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7 things to consider when selecting a cloud-based HR system

by Steve Arrow on 02 Aug 2017
Cloud based HR system HRIS

A new generation of cloud-based HR information systems (HRIS) are shaking up the way businesses manage their people and processes. Providers like Workday and SuccessFactors are becoming increasingly popular and taking market share from traditional on-premise solutions, particularly amongst small to midsize businesses. And there has been an explosion of smaller providers looking to innovate in this space.

Choosing a new HR system for your business is challenging, especially if seeking a cloud-based solution for the first time. You are likely to be overwhelmed by the multitude of options available. Gartner have created lots of content on this topic, and you’ll be sure to find some good pointers from them on the best solutions.

But it’s not ‘one size fits all’. The right HRIS solution for your business will depend on the type of organisation you are, your global footprint, and the mix of employees you have - full time, part time, contingent workers.

And think about your business case; your motivation for seeking a new system. You may be a global player, or perhaps you have been federated, and you want consistency in your ways of operating. Or maybe you are motivated by cost savings; you’re frustrated at having to pay to upgrade to the newest version of your current system.

You’ll need to identify what’s important for your organisation. Think about where you want to be in five years' time - what do you need from an HR system to help get you there? Determine a set of criteria to help you narrow down options, and determine your ‘must haves’ versus ‘nice to haves’.

Use this criteria to evaluate and stress-test your options. Request a meeting with vendors so they can demo the software. Find out how their solution has worked for other businesses in your industry. And get references - most sources recommend three or four. You can then ask these customers about the pros, cons, and any challenges of implementing and using that system. If the vendor can’t provide you with references - treat this as a red flag.

After speaking to experienced Global HR Programme Manager Stephen Neil, we have compiled a list of seven things you should consider when determining what you need from an HR system, so you can select the best option for your business.

1. Functionality

Too often, people overlook the core functionality of a system and are attracted by new and exciting technology. What you really need is an industry-specific system that has the tools and features for your distinct business requirements. Think about the data you have and the functionality you require. You may need core HR functions, calendar, talent performance, and options for scalability; but video support and e-learning management might not be relevant. If you over spec, you’ll be paying more than you need to for no additional gain.

2. Scope

Some cloud-based HRIS offer an all-in-one solution where you buy all modules in one go. Like Workday for example. Others, like SuccessFactors, are more modular. If talent and performance are your main areas of focus, you can choose to start out with these modules, and build more in over time.

Pick the most suitable option for your needs. Make sure you take into account any variations in how your business operates too. You may have a common way of working across the business and therefore all need the same tools. Or maybe you need more flexibility to account for differences across countries or divisions.

3. Culture fit

When you choose a new solution, you are also choosing a vendor. You therefore need to know that you can work with them; that their beliefs and values fit with yours, and that you get along with their people.

You also want to understand their service offering. How much support will they provide with implementation, and ongoing? Cloud solutions are updated far more often than traditional, on-premise software, and some vendors will be better at providing ongoing support and maintenance than others.

It’s also worth exploring what industries they work with; some providers may be better suited to particular industries.

To determine the fit, spend time with vendors face-to-face to understand them and their offering, and seek out third party reviews.

4. Pricing

Price certainty is often a driver for exploring cloud-based options versus more traditional ERP on-premise solutions. With a traditional system you typically pay more for upgrades or new features. With most cloud-based solutions, you pay a set licence fee which includes regular updates. Does this work for your business?

Costs do vary across cloud HRIS platforms, so you’ll want to do your research to benchmark costs against the rest of the market.

5. Technology

A cloud-based system is not a simple ‘plug and play’ solution. A new tool will have many implications across your business, requiring a lot of work from your tech teams.

You’ll need to consider how easy it will be to link with other systems in the business. Can you integrate it with finance data for reporting? Does it support how you control access and security across your business globally? For this reason, it’s a good idea to involve your tech teams in the evaluation process.

6. Implementation

Once you have signed up to a new system, the hard work really starts. It may need to be, or benefit from being, integrated with other systems in your business, for instance learning management, payroll, data analysis, and financial control systems.

The majority of solutions will require a third party Systems Integrator (SI) to set up and configure the system. So success isn’t just down to buying the right solution, you’ll need to choose the right SI to manage the integration.

A new system will impact the whole business too. Gone are the days when only the HR team were privy to using it. Many modern HR solutions offer user self-service functionality, allowing employees to book holiday, or update their personal details for example. So your workforce will need to be trained on how to use it. And an ‘out the box’ solution means the pace of change is much greater.

7. Utilisation

Beyond the initial implementation, you will want to ensure the solution you choose is used by everyone in the business who needs it or could benefit from it. And, that it is used to it’s full extent.

Many vendors will talk about ROI in terms of time to value. But really, it’s about sustained utilisation. You want to limit any disruption to workflows, so you’ll need to think about how you can successfully deploy a new system that will create engagement and keep utilisation levels high. Change management activity will play an important part in getting your workforce on board and engaged with the platform. Communication and transparency about the reasons behind the move to a new system will be key.

You will also need to decide your support structure within the business - who will be responsible for maintenance issues and for reporting on ROI?

 

The solution you choose will have a significant impact on your business. If you choose the wrong solution, you’ll have to live with that choice for the term of your contract. Cloud-based options promise an easy-to-use solution, but determining the best one for your business is a complex process. With a strong understanding of your people, processes, and what you are trying to achieve, you will be well-equipped to stress test solutions and come to the right decision for your business.

How to approach your business transformation

Topics: Insider, HR, IT systems

Steve Arrow

Written by Steve Arrow

Director, HR and Business Transformation at BIE Executive