Head in the cloud: Is HR technology moving on-demand?

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The GFC posed interesting dilemmas for HR professionals on many levels, but perhaps none more so than choosing HR technology. At a time when budgets were stretched to their limit and CEOs were looking to cut overheads, justifying the HR team's time and resources became more important than ever. As any HR professional knows, reporting is crucial as a means of demonstrating HR's value to the business. Technology can have an important role to play in helping the HR team operate as efficiently as possible.

However, the initial layout for a big software project can be huge and in many cases updating existing systems was viewed by many as a 'non-urgent' task to be put off until more secure financial times.

Now that the economy has improved, how should HR choose between the myriad of technology delivery models on offer? Nick Payne, Australian country manager at NorthgateArinso, notes that the average HR manager wants a global view of HR, as well as in-depth local knowledge and expertise that's not bogged down in admin. He also says HR teams need to be able to respond to the rapidly changing HR requirements of a business, and that means downsizing or upscaleing technology quickly.

"Now is a good time for managers to be looking at alternative models of software delivery, including software delivered 'on demand', which can be well suited to periods of static, or slow economic growth," says Payne. "Monthly bills rather than a large initial payout are an attractive proposition for the finance team, and broadband internet is now standard across business. This combination means that HR managers should be taking a serious look at the on-demand delivery model for support processes."

Going on demand
On-demand technology is nothing new. It comes under several different names - cloud computing, utility computing, Software as a Service (SAAS) - but all have the same basic attributes. Thanks to companies like salesforce.com, it has already proved it can work for applications like CRM and marketing. However, there's no reason why HR shouldn't enjoy the same benefits.

Further confusing the issue is the fact that some on-premise software providers now offer a 'hybrid approach', which may allow for their software to be installed on customers' machines or accessed via the Web. They may focus on delivering their software over the Internet, but put customers on a dedicated copy of the application. Hybrid backers say their products offer benefits such as improved data security and more customer control over software settings and the timing of upgrades.

The initial decision - whether to buy a system or use SAAS or ASP (Application Service Provider) solutions - should not be taken lightly. However, Rick Verloop, managing director, HR3, says it's "horses for courses".

Technically, he says it's easier to implement and maintain a SAAS or ASP solution, but there are limitations as well. "It can also be quite expensive to go SAAS or ASP and the loss of control is also a concern for some people. Mostly, I think it comes down to functionality and 'bang for buck'. Buying a system is normally a fair bit cheaper, but you may need your IT department to perform upgrades etc. If your IT department is already tooled and skilled to do this, then the economy of scale effect makes this issue negligible."

Verloop suggests another important consideration when purchasing a HRIS is whether or not the system shares a common database. "You just don't want payroll information in one database, HR in another, OH&S in another, web information in another, and so on," he says. "I've seen this happen so many times and the outcome is normally the same...information is updated incorrectly, users become disillusioned; management information takes a long time to compile and is often incorrect. It's just much more efficient and productive to have everything in one place," he says.

If separate databases are unavoidable, Verloop says it's vital that each system has integration via web services or similar tools. "An 'interface' is too problematic," he says. "Open Database Connectivity [ODBC] and other such database reading tools are okay, but can cause data mismatch issues. With web services you can read and write information from one database to the other as well as control the movement of data depending on conditions and actions."

Migration from legacy systems must also be considered from a time and productivity standpoint. "Most applications can import data from third party systems and spreadsheets but the information often will require some level of user manipulation to massage it into the required format and to ensure the target system can adequately store and report the legacy information," Verloop says.
The end-user
Regardless of the debate over on-demand or on-premise software, one thing is clear: users are much more demanding of workplace technology than they were a few years ago. Payne says that IT used to be a bit of a mystery, and consumers almost expected slow running systems and broken down hardware in return for the ability to automate much of their work.

"Nowadays, we go home and happily log in to Google and Amazon.com, where the interface is easy to use and simple to navigate," Payne says.

As a result, it's no longer acceptable to go into work the next day to use clunky, complex technology for work. Most HR professionals aren't IT experts, and don't expect to be bogged down in complex procedures. A good on-demand system has got to have a good user interface to be successful, Payne suggests.

"Given the amount of time users spend working with a particular system, they need to have a clear screen that can be customized to show the information they need. We also expect applications to 'just work' - it should be clear how to access information, and how to save and store details. An intuitive system rather than one that requires detailed training is no longer a nice to have, it's crucial to the success of any IT system used by non-IT people."

Weighing it up
However, it's important to remember that when it comes to HR support, one size certainly doesn't fit all. The benefits of an on-demand system are clear, but a business considering an investment should be careful to look at all available HR service delivery models, and weigh up the right choice for them.

On-premise software is reliable and scalable, so it is still the model of choice for large enterprizes. There was a time when HR modules in large Enterprize Resource Planning (ERP) implementations were cumbersome and difficult to use. That's no longer the case, although Payne admits there's still work to be done to shake off this reputation.

Another factor to consider when implementing IT to support HR is what it's actually going to be used for. It's often assumed that IT will support the processes and admin that so often weigh the HR team down. Traditionally, the biggest benefits for HR have been felt when admin like absence requests, tax forms and employee information have been automated.

When researching systems, Verloop suggests getting the needs analysis right. "Too often I see War & Peace sized RFI [Request for Information] documents that have so much in them that you'd need a small HR army to administer and maintain a HR system like what's being requested. That's fine if you're a bank, but most businesses can't afford a high HR to employees ratio, so think about what you really need and what you'll be able to manage; it will make for an easier discovery, implementation and management process."

Payne adds that, increasingly, IT is being used to support the more strategic part of HR. He sees no reason to believe that strategic elements of HR, such as talent management, cannot be supported with the right IT platform.

Succession planning is perhaps the most critical issue HR will face over the next five years as the post war Baby Boomer generation retires. Unless companies are prepared, Payne warns they'll take with them a huge amount of knowledge and experience. "Managers need to be preparing whoever will take the place of these managers. Again, the long-term view of the business can't be ignored, and HR directors should be looking to technology to manage some of these processes," he says.

As a final tip, Verloop urges clients to take each vendor on their own merits: "Biggest doesn't always mean best; most clients doesn't always mean satisfaction; pretty doesn't always mean functional; and expensive doesn't always equate to quality!" he says.

On-demand technology can help manage costs, and is more easily scalable than some other delivery models. However, different models suit different companies, and Payne suggests that on-premise software has moved a long way from the "expensive dinosaur" it once was. "What is important is that when the right system is up and running, it helps prove HR's value to the rest of the business at a time when the team is needed more than ever," he says.

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