The decision to use cloud-based human resources software can be a practical one. An internet-hosted workforce platform is a collection of functions and modules that allows companies to manage employee records, performance management, time-off requests, benefits administration, compensation, payroll, and more. It’s essentially the core of your company’s operations.
However, it’s also an operating model: You don’t own the servers or infrastructure. That’s up to the provider, who manages updates, maintenance, scaling, and access (usually via a browser or mobile device). Instead of managing server rooms, you’re paying for access and service — and in return, you get what some call the future of business.
Cloud-based systems are not just another option for enterprise systems. They offer advantages like remote access, centralized records, routine automation, and self-service portals, all without requiring you to purchase additional hardware, maintain an IT staff, or worry about security patches. And they’re becoming more affordable as the market matures.
Yet there are challenges, too: Data migrations, training your employees, and integrating with other financial, compliance, and business applications. In addition, there’s always the risk of poor implementation and adoption.
You’ll need to do technical due diligence to ensure these systems will integrate well with neighboring systems and handle the necessary data securely and accurately.
Finally, the right HR platform should reflect your actual needs. If you have a small team, maybe you’ll start with only recruitment or time and attendance, rather than an integrated system covering everything from onboarding to learning and development. But if your company is growing quickly, a comprehensive system may be better.
What Is Cloud-Based HR Software?
At their most basic level, HR platforms are collections of interconnected functions and modules that allow organizations to track employee information and perform certain activities. This includes things like maintaining employee records, tracking employee performance, managing benefits, handling payroll-related transactions, etc. These systems typically fall into two types: unified HR platforms and modular HR suites. Unified platforms contain everything from HR, payroll, talent, and workforce management to benefits administration. Modular systems let organizations pick and choose individual pieces, adding more functionality as needed.
Both types of HR software have strengths. Unified platforms often provide shared real-time data across a broad suite of functions. Modular systems offer more flexibility for growth and expansion, but require integration with legacy or existing systems to avoid redundancy. There are several major features that make up a typical cloud-based HR platform:
Employee Records
Benefits Administration
Time and Attendance
Performance Management
Learning & Development
Workforce Planning
Analytics
Payroll-related Integrations
Compensation
Reporting & Dashboards
These features may not appear in every product or package. Rather, this map shows how a cloud-based HR platform can function.
While cloud-based systems are still relatively new, their functionality continues to expand as vendors seek to differentiate themselves by offering broader coverage of HR functions, better integration, improved mobility, and greater flexibility to meet specific employer needs. Vendors are responding to demand by developing systems that include both HR and finance functionality, which many users would consider “integrated” systems.
There’s one caveat, however. A growing number of vendors claim to be providing “integrated” HR systems; but few actually are. The term refers to a unified codebase that enables seamless interactions among all the different functional areas within a given product. While a company may contract for services that span the full breadth of an integrated system, the responsibility remains with the company for ensuring proper configuration, customization, migration, and integration. This means that the vendor’s support for any particular module does not necessarily mean that it supports all of the modules in the same manner.
How Cloud-Based HR Systems Help
Cloud-based HR systems provide numerous practical benefits. Perhaps most notably, using them significantly reduces the burden on internal staff to maintain infrastructure while allowing them to focus instead on their main responsibilities. Organizations can enjoy such advantages as reduced hardware maintenance costs and increased visibility into operations through reporting capabilities. Additionally, the ability to access systems remotely provides significant flexibility to adapt rapidly to changing situations. However, achieving those outcomes isn’t automatic, especially when moving from legacy systems. It involves work on migration, data quality, and change management processes that should accompany the move.
Data Migration
Any transition from legacy systems requires work. The first step is assessing the data that currently resides in your existing systems, identifying data elements that need to be migrated, cleansing the data, defining transformation rules, validating, testing, and implementing the migration. Many employers simply begin migrating data immediately, which may lead to errors that could affect operations.
Change management is equally important. Whether employees or managers are using a new system, the organization needs to communicate the changes, provide training, support, and help desks. Employees and managers may resist making changes, so communication is essential to help everyone understand the reasons for the change and why it’s beneficial.
