Why SaaS HR Software Is Ready to Take Off

It's estimated that 90 percent of Fortune 1000 companies plan to replace their human resources management software in the next four years. Many are replacing these legacy on-premises systems--some of which date back to the 1960s--with cloud-based HR systems. On top of hardware savings, enterprises using SaaS HR say they spend less on support.

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IBM is working on the application design, development and testing phase of the VA project. The company will eventually operate the hosted system, which will be built around Oracle PeopleSoft, Monster Government Solutions and IBM software. Deployment of a production application is slated to begin in January 2014 with the rollout to be completed by year end 2015.

SaaS HR Implementation Isn't Always Quick and Painless

Installation time is often cited as a benefit of the SaaS model, but the duration of the rollout varies according to the size and experience of the customer and the scope of the project, industry executives say. The VA's phased-deployment will span a couple of years—but the system will support more than 300,000 employees.

In contrast, Stelmasczuk says the core SaaS human resources deployment at Rico Manufacturing, which employs about 100 people, took about a month and a half.

Bob DelPonte, senior product line director at Kronos, says that, while SaaS removes the infrastructure component, the approach doesn't save time in configuration or other aspects of a rollout. SaaS providers must hold discussions with customers on how the application should be set up, he says: "Those conversations still need to be happening with the business folks."

Related: Salesforce.com Acquires Rypple for Push Into Cloud HR Software

Averbook concurs that the technical aspects of SaaS deployment go much faster compared with on-premises solutions. The people and process side, however, takes time. "What isn't necessarily faster is the cultural change that goes into deploying these new tools," he says.

Averbook says SaaS vendors can get a customer live in six to 12 weeks, "but that doesn't mean people are going to use it [the cloud app] or understand why you did it." A six- to 12-month initiative is a more reasonable expectation for an organization's human resources SaaS deployment, he adds.

Channel Partners Can Play HR SaaS Consultant Role

Averbook says a human resources cloud project slants 90-10 towards people and process vs. technology. That's in contrast to enterprise resource planning (EPR) projects, where Averbrook spends perhaps 70 percent of his time on technology and 30 percent on process and cultural change.

Process-oriented installations provide an opening for channel partners with a consultative focus. Averbook says Appirio aims to help customers "reimagine" how workforce-facing tools can be used. Human resources software doesn't have a good reputation among workers, who may resist using it. But the consumer technology-inspired interfaces of the newer cloud solutions provide an opportunity to make human resources software an everyday tool that employees want to use.

"Let's not try to figure out how to get it adopted," Averbook said of SaaS human resources. "Let's try to figure out how [employees] get addicted to it."

SaaS human resources vendors recruit partners to extend their market reach. Workday's partner ecosystem includes 29 service providers, for example, with Accenture, Appirio, Deloitte, IBM and PwC among the companies on the roster.

Leighanne Levensaler, a Workday vice president who oversees the company's human capital management product strategy, says those partners can provide implementation help as well as business transformation and change management services.

Since Workday does all the infrastructure set up, Levensaler says, "The systems integrators are doing far more than they—had been able to do on legacy providers' implementations. They can focus on some very strategic engagements as well as configure the system for production."

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DelPonte says Kronos works with about 120 channel partners, who offer the company's small and medium business products. He says that channel generates about 45 percent of the company's SMB revenue.

Channel partners hope to secure work easing customers' human resources cloud transition. But the buyer'' own experience with SaaS in workforce-related areas can also help pave the way.

Jelic notes that the VA had been using a SaaS-based learning system prior to the full-scale human resources engagement and adds that other public sector clients use SaaS-base recruitment systems. "It gives them an example of how certain components of human resources can be handled through SaaS and encourages them to expand," he says.

Copyright © 2013 IDG Communications, Inc.

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