Purchasing an ATS: What You Need To Know Before You Sign

In my experience in the recruiting space, I am continually amazed at the “don’t ask, don’t tell” relationship that exists between applicant tracking system vendors and their customers. As I write this, companies across the country are locking into agreements and contracts that put their respective organizations and the reputation of their internal buyers on the line. While there seems to be an art to this process, the reality is that the ATS selection and purchase process should be more of a science. For the initiated, this may be a refresher. But for those novice purchasers, take heed! Below are some issues to be watchful of as you review and ultimately sign on with an ATS vendor. This is by no means a complete list. We will assume for the purpose of this article that the ATS you have selected has all the bells, whistles, and features you are looking for in an e-recruiting solution. This list, at a minimum, can serve as a recap before you sign on the dotted line. Pricing When drilling down into negotiations, think of one word: “collaboration.” If your vendor wants to charge you on a “per-seat” basis, then negotiate a different pricing model, or find another vendor. This may be an unorthodox point of view, but advances in the technology in this space mean that now more then ever, collaboration is a requirement. The larger the organization, the greater the benefits of collaboration. Some of you may think I am crazy for bucking the “good old” model, but one of the basic fundamentals of an ASP-based applicant tracking solution is its ability to capture, manage, and share candidate, requisition, and reporting data enterprise-wide, real time, with anyone in your organization. A vendor that charges on a per-seat basis in this space is only penalizing you on the full use and potential of an applicant tracking system. If per-seat is the only pricing model available, the application being pitched to you was not designed for enterprise-wide collaboration. We are in the digital age, not the stone age. Fostering real-time collaboration between recruiting or HR folks (i.e. the influencers) and hiring managers (i.e. the buyers) is critical. Even in this down economy, the fight continues among most companies in winning the war for top talent. If your organization is highly decentralized, like many companies, then many hiring managers, recruiters, influencers, and executives are in remote locations all over the globe, and the need for collaboration becomes even more critical to your business. On a side note, Most applicant tracking systems are rules based anyway, so adding or deleting users within the application with varying degrees of security and user access should be as easy as pie. If most users in the organization were loaded during your deployment, then additional maintenance would only be incremental for your ATS administrator. Hosting Bring it in house if you can. The trend in the late 1990s for buyers was a move towards the ASP model. However, many companies became “at risk,” because their vendor’s hosting provider closed shop one day with their data. (Do I have to mention how many hosting providers are either in or near bankruptcy?) Yes, you may have signed a service-level agreement with your ATS vendor including downtime and/or disaster clauses ó but what about your ATS vendor’s service-level agreement with their hosting provider? Let’s say your ATS vendor does their own hosting, how do you really know what you are getting? Are you planning on visiting the vendor’s facility and operations? Yes, I know what you’re saying now: you have clauses for these protections (which is indeed important) and probably even have some type of money-back guarantee or such. But if your ATS is truly mission critical to your recruiting operation, then you can’t go dark for 10 minutes, let alone 10 days. Does anyone really care about the money-back guarantee if your recruiters can’t access the data and workflow for days? If you think this doesn’t happen, think again. As a consultant, I have unfortunately seen this scenario happen more than once. Keep it simple: If you purchase an ASP-based ATS, host it yourself. It may be a little more work for your IT staff, but the security will be there. ASP vendors and hosting providers generally double or triple redundant back-ups for you. However, the data is rarely sent to the customer during the life of the contract. Be smart, put in the contract that you want your data monthly on CD in a format that’s easy to import if you don’t opt to host your ATS. Don’t wait until the contract is finished to request your data. If you have been unhappy with the solution over the life of the contract, the vendor may not send you your data until the contract is paid in full. Be aware and don’t fall into this trap. You may be cutting a large check just to get your data in the end. Disaster Clauses You must have heard the rumor that technology companies go out of business too. What happens to you if that’s your vendor? Make sure that some unforeseen event doesn’t take your recruiting operation out with it. At least have a disaster recovery clause in your contract that puts the code in escrow in an event of disasters on part of your vendor. Again, if the ATS is in-house, you are better off. In recent events, several ATS vendors (including one that has been in the space since the early 1990s) closed their doors with little or no warning to customers. Don’t assume vendors will always be working in your company’s best interest. Financials Ask for and obtain a copy of your ATS vendor’s financials. If you are going to spend hundreds of thousands of dollars on a recruiting solution and commit to a vendor, make sure they will be around three months after your go-live date. In this economy, there’s no guarantee that even the financially sound vendors will be around tomorrow. If your vendor holds the line, then there may be something more to the story than they’re telling you. Investigate, research, and ask for this information. References This is one of my favorites. Most vendors will offer up references to you. These references, not surprisingly, usually come from companies that are happy with the application. Before you sign on the dotted line, take a look at their client list and pick three companies from that list to speak with in person and in a timely fashion. Don’t settle in letters of reference. True, no one vendor is perfect in the software industry. As a buyer, I would say that a 90-95% positive account reference rate is not too shabby (yes, we all shoot for 100% ó but I am also a realist!). If you get three decent references from three attempts, you probably can sleep better at night knowing your ATS vendor will probably delivery on their promises. Support Generally, when financials are bad, vendors cut support first. Make sure your ATS vendor is holding their contractual obligations on support issues. Find out what the escalation process is for support and if you have any dedicated resources. Find out when within the escalation process critical issues get the attention from upper management. Ask if your ATS vendor has a CRM or knowledge-based library for reference support. If not, you may find your users calling support often with the same technical and customer support issues continually. Many buyers fail to thoroughly consider the ATS vendor support model on the front end because we don’t expect to have issues and problems on the back end. The Actual Contract Get it in all in writing! Much can be promised during the sales cycle and then forgotten during the services/delivery cycle. Sometimes, the participants in each cycle can even be different groups altogether on the client and vendor sides. The bottom line is that expectations are set during the first contact with an ATS vendor and should be managed to your satisfaction throughout the entire process. If a sales rep tells you that an ATS will be able to do “this or that” in the next release, or a custom job can be done without discussing pricing, get it in writing ó ALWAYS. The signed contract, including the service level agreement, is your bible. Make sure you know exactly what is “in scope” for your ATS deployment and what is out of scope. If not, you may find yourself paying for custom development and enhancements down the road. One last thought. This isn’t an ATS vendor-bashing article ó quite the opposite. Most ATS vendors provide solid solutions with high ROI, not to mention many of the intangible cost savings that are difficult to measure. No, the purpose of this article to help better inform buyers on some of the more common pitfalls that we can all land in when searching for that perfect ATS and vendor. The ATS will be your partner in the war for talent ó make sure your vendor is as well!

