Rise to the cloud or stay put? An accelerated method for assessing HR SaaS viability

Posted by Michael Gretczko and Gary Cole on May 06, 2016

Your organization is considering moving its core HR system to the cloud. How will you decide yes or no? Which factors are critical to the decision and which are just noise? And is there a way to figure this out quickly—like in several weeks quickly?

Some of your organization’s HR services are probably already delivered via the SaaS model in the cloud. Whether for talent acquisition, performance management, or the plethora of cloud-based third-party specialty services, your organization has most likely begun, by accident or by design, its journey to the HR cloud.

But what about the core HR system of record? Is it time to take the leap and reach for the cloud? Given your portfolio of current HR technology investments and specific requirements, are the available cloud-based solutions viable? Will they meet your organization’s business requirements, and do they comply with enterprise technology architecture and data security policies?

And, perhaps most importantly, is the leap worth it? One of the potential advantages of moving to the cloud is to refresh the HR service delivery model to put an efficient, integrated solution directly into the hands of HR customers. Is this opportunity compelling enough to drive the business case for change?

An accelerated, iterative approach to HR SaaS viability assessment can help answer these questions more rapidly, building toward the solution incrementally instead of trying to deliver it all at once near the end.

This approach begins with three steps: framing the business question, developing a preliminary hypothesis, and identifying critical decision factors.

Framing the business question

An accelerated approach is most effective when there is singular clarity about the business question to be answered. What is the primary driver for considering a move to the cloud? Is there imminent change in the HR technology landscape? Is an HR outsourcing (HRO) agreement up for renewal? Does the current on-premises HR ERP require an expensive upgrade to remain under contractual maintenance?

Based on the answers to these questions, a hypothetical framing of the business question might look something like this: “Is there an HR cloud solution that will work for our organization, and is there a reasonable business case to support the investment?

Developing a preliminary hypothesis

The preliminary hypothesis falls naturally from the business question to be addressed. You simply state, in positive terms, the potential outcome you want confirm or refute. For example: Successful transition to a new HR cloud solution is possible in the 2017 Q4 time frame, but may require changes to our service delivery model to maximize our investment and to support a reasonable business case.

It’s important to tightly focus the hypothesis so that during the next step, identifying critical decision factors, it is possible to narrow the investigation down to the 10 to 15 factors that are likely to have a significant impact on the final recommendation.

Identifying critical decision factors

Next, you identify the factors that are likely to prove critical to testing the hypothesis. Typically, the factors investigated include functional requirements, technology platform, service delivery model, deployment roadmap, and business case, all of which may differ depending on the organization’s needs.

This final list is then evaluated against the capabilities of various HR SaaS solutions, and the preliminary hypothesis is either confirmed, refuted, or refined.

Moving forward

Once you have completed a fit/gap analysis between the final list of critical decision factors and the short list of HR SaaS solutions, you can determine the probability of satisfying your preliminary hypothesis. If the conclusion is that HR SaaS is viable, you can now iterate toward a more formal analysis of sourcing strategies and the development of the business case.

While every organization brings unique considerations to the decision-making process, this accelerated approach to assessing HR SaaS solution viability can quickly result in solid, evidence-based recommendations.

Michael Gretczko is a principal in Human Capital at Deloitte Consulting LLP and is the US leader for its Human Resources Service Delivery (HRSD) practice. He focuses on large, complex global business HR transformation.
Gary Cole is a principal with Deloitte Consulting LLP and the practice leader for HR Technology Strategy. He focuses on large scale, technology-led Human Resources transformation programs.

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