Welcome back to The RecruitingDaily Podcast! Today we have guest and long-time friend and contributor Phil Strazzulla on to answer the question: how should HR/TA practitioners purchase software?
Phil, the founder of Select Software Reviews, is an entrepreneur focused on helping advance recruiting, people and human resources functions by sharing knowledge and building communities. He is also the founder and CEO of NextWave Hire and formerly a VC at Bessemer Venture Partners before getting his MBA from Harvard Business School.
Select Software Reviews, as self-proclaimed, is a group of “HR tech nerds who spend all day long understanding the landscape of ATSs, payroll providers, employee software, AI and much more.” They research products with a mission to save you time and energy, offering vetted shortlists of vendors, pricing, budgeting tips and more before you dive into the commitment of purchasing HR tools.
A few things we talk about today: How should a practitioner view software that’s being pitched to them? What “red flags” should a practitioner look for to avoid bad decisions? If there were an ideal pitch process, what would it look like?
Of course, there’s more! But you have to listen in to find out. Please drop your thoughts in the comments!
Listening Time: 28 minutes
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Phil is an entrepreneur focused on helping advance the People/HR/Recruiting function through knowledge sharing and community building.Follow Follow
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Let’s jump in. This is William Tincup and you are listening to the RecruitingDaily podcast. Today, we have Phil on from Select Software. Where we’re talking about how should HR and TA practitioners purchase software. And it’s a topic that’s near and dear to my heart, and Phil’s doing it really, really well. I love what he’s been building and how he’s been building it as well. And so we’re going to talk to him a little bit about it. Phil, do us a favor, the audience a favor and introduce both yourself and those that might not know Select Software. Introduce Select Software.
Yeah. And thanks for having me on William. So I started my career off working in venture capital to an early stage software investing and kind of a finance nerd, then investing in the stock market since I was a little kid, but I wanted to start a business eventually. So I went to business school, got my MBA and while I was there, I taught myself how to program and just started working on a bunch of different projects. One of which turned into an HR tool that helped companies with employer branding. And after running that business for about five years, I hired somebody to be a general manager, kind of take over on a day-to-day basis.
Found myself with a lot of free time. And I personally love to learn. I love to teach and a gap in the market that I saw is that there’s this really hard problem of figuring out what HR solutions you should buy for your company. And of course, there’s so many different tools out there and every single day, there’s more and more tools. And so I started this website, Select Software Reviews, which has a mission of just helping HR and TA professionals to understand what tools might be right for their business, how much should they pay for them, how to get the budget, how to think about ROI, et cetera. We’re not consultants. We just kind of do a bunch of research and write it up on our website for anybody to access for free.
We’ll get into the kind of the financial model and all that other stuff down the road. But the advice that you give, because you’ve interacted with practitioners for years now and obviously they don’t buy software every day, so they’re not as skilled at and vendors are really skilled at both marketing and selling software. Let’s start with kind of how you bring them into kind of how they should process-wise, how they should look at software that’s most likely being pitched to them.
Yeah. So I think… There’s a couple of different frameworks that I use to try to understand where are the places you should actually be focusing on because I think if you’re like most people you’re getting 10, 15 emails and calls every single day from vendors, right? And most of those are probably going to be fairly irrelevant. They just know that you’ve got the right title and eventually in the next five years, you might buy something theirs, but you have limited amount of time. And so what I typically say to practitioners is say, “Look, there’s three ways of thinking about what you need. One is to talk to the business leaders and the rest of your organization and understand their problems and how the people team can help solve them.”
So retention issues and customer success, more bodies in sales roles, et cetera. The other way is to sort of map out your employee journey from the first time they ever touch your employer brand through alumni and understand where are the biggest weaknesses and where are the places that we could make the most impact by changing things. And then the last framework that I usually use is just to trust your gut. You’re taking in data all day long through the conversations that you have and what you are thinking about in the back of your mind is probably right, and it’s just incumbent upon you to sort of take that gut feeling and then back it up with data.
