Although technology is the trend of the future for benefits, there are five key areas to watch out for when implementing new solutions, said Steve Smith, partner at consultancy The Starr Conspiracy, during a conference last week in Park City, Utah.

Speaking at the conference, sponsored by PlanSource, Smith said that a shift to software-as-a-service is continuing as small employers in particular are beginning to understand the business value of making a move to a SaaS solution.

However, there is a “level of tension” being created between buyer and tech vendors as this “explosive and dynamic market within HR tech” forms, Smith said. That tension is caused by buyers’ expectation that multiple services will be included in the products they purchase, when in fact they often are not.

Smith outlined five other “risks” in the move to HR technology solutions:

1) Experience matters

Employers and brokers need to choose tech vendors wisely, he said. “What you are seeing is as the benefits space becomes very compelling from a business and investment standpoint … companies like Zenefits come in and apply a business-to-consumer growth-hacking approach to an industry that is maybe the most compliance-driven industry,” Smith said.

He points to Zenefits and its recent compliance issues to represent the notion that there are companies in the space that “don’t understand the gravity of what goes on in this business.”

“There are people looking to make a fast buck,” he added. “As vendors are evaluating solutions, it behooves you to ask questions and add an extra level of due diligence. A lot of companies out there have flashy brands that I don’t think you want to invest your time and money with.”

2) Private benefit exchanges

Although private exchanges will play more of a role in the future, the data right now show employers are not moving in that direction, Smith said. “We are not alone in thinking that an exchange is still in its early days and, until there is a little more visibility,” there will be little traction.

3) Brokers struggle with technology

The “aggressive approach [of Zenefits] bifurcated the broker market of those who realize technology is the future and must embrace it and those who want to continue to do business like 1995,” Smith said.

“Many tech vendors don’t know the best way to engage with brokers. That is an interesting ongoing conversation,” he added.

4) Security

Security of systems remains a “significant risk,” Smith explained. According to Skyhigh, of 10,000 cloud services available today, only 9.3% meet the definition of high protection.

5) Service

The average net promoter score for benefits HR technology solutions is -35% — “shockingly low,” Smith said.

“To thrive, you have to do a better job taking care of service,” he said. Tech vendors “do a lot of lip service. Check references and know what you are getting into.”

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