The Top 5 Reasons to Benchmark Your HR Services


As organizations look to digital technologies to drive business forward, HR organizations are rapidly adopting human capital management (HCM) software-as-a-service (SaaS) solutions. HCM SaaS solution pricing has leveled out in recent years compared to the fluctuating costs seen from 2012 to 2016.

As technology capabilities increase, HCM SaaS service providers are constantly innovating new solutions. Additionally, these technology capabilities are commoditizing the current solutions and making it more important for organizations to benchmark, to ensure they are on top of the trends and are not overpaying.

Price benchmarking is a powerful tool for determining current HCM solution costs compared to peer organizations. It helps enterprises assess HCM solutions as part of a business strategy, evaluate service provider pricing and terms during the selection process, perform mid-contract “health checks” and design a strategy for re-negotiations.

Organizations that invest in price benchmarking see five important benefits:

  1. The ability to plan ahead. With such rapid evolution of technology in the digital age, organizations must plan for the future. The HCM strategies that are most successful are those that incorporate price benchmarking and take into account the costs of new HCM services. These benchmarks can be used to find the cost of ownership and analyze the value proposition for HCM solutions.
  2. Corporate buy-in. Most, if not all, organizations are under constant financial pressure and must scrutinize HCM strategy and decisions. While new HCM solutions are valuable to an organization’s operations, they can be costly, and executives need assurance that they are getting the most value for their money. Knowing the potential costs of implementation and related fees is critical to attaining corporate buy-in. This means incorporating a cost-benefit analysis from an independent third party that objectively identifies both financial and non-pecuniary benefits associated with HCM services. To obtain support of management, planners should define and compare the benefits in relation to the costs.
  3. A best-practice approach to improving the performance and cost of HR services. Regular benchmarking leads to best-in-class HCM solutions that drive digital transformation within the organization, including HR technology processes that drive employee engagement.
  4. Cost savings during contract negotiations. Knowledge is power, and the knowledge of price benchmarking puts the negotiation power in the organization’s hands. Organizations that leverage price benchmarking during contract negotiations with HCM SaaS service providers can turn that leverage into savings.
  5. The full benefits of investing in an HCM SaaS platform. HCM solutions are an investment, but they bring many benefits that organizations may not realize they need. They reduce the administrative burden on an organization’s HR staff, allowing the staff to focus on the organization’s employees. They streamline processes that improve the efficiency and experience of all involved. And they bring the expertise from HCM service providers to ensure compliance with the many regulations involved in HR operations.

ISG is recognized throughout the outsourcing industry as the leading source of HR market data and is uniquely qualified to provide price benchmarks. Our data spans the globe and includes clients with up to 300,000 employees from new contracts, business proposals and renewal negotiations. ISG maintains detailed comparative data on engagements covering all major HR, HCM, and ERP process areas. Contact us to discuss how we can help you.

About the author

Jenni Cornwall is a Consultant for ISG and brings 20 years of experience to the HR BPO industry. Her expertise includes service delivery assessment, benchmarking, strategy development and service provider evaluation and selection. Jenni maintains the database of ISG’s HR, HCM, ERP, and Benefits Mark-to-Market® data for benchmarking.