Our HRIS report found, on average, companies spend approximately $100 per user per month on their system.
This is a great starting point for calculating the cost of HRIS, but there are few more factors to consider when working out your budget, and, ultimately, the worth of implementing an HRIS in your business.
HRIS can do a lot for an organization. It can save a lot of money, reduce administrative HR burdens, and improve employee retention.
It can also be costly to implement
But, how much exactly should you be spending on your HRIS system?
We’re going to walk through calculating the HRIS cost for Company X, and explain some of the key areas of HRIS ROI that you should look out for when implementing.
Using the data from our HRIS report, we’re able to calculate that Company X will require 26 employees to be listed as users of their HR software. Users, in this case, refer to employees who will have administrative privileges and are responsible for managing and maintaining the system. These employees will likely be in a dedicated HR team in a company of this size.
Determining the number of users of an HRIS is an important step in calculating your system cost as most HR software will be calculated on a cost per user pricing model.
The average cost for an HRIS system is $6,125 per user over a five year period or $100 per user per month. For larger companies, this cost increases to $8,750 per user over five years, breaking down to $146 per user per month.
Our data found the main driving factor causing larger companies implementing HRIS was to consolidate disparate systems. This could potentially account for the difference in system cost as the HRIS will need to be able to integrate with multiple systems, as well as include the cost of data migration across legacy systems.
It’s also possible that larger businesses need greater scope in terms of features and functionality requirements, resulting in a higher cost.
For company X, we expect that 26 users will cost $3,796 per month, totaling $45,552 per year.
Your HRIS budget should, first and foremost, focus on the cost of the software. However, there’s more to consider beyond the software cost alone.
When calculating your budget you should consider startup costs, one-time costs such as initial purchase price, and ongoing costs, operational costs that continue after the initial payment.
You need to consider:
- Deployment related costs: this includes the software licensing cost, as well as additional hardware or server space, and any additional software needed to support your system.
- Labor costs for internal staff: the time your staff take to choose the system, prepare for the implementation either via training or cleansing data, as well as the time they spend during implementation should also be accounted for.
- Consultancy fees: if you need to hire a consultant during the selection or implementation process, this needs to be accounted for in your official budget and included in the total cost of ownership for your HRIS.
- Data cleansing and migration costs: this is particularly important for large businesses who are consolidating their disparate systems. Someone needs to map the existing data from legacy systems to the new HRIS and ensure that data is correct; this a time-consuming process, but essential to the success and accuracy of your system.
- Updates and system maintenance: either from your own IT department maintaining the system, or paying for system upgrades if not included in your software cost.
- Staff training costs: this includes initial user training cost supplied by either the vendor or consultants for both the cost of training materials and the staff time spent being trained.
You should have a clear figure of what these costs amount to so you can calculate your HRIS return on investment.