Why Do HR Tech Projects Overrun Time and Costs?

HR Technology (HR tech) has become an indispensable tool across industries and scales of business.

The good part?

As per the 2023 ISG Survey on Industry Trends in HR Technology and Service Delivery, 20% of the participating companies said they were saving up to 40% of costs with HR tech.

The not-so-good part?

In the same survey, ISG points out that only 46% of the surveyed companies could achieve business value with HR technology. 

Most enterprises are still struggling to achieve tangible business results from HR tech. 

The reasons? Process transformation delays, unplanned costs, increased expectations from the word go and so many more.

HR Tech projects can fail and we’ve talked about the reasons for the same. Interestingly, an early indicator of potential failure is either cost or time overrun. 

Let’s find out some of the common causes behind these time and cost overruns in HR tech projects and relevant remedies.

HR Tech Projects are Inherently Complex

Before I even get to the reasons and remedies for time and cost overrun, I would like to acknowledge the complexities involved in such projects. These complexities arise from: 

• The involvement of different stakeholders with diverse needs and priorities
• An ever-expanding choices of HR tools and technologies
• The rapid pace of technological innovation with Artificial Intelligence, Machine Learning, analytics, cloud-based solutions, and more.

Added to all this, changing scope, inadequate expertise, integration challenges and compliance requirements can make things even more complicated.

Time Overruns in HR Tech Projects – Causes & What Can Be Done to Address These?

First things first: All types of tech or IT projects are likely to face delays. As per a study by Oxford University, one in ten projects is likely to see time overruns. 

The probable causes are:

Improper and incomplete definition of scope and poorly defined timelines

Frequent changes in the initial scope of work

Resource constraints related to staffing and skills

Complex integrations and customization requirements can pose a big technical challenge

Data migration issues from legacy systems to the new platform can be time-consuming

Disagreement & miscommunication among stakeholders

Unexpected issues during testing and quality assurance procedures

Resistance to change during the user adoption process

Other non-controllable factors like the economic conditions of the market, unforeseen events, or regulatory changes

Tackling these challenges:

Clear & precise detailing of project specs including phase-wise definitions of deadlines & scope of work

Adopt an agile methodology by dividing the project into multiple phases & tracking each phase separately

Avoid scope creep or ensure that the scope is well-defined from the start

Plan for the unexpected. In other words, increase the expected timeframe between 10% and 20% to address unanticipated events

Use time-tracking software or apps to keep a watch on workflows and associated deliveries

Cost Overruns in HR Tech Projects – Causes & What Can Be Done to Address These?

A McKinsey report says that most software projects have higher risks of cost overruns. As per the report, 45% of large-scale software projects go over budget. 

Cost overruns are one of the highest risks in IT projects.

The probable causes:

Cost estimation errors

Unforeseen expenses

Unplanned hike in resource costs

Frequent project budget adjustments

Burnout & stress among team members

Frequent changes to the scope of work

Lack of HR Tech experts on the team

Here are a few ways to tackle these challenges:

Hire skilled financial experts for accurate project estimations.

Be prepared with contingency planning to address unforeseen expenses

Optimize available resources like training and upskilling the existing team

Regular budget updates

Regular budget reviews internally and with the HR Tech partner

Time and cost overruns can greatly jeopardize an HR tech project. It can erode the senior leadership’s trust in the success of the project and can be put on hold due to lack of time or resources – ultimately, not seeing the success it was supposed to see. The same McKinsey report I spoke of earlier also mentions that as many as 17% of these projects can go so bad that it can threaten the very existence of the business.

But the good part is that such overruns can be effectively handled. Sometimes you can manage all the moving parts internally or a lot of companies now hire HR Tech consultants who can help bridge the gap between your expectations and the HR tech partner. 

Getting a consultant or specialist reduces the chances of going overboard with costs and also expedites the project without compromising on quality or performance. 
If you need some help, book a no-pressure call with us and we can discuss the way forward.