Many small business owners aren’t sure if they will benefit from using Human Resources Information System (HRIS) application to keep up with their employee-related data. American Small Business news thanks Brad Flipse, president of BeneTrac, for sharing his insights on the subject. BeneTrac is a Paychex company and provider of powerful, web-based electronic enrollment and employee benefits administration software.

1. At what point should small business owners consider adopting an HRIS?

Businesses as small as 10 employees find value in technology for information availability, ease of update, accuracy and communication. If the small business is a growth company, the sooner the better.

2. What are the biggest benefits to using a software application for managing human resources functions?

There are many benefits to using an HRIS system, such as umbrella payroll, including the fact that up-to-date information on benefits is able to be easily accessed at any time. A good system is able to accept data from multiple Excel spreadsheets, databases, and paper documents, and provides the flexibility to interface with all kinds of systems and data. A truly capable enrollment engine will evaluate each enrollment activity and apply any necessary combination of rules, messages, prompts, and options specifically designed to meet the exact eligibility requirements desired.

The system should be able to accommodate company-specific eligibility rules, employee classifications, company locations, contractors payroll, etc., and provide multiple layers of security. It should also link directly with carriers so that enrolling employees in benefits or making changes is automated and does not require information to be printed out and mailed to the provider. Connectivity should be judged not only by the number of carriers with which the software provider has relationships, but also by the type of connection that it enables. Companies should look for providers that offer clean, validated transfers (ensuring the eligibility of the transaction), customized to each carrier’s needs to avoid issues.

Another benefit is self-service. Most people have access to computers at home and/or at work (70 percent of the population has home access). Self-service is a natural extension given this fact, the time and cost-savings possibilities and employee satisfaction at gaining access to directly access and manage benefits online. For HR departments and businesses, self-service can be a huge time saver and provide added employee satisfaction.

It is also important to note, however, that “self-service” or “online enrollment” can hold many different levels of meaning. These can range from a form being offered online, a spreadsheet being created and sent by the administrator (of little more value than a paper form when received), to truly automated and compatible files being sent by the system to carriers. Technologically usable, accurate, and timely updates between systems are key to obtaining real value.

Reports available through HRIS systems such as the one offered by umbrella companys, also offer a number of benefits, including the ability to access multiple views, from big picture to drill down, to enhance decision-making.

Finally, some human resource information systems also offer integration and information exchange with programs for managing payroll and other aspects of business, providing added efficiency.

3. What types of information do small business owners need to provide to HRIS application vendors when researching options?

Many factors should go into selecting the right HRIS for an organization. Small business owners should discuss factors such as required level of scalability/plans for future growth, existing sources of data and importing information into the system, expected implementation timeline, desired functionality, level of customer service expected, business rule needs, and budget, to name a few. Integration with existing business applications is often another factor that can be discussed.

4. Is there a good way to determine how much a small business owner needs to invest in an HRIS?

Human resource information systems can range in price, depending on factors such as those mentioned above and level of services needed. Often HR managers can get a good idea of the expected ROI of a system by looking at models that compare the current cost for administration with the savings offered with an HRIS. Returns of 100 percent in the first year are a good measure. Also, selecting an HRIS that grows in value of efficiency, and at a rate relative to employee growth, is important.

5. What are the major advantages/disadvantages of web-based applications versus server-based solutions for small business owners?

Programs housed and maintained by an Application Service Provider (ASP) give organizations all of the benefits of the software through a conventional Internet connection, without requiring full-time, in-house IT support. In smaller companies, where resources are limited, this can be especially important. Software updates are typically done automatically with a web-based or software-as-a-service (SaaS) solution, and the manager simply needs to securely log on to any computer, with the correct user name and password, to access the service and his or her company’s information.

Using the ASP model can also allow for higher security of salary and employment data within a small business, sine determining who sees or has access to this information can be more easily regulated through this off-site security and functionality.