Getting Handcuffed with Benefits Technology

Today I saw a presentation from a new HR-Benefits-Payroll technology vendor that I thought is pretty cool. It looked great. It is web, mobile, and social. It could even send text messages to employees. It has nice colors, pictures, and looked real user friendly. It is a true end to end solution. The system could manage all employee data from recruitment to retirement. Or some would say from hire to fire. Employers love it. At least some do. Yet I know that in a few months there will be something better in the market and in another 6 months something better again.

Today I also got two calls from benefits brokers asking about some benefits technology vendor they just saw wondering what I thought of them. I get these calls every day. For some I know their goal is to have some lead benefits enrollment system that will help them “tie their client to them” so that it would be more difficult to get fired. Or at a minimum they are looking to use technology as a competitive advantage. As I had written in my article titled “There is a Ghost Lurking in the Benefits World” ( these brokers are looking for that silver bullet. However, while the broker is trying to tie the clients to them what is really happening is the broker is getting handcuffed to some technology vendor. They get stuck in some long contract with some ongoing monthly expense only to find out the solution they are handcuffed to doesn’t generate new business and is very quickly yesterday’s idea.

There are a few things I know about benefits technology. First, all clients don’t buy the same solution. They don’t buy the same health insurance. They don’t buy the same computer equipment. And they don’t buy the same benefits enrollment system. In fact I see few employers buying stand-alone benefits enrollment systems at all. At HR Technology Advisors we recently did a survey and found that of the top 15 benefits enrollment systems being used today only 2 are stand-alone benefits enrollment systems. The other 13 are leading HR and Payroll vendors that have benefits enrollment as a part of their system. Only one vendor has more than 10% market share. See my article “The Coming Obsolescence of Stand-Alone Benefits Enrollment Systems.”

While not all brokers are looking to tie their clients to them with technology, most will admit that they are looking for a competitive advantage. The problem with this strategy is that the result is often the opposite. They actually leave themselves competitively vulnerable. I had one of my broker clients tell me the other day that their competitor just signed a contract with a specific technology vendor. My advice to him was to let the other broker be handcuffed to one vendor. While your competitor enters the race with the 8th fastest horse you can bring in the top 5 and increase your chance of winning. What producer wants to enter a prospect meeting with the 8th best anything?

I realize that just because a broker signs with one vendor does not necessarily mean they sell only that vendor. The problem though is that they often feel an obligation to “get their money’s worth” so they end up pushing that one solution and become blind to alternatives. They do seminars and webinars on that one solution. They train their staff on how to “sell” that one solution but don’t train them on how to become better at being a ‘trusted advisor” around technology to their clients. The producers bring this solution to clients and prospects with the belief that they have the best thing only to quickly find out there are many good solutions in the market. As we all know technology changes fast. Unless you bought your car, TV, cellphone, or computer in the last 12 months the odds are you aren’t using the best technology.

There are so many great technologies in the market and so many good things brokers can do for employers with technology there is no reason to limit yourself to one. We know all clients don’t want the same thing. Today’s technology will be yesterday’s technology in 6 months. No one vendor has cornered the market with some great idea though some vendors will certainly try to convince you that is the case. The good thing is you can be even more competitive by having more options. So be careful for what you wish for. While you seek that idea that will tie your clients to you, you may be the one that gets the handcuffs.

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