Yeah. I think the only thought… first of all, I love that framework. Secondly, the only thing I’d add, and you probably already have this in there is peers. One of the under leveraged parts of this buy-in process is your peers are going through the same stuff. Now, just because a tool works for them doesn’t necessarily mean it will work for you, but you can avoid some of the horrible experiences, which is part of this. Some of this is about the technology, features, functionality, all that stuff, and solving particular problems, et cetera. But some of it’s also avoiding vendors just… We’ll just say it the way it is. You’re horrible. And again, leveraging your network and talking to people and say, “Hey, we’re thinking about implementing product X. Do you have any experience with that?” And again, it’s your network. It’s there, you already have it. You may as well ask them. And again, it doesn’t necessarily mean that that’s a good buy for you.
But again, I’m looking more of it as a way to avoid just vendors that don’t do what they say or the technology doesn’t work, or they’re just not great in implementation, just horrible experiences. What’s been your kind of advice on that level? Because obviously you help people how to navigate all of these tributaries. Just how they avoid making the wrong decision.
Yeah. And I think the network one is a really good point. The only pitfall I think is that a lot of us build opinions based on sometimes irrelevant information. The number of times that I’ve asked somebody, “Oh, why do you love XYZ tool? Or why do you hate XYZ tool?” Great example is I asked a CEO of an e-commerce company a few weeks ago, “Why do you hate your ATS so much?” And he said, “I love everything about it…” Because he started off the conversation with, “I hate my ATS,” I can’t even tell you much and many people feel that way, right? But the thing he didn’t like about it is that he couldn’t include rich media in candidate emails, which is kind of like a bit of an idiosyncratic thing. I don’t think if you talked to him for three minutes and all you got out of it was, “Hey, I hate XYZ solution.”
That’s probably not the right signal. And so what I always tell people is, “When you have these conversations with your network or with vendors, don’t be afraid to ask really stupid questions and dig into the why behind statements.” A lot of vendors will pitch you, “Hey, we’re the best quality candidate source.” Okay, what does that even mean? What does quality define? How do you know that? Where does the data come from? Where does the data really come from? Is it anecdotal? Did you see some numbers? What does it relate to before and after implementing this solution? There’s all these different things that you really need to dig into, unfortunately, because it’s so hard to have structured data that says, “Hey, this is the best XYZ solution for your company.” There’s so many, it depends in this industry.
It’s interesting because we’ve been talking about sweets versus kind of products or best in breed, if you will, and what works. And again, we can be in the same retail industry, same size, et cetera. The dynamic of how work gets done is significantly different than it is another [inaudible 00:08:34] company that it falls apart. And you know this because you coach folks on this as there’s a technology stack, there’s never one thing. Once you dig into TA and HR, there’s multiple applications. And it’s kind of looking at that ecosystem and looking at what works the best inside of both for your organization, for your initiatives and outcomes, but also with the kind of the current stack of software that you have.
Yeah. And I think one of the more counterintuitive things is that many times, more tools is a bad thing because we’re all constrained by the hours in a day, the resources that we have. And so if you’re having trouble sourcing XYZ type of candidate, the solution may not be to get another sourcing technology. It might be to look at your different channels and say, “Hey, our recruiting team is spending a ton of time vetting all of these inbound applicants from this job board and we don’t hire any of these people. And because they’re spending so much time on that, we’re not using the super powered AI sourcing tool that we bought that there’s actually a lot of low-hanging fruit in and that’s where we’re actually hiring people from, but we’ve kind of been spending time between these two different systems and so we actually need to eliminate stuff.”
It’s not a matter of adding tools. It’s actually just a matter of focus. And so, this is where it just becomes so complicated on a case by case basis. And we try to do a really good job of putting these best practices out there but a lot of times it takes somebody who’s a pro to sit down with you and say, “Hey, here’s what I’d recommend for your business.” The problem is that there aren’t that many great HR tech pros out there. There’s more every day, but there just aren’t that many that are super, super sophisticated that aren’t just going to say, “Hey, use this vendor because I have better relationship with them.”
