_Cloud_HR_Cloud Com.put.ing (noun; jargon)

The practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server…*

Cloud computing, a pervasive term in the world of technology these days, involves the sharing of resources to achieve economies of scale and maximizing the effectiveness of the shared resources.

The term ‘moving to the cloud’ refers to an organization moving away from the traditional capex model (buy the dedicated hardware and depreciate it over a period of time) to the opex model (use a shared cloud infrastructure and pay as you use it)*. Whether as NaaS (Network as a Service), PaaS (Platform as a Service), IaaS (Infrastructure as a Service) or the most popular SaaS (Software as a Service), cloud computing is transforming the technology landscape in ways that can be best described as ‘disruptive’ and HR functions are no different. Irrespective of scale and size of the organization, HR teams across the world are leveraging the flexibility and scalability offered by SaaS solutions to become globally competitive and deliver clear business impact.

HR and SaaS: Faster, Better, Effective

Functions like recruitment, performance management, compensation, rewards, collaboration, and recognition are rapidly moving to the cloud. Using a well designed SaaS solution can improve efficiencies by doing existing processes faster, better and cheaper. Additionally it can deliver cost-savings and benefits by enabling a rapid deployment of new solutions and processes, integrating seamlessly with other technology used in the organization and free up management bandwidth to focus on the strategy rather than get bogged down in execution problems.

Traditionally HR has been one of the last functions in the enterprise to adapt new technology. Indeed I still know a few organizations where important HR functions are run using good old Excel (and these are not start-ups with a handful of employees). Multiple copies of the same spreadsheet floating around in various inboxes and nobody has a clue which is the most recent version – you can imagine the situation when the organization wide annual appraisal happens.   This situation typically arises because not too many IT resources are assigned to HR – in fact, sadly, most of the time there is hardly any dedicated IT budget for HR.

In an article published way back in 2011 – HR in the cloud: It’s inevitable, Deloitte Consulting** pointed out that an astounding 84% of the companies they surveyed were transforming or planning to transform the way they handled human resources functions.  The main motivators of this change were cost-savings (85%) and better-effectiveness (75%).

SaaS solutions are able to address the technology needs of the new age HR department while sticking to the IT budget the CFO wants and delivering the security the CIO demands. There are several practical drivers behind this trend of SaaS driving HR transformation.

  1. Cost: Compared to proprietary solutions, the cost of deploying a SaaS based solution is substantially lower. The old approach would require not just investment in expensive hardware and software, but also in a team to maintain and upgrade the systems. In a SaaS solution, the product is typically available off-the-shelf and the costs are usually a function of the scale of deployment. Most SaaS solutions are multi-tenant and the supplier is thus able to deliver the solution at a much lower cost by leveraging associated economies of scale. This makes SaaS an especially attractive solution for small and medium sized firms with limited HR-IT budgets.
  2. Security: With the evolution of cloud computing, security has improved by leaps and folds. For those who are not ready to commit fully to the cloud, there are options to configure private clouds or Single tenant solutions. SaaS is now enterprise-ready in the true sense and is one of the easiest mechanisms to securely access information from any device at any place.
  3. Intuitive: With the explosion of social networking sites, music and video streaming – people are now familiar with and comfortable using cloud based solutions. Navigating through and using the various access options is second nature to most people in the workforce today. Deploying an organization-wide HR process on a SaaS platform makes much more sense than creating a clunky restricted proprietary solution that bogs down employees by forcing them to use particular machines or restricting access only when they are on office premises.
  4. Flexibility and Scalability: True SaaS solutions are extremely flexible. The base product is available off-the-shelf and vastly configurable. Large organizations with mega-HR budgets might choose to invest in customization of the solution but most can just click a button and get started. Features and services can be turned off or on depending on the organizations requirements and the payment is typically based on what services are used rather than the whole package. And with SaaS the challenges of storage and scalability is passed onto the supplier and the HR team can focus on building the strategy and the process. SaaS solutions can be deployed anywhere in the world and can scale from a single user to thousands of concurrent users without any delay. You could go from a pilot program involving a handful of people to a multi-country roll out practically overnight.
  5. Frees up HR to do what they do best: HR teams should be spending most of their time thinking about the employees, the processes, and the strategies to tackle challenges of growth. The technology behind how it is to be done should be hidden. Unlike in-house IT projects that demand a substantial involvement of the HR teams in specifying requirements, design and testing, SaaS solutions represent a paradigm shift in approach towards building solutions. The focus is on configuring the solution rather than building it.  The solution can be deployed quickly with visible and measurable cost savings and additional services activated along the way as required.

While SaaS can help transform the way HR functions, there are a few pitfalls that organizations must be aware of.  Remember SaaS as an approach towards technology, is an enabler and not a magic wand to fix all problems. While evaluating SaaS as a tool to take your HR function to the next level, consider the following.

  1. As with any investment in new technology, HR should establish their requirements and business case for migration to SaaS.
  2. HR teams should involve themselves in the overall technology strategy of the organization. Any solution that is deployed will deliver much better benefits when integrated well with other HR systems and technologies being used by other departments and functions. Today most systems talk seamlessly to each other but achieving this should not be an afterthought.
  3. The cost benefit of SaaS is achieved when there is a rapid deployment of the solution and a tight feedback loop which enables further configuration or activation of new services as required. The difference between customization and configuration should be appreciated and embraced in the true sense.

HR-SaaS solutions are today enabling a radical redesign of HR delivery. The paradigm shift in the IT architecture lets HR transform their talent strategies, revenue growth and operational excellence while becoming competitive globally. Organizations looking to be market-leaders and ahead of the curve in engaging their workforce, should be cognizant of the emerging capabilities of cloud based solutions and take advantage of these flexible, scalable and affordable architectures.

Image courtesy of FreeDigitalPhotos.net, *source: Wikipedia, **‘HR in the cloud: It’s inevitable,’ is a single article extracted from a broader collection of articles from the Deloitte ‘Human Capital Trends 2011’ publication.

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