How to Determine which Technology best Supports your HCM Strategy (Part 2 – HCM Solutions)

By David Braithwaite – Head of Technical Services.

Once you’ve identified and quantified your pain points, you’ll need to understand the options available to address the situation, whilst bearing in mind the wider context of the organisation, e.g. your corporate strategy, user community, existing technology landscape, geographical considerations, budgetary constraints etc.

One of the fundamental choices you’ll need to make is “on-premise or cloud” – i.e. does your organisation want to own and maintain the servers that the system runs on, or subscribe to a software-as-a-service (SaaS) model where the system is hosted on remote third-party servers and accessed via a web browser.

Keys with Word HRM on Golden Label.

There are many advantages to the cloud model. One of the most significant is the regular system updates that are typically included in the subscription – this means that once you have implemented a cloud solution, you will effectively end up with a state-of-the-art system in perpetuity, and can forego the costly and time-consuming upgrade projects required with an on-premise solution. In addition, the cloud approach means your organisation can avoid IT costs such as hardware purchase and configuration, disaster recovery provision, support staff etc. since these costs are borne by the vendor and therefore included in the subscription benefitting from economies of scale.

It’s also worth remembering that cloud solutions are a more efficient business model for the vendor, since they can maintain one code line for all of their clients, rather than having thousands of individual on-premise installations around the world requiring support. This means that vendors are taking steps to entice their customers away from on-premise solutions and onto cloud, and – significantly – focusing the vast majority of their research and development spend on cloud solutions. SAP for example has already announced that they will not be investing in any further development of on-premise talent management solutions, and their SuccessFactors suite will be their sole investment focus for talent management.

Having said all this – and although it may be unfashionable to admit it – not all organisations are ready to transition their HCM solutions to the cloud; perhaps your organisation has made significant investment in on-premise solutions over recent years, and needs to complete the return-on-investment cycle, perhaps there are cultural concerns within your organisation about your HR data being hosted by a third party, or perhaps you’re not ready for the quarterly change management exercise that a cloud HCM solution may require. It’s also worth conducting a thorough analysis of how well the considered solution fulfils the key functional requirements of your organisation; on-premise ERP HR software has been around for many years now, so functionality is typically very mature and robust – it may be the case that a certain functional area in a cloud solution is not yet mature enough to support your organisation, so make sure you research the product thoroughly with your implementation partner.

If a cloud solution is not yet for your organisation, there are still plenty of options available to you with an on-premise solution – SAP has announced that they will be supporting their ECC6 on-premise software until 2025, and recent releases such as the HR Renewal program and Payroll Control Centre show that SAP is continuing to invest in on-premise HR.

In addition, there are other options available to support future innovation – if you feel that the right choice for your business does not lie with one of the mainstream ERP providers, and you would like more control over your applications, it would be worth considering an Application Platform as a Service (aPaaS or PaaS) technology such as Mendix – such options give you flexibility to develop your own applications rapidly, and easily integrate with your existing enterprise systems.

Don’t forget to take a look at part 1 and part 3 of this blog, or click here if you’d like to discuss which HCM system is best for you.

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