Human Resources organizations continue to move their management systems to the cloud as they seek improved user experience and stronger alignment with the business, according to a new survey from Information Services Group (ISG), a leading technology insight, market intelligence and advisory services company.
ISG’s second annual survey, Industry Trends in Human Resources Technology and Service Delivery, found that more than 70 percent of respondents say they already have implemented or will move to an HR Software-as-a-Service (SaaS) platform in the next two years.
Mid-sized companies (those with fewer than 10,000 employees) appear to be adopting SaaS models more readily than larger enterprises, with 34 percent indicating they primarily use a SaaS-based model, compared with only 17 percent of larger firms.
Larger firms are more likely to deploy a hybrid model that uses both SaaS and legacy on-premises Human Resource Management Systems (HRMS). Such hybrid approaches are typical when enterprises are reluctant to abandon their already significant investments in HRMS.
The most prevalent reason for moving to HR SaaS platforms, the survey found, are the desire to deliver an improved user experience similar to what employees expect as consumers, access to continuous innovation and best practices, and improved integration of data and applications.
“When it comes to HR technology and service delivery, HR organizations are shifting their focus from cost savings to strategic business alignment, process improvement and employee engagement,” said Debora Card, partner, ISG Human Resources Technology and Delivery Strategies.
“We’re seeing initial signs that enterprise-level HR decision making is becoming increasingly data-driven, and we therefore expect HR analytics will continue to grow in importance.”
The survey found twice as many larger companies (those with more than 10,000 employees) have invested in analytics as smaller enterprises. More than half of the organizations surveyed consider predictive analytics a “must have.” Mobile access and social capabilities also are near the top of the list of needs in about half of the companies surveyed.
Integrated talent management solutions also are in high demand, with more than half the firms responding to the survey looking to move to an integrated suite from highly customized, niche products.
“The newest talent solutions offer improved user experience, better business functionality and tighter process integration, for instance, providing machine-learning recommendations to address competency gaps,” said Stacey Cadigan, director, ISG Human Resources Technology and Delivery Strategies, and a specialist in Talent Acquisition and Management.
Regardless of function, Card cautioned, companies must avoid the allure of “shiny, new HR technology for technology sake alone.”
“New technology alone will not bring the kind of transformation many HR organizations are seeking,” she said.
“The real benefits of these systems are realized only by enterprises that carefully redesign processes to work smarter with new technology, rethink HR roles and skill sets, and evaluate service delivery models and plan for the impact these changes will have on those who use HR information – employees, management and the HR organization itself.”
Card advises companies to create a comprehensive HR technology and service delivery strategy as a first step on the path to adopting SaaS. “The strategy must include a strong business case and a roadmap for change, including phasing of both new technology deployment and delivery model optimization.”
ISG’s Industry Trends in Human Resources Technology and Service Delivery report covers key survey findings related to the current HR technology landscape, trends and initiatives in such areas as workforce administration, payroll/time, benefits administration, talent management and HR analytics. It also examines HR service delivery models, such as shared services and HR process outsourcing.
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