SaaS HCM growing, but some prefer customization of on-premises HCM

As more companies consider taking human capital management to the cloud, analysts say the on-site version also has its benefits.

Software as a Service human capital management (SaaS HCM) has become a viable alternative to in-house, licensed HCM software. Analysts say it can be faster to implement, more affordable in terms of upfront costs and relieve IT departments of maintenance chores.

"More organizations are moving toward SaaS," said Sherry Fox, a research analyst with Montreal-based Technology Evaluation Centers, which helps companies select software for human resources and other business processes. "The subscription-based pricing is very attractive in that there are very low startup costs. And in terms of upgrades, that's all taken care of for you."

SaaS HCM use rising

The 2012 Global Cloud Business Software Survey: Data Report, published by Saugatuck Technology Inc., a research and consulting firm based in Westport, Conn., noted that HCM is one of the top software categories that organizations are considering for SaaS-based deployment. According to the survey, 22% of organizations already use a SaaS-based HR and talent management product, while another 30% plan to subscribe later this year or in 2013.

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The report also noted that while companies started using SaaS HCM products to fill in gaps in their HR systems, now they are looking for integrated SaaS HCM suites, presumably to replace their on-premises suites.

“The advantage of going with SaaS HCM is lower up-front costs and fewer worries about maintaining the software and upgrading it every six months to two years,” said Jeff Seitz, a principal consultant for HR consulting firm Jeitosa Group International. "Any new functionality you'll get automatically."

Then again, there are merits to having your HCM system in-house. Namely, you control the software to a greater degree and can make more changes to the functionality than is usually possible with SaaS-based HCM, Seitz said. If you don't want a particular upgrade, you can ignore it.

"If you're hosting the system internally, you have greater flexibility because you own that system, you can customize it up and down," he added.

For organizations that really don't want to have to deal with their HR technology, another option is to outsource the entire system -- including the staffing and daily management -- to a consulting firm that can either host the HCM system or install it and supervise it on-site.

Consultants provide services such as selecting, implementing and supervising the HCM system as well as supporting end users. The organization still needs to have executives to act as liaisons to the outsourcing company, meet with it regularly and ensure the HCM system meets users’ needs.

More HCM system users expect mobile access

Mobile access is another option that HR and IT managers must consider. Both HR professionals and the employees they serve expect to be able to check benefits, submit vacation requests, review resumes or file performance reviews from outside the office.

"Hiring managers can use mobile access for advertising jobs, managing candidate relationships, scheduling shifts and updating performance reviews," said Fox, the Technology Evaluation Centers analyst.

While smartphones can access Web-based applications, regular browsers are often difficult to read on small screens. The Apple iPad and other tablet devices offer bigger screens, and industry observers say HCM vendors may provide applications specific to mobile devices, removing extra graphics and noncritical functions. Companies should also restrict access to highly sensitive employee data, such as tax ID numbers or bank account information.

No outsourcing HCM governance

Finally, remember that the more disparate components added -- such as outsourced point solutions, mobile applications or consulting agreements -- the more organizations need to establish good governance over the providers and various HCM components.

“The responsibility for governance over the many moving parts rests squarely with you, the end-user HR leadership,” advised Naomi Bloom, HR consultant and founder of Bloom & Wallace, an HR and IT consulting firm based in Fort Meyers, Fla. “Even when much of the software and databases are delivered via true SaaS, there’s still a great deal of the operating model for which the end-user HR leadership is responsible.”

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