Key Insights on Adoption of HR SaaS vs On-Premise Software

What HR departments want to do and what HR departments can do are two different things, says an Information Services Group (ISG) survey. With 80 percent of personnel professionals admitting they still operate with an on-site, internally-built system, the trend towards an HR SaaS model of delivery has been slower than expected.

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In a similar survey done in 2016, ISG reported that 40 percent of HR professionals expressed a keen interest in migrating their systems to an on-premise and online-hosted hybrid. The divergence between ambition and actualization for online HR systems has many causes, says ISG partner Debra Card. She points to funding delays, mergers, poor business planning, or a lack of internal resources as roadblocks to HR technology progress.

These may not be the only reasons why company’s might be commitment-phobic about the cloud, however. Recent research indicates that post-migration woes may be making other businesses pause before pressing send. Another survey conducted in 2017 by PwC showed that less than 20 percent of users described themselves as “very satisfied” after making the cloud their new human resources home.

The top concerns cited by the HR and IT people polled included a hesitation to give-up the flexibility that comes with customization – such as building a specific operation to calculate a complex union payment formula, for example. A cloud-based payroll provider wouldn’t be able to accommodate that and may require a manual workaround. Additionally, many companies may balk at losing their on-site IT support services. Forty-four percent of survey respondents stated the “lack of internal resources to assist with a project” was a challenge.

“When an HR organization moves to the cloud, the common question is, ‘Who will we call for help now?’” said Chris Keys, director of HR software for global advisory and solutions company Willis Towers Watson. “That gets you into a whole new dialogue around the structure of your service-support organization.”

Despite the challenges, ISG’s Debra Card states that for those firms that made the migration, more than half of those have saved 10 to 30 percent in IT and HR administration costs. Another 15 percent saved 30 percent in both areas. SaaS-based services also offers modern, user-friendly solutions that can support everyone from the modestly-staffed start-up to the mega-corporation without missing a beat. Cloud-based services means new ways of thinking and doing business. Adapting to a new situation is different than assessing usefulness and companies may want to separate these processes before settling on a course of HR action.

ISG, an IT consulting and market intelligence firm, asked 271 organizations with between 1000 and 20,000+ employees about their intentions to transition to a more modern HR system in both 2016 and 2019.

The 2017-2018 Sierra-Cedar HR Systems Survey was conducted by PwC and included responses from HR and IT professionals working across 307 companies of various sizes across multiple industries and in forty countries.