According to a recent survey from HR solutions company Sierra-Cedar, 2015 was the year in which Software as a Service (SaaS) hit a tipping point.
More than half of core HR systems were SaaS solutions, according to its annual survey.
Rather than make huge investments of time and infrastructure in hosting and maintaining an HR system on site, organisations increasingly prefer the convenience and cost-savings available by “renting” cloud-hosted systems.
Selecting HR software: what you need to know about technology (webinar)
Furthermore, they can access systems via a web browser or mobile app, meaning they’re not tied down to the office when they need to make updates or review profiles.
But as the popularity of cloud-based systems grows, how can organisations work out which system and provider is best for them? Here are five questions to ask before you sign up to SaaS.
1. How will the fees be managed?
Cloud-based HR solutions mean there is no significant upfront investment; IT departments don’t need to set up additional servers or infrastructure because everything is managed externally from a central location for a monthly fee.
Before you invest though, ask the vendor how these fees will be managed and what they will include. Does the cost include telephone support, and will training be provided to get you up and running or does this cost extra? Can you increase (or decrease) your investment during the contracted period if you require more or fewer features?
An important consideration is your service level agreement. Many vendors will guarantee a certain level of availability and can produce reports on whether they have met them. Ask if you can see how their performance has matched up to their claims.
2. What security processes are in place to protect your data?
One of the concerns many organisations share about moving any software system to the cloud is whether it will be secure. This is a particular worry for HR professionals as the information they process tends to be highly sensitive.
Make sure that your supplier uses an established and independently certified data centre, ideally one that’s within the European Economic Area and that meets a recognised standard such as ISO27001 or SOC 1 or 2. The Data Protection Act requires companies to ensure an adequate level of protection of data if sending data overseas.
When it comes to the software itself, a system that is built on several layers and designed around “roles” tends to be more secure. This means that each user’s access and permissions are carefully controlled – for example salary data might only be viewable to certain senior members of staff.
This is the same for reporting tools – these need to be integrated into the security of the system so reports cannot be pulled off the database directly.
A good place to start with security is to look at your own processes and see how the vendor’s security standards match up to these.
3. How will the system be updated?
One of the major selling points of SaaS is the minimal fuss required to bring the system up-to-date. Traditionally, in-house HR systems could take months to upgrade as new features were made available and were costly both in terms of time and money.
Cloud systems, by contrast, can be updated during scheduled maintenance windows and enhancements are made to them on a regular basis.
Another advantage is that multi-tenanted cloud vendors can add new features to a single code base rather than having to maintain different releases across lots of different client sites.
That said, it’s important to know how and when these updates are likely to happen and how they will be communicated. How much input will be required from your end to ensure the process is seamless, and how much involvement will your IT department need to have?
4. What is the return on investment?
Research from consulting company Knowledge Infusion claims that cloud solutions can end up costing half that of an internally-hosted solution, while Forrester analysis suggests return on investment can be around 26%, with payback within 12 to 24 months.
Of course, though, every SaaS user will have a different experience. Initially the monthly fee can seem expensive compared to a premise licence, but it’s important to factor in how much labour and time would be required to maintain and update that system when comparing the two.
Consider also not just your present software needs but what you might need in the future. If you increased the scope of an internal system, this might require additional hardware investment. Because cloud systems are scalable, it’s likely your vendor would be able to add new features (and users) fairly smoothly.
5. How should we prepare for a move to the cloud?
Worries about data security and ownership mean many managers have misgivings about moving away from a system over which they have internal control to one that is managed by a third party.
Because of this, HR departments may find themselves having to deal with some internal politics if they opt for SaaS. And while IT and finance departments may welcome the transition because of the reduced financial and maintenance burden, for others it will require a deeper shift in attitude.
One way to tackle this is to appoint “champions” for the system from an early stage who can promote the benefits of a more flexible and scalable system and allay any fears.
Personnel Today Awards newsletter
Be the first to read updates relating to the annual Personnel Today Awards, celebrating excellence in HR and L&D among employers and suppliers.