• Navigate the selection process: Guide your selection process for in-house development resources or external vendors.
• Build with the long term in mind: Define a cloud support model roadmap bearing in mind the strategic needs and the reality of the shorter-term go-live, adoption and benefits realisation needs.

By partnering with a strategic HR technology advisor, you gain access to expert guidance and ensure you make the best decision for your organisation. They can help you navigate the complexities of HR technology support models, saving you time, money, and resources.

Here at LACE Partners, we have extensive experience in guiding organisations through the HR technology selection and implementation process. We can help you assess your needs, develop a strategic roadmap, and select the right solution for your business. Contact us today to learn more about how we can help you unlock the full potential of HR technology – fill in the form below and let us know how we can help you.