HR and the Cloud: A Perfect Storm

Posted by John Malikowskion June 10, 2011

HR’s ascent into the cloud is one of six revolutionary trends in our Human Capital Trends 2012 report. Why? Because in the past 24 months, a couple of factors have converged to create a “perfect storm” of opportunity for HR organizations to leverage the usage and availability of Software-as-a-Service (SaaS) technology.

First, businesses expect more from HR than HR has been able to deliver in the past. For example, during the downturn, company leaders were asking HR to help make critical talent decisions: Who are the right people for us? Who has the best potential long-term? Where should they be located? In my experience, leaders felt HR fell short in being able to answer those questions. Now, as the economy is recovering, leaders are becoming even more demanding that HR be able to support critical decisions necessary for the business to grow. HR transformation provides opportunities for operational excellence, but is also enabling HR to focus and deliver value to important business areas:

  1. Support operational excellence. In the early days of HR transformation, the focus was primarily on automation and moving administrative transactions to centralized service centers. Now, I see HR transformation evolving more into doing things that add value and results to the business. It’s about taking a companywide perspective rather than a business unit perspective to save costs, simplify and standardize. For example, standardizing HR operations in terms of technology, processes, cultural norms, communications, workforce intelligence and HR policies. The demand for workforce information is continually increasing. I see a transition from a “what do I need to do” mentality to now one of “what do I need to know in order to solve a business problem”.
  2. Devise and implement improved talent strategies. People are a key enabler for companies being able to grow as the economy recovers. As a result HR is being asked to play a bigger role in not only performance and succession strategies, but in providing management with coaching, insight and advice on bigger issues, like workforce planning, workforce development and global sourcing—requests that were not as prevalent and to the level of specificity three years ago.
  3. Support revenue growth This is the biggest change I’m seeing. HR is being requested, even mandated, to support M&A activity, business transformations, globalization and entry into new markets. That means having a talent roadmap and model that can be applied across the board and quickly put into use when needed.

Second, just as HR was being asked to do more, cloud and SaaS HR technologies have evolved to enable more, with broader functionality, intuitive usage and entirely new offerings that weren’t available a few years ago. Key advantages of SaaS:

  1. Speed to Deliver. Newly available SaaS solutions are easy to acquire, allow companies to implement with a different iterative approach, and reduce overall implementation effort and timeframes.
  2. Lower Cost of Ownership. Implementing a SaaS solution delivers a reduced implementation cost relative to the older on-premise solutions. SaaS solutions provide a lower total cost of ownership, reduce capital spending (subscribe vs. buy) and allow for faster realization of benefits.
  3. Unified HR Solutions. Companies are achieving value through integration. Solution consolidation will continue. As a result, companies will have less need for point solutions in the future. Integration and simplicity will allow companies to improve the usage of data and analytics.

So, two storm fronts have converged into one large opportunity. Demand for greater HR involvement in the business is met by a robust supply of enabling SaaS technologies.

Big requests. Big capabilities. The perfect storm for HR and SaaS to create waves.

John Malikowski is a principal in Deloitte Consulting’s Human Capital practice with over 25 years of experience in Human Resources (HR) and large scale project management. He is currently the National leader for Deloitte’s Workday practice.

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