Five Reasons HR Application Software Implementations Exceed Budget

The following list is not in any particular order. I’ve seen HR application software projects exceed budget expectations for all of the reasons listed below. My objective with this article is to provide some foresight into why a project might exceed budget and, hopefully, help you limit the chance that the project exceeds the agreed upon budget for the work. I’ve had to go to companies in the past and provide reasons why we were not going to complete a project within the budgeted expectations so I know firsthand that this is not much fun.

1. HR Application Implementation Scope not defined – If you have specific interfaces, reports, or capabilities you need from your new HR application system, make absolutely sure the time is allotted within the scope of the engagement. With my prior consulting practice, we would break down each function and process of the implementation by a range of hours. Specific custom interfaces or custom reporting requirements were included as a line item.
2. HR Application Implementer’s access to HR and IT resources are limited – The few times we came in over budget on projects, this was frequently the reason. Before we would schedule time or book travel arrangements, we required the client to send us, in advance, everything we would need to set up the product. Often times we set up many of the code tables and data remotely and then finished the setup on site. Even with this process we occasionally ran over budget because of limited access to HR or IT resources. Make sure your IT staff makes time available to assist the implementer and make sure someone within the HR staff is available for any issues or questions that may arise. Hourly rates for HR application software implementation experts can run well over $100 an hour so it’s a good idea to not have them waiting around for access to those people from whom they may need assistance.
3. Lack of experience from the HR application implementer – I’m sure you checked references for the software you plan on selecting. Did you check references on the person who will implement it? Every HR application software implementation expert has to perform their first five installs of a product. My advice is to not be one of the first five and maybe even the first ten. With HR applications, it takes that many installs to figure out what you are doing. Sure, the implementer may be certified on the product but there is absolutely no substitute for experience. Ask the companies you are considering for references on projects that your assigned implementation specialist performed.
4. The project time was under quoted – This is rare and it’s a good thing it is. In the past, I have seen a few companies purposely under quote a consulting project to win the deal. The project is then half completed and they let you know additional consulting time is needed to finish. When you end up contacting references regarding the software and the implementer, it’s a good idea to ask if the project exceeded the budget or not. If you chat with four or five references and all of their projects exceeded the budget, this might be a red flag.
5. Unforeseen computer errors and conflicts – We all use computers and we’ve all seen very strange unexplainable problems occur. Any time you are installing a software application mistakes and conflicts are possible. With a prior HR application system I performed implementations on we ran into a handful of situations where we could not get our system to install correctly on a customer’s servers. Installing the system, at most, was usually supposed to take only a few hours. I’ve seen it take an entire day. The problem with this budget exceeding reason is that it’s no one’s fault and it can’t be predicted. On a positive note, this type of problem was rare and not the norm.

As I have pointed out in this article, there are many reasons an HR application implementation might exceed budget. I’ve tried to point out a few of the more obvious reasons to hopefully allow you to avoid those situations. Budgets are tight right now and no one wants to go to their boss and let them know an expensive project just became a whole lot more expensive.