Every once in a while, we get a prospect that asks us, “How do I know I’m ready to buy HR software?” The answer is as varied as the companies that ask. Generally there are a few simple things to think about when considering buying HR software.

If your main goal is automation, take a week to record how much time of your day is spent on different tasks. For instance, watch your recruiters and try to figure out how many hours they spend sifting through their inbox and estimate how much faster it would be to have only candidate resumes to sift through instead of spam, internal communications, follow up emails AND candidate resumes. Or, watch your managers during an appraisal cycle fill out form after form with roughly the same information and try to estimate time savings if managers had one place to go and appraisals forms were pre-populated with the right competencies.

Then try to put a real dollar value on the estimated time savings. How much value does basic automation provide to you and your company? If your main goal is to create unified processes to drive efficiency, the same sort of activity applies. Though slightly more difficult, try to estimate a real dollar value for aligning goals and providing clear direction to your employees.

We find that efficiency numbers increase within an organization somewhere between 30 to 50 percent depending on the process that the software addresses. Take what you think you will save in hard dollars and compare it to your cost per hire across your organization. If what you will save in dollars is roughly equal to or less than 30 percent of your entire year’s recruiting budget based on cost per hire, then the time to look at HR software is now.

Ok, so you’ve probably had an ATS for years, but now your company is getting bigger and your vendor isn’t necessarily built to meet your long-term needs. Alternately, your vendor is being acquired by another vendor (a trend we think will be happening much more frequently in the future) and you’re not sure the newly merged vendor will meet your needs either. Making a change is tough because you have many processes that are either built around your current vendor or built in spite of your vendor. However, knowing that you will need to make a change sooner rather than later gives you a chance to really think about what you want to change in your processes and address what you wish you had done the first time around. It can be stressful but it can also be liberating.

At the core of the question is the angst that you may be buying more than you need or can use. If you are asking the question, the need is there. You’ve recognized on some level that you need HR technology that helps you get insight into your people or processes and realize success. That’s usually a good sign that you are ready for whatever the market has to offer whether it’s an OnDemand Delivery or a hosted setup.