A third of companies feel that their human resources (HR) and payroll IT systems either do not meet their requirements adequately (29%) or fail to do so at all (5%).

As a result, 37% have plans to replace their current software and 68% intend to upgrade their existing applications, according to the latest survey of this market from PMP Research, commissioned by the Evaluation Centre.

While cost remains a key determining factor in any purchase or upgrade according to 80%, the survey reveals three other important considerations – integration (74%), flexibility (71%) and functionality (71%).

These factors emerged as important to many companies, where 66% want to extend the reach of their HR applications beyond the traditional administrative areas. Popular options include software for recruitment, mentioned by 32%, workforce management (29%), employee absence management (23%), learning management (20%) and succession planning (17%).

As the portfolio of HR activities gets bigger, so organisations are becoming more interested in online working—just over half (54%) say their preferred area of investment lies in internet-enabling HR processes. By offering employees access to HR information via the web or a company intranet, the HR department can improve the service it offers without increasing the administrative overhead. Most (89%) now have a way of disseminating corporate news such as changes to HR policies and procedures through an online service.

A smaller proportion (34%) have implemented self-service options whereby employees can not only view key HR data online but can also make changes to specific pieces of information, such as address or bank account details.

PMP’s research shows that this trend is likely to continue, with 46% indicating that their future HR plans include self-service functionality and only 17% ruling this option out. But, while 9% calculate the costs and benefits for all HR system implementations, 23% only do so for major implementations, and 60% do not at all. The survey questioned 100 organisations with turnovers in the region of £10 million to over £1 billion.