Throughout the enterprise software sphere, various aspects of business from customer service to procurement are being shifted to cloud platforms. Human Capital Management is among the processes once supported by traditional on-site infrastructure that is making a rapid transition to the cloud.
HR is Well Suited to Cloud Migration
In some ways, HR software is uniquely situated to be near the forefront of the enterprise cloud movement. Many employers still view HR’s role as being largely administrative rather than a core part of strategic activities. This is evident in the success of outsourcing firms that handle everything from recruiting to I9 administration and training. Now, PEO firms offer businesses the opportunity to offload even more responsibility for employing and managing a workforce from day to day.
With areas such as HR that are often seen as less “central”, it may be easier for companies to accept the idea of having less direct control over the IT resources involved. So, if a cloud vendor can demonstrate cost savings, greater efficiency, and a higher level of compliance, making the case for a move to cloud hosted HR applications is not too difficult. Ironically, it is often these cloud-based HR software solutions that manage to position Human Resources as a truly strategic partner for the first time by offering greater visibility into the affects of HCM on core business objectives.
Business Benefits of the Cloud for Employers
To see the “big picture” benefits of cloud computing for HR, it is necessary to understand the 3 main components of cloud offerings.
Software as a Service (SaaS) – This is the term most end users know best. Access to SaaS applications is delivered to customers via the web. Not every SaaS vendor is necessarily completely “in the cloud”. For example, a vendor might have a dedicated server facility and build its own delivery platform. This approach is becoming less common as the cloud gains popularity.
Platform as a Service (PaaS) – This term refers to the software platforms made available in the cloud for firms to build and run applications while providing online access for customers. In the employment field, a business might deploy an HRIS database product on a cloud platform to conserve in-house data hosting and processing capacity for other purposes.
Infrastructure as a Service (IaaS) – The infrastructure is the actual distributed server “space” that makes up the cloud. Microsoft, Amazon, and Google are examples of companies that have created a huge network of cloud infrastructure that virtually undergirds what we now think of as Web 3.0 technology.
The top benefits employers see in SaaS for HR include:
- Up-front investment is small since there are no licenses to purchase
- Fees count as operating expenses rather than capital expenditures
- Infrastructure requirements are minimal since the vendor hosts the application
- ROI is easy to calculate and may begin immediately
- Maintenance and upgrades are included in set monthly or per-use pricing
- Access can be scaled up or down along with the size of the workforce
- IT has less responsibility and involvement than with on-site software
- Implementation is typically much faster than traditional software, allowing HR to begin automating processes sooner for greater efficiency
- Service oriented architecture (SOA) means many applications interface readily with other systems
- Customization is often available to meet strategic business needs for HCM
How PaaS & SaaS Fit into the Big Picture
As customers and end users, employers are typically one step removed from directly purchasing PaaS and IaaS services. Instead, businesses select SaaS vendors who build, host, and deliver HR applications using PaaS and IaaS behind the scenes. So, what actual benefit do PaaS and IaaS have for HR as underlying services?
First, the cost of distributed servers is far lower than that of traditional data centers. The virtual nature of Web 3.0 infrastructure means loads can be shifted throughout the cloud to utilize available resources minute by minute. A traditional data facility has to build in a huge amount of excess capacity to meet potential customer needs even though the center will rarely operate at peak capacity. Customers end up paying for the data center to keep this extra infrastructure in place at all times. In contrast, with IaaS, customers pay only for what they actually use. The cost savings SaaS vendors realize through using IaaS are passed on to employers. This is one of the main reasons HR cloud vendors can offer low pricing with fast ROI.
Second, the advent of similarly cost-effective PaaS has provided smaller tech firms with the ability to develop new products that can actually compete with some of the HR software industry’s largest companies. This has several beneficial effects for employers, including access to a broader spectrum of product offerings to manage various aspects of HCM. Larger companies are currently buying up Best of Breed HR applications right and left – improving the overall quality of suite solutions that were previously stagnant. The agility and scalability of the Web 3.0 platform will continue to support innovation to keep up with the rapidly changing employment environment. This evolution of HR software is critical from a compliance standpoint.
Source by Chuck Ros