Making the Leap

Considerations for cloud-based solutions.
 
By Madeline Laurano
 
Given the momentum around cloud-based systems, it may seem surprising that more than one third of organizations are still leveraging on-premise HR technology solutions.
In fact, Aberdeen’s recent HCM Trends survey found that organizations have several concerns when making a move to the cloud including security, integration, and control over data. Although staying on-premise may be the right option for some organizations, cloud solutions offer tremendous benefits to any organization looking to keep pace in today’s changing workforce.
 
In 2014, organizations will invest in learning, employee performance management, and talent acquisition technology. Although these are some of the more mature areas of HCM, they also present the greatest opportunity for change. Currently, more than 50 percent of organizations have invested in the same HR providers for three years and will likely be due for upgrades. It is inevitable that many of these companies will be looking to overhaul their legacy systems and consider a new delivery model in the next few years.
 
For many of these organizations, making a move to a cloud- based provider is a natural next step. Cloud solutions are becoming a compelling differentiator and a key factor in
all HCM technology decisions as a way to improve processes and provide a better experience. According to Aberdeen’s 2013 HCM Trends: It’s a Brave New World report, cloud-based services are the preferred delivery model for 31 percent of leading organizations.
 
Although a move to the cloud may seem inevitable, Aberdeen identified several barriers to moving from on-premise to cloud:
 
• Security concerns
• Lack of support from IT for integration
• Lack of support for change management
• Losing control of data
 
By providing the right communication and preparing for this change, organizations can overcome these barriers and make this transition to cloud more seamless. Recently,
I spoke with industry expert and consultant for Black Box Consulting Carole Seymour around the change management that is involved with moving from on-premise to SaaS.
In a cloud-environment, the responsibility for managing the vendor relationship typically shifts from IT to HR. As a result, HR leaders must ask providers critical questions about integration, data centers, back-up hosting, privacy requirements, and compliance with Safe Harbor. Cloud solutions often include more frequent updates, which will require additional resources for training. But playing a greater role in its technology implementation and training will enable HR to maximize its investment in a cloud solution.
 
As organizations move to the cloud, a few of the immediate benefits include:
 
Efficiency. The most obvious benefit of a cloud investment is that IT no longer needs to focus on hardware, maintenance, and operating systems. Instead, cloud technology providers are able to handle all IT-related functions, allowing internal IT departments to focus on more strategic workforce management initiatives. By investing in cloud, IT can focus on other areas such as exploring and implementing potential changes in scheduling practices to streamline costs.

Access to HCM data. A cloud environment allows organizations to have access to data anytime and anywhere. HCM solutions in the cloud allow HR to respond to business needs in a timely manner and present critical information that may have been difficult to access with on-premise systems. Also, since 48 percent of organizations are still managing
and integrating data manually according to Aberdeen’s 2013 HCM Trends: It’s a Brave New World report, the cloud helps to make this data easily accessible and more visible to key stakeholders.
 
Reduced costs. Moving to the cloud allows organizations to remain agile and flexible enough to achieve growth goals in a highly competitive market. In addition to the costs savings to IT with less hardware and maintenance expenses, Aberdeen found that revenue per full-time employee increased by 5 percent and administrative costs decreased by 5 percent.
 
 
Madeline Laurano is research director of human capital management for Aberdeen Group.