Adoption
Once a system has been implemented successfully, it must be adopted throughout the organization. Adoption depends upon how useful employees and managers find the new system, and whether it fits well with their daily workflows. For example, employees who use a time-tracking system will likely want to be able to track and approve time-off requests. Managers will want to see reports showing who is working and when, along with performance metrics and other productivity indicators.
Technical Due Diligence
Most cloud-based HR systems connect to various applications, including payroll providers, benefits systems, learning and development tools, and financial applications, among others. The key is ensuring that the system integrates well with these applications and that the appropriate data is handled properly.
Many organizations already use some of these applications. Others may have chosen to deploy internally. As with other integrations, you should assess how well the HR application handles its interactions with these neighboring systems.
A variety of questions arise, including:
Do these applications run inside or outside of your firewall? Does the HR application reside on-premises or on the cloud?
Does your existing application talk to other systems, or does it operate independently?
If the application talks to other systems, are these interactions designed for failover scenarios? Are there any failure points? Is there a single point of dependency? Where does responsibility remain with the company?
Integration With Other Applications
Integrating HR systems with other applications and services involves careful planning. First, you need to determine which applications are relevant and identify any potential conflicts. Next, evaluate your integration requirements, including what information flows are necessary and how they might impact each application.
For example, when linking HR and payroll systems together, you must ensure that the HR system can provide accurate information about current employees, their job titles, and pay rates. At the same time, the payroll system must pass that information to the HR system accurately.
Security
When choosing cloud-based HR software, consider the provider’s approach to securing your sensitive HR data, both on their systems and yours. Ask the vendor to detail their security processes, including how they secure your data while storing it, how they encrypt data at rest and in transit, and how they monitor access to your data. Make sure they have agreements in place to ensure that they keep your data out of jurisdictions where it’s not legal to do so.
Ask them about the kinds of controls they put in place to protect against unauthorized access and disclosure, including identity management, multi-factor authentication, role-based access, encryption, and audit logging. Finally, ask them whether they have the capability to fulfill your jurisdiction-specific regulatory requirements, such as privacy laws and labor laws.
Compliance
Cloud HR solutions offer many helpful compliance features, including regular updates, tax rules, privacy regulations, and reporting requirements. Unfortunately, there are no guarantees that cloud HR tools will automatically satisfy all your compliance needs, because the employer is ultimately responsible for meeting all of them.
That doesn’t mean that your organization shouldn’t use cloud HR solutions to assist with meeting compliance goals. However, before you implement any new solution, verify that your vendor is qualified to provide advice on matters involving tax, payroll, and employment disputes.
Evaluating a Vendor
Before selecting a vendor, examine your company’s workflows and identify what your HR system must accomplish. Then, look for the vendors that best fit your requirements.
Start by evaluating vendors based on scenarios that reflect your company’s needs. Talk to representatives of similar-sized organizations within the same industry and ask them about their experiences with vendors. Find out what features they value most and whether they had any problems with specific products.
Inquire about what modules the vendor offers, and how they’ve integrated these functions with your current systems. What kind of implementation support will the vendor offer? What are its ongoing service models? How long have they provided services, and what kind of support do they offer?
Asking for references will help you get a clearer picture of how the vendor operates. Also, review what kind of support they offer, and whether they provide online support resources.
Next, confirm that the vendor will support your company’s workflow. Evaluate whether its offerings match the size and complexity of your company. Can you scale up as needed, or will you have to buy a different product? Will the vendor evolve as your needs change over time?
Finally, establish how you’ll measure success after launching the new solution. Look for measures of how well it fits your company’s needs. Ask about the adoption rate and how effective the solution has been for similar companies. How many help desk tickets were opened? Were there any process improvements? Was the vendor involved in optimizing your workflow after deployment?
Ultimately, though, the success of your implementation depends on your willingness to take advantage of the tools available. Don’t wait until you’re forced to adopt them to reap their rewards.