The Hidden Costs of Traditional Software

If you're considering traditional or self-hosted software for running 360-degree feedback reviews or automating performance reviews, you may be headed for an expensive, time-consuming endeavor. Fortunately--thanks to modern Web services--there is a better way

Articles » The Hidden Costs of Traditional Software

Strategic HR professionals are adept at calculating a true return on investment for every activity in which they engage company resources. For instance, they understand the true cost of turnover in terms of lost revenue and have developed succession plans to mitigate risk. Or, they have optimized their recruiting process to weed out unqualified individuals before committing manager's time in lengthy interviews.

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-degree feedback project 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-degree feedback 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
  • 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.

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-degree feedback, performance reviews and employee goal management. 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.

Last updated: Monday, November 21, 2011
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