In light of the increasing challenges in finding qualified personnel, human resources departments worldwide are faced with the task of preparing for the future.

Human resources work has now attained critical significance in business. There is a need to identify an optimal software solution that can support both operational and strategic human resources functions in the best possible way. However, the main goal of this article is not to explain the components of high-quality HR software. Instead, we focus on the fundamental, perhaps even philosophical, question of whether an integrated HR software or a “Best-of-Breed” solution should be preferred.

An “integrated HR solution” is one that can cover almost the entire employee lifecycle, with only a few exceptions. In contrast, a “Best-of-Breed” solution covers only one or very few components of the HR process, claiming the status of the best solution on the market for that specific purpose.

What are the advantages and disadvantages of “Integrated” and “Best-of-Breed” solutions?

In theoretical terms, the arguments are clear. The “Best-of-Breed” solution promises a strategic advantage by combining the best of various worlds, thus providing the overall optimal solution. The appeal lies in selecting the best options for systems like applicant management or time management without having to compromise.

Let’s now transition to practical considerations and immediately identify the challenges: The “Best-of-Breed” solution incurs high costs, inconsistent points of contact, challenging project progress, unclear HR processes, duplicate entries, and data inconsistencies. Why is this the case?

This is primarily due to the fact that HR processes cannot be viewed in isolation but are intertwined. Examples include:

  • The applicant (applicant management) should be directly transferred to payroll and time management upon hiring, being able to book times from the first day.
  • The employment contract should be created directly from the document management system.
  • Absences from time management should be available at any time in personnel cost planning and payroll (not just monthly), explicitly including future absences and even shift schedules.

These requirements are not fabricated; on the contrary, they are quite commonplace. Certainly, these requirements can be implemented in a “Best-of-Breed” world, but the realization is extremely challenging. There will also be ongoing challenges in processes. Interfaces will not function, and manual intervention will be required. Before reaching that point, you can expect a project or a variety of projects with numerous points of contact, all of whom are unfamiliar with each other, not to mention the interface specifications. Without effective project management, the process is challenging. Therefore, it is advisable to closely monitor developments when various service providers and software suppliers operate in a complex project environment. The need for a clear responsibility structure becomes evident, as all parties involved tend to shift any errors in processes and system communication onto the other side.

But it goes further: In the market, there are highly qualified sales representatives who can cleverly appeal to the allure of the HR manager. They present appealing visual representations and emphasize special niche functionalities. However, practical experience teaches us that HR departments seek simple and easily learnable tools. When asked whether customers utilize all the functions of a software, the response is often a shrug. In the worst case, the software remains unused because it is perceived as too complex.

Especially medium-sized HR departments find that “Best-of-Breed” does not work for them. The HR department usually consists of only a few employees who are happy to manage two or three solutions, but eventually, it becomes overwhelming. If there is also a personnel change, such as the specialist for personnel cost planning leaving the company, the software can no longer be operated.

Our conclusion: Integrated HR solutions are the opposite of what was just described. They are fully sufficient for a variety of requirements and can be expanded module by module as needed. They reduce coordination efforts, simplify processes, ensure integrated data, and are ultimately more cost-effective. One provider, one point of contact, one contract, one training, and no interfaces.

Our recommendation, therefore, comes as no surprise: “Integrated” beats “Best-of-Breed,” not in theory but in practice.