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Why SaaS HR software is ready to take off

John Moore | July 10, 2013
It's estimated that 90 percent of Fortune 1000 companies plan to replace their human resources management software in the next four years. Enterprises using SaaS HR say they spend less on hardware and support.

Averbook says a pending on-premises upgrade of a legacy human resources system can trigger a move to SaaS. Many aging in-house systems have been customized beyond recognition and require a ton of internal support to keep them running, he points out. "CIOs want to get out of the business of maintaining back office systems. When the time to upgrade comes, it's natural to look elsewhere."

Rico Manufacturing avoided a legacy system and infrastructure upgrade and also offloaded the ongoing chore of updating an in-house application. The company used to receive quarterly state and federal tax updates from its previous HR vendor. But the updating task was susceptible to human error. The in-house software, for example, let customers select which portions of the update they wanted to install. (In one case, prior to Stelmasczuk's arrival, the state tax updates were applied, but not the federal.)

In addition, the updating process involved downloading the update file, applying the update to the software and then going into the application and launching the updates, Stelmasczuk explained: "It was a multi-step process."

Now, Kronos handles the job of keeping the software current. "We don't have to do the application of the updates and patches," Stelmasczuk says. "It's all happening behind the scenes."

The VA, meanwhile, benefits from its SaaS deployment shared-services pricing model, according to Adam Jelic, partner at IBM Global Business Services. IBM is providing the VA's human resources management application through an HR Line of Business Shared Services Center. SaaS advantages, Jelic says, include sharing cost across multiple clients, keeping software up to date and deploying software quickly.

IBM is working on the application design, development and testing phases of the VA project. The company will eventually operate the SaaS system, which will be built around Oracle PeopleSoft, Monster Government Solutionsand IBM software. Deployment of a production application is slated to begin in January 2014, with the rollout to be completed by the end of 2015.

SaaS HR Implementation Isn't Always Quick and Painless
Installation time is often cited as a benefit of the SaaS model, but the duration of the rollout varies according to the size and experience of the customer and the scope of the project, industry executives say. The VA's phased-deployment will span a couple of years-but the system will support more than 300,000 employees.

In contrast, Stelmasczuk says the core SaaS human resources deployment at Rico Manufacturing, which employs about 100 people, took about a month and a half.

Bob DelPonte, senior product line director at Kronos, says that, while SaaS removes the infrastructure component, the approach doesn't save time in configuration or other aspects of a rollout. SaaS providers must hold discussions with customers on how the application should be set up, he says: "Those conversations still need to be happening with the business folks."


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