The origin of cloud-based HRIS (Human Resource Information System) software is intertwined with the broader development of cloud computing technologies. Cloud computing started taking shape in the mid-20th century but gained significant traction in the early 2000s. Until 2010, I had worked with traditional on-premise PeopleSoft systems, where I had complete control over the applications and back-end infrastructure. I had my first experience with a cloud-based HCM system in 2011. It was a little intimidating to work with a system that “seemed” to allow very little flexibility to customize the application and limited access to the backend database. I could no longer “please” and “pander to” the demands of my users the way I was used to. Additionally, th reporting seemed oddly constrained. For a long time, I debated the rationale of adopting a restricting technology (cloud-based) over one that provided creative freedom.
I realized the idea of delivering HRIS functionalities through the cloud was gaining popularity for several reasons:
- Cost-Effectiveness: I debated between paying the full subscription cost every year versus a smaller annual maintenance fee for on-premise software. The cost of on-premise infrastructure and expensive system upgrades outweighed the full annual subscription fee of the cloud platform.
- Scalability: This is where the cloud scored the most points for me. Enabling my organization to adjust resources based on our HRIS needs without the constraints of physical hardware limitations was a touchdown moment.
- Accessibility: The fact that I did not need to carry my laptop while vacationing in order to access the system on an emergency basis made the cloud-based software a very alluring option. I could access HRIS data from anywhere through any device as long as I had internet connectivity. It also promoted remote work and collaboration.
- Automatic Updates: This was another huge win for me. The on-premise HRIS system required months of planning and executing system upgrades. Besides they were very expensive. The cloud-based solution is upgraded automatically at pre-determined regular intervals. It minimized my burden of managing software updates and security patches.
- Collaboration: Did I mention that my globally dispersed team and the stakeholders could collaborate seamlessly in real time? A perfect tool to promote the AGILE development framework.
The adoption of cloud-based HRIS solutions, aka Software as a Service (SaaS) accelerated during 2010s. Let me attempt to settle the debate of cloud vs. on-premise. On-premise and SaaS based HRIS software each have its own set of advantages and disadvantages.
On-Premise HRIS Software – Advantages
- Control: On-premise systems provide greater control over data and infrastructure. I could mine and present the data in a level of detail that SaaS could not afford.
- Security: Some organizations perceive enhanced data security in on-premise software. At one of the financial companies, the ability to control access of proprietary data outweighed all other advantages of a SaaS solution.
- Customization: On-premise systems offer unparalleled customization options. I could tailor the software to meet the unique requirements of my stakeholders because I had full access to the tools and backend.
On-Premise HRIS Software – Disadvantages
- Cost: Maintenance and upgrades were the two major cost factors. The upfront cost of software licenses and hardware did not suit the purse of organizations who would rather spread the spend over multiple years. On-premise software maintenance also required a larger IT workforce footprint thereby increasing the maintenance cost.
- Scalability: This was one of the biggest disadvantages. Scaling up required additional hardware and infrastructure adjustments resulting in increased maintenance cost and time to scale up.
Cloud Based (SaaS) HRIS Software – Advantages
- Cost-Effective: Cloud-based solutions typically have lower upfront costs. They also don’t require significant investments in hardware or infrastructure. Upgrades are quick, automatic, and do not require an army of IT staff. I would recommend organizations to do a 3-5 year ROI calculation to compare the cost of ownership of SaaS and on-premise solution.
- Scalability: Cloud HRIS allows for easy scalability, elasticity and flexibility of data storage and processing power, enabling organizations to adjust resources quickly based on their changing needs.
- Accessibility: Cloud-based systems provide remote accessibility, allowing users to access HRIS data from anywhere with an internet connection. I can access my cloud-based HRIS platform from anywhere on the planet through any device, as long as I have internet connectivity.
- Mobility and Adoption: SaaS HRIS software has tremendously increased the adoption of self-service. It enabled my workforce to use their mobile devices (smartphones and tablets) to safely access and execute sensitive and complex transactions.
- Security and Availability: Every SaaS platform provides unparalleled data security through encryption, Role Based Access Control, secure APIs, and data audit features. The globally distributed data model encapsulates disaster recovery and backup as part of the subscription cost.
Cloud Based (SaaS) HRIS Software – Disadvantages
- Security Concerns: Some organizations may still be concerned about the accessibility of sensitive data in the cloud, although cloud providers invest heavily in security measures.
- Dependence on the Internet: Cloud solutions rely on internet connectivity. If I am in a wilderness with no internet connectivity then my option would be to use a hotspot device.
- Limited Customization: For most organizations, this would be the biggest factor to not opt for the cloud-based HRIS systems. They offer customization to some extent, but not the same level of flexibility as on-premise solutions. As an HRIS leader, this is where I have to a) coach the organization leaders to think differently and b) come up with an innovative alternative to address their need.
Ultimately, the choice between on-premise and cloud-based HRIS depends on an organization’s specific needs, budget, and preferences regarding control and security.
Today, it will be hard to find vendors who do not offer SaaS based HRIS systems. Companies are beginning to acknowledge the benefits of SaaS based HRIS platform despite some limitations and more and more of them are converting from on-premises to SaaS solution.
About Kumar Manish
Kumar Manish is a results-driven HRIS director who delivers impactful business outcomes through seasoned operational skills and expert technology portfolio management. He has proven expertise in process re-engineering, cloud migration, digital transformation, and architecture governance. He has exceptional understanding and ability to bridge the gap between technology and business and align IT strategies with HR goals for long-term success. Kumar has a career marked by fostering a culture of continuous improvement, a passion for problem-solving, and dedication to optimizing technology’s role in Human Resources.
A global cross-functional team leader who can add value to any organization through:
- Strategic Vision: Possess a deep understanding of technology as a strategic enabler; expertise in designing and executing IT strategies that help Human Resources adapt to change, enhance their competitive edge, and embrace disruptive technologies.
- Digital Transformation Leadership: Specialize in guiding the enterprise through digital transformation journeys, leading teams to ensure a seamless and secure transition, and aligning technology initiatives with business objectives.
- Enterprise Architecture Expertise: With an in-depth knowledge of HR Technologies, skilled in designing scalable systems, selecting relevant technologies, and optimizing infrastructures for performance and cost efficiency.
- Process Optimization: Enable technology to optimize HR business processes that are efficient, guarantee data privacy and meet regulatory compliance standards.
Kumar is one of the great many talents available through TCG. He is currently located in San Gabriel, CA, and is available for on-site, hybrid, and remote opportunities.