Research Shows HR Organizations Are Heading to the Cloud

The promise of the cloud continues to win over the hearts and wallets of today’s human resource (HR) organizations. This was among the key findings of the ISG 2015 Industry Trends in Human Resources Technology and Service Delivery Survey, our second annual poll of what is on the minds of HR and IT leaders in companies around the world.

Every year, more and more HR organizations move from their on-premises and licensed solutions to Software-as-a-Service (SaaS) subscriptions and hybrid models that blend SaaS with licensed technologies. When we conducted our survey in the second half of 2015, we found mid-sized companies (those with fewer than 10,000 employees) have adopted SaaS models more readily than enterprises with more than 10,000 employees. Thirty-four percent of mid-sized companies indicate they already use a primarily SaaS-based model while only 17 percent of larger enterprises say they are doing so. Most large enterprises today are more likely to deploy a hybrid model, as detangling their legacy technology investment is such a complex undertaking.

ISG’s survey results indicate the move to SaaS will accelerate over time. More than 70 percent of respondents told us they are either already using SaaS or are considering implementing a SaaS solution within the next two years.

Companies evaluating the move to SaaS for human capital management (HCM) have a long list of expected benefits. Our research found the three most common of these benefits are:

1. Improved user experience,
2. Access to continuous innovation and best practices,
3. Improved integration of data and applications.

It’s not surprising, then, that the leading HCM SaaS suites woo their prospects with what translate as very compelling promises:

1. Technology that’s intuitive and maybe even fun to use,
2. Continuous updates without having to “take a number” at the IT counter,
3. Unified HCM that offers one place for all of your HR data and actions.

HR has waited at the back of the IT investment line for years, so the potential of shiny, new HR technology may seem like the function has finally arrived. But new technology alone will not bring the kind of transformation so many HR organizations are looking for. The benefits of these systems will come to enterprises that carefully redesign processes to work smarter with the new technology, rethink HR roles and skillsets, evaluate service delivery models and plan for the impacts of these changes on each of the groups who use HR information—employees, their managers and the HR organization itself.

A first step on the path to SaaS should be the creation of a comprehensive HR technology and service delivery strategy—one that considers key objectives specific to your HR organization and ways technology can improve efficiency in service delivery and quality of information in achieving those objectives. The strategy must include a defensible business case and a roadmap for change, including the phasing of both new technology deployment and delivery model optimization.

Considering your journey on the path to SaaS? ISG can help you get where you want to go. Read about these latest trends in the Industry Trends in Human Resources Technology and Service Delivery Survey, or contact me directly to discuss further.