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J. Gregory Donovan (vt123@bellsouth.net) has over eight years of experience in HR and recruiting, including particular experience with Applicant Tracking Systems (ATS) technology. His specific areas of expertise include global staffing, recruitment strategies, and HR and e-recruitment solutions. Formerly a founding member of an e-recruitment technology firm, Greg has held various recruitment and consultant roles with such companies as iXL, the John Harland Company, and Geac Software. He holds an MBA from Duquesne University and a B.S. from Penn State University.


2 Comments on “Purchasing an ATS: What You Need To Know Before You Sign

  1. I would not disagree with any of the points raised in this article, I would only add a few additional items that I have found and are very important when any company selects an ATS or hiring process management system.

    Flexibility – Companies are often forced to purchase solutions that are bundled and not direclty targeted to the needs of the organization. “Un-bundled” or a la carte service offerings will save companies money and likely a ton of frustration. Why should any organization pay for a system and only use 20% of its useful functionality.

    Good Sales and Training – Any ATS company that prides itself in asking the hard questions and challenges the company on any possible or visible disfunctions within the organization is not a bad thing. A good ATS sales person has seen many different recruitment org. structures and can and should question the hiring process of the prospect organization to make sure the ATS will in fact benefit rather than automate a bad process.

    Back to flexibility, once a company has been sold the best set of services (“for now”)the company should be able to add-on additional services without pain or expense, and then ONLY based upon the company end users ability and desire to embrace these new added-value services.

    Lastly, because I could go on and on would be Vision. Does the ATS vendor have good vision… not just in their own product backyard, but that of the industry and how any changes (in and out of their own technology) will have a positive impact on all the ATS clients regardless if they are ASP or Client Server.

    I hope these thoughts help as a “smart” ATS purchase decision has been hard for many companies to make.

    Jeffrey Elletson

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  2. Mr. Donovan,

    I want to thank you for such a detail analysis of ATS. My company is going through the review process right now and the invaluable information and insight that you have provided will help guide us to make the best cost effective choice possible. I look forward to reading more of your articles in the future. Good luck but I must say I am humored by your college choices.

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