Recruitment, payroll and performance reviews in the cloud

Should you put your employees’ personal data in the cloud? Ulrika Hedquist investigates

The organisation has a “very complex payroll with numerous variables”, says strategic project manager and clinical advisor, Judy Garriock. In addition to a strong union presence in the organisation, staff members range from casual employees that work one hour per month through to psychologists. Add to that individual contracts, mileage and sleep-over allowances, she says.

Spectrum Care already had a partnership with Wellington-based consultancy Intergen, which helped roll out a Microsoft-based environment, including SharePoint, four years ago, says Garriock. Payroll was the only component that wasn’t Microsoft, she says – it was a standalone system. The organisation decided it was time to renew the payroll system, and to also look at other components of HR, such as performance management, training, rostering and timesheet management, she says.

Four vendors responded to the RFP, but only Christchurch-based Honey Software proposed a Microsoft product. Spectrum Care began negotiations with two vendors and in the end, Honey Software won the contract.

“The reason we chose Honey was that it future-proofed the organisation,” says Garriock.

The system integrates with all the other systems, creating a streamlined process, she says. Another reason was the ‘non-lock-in’ factor – if Honey Software for some reason fell over, other providers could pick up support for the system very quickly, she says.

The next phase of the project is enabling remote timesheet management, where staff across over 80 sites can go online to report their hours and view rostering. Future plans also include the ability to do balanced scorecarding through a dashboard system, she says.

While the system is still very new, the perceived benefits include resource and time savings, primarily arising from doing timesheets online.

“Payroll will be able to become more proactive rather than reactive,” Garriock says. “Instead of dealing with timesheet issues, they will be able to go out and educate users and spend more time working on solutions rather than putting a Band-aid over the issues.”

The ability to do things like casual pool management and training needs analysis will also help the organisation work smarter, she says.

Among the lessons learned is to get buy-in from key people early – “we didn’t do it early enough”, she says.

“In hindsight, we should have brought payroll and HR into the project from the start.”

If they had been involved from the beginning, spent the time with the provider and communicated just how complex the payroll was, some issues could have been avoided. “Put more money in the upfront scoping part of the project – it will lessen the problems at the end,” she says.

Gartner: SaaS dominates HR
Two major deals have altered the human capital management (HCM) landscape in the past year – SAP’s acquisition of SuccessFactors and Oracle’s acquisition of Taleo – say two Gartner analysts Thomas Otter, research vice president, and Jeff Freyermuth, senior research analyst.

“These acquisitions show that SaaS is becoming the dominant delivery model for much of HCM,” they write in the report ‘Hype Cycle for Human Capital Management Software, 2012’.

Core HR management systems are now facing increased disruption, they say.

“IT leaders should expect their HCM technology landscape to undergo significant additional change through 2015.”

Gartner predicts that many organisations will ponder whether to continue to invest in on-premise core HR management systems or move to SaaS-based offerings over the next 12 months.

Among the trends in HR software are talent management, mobility, workforce analytics and social capabilities, according the Gartner. Most vendors now offer some sort of mobile capability, and some offer tablet support for manager self-service, learning and reporting, the report authors say.

Investment in talent management suites is growing faster than investment in point solutions.

“Some vendors are now combining strong core HRMS capabilities with talent management. We have seen an increase in inquiry from customers seeking a broader suite,” they write.

However, “integration continues to be a challenge for many organisations”.

Gartner research shows a “continued focus on workforce analytics, with many large organisations looking to better mine and understand their employee data”. However, analytics continues to challenge HR departments, say Otter and Freyermuth.

“HR departments battle to get their analytics in order, mainly because of a dire skills shortage among analytically minded HR department employees.”

While social capabilities are now common in most vendor offerings, the “hype is well ahead of adoption”. According to Gartner, social recruitment highlights the shift toward solutions that manage “passive candidate acquisition and relationship building, rather than just an efficient application process”.

“We have seen a number of HCM vendors acquire social collaboration vendors. Interest in integrating HCM solutions with generic collaboration tools is also growing, with several vendors announcing integration to Chatter and Yammer,” the report concludes.

Avoiding SaaS risk
Another piece of Gartner research shows that many HR departments go out and buy SaaS applications from their own budgets, without involving IT procurement.

While the HR department may be happy to buy and get a SaaS solution up and running quickly, key parts of the deal are often missing – such as renewal terms, data security, data privacy, backup and recovery, and SLAs – simply because the HR department doesn’t have the negotiating skills and experience necessary to get the deal right, write Otter and research vice president Alexa Bona.

“On the other hand, IT procurement has often been slow to serve HR department requirements. A new spirit of collaboration is needed,” Otter and Bona say.

“SaaS vendors in HCM have successfully spun the myth that they are kinder and fairer than megavendors when it comes to contract negotiations and terms and conditions. This is a fairy tale,” they say adding that SaaS vendors’ contracts are often nearly as complex as any ERP vendor’s.

IT procurement can also help push the price of the solution down, according to Gartner. Based on hundreds of contract reviews, the research firm estimates that when IT procurement is involved in the deal, pricing of SaaS HCM solutions is typically at least 30 percent lower.

Gartner recommends
When evaluating SaaS HCM vendors
• Check the vendor’s level of cloud infrastructure adoption and be cautious of smaller vendors attempting to build it all themselves.
• Make sure that the vendor has effective SLAs throughout its infrastructure supply chain.
• Understand the vendor’s business model – is it profitable? What impact will cloud-computing have on your business?

When buying SaaS HCM solutions
• Involve IT procurement in all HCM SaaS purchase decisions.
• IT procurement departments should develop governance policies, negotiation guidelines and support for all SaaS deals.
•Price is only one factor – also focus on key terms and conditions, such as SLAs, renewal terms, privacy, security, backup and recovery, exit protections and data ownership.