Yeah. And it’s what I found in that space is a lot of folks have relationships with software companies. And this isn’t necessarily a bad thing or a negative in… they might, let’s say, “It’s ultimate software.” They might know ultimate software really, really, really well. And if it fits and they might make that recommendation, they are making that recommendation because they know where all of the bodies are buried. They know the ins and outs and how the software can be bent in ways. And so it’s not necessarily a bad thing that consultants or analysts or any of these types of vendor selection folks that they have those relationships, it can be a good thing. Now, if they’re financially motivated to make recommendations then it gets a little trickier. And I think practitioners sometimes they don’t understand how people make money, which I think is always a good… If you’re going to engage a consultant in that way to help you kind of review what you have, audit, make recommendations, et cetera.
It’s a good way to… I’d say it’s a good thing to ask them how they make money because if they make money recommending software then they might be motivated to recommend certain software, right? And so understanding people’s intentions, I think is really important when you look at vendor selection. So let’s get back to kind of how you wish, and you want to kind of really raise the acumen for practitioners and how they go about software. So again, maybe reducing tools, maybe this isn’t what you need, recognizing what you need, what’s critical, what’s important, et cetera. What do you… Again, this is a process, what do you want them to go through? Is it a shortlist? And then do deep demos? And then talk to customers? And then talk about price? What do you generally advise folks on kind of how… once they’ve recognize, “Okay, we need a CRM. State had it covered, we’re going to buy a CRM. It actually makes sense. It’s in align with our objectives. In align with what we need. Okay.” We’ve crossed over there, now what?
Yeah. The point that you just made is really important, which is you got to make sure you want a CRM and you have the necessary buy-in from the powers that controlled first [inaudible 00:13:36], as well as I think cross-functional buy-in is so important for most HR tech because you need typically employees in marketing, engineering, et cetera, to sign on to the thing that you want. And so, one of the best tips that I’ve ever learned that I typically tell people is try to create a cross-functional buy-in committee of people in different functions who can help you vet the top of funnel ideas for solving a problem. So it’s CRM, maybe the problem is, “Hey, we need to build talent pipelines, or we want to decrease time to fill, et cetera. Get people to help you understand, is the CRM the best way to do it? Get those people to help you get the budget, et cetera.
And then to your question, I think the next thing you got to do is figure out, “Okay, what are the things that we really, really care about?” So we want to be able to pipeline talent. We need this to integrate with our ATS. We need XYZ. What are the things that we’d really like it to do? And then how do we create a shortlist of vendors? And part of that’s going to be network. Part of that might be going to a conference, like HR tech. And part of that might be doing some online research as well. And trying to understand what are those four or five vendors that we should actually spend time with? And hopefully one of those two vendors, or maybe even just one that would go really far down the path with… we kind of do our diligence to make sure this is the right partner for us, and then actually implement.
And a lot of companies will do RFPs. I think there’s a lot of things wrong with the RFP process. And it’s really hard for the vendors, that’s for sure. But it can also just surface the wrong solution providers that are many times designed to win in those situations. And then the other thing people can do is they can partner with a consultant and I think you’re totally right. What you were actually just describing with this whole expert thing reminds me of going to the doctor. When you go to the doctor, you should understand their incentives. If they want you to get an x-ray, it might be because you might have a broken arm, it might be because that’s how they make money.
And you also have to do your own research to be your own advocate because people are experts, but they don’t know your body or your company as well as you do. And so you’ve got to be your own advocate. Even if you hire somebody who’s implemented 30 CRMs before, there’s still going to be stuff that they don’t understand or assumptions that they make and so you’ve got to do your own research that you can guide them and avoid those pitfalls.
