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Avoiding the Hidden Costs of Software
If you’re considering traditional software for running 360
surveys or managing performance reviews, you may be headed for an expensive, time-consuming
endeavor. Fortunately--thanks to modern Web services--there is a
better way.
Joseph A. Vance, MBA
EchoSpan, Inc.
This type of analytical, return-oriented thinking should not be
ignored when evaluating services and software to support
Employee Performance Management (EPM) functions. However,
even the savviest professionals are often misguided by the
low-cost appeal of software packages and too frequently fall
victim to the high upkeep and maintenance costs of these
types of tools.
There is a sea of vendors to choose from when selecting
an EPM provider. Many of them offer their solutions for a low
upfront cost (some as little as $1,000 for a perpetual license).
Costs-of-entry in this neighborhood are attractive to many.
However, software companies do not always reveal the necessary
upfront or maintenance work required to properly execute a 360
survey or online performance review, thereby increasing the organization’s total cost of
ownership.
Unfortunately, it’s only after the product is purchased that
installation, configuration, setup and training complications
become clear. So begins the spiral into the hidden-cost trap.
Often times, HR departments must enlist IT to assist in
installation, taking their attention away from their planned
responsibilities. The cost associated with misdirecting
resources is called the “opportunity cost”—the cost of using
people or materials to do one thing when they could be doing
something more valuable. Executive management is keenly aware of
opportunity costs and likely considers them in every investment
decision.
Before you know it, the “$1,000” tool is costing thousands more
in company resources just to get it deployed. In many cases,
hundreds of man-hours are lost. With some tools, new and
expensive server hardware must be purchased, compounding the
problem with capital expenses. Even when the software is up and
running, support services usually cost extra.
What’s more, do-it-yourself tools often leave the structuring of
survey and review content to the client, or worse, offer
template-based surveys that don’t accurately reflect company
direction or values. This can lead to improperly structured
surveys that take too long to complete and don’t capture
relevant data. Both aggravate a managerial situation already
tense with the perception that the program is costing more time
and resources than it should.
Secure a positive ROI with a managed, online
EPM service
The software solution stands in contrast to modern online 360
survey services, where most or all planning, setup,
configuration and administration of this is done for you. This
saves tremendous amounts of time, money and offers you the
results to aid in the decisions to help your organization
succeed in its strategic initiatives.
High-quality online
EPM services are made to be very flexible
(just as flexible as a do-it-yourself tool, but without the
configuration hassles), and can be customized for every client
company. Because companies that provide online EPM solutions
don’t incur costs associated with mass software publishing and
support, they can often invest in providing other valuable
services such as professional consulting and coaching.
Instead of buying software, many forward-thinking companies have
turned to managed, online EPM solutions from companies like EchoSpan. A managed solution is different from off-the-shelf software in
several key ways:
- No Setup Hassles. You don’t have to setup or configure
software. Our solution is fully hosted, and we do 99% of the
setup legwork for you.
- No Hardware to Buy. Since our solution is managed and hosted
by us, you don’t have to buy any server hardware
- Professional Advice and Content.
Our PhD-level consultants can
tailor survey structure and content to your organization’s
unique needs.
- Better Results. Because professionally-crafted, online surveys
are shorter and easier to complete, participants can provider
higher-quality feedback in less time.
- Free Upgrades. All of our clients receive the latest version
of our tools, free of charge. Because our revenue model relies
on clients renewing service year-over-year, we have a natural
incentive to continually improve our service’s capabilities.
Consider this cost comparison
Take a look at the cost scenario below to see the difference
that a managed 360 feedback solution can make in your
organization. This example assumes 100 individuals are receiving
feedback, with average of 15 people providing feedback to each.
Also assumes $50,000 per year average employee salary.
Do-it-yourself software costs:
Software License: $1,000
Time to setup, configure, build deploy and support surveys: 200
man-hours: $25 x 200: $5,000
Hardware costs: $3,000
Time to complete an inefficiently-built survey: 45 mins
x 100 x
15 x $25/hour: $28,125 in internal labor
Total cost of ownership: $37,125
A managed solution from EchoSpan:
Managed service fee: $7,500 (will vary depending on options)
Time to setup, configure, build, deploy and support surveys: 2
man-hours: $25 x 2: $50
Hardware costs: $0
Time to complete a professionally-designed survey: 8 mins
x 100
x 15 x $25/hour: $5,000 in internal labor
Total cost of ownership: $12,550
EchoSpan is one of the fastest growing and most
valued Web-based performance management services providers
on the market. Through our comprehensive suite of online
tools, we provide an unprecedented level of insight into
companies’ human resource and goal-management activities.
Currently, EchoSpan’ suite of tools includes 360
feedback, performance reviews, total goal management and
employee surveys. All of our tools share a common platform,
which means data is easily exchanged between each module.
This provides managers complete access to employee and
company performance metrics from a single Web-based
dashboard.
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