New survey reveals price has surpassed ease of use as the most influential factor when SMBs choose software solutions; budget-specific shift could increase opportunities for larger-cost integration issues

ARLINGTON, Va.—Capterra, the leading online resource for business software buyers, released findings from its latest survey of small and mid-size business leaders across vertical markets to understand how SMBs are choosing talent management solutions and their implications on businesses.

Capterra’s Talent Management Industry User Research Report revealed that price heavily impacts talent management solution decisions, surpassing ease of use as a key factor across SMBs. This focus on price creates a disconnect for small business leaders trying to choose the “right” software for their organization, as they’re using low price as the main driver when buying software.

“Understanding how buyers successfully leverage talent management solutions can help small business leaders make wise decisions based on their company’s size, resources, and software needs,” said Brian Westfall, principal analyst at Capterra and the survey’s lead analyst. “While low cost may seem like the most important aspect of software, choosing a solution solely based on price can create more issues than most SMBs are prepared to handle.”

Small business leaders run the risk of choosing a system that doesn’t meet the needs of their organization, ignoring the potential costs associated with picking the “wrong” software and eventually creating the need to search for and implement new solutions. This lack of knowledge is reflected in one key survey finding: 45% of respondents spent morethan what they expected, while another 45% spent less. For SMBs operating on razor-thin margins, any unnecessary use of budget or resources could be detrimental to the business overall.

Key findings include:

• Importance of price: Price has surpassed ease of use as the second most important factor behind functionality in talent management software purchase decisions for all SMBs and is the primary factor for the smallest SMBs.
• Software search expectation vs. reality: 45% of users took 10 months or more to research and choose their talent management software, despite only 18% expecting the search to take that long.
• Key software features: Succession planning and 360-degree feedback are the most ignored talent management software features by those who have them, and the most desired by those who don’t.

SMBs can avoid making potentially harmful software purchase decisions, while keeping bottom-lines in check and by making careful technology choices – not just cost-conscious ones. Capterra’s survey offers key takeaways on this topic, exploring data on the shift in decision-making, tips for choosing the right solution, and the most important software features.

These additional key insights include:

Prioritizing Price in Talent Management Software Selection

While budget-strapped SMBs are increasingly purchasing talent management software, price significantly impacts spending decisions—an issue that can cause talent management software implementation to backfire. The cost of choosing software that isn’t a fit for their organization or lacks the features necessary to meet HR needs could impact meeting business goals and retaining and gaining new talent.

The number of small businesses implementing talent management software has increased over the past ten years as vendors began creating products geared toward smaller buyers, focusing on affordability and ease of use. Results from Capterra’s 2019 survey revealed a shift in spending from a similar survey conducted in 2016—price surpassed ease of use as the second most-cited top factor in selecting talent management software.

Expectations vs. Reality

Capterra’s survey found that 80% of users are satisfied with their talent management software. Businesses of all sizes and industries are increasingly relying on talent management software to both automate and optimize HR processes and achieve positive results related to money and time saved. However, understanding the pitfalls of prioritizing low price over functionalities, and processes behind researching, purchasing, and implementing this software is paramount to success for SMBs.

Additional functionality correlates with additional cost, but a wide array of features is often necessary for talent management software. Although the smallest SMBs surveyed consider the price of software above functionality, cutting corners on functionality for a better price has led to dissatisfaction. In fact, 62% of talent management software users in Capterra’s survey who switched talent management software providers did so due to lack of features.

Using Talent Management Software Effectively

For 60% of users, the search for talent management software took six months or less to complete from initial research to final purchase. For 45%, it took 10 months or more to research and choose a talent management software, despite only 18% expecting the search to take that long at the beginning of the process. This proves the importance of taking time to understand the company’s needs before beginning the search and using online reviews to identify the “right” option. Online reviews are important in the buyer’s journey for gaining information and understanding functionalities and choices.

Businesses use talent management software for core HR needs such as personnel tracking, time and attendance, payroll, and recruiting. HR personnel can spend as much as three-fourths of their time on these administrative tasks, so using software to automate this work is a top priority, as it frees up their time and energy to focus on strategy and employee experience—key to remaining competitive in the job market.

Small businesses today are forced to do more with less, but opting for the less expensive software solution isn’t always the most effective option. For more information and tips for business leaders, view the full survey results in today’s accompanying blog post, “Talent Management Industry User Research Report.”

Capterra collected data for this report through an online, 24-question survey. Over a two-week period, 350 talent management software users completed the online survey via a third-party independent research firm. The information contained in this report has been obtained from sources believed to be reliable. The applications selected are examples to show a feature in context, and are not intended as endorsements or recommendations.

About Capterra: Capterra is the leading online resource for business software buyers. Founded in 1999, Capterra features validated user reviews and independent research across hundreds of software categories. From Accounting to Yoga Studio Management, Capterra covers it all. Each month, Capterra helps more than three million buyers find the right software. Capterra is a Gartner company. For more information, visit Capterra.com.