7 Reasons Entrepreneurs Who Know How To Implement HR Software Are Saving Their Business From Failing In The Next Decade

With entrepreneurs spending 40% of their day on administrative HR tasks, on-premises software is coming to an end. Say hello to cloud-based HR software.

Entrepreneurs are expanding their HR departments with cloud-based solutions around the world, which has left many others wondering how they can implement HR software and say goodbye to their outdated legacy system for good.

As the list of reasons to switch to Software-as-a-service (SaaS) continue to grow.

More and more entrepreneurs are leaving behind their on-premise software model because SaaS is significantly less expensive and more efficient.

However, some business owners, believing on-premise software is more secure than cloud-based solutions, may be hesitant to make the switch to SaaS.

And if you fall into this category, I want to tell you the honest truth I’ve learned while researching SaaS and on-premises software solutions:

The days of expensive on-premise software are quickly coming to an end, and by clinging to the past, you risk missing out on solutions that could save your business from becoming irrelevant in the future. As the Internet expands and the standards for connectivity continue to surpass the limits of on-premises software — sooner or later — nearly everyone will have to start implementing SaaS solutions.

For the remainder of this article, I’m going to talk about why entrepreneurs need to know how to implement HR software to stay relevant in a constantly developing global market, and finally put the debate between on-premises software and SaaS to rest.

1. Outsourcing HR

For small business owners and entrepreneurs, time is precious.

And when entrepreneurs spend 40% of their day on performing administrative tasks (time that could be used to generate revenues), you have to ask yourself: Why would anyone oppose outsourcing HR?

Why would anyone oppose outsourcing HR?

Now, I completely understand there are inherent risks that come with any major change to your business.

But what a lot of entrepreneurs may not realize is that SaaS isn’t an all or nothing decision.

With SaaS, you can start small and branch out when you’re ready.

If you’re unwilling or unable to implement SaaS solutions completely. Then, you may want to start where SaaS is needed most: HR.

The responsibilities of an HR professional range from handling employee benefit plans, checking government compliance, taking care of payroll and performance evaluations…you get the point.

Recent data by the ADP reveals that 61% of HR professionals report that day-to-day management of employees and other administrative tasks like the ones mentioned above are their most time-consuming duties.

HR managers spend 73.2% of their time on administrative tasks

SaaS solutions allow you to implement HR software updates to your entire staff in a matter of seconds.

David Ludlow, Group Vice President of HR Line of Business at SuccessFactors/SAP, believes the simple, user-friendly interface of cloud software is the foundation of HR innovations.

Ludlow also claims that HR teams who aren’t making the switch to cloud-based software increase the risk of falling behind.

The Information Services Group (ISG) conducted a global survey in 2014 and found that 51% of the respondents said they have already started using or are currently implementing cloud-based HR management solutions.

Simple, user-friendly interface of cloud software is the foundation of HR innovations

Outsourcing HR offers solutions to two common goals in human resource management: to develop and retain staff.

Your employees expect speed and simplicity. And cloud-based HR software provides faster access to data with improved user interfaces to do just that.

The result is less time spent on administrative tasks and more time spent on bigger and better things, like talent management.

2. Knowing How To Implement HR Software

The key to a smooth transition from on-premise software to SaaS is understanding two basic things:

  1. What you want out of new HR software
  2. How you can use SaaS solutions to meet your end goals

Given that the majority of HR departments are already on board with SaaS.

One of the first steps of implementing new HR software is understanding what you want out of SaaS most.

In the survey conducted by the ISG, an overwhelming amount of respondents said their companies were looking to use new HR software for three things:

  1. Strategic alignment to the business
  2. Talent acquisition and retention
  3. Driving business process improvements.

Besides knowing what you want to use new HR software for, you must also know which SaaS features you can use to achieve your goals.

In what’s to come, I’m going to talk about several ways SaaS solutions have been used to meet improve HR.

3. Improving HR Strategy With Talent Management

It turns out that companies with engaged employees outperform those without by as much as 202%.

But the numbers also report that 71% of all employees are not completely engaged.

One U.S. consumer goods company addressed this problem by implementing SaaS solutions that would drive talent management (the leading factor behind all employee engagement).

Considering that an estimated $11 billion is lost annually due to employee turnover.

They realized talent management would play a major role in helping them progress over the next ten years.

The company was seeking solutions to inconsistent recruiting, succession, and compensation processes among several divisions.

An estimated $11 billion is lost annually due to employee turnover

On-premises software posed several challenges to improving talent management.

For one, it made it harder to extract talent data promptly, which was leading to overall problems with being able to recruit, develop, and retain talent.

The company emphasized three areas of time and budget management in their HR software solution.

These were employee profiles and succession planning, performance, goals, and compensation planning.

With SaaS solutions, the company implemented a hands-on approach to talent management.

This gave them the ability to see organizational charts that showed what their workforce was capable of, and specific talent pools of their most important positions.

Being able to consistently rate staff performance allowed them to create successions plans with ranked and unranked successors for critical job roles.

Lastly, the company improved their annual compensation cycles, which included equity rewards on an online platform.

By implementing SaaS solutions to improve talent management, the company was able to focus on developing and retaining staff by addressing their needs and rewarding performance.

4. Accessing Core HR Data

HR processes are rapidly evolving as employee expectations for speed and simplicity increase.

Leaving many entrepreneurs turning to SaaS cloud-based HR for solutions.

To give you an idea of how accessing core HR data can be made easier with new HR software.

I’m going to talk about how a global technology company implemented SaaS to meet the demands of HR processes.

Before introducing cloud-based HR software, the company was struggling with slow and long HR management cycles that failed to deliver the kind of speed and efficiency that employees now expect.

Additional problems included inadequate performance reporting and analytics due to little data spread across varying unit definitions for data elements.

71% of all employees are not completely engaged

Through local needs analysis, the company implemented SaaS solutions that would work for every aspect of their global processes.

The results were astounding. They were able to reduce the amount of HCM Integrations from 700 to 350 in the new SaaS-based environment.

SaaS also allowed them to extract over 20 million data records in under a week.

Perhaps most impressive was the three-day window in which SaaS was made live for 40,000 some employees.

Talk about speed.

5. Evaluating The Costs of Software

Many entrepreneurs are implementing new HR software over on-premises software with the goal of lowering costs.

And if you consider the upfront and hidden costs of on-premises software, it’s undeniable that SaaS is the more affordable, efficient, and waste-reducing option.

On-premises software is installed and run on computers located in the business. Most companies utilized on-premises software until about 2005.

At that point, the Internet was rapidly expanding, and companies started switching to co-located web servers in remote data centers (SaaS) to meet higher standards for connectivity.

SaaS is the affordable, efficient, and waste-reducing option

Switching to new HR software is allowing entrepreneurs to cut out the substantial costs of building, installing, and configuring on-premises software.

On-premises HR software requires a significant amount of start-up capital. Think about the costs of hardware, software, licensing, building space, indoor heating and cooling, etc.

Put together, and your business is now also stuck with a staggering amount of ongoing costs.

One study found that, on average, large companies keep their HRMS for 7 years, of which more than half are 7 years or older.

And with the majority of enterprise software becoming obsolete in 7 years, big companies are finding the high costs of updating on-premises software to be too much.

By integrating HR cloud-based software, they’re able to eliminate costly upgrades every couple of years since cloud vendors do it for them.

The Hurwitz Group has put together a well-thought SlideShare of the hidden costs of on-premise HR software.

Cloud Computing, Software as a Service
Cloud Computing, Software as a Service (SaaS)

The comparison of HR cloud computing and on-premises HR software doesