Why HR Tech is sexier with SaaS

By / December 10, 2014 / / 3 Comments

Last month I attended the first HR Tech Fest in Sydney. As a member of an HR Software team, I (obviously) found it pretty great.

 

I went over 3 of the big issues facing HR in the employee onboarding space last week, but there were many more general HR issues being raised by Australian HR professionals during the conference.

 

Listening to the speakers’ presentations and attendees’ concerns, I came to realise – HR Technology really needs more SaaS (Software as a Solution).

 

Whilst HR tech isn’t considered sexy in the HR world (yet), a little SaaS may just make your CEO, CFO and HRD buckle at the knees.

My colleague, Michael Specht, presented the findings from the 4th Australian Annual HR Tech survey, which outlined current attitudes towards SaaS in HR.

 

Currently, 65% of Australian HR systems are still ‘on premise’ (meaning they are hosted and maintained on servers within the organisation, rather than externally hosted).

 

Only 5% of Australian HR systems are SaaS products (a growth of 500% from the previous year).

 

In terms of preferences, 24% of HR systems users would prefer to work with SaaS applications.

 

Why are on-premises systems slowly being replaced with SaaS?

 

Let’s use the example of the most used system in most HR departments: the Payroll System.

 

55% of payroll systems in Australia have been in place for 7 years or longer. Most of these are on-premises systems.

 

When you consider that it takes most businesses 2 years to implement an on-premises system after purchasing, half of Australian HR departments are using payroll systems that are nearly ten years old!

 

How do you expect to keep up with the latest technology if the product you purchased is out of date by the time you implement it?

 

This is becoming one of the biggest reasons why businesses avoid purchasing new on-premises solutions (the other big one being implementation cost).

 

I get asked four key questions by pretty much every customer I meet who is looking for a new software solution:

 

How soon can it solve my problem?

 

With SaaS, there is configuration.  No installing, building and customising so setup is almost always significantly faster than an on premises installation.

 

Does the solution come with all the latest tech, features and compatibility?

 

With SaaS, you’re on a multi-tenanted platform sharing a code-base, so updates and upgrades are automatically rolled out for you by your SaaS provider.

 

Can I avoid involving any other departments in the setup (namely, IT)?

 

With SaaS, the vendor provides the hosting, so there’s no need to get IT to build or customise servers to setup your solution.

 

Will it fit my budget?

 

Obviously, this depends on your budget and what SaaS solution you’re looking at, but as SaaS removes most of the installation and setup costs of a traditional on-premises solution, it’s almost always the cheaper alternative when you look at the total cost of ownership.

 

In a year’s time, I could safely guess that the group of HR users who prefer SaaS solutions will continue to grow past 24%, especially as more people become aware of what exactly SaaS is!

 

Of course, preferring SaaS to on-premises is one thing, but actually using a SaaS solution is another. It’s not always easy to convince all the decision-makers within a business to move off of an old, established system, even if it is outdated and failing to meet current business needs.

 

If you’d like some help in making that business case, check out our Business Case for Employee Onboarding Software whitepaper for some ideas.