To meet rising expectations and shrinking budgets, a growing number of employers are moving to SaaS, or Software-as-a-Service solutions hosted "in the cloud," for their human capital management (HCM) needs.  

When it comes to SaaS HCM, accept no impostors

To meet rising expectations and shrinking budgets, a growing number of employers are moving to SaaS, or Software-as-a-Service solutions hosted "in the cloud," for their human capital management (HCM) needs. 

In a 2011 study, 60 percent of CIOs surveyed indicated that they were ready to embrace cloud computing over the next five years as a means of growing their businesses and achieving competitive advantage. This is more than double the number of CIOs who were ready to embrace the cloud in the same survey back in 2009. 


Why so much interest in SaaS? 

"While companies are concerned with reducing costs first and foremost," said Larry Dunivan, senior vice president, product management and technology for Ceridian U.S., "it's not just about spending less. It's also about empowering your workforce to be more efficient and effective. Before making an investment in enterprise software, businesses want to be sure it will have a positive impact on the bottom line." 

Today's true SaaS solutions are proving to satisfy a variety of C-suite stakeholders because in addition to organizational benefits such as integration and accuracy, and user benefits such as speed and ease of use, these solutions deliver up-front savings, rapid return on investment and greater ongoing cost stability. 

Is your application truly SaaS?
While there are many definitions of SaaS and cloud computing floating around, most experts agree that true Software-as-a-Service solutions have a technical infrastructure that meets the following requirements: 
  1. It offers a high level of configurability. Things that would normally have to be customized (at a greater cost) are instead set up in configuration tables and controlled by the customer.
  2. When a new release is delivered, it is invisible to the customer. New features are delivered turned off, and the customer decides when to switch them on. Until they do, nothing changes and service remains constant.
  3. It is accessible from anywhere, anytime. Plus, it has to be available to all customers at all times (with the exception of about 0.5 percent prescheduled downtime).
  4. There is never more than one version of the product in production. Every customer has the same software all the time (although they may configure it differently).
Why SaaS? Why now?

One important reason that various workforce management solutions are moving to the cloud is that technology has finally caught up and allowed all of these separate-but-related functions to work together. "Only recently have these solutions become integrated, sophisticated and powerful enough to make a significant organizational impact at an attractive cost," Dunivan said. Much of this integration and sophistication is the result of SaaS delivery.

In addition, in a time of stepped-up enforcement efforts by the Department of Labor, employers are finding that using manual processes for certain administrative tasks can leave them open to compliance risk. So, the time is right to invest in human capital and workforce management solutions that focus on accuracy and compliance, such as those delivered via SaaS. 

How true SaaS solutions deliver cost savings

By subscribing to solutions that are hosted, operated and managed by a vendor, organizations are relieved of the need to support and upgrade their own systems. SaaS vendors will generally implement a number of system updates each year, and give organizations the power to opt in when it's convenient. The SaaS subscription model provides: 

Reduced technology expenses. SaaS solutions do not require large up-front hardware and software investments. All licenses, upgrades, maintenance and tech support are included in a single subscription fee. Internal IT workloads are reduced, so resources can be refocused on core projects. 

Rapid ROI. Due to implementations that can be 60 percent to 70 percent faster than traditional on-premise software, SaaS solutions can more quickly pay for themselves. Workforce management solutions generate an average of $7.88 in return for every dollar employers spend on them, with ROI often realized within in the first year. 

Greater predictability. With no surprise expenses, SaaS helps companies calculate budgets with confidence. The predictable per-employee, per-month subscription fee is generally considered an operating expense, not a capital expense. Unlike traditional licensed software, SaaS customers don't pay extra for upgrades, and any downtime is minimal and prescheduled.

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Everyone loves SaaS, but beware of hybrid solutions

CEOs value the fact that SaaS-based solutions pay for themselves quickly. CFOs like cloud-based software due to its ongoing budget stability. CIOs enjoy reducing costs and getting more value out of their software investment. Human resource professionals appreciate the SaaS model because makes it simple for everyone in the company to access powerful functionality that will help the organization thrive. And last but not least, managers and employees save time and find that SaaS solutions are more user-friendly than legacy on-site software. 

"The increased interest in these solutions has led to more vendors making claims that their solutions meet the stringent criteria of true Software-as-a-Service," Dunivan said. "Hybrid SaaS solutions are more expensive to implement and maintain, often diluting the real benefit that would have been realized." 

Is your company ready to embrace the cloud for human capital management? Let us know in the comments below. 

For more information:

  • Read the executive briefing, "SaaS: More affordable, faster and easier"
  • Visit our website to learn about Ceridian's Dayforce-driven WFM solution