I love that. The first were great advice, as always. Best buy-in questions, so you’ve seen this from a couple of different fronts, right? So you had a solution that you were taking to market and it’s still an entity. And so you were asked a bunch of buy-in questions and now you consult and you advocate and you help people with this process of buying a software. And you’re just going through the whole process of selecting, buying, making sure to avoid some of the pitfalls, et cetera. What are some of your favorite buying questions for practitioners? What should they be asking?
The thing that I always harp on is the economic reason for doing something, which I think is something that many times gets lost in human resources. So if there isn’t an ROI from what you’re doing, it’s probably not worth the time. And it can be challenging, especially in HR to figure out, “What is the dollar and cents thing that should come out of this?” But when I was selling HR software, I would get that question a lot. “What’s the ROI of this?” And you’re sort of an eighth of the way through the first sentence. And you mentioned any sort of data point and someone says, “Oh okay, great.” And they don’t really understand what you’re talking about. And so I think you need to find somebody in your organization, if you’re not adept at this, who maybe got their MBA, or maybe is in a finance role, who maybe just thinks very analytically on the engineering team or whatever it is to help you understand how does this change our hiring funnel, our employee experience, our employee lifetime value in a way that impacts our business.
And the [inaudible 00:18:08] with the vendor, you have to diligence how it’s actually going to make an impact. And that comes down to workflows. It comes down to implementation. They come down sometimes to the data that the vendor might have, et cetera. But that’s sort of the key thing that I’m always trying to get at. I think like an investor and I’m trying to de-risk it and capture the most possible value when I buy a software.
I love that. And I think it’s important for practitioners to think that way, because we don’t often think that way. Now, sometimes there’s a rush to price, there’s a rush to, “How much does this cost?” You’re going to eventually get there. And you should get there, of course, because there’s going to be contracts and proposals and all that other stuff. However, I kind of liked the idea of, “Okay, do we need it? Which is which?” Initially you nailed that, “Does this fit us? Can this fit us? Does this fit us? Can we make a case for it?” Et cetera. And then you eventually get to price. Some of the things that I advocate when talking to practitioners about the same thing is “You can like me,” examples. If you’re a 5,000 person healthcare facility in Tampa, Florida and you’re talking to a company, do they have other healthcare clients?
I don’t want to be their first, generally speaking. So I’ll let some “Like me” things. I also want to talk to customers, there were references that they generally put forward are people that like them and people that have had a good experience, not shocking, right? I want to as a buyer, I want to talk to people that got really far in the process and said, “No.” And that’s a harder ask of salespeople, but there’s a reason they ask that question is to find out like, “Hey, something changed,” and see you liked them well enough, they got that pretty far in the process. You took a lot of time. What was it? And finding out some of those things that might be similar to your situation, that might not et cetera, and also think connectivity.
You’ve touched on it a couple of times. Lesser tools, more tools, but these things working together, playing well in the sandbox. However that is, you’ve got a sandbox and you’re going to buy something new. It’d be good to know, does it play well with some of the other things that you have and some technologies you well know, some do, and some don’t. And so I’d like to know those things. So one of the things that I love about, Select Software, what you’ve built is, again, it’s a navigating system. You’re helping people get to a place to understand both what’s available and also because you’ve got reviews, what experiences people are having and have had with those solutions. How do you see that? First of all, I know you’re early in that journey, ish. What are you learning as you’re going through this process of looking at the reviews and looking at what people are saying. What is it, what is that feeding you and how you should then help practitioners with this, again, quandary of buying software?
I think we’re learning that a lot of companies are still buying really bad tools for not the worst reasons in the world, but they’re just buying really suboptimal. And it’s even honestly, it’s sometimes people that are speaking at big conferences and you asked about their tech stack and it’s like, “Really? Why did you buy this?” “Well, we had a preexisting relationship with that. So it was easy to get it signed off on.” “Oh, okay.” That’s a pretty bad reason to buy a core-
So horrible reason.
Yeah. To buy your ATS. You know what I mean? It’s not like some teeny tiny thing, it’s something that your TA team lives in. And so we’re learning, we’re very blessed to talk to really smart people who have figured out, how do you clean up your tech stack? How do you figure out what an integration actually is when the sales person says, “Oh yeah, we integrate with that.”? All these teeny tiny things that make you a really adept software buyer. But unfortunately we’re also still learning that look, “It’s a big world, there’s a lot of really sophisticated sales and marketing teams that have figured out how to throw bad tools down people’s throats and make a ton of money off of it.” And it’s going to be a while before that stuff changes because then they’ve got it figured out and they have a very large, billion dollar economic incentive to keep that train running.
That’s right. It’s funny, I was asked one time. Think it’s in Sydney, but someone asked me, “Is HR software… Is it purchased or is it sold?” And it was a fascinating question because I knew the answer of course, because it is absolutely sold. Sales and marketing team of a lot of these companies, especially all the funding that’s being dropped into it. They’re getting more sophisticated at selling both what is there, and also what’s on the roadmap. So both current state and future state simultaneously.
That’s why I think you shouldn’t be afraid to ask dumb questions. If somebody says, “Hey, we do XYZ. Okay, show me that. How does it work?” Really get into the details and you don’t want to be a jerk about it, but you really have to question assumptions because unfortunately, the person on the other end of the phone, they have a pretty strong incentive to get the deal done.
And so you’ve got to diligence stuff for yourself. And the really amazing thing is once you become good at this, you can actually start partnering with companies in deeper ways that get you tremendous amount of value. You can partner with companies where maybe you are that first healthcare client, and because you are the first one, you get a crazy discount.
And you can have the confidence that it’s going to work because you’ve gotten really good at understanding how to navigate this process. There’s so many examples of companies that I think are just really great at buying software or who have reaped outside benefits because they’re able to maybe move really quickly and decrease that sales [inaudible 00:25:03] time, which the vendors value a lot. Just all kinds of cool stuff.
I think one of the things that for the audience to make sure that you really got with one of the things that Phil said is, not just asking dumb questions, but also looking at live software. So one of the things to kind of distill between kind of anybody can make something in Photoshop or some screenshots and things like that. But there’s just nothing like looking at a live software. So when somebody says, “Oh yeah, we can do video interviewing in this way.” It’s like, “Cool. Show me.” Not show me in a demo environment, show me in live software. Show it, cut it and cut it into somebody, as instance, let’s look at it. I want to see it work and almost kind of prove to yourself, I’ve seen it. I know that it works.
I know that… it’s trust but verify. Like a lot of things in life, trust but verify. Phil, on the way out, I do have one question left that I want to ask you about and that’s pilots. What’s your stance or what’s your take on companies that basically say, “We want to buy, we’re not a hundred percent sold, but we like it. Can we try it in some ways before we buy it? Can we pilot?” It in a paid pilot, unpaid, whatever. Big part of the company and a large part of the company, small division, whatever, but what’s your general take on pilots?
I think it’s tremendous. The rest of enterprise SAAS is driven by product led growth, where somebody on the marketing team or engineering team or whatever uses a new tool and says, “Hey, it worked in this teeny tiny use case. Let’s use it the rest of the organization.” HR that’s starting to happen, but it hasn’t happened as aggressively because a lot of HR teams just don’t do stuff like that. They think about annual cycles and long-term planning, et cetera. I think pilots are amazing. It’s got to be a paid pilot, otherwise you don’t have skin in the game to make it successful. But assign a champion on your team, somebody who is competent, who has a passion for this particular project, set benchmarks upfront that it needs to meet in terms of implementation time and other KPIs that relate to that specific type of technology and do it for three months. And if it works, scale it. If it doesn’t, kill it. That’s an amazing way to figure out how to evolve your tech stack
Drops mic. Walks off stage. Thank you. Thank you so much, brother. Absolutely great advice, per usual. And just thanks for coming on the podcast.
Thanks for having me. Great conversation, a lot of fun.
Absolutely. And thanks for everyone that listens to the RecruitingDaily podcast. Until next time.
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William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.