When comparing on premise to cloud HR software a good place to start is company strategy – has your organisation already made a conscious decision to utilise cloud technology?
Many organisations choose cloud HR solutions following the successful implementation of cloud technology in other departments (e.g. sales, using CRMs such as Salesforce.com) where they have already started to benefit from:
- reduced demands on internal IT resources
- reduced requirements for hardware and servers
- more compelling user interfaces (hence higher end user adoption and productivity)
- improved accessibility through a range of internet enabled devices
- application maintenance and upgrades with minimal disruption
- standardised reports and analysis where applications sit on the same platform
With reference to the last point, many existing Salesforce.com CRM users who choose to adopt XCD HR (hosted on the Salesforce.com platform) find great benefit in using reporting systems which they are already familiar with. This leads to another benefit – where one or more business applications are anchored to a PaaS provider (e.g. Salesforce.com) this allows organisations to pick and choose systems from independent software vendors (such as XCD HR) without needing to be concerned by how to integrate these systems.
Regarding application maintenance and upgrades, a key driver behind the rise of cloud computing was the difficulty companies had staying current on new software releases without having to resort to customisation. Many users of on premise systems have had to wrestle with bending their business processes to the limitations of their on premise systems to avoid the need to make changes to the underlying source code.
Alternatively, those who have resorted to customising the underlying source code have created problems for their IT team who often have great difficulty staying current with new software releases for compliance and product enhancements, an issue that continues to snowball over time.
Cloud HR software built on a multi-tenant platform (such as XCD HR) address a lot of the challenges on premise customers experience and provide several key benefits including:
- Lowering costs through shared infrastructure and economies of scale
- Simple ongoing maintenance and updates
- Application can be configured whilst leaving the underlying source code unaltered
The key disadvantages of on premise solutions can be summarised as follows:
- Less convenient – access limited to certain locations/devices/software, often requires significant capital investment which ‘locks in’ the customer
- On going support from IT team required
- Often a longer implementation period
On the flipside, some of the key benefits of cloud HR software can be summarised as follows:
- Highly convenient – no upgrades, maintenance or hardware requirements, access from (pretty much) any internet enabled device, customer pays per system user
- Provider responsible for maintenance, security and certification
- Quick to deploy
Major industry commentators note that there are relatively few innovative global HR software product suites now being built as on premise, as the majority of these vendors now turn to investing in next generation cloud HR software systems.
Many of the existing on premise systems available have changed little since originally devised in the 1990’s. Therefore the comparison increasingly becomes one between 20 year old on premise designs and cutting edge technology.
Over the last 20 years significant progress has been made, not only in terms of technology, but in the fundamentals of business, globalisation and in the speed of change.
This has caused many businesses to now realise its simply no longer credible to plan a future in which they run their HR function as though it were the 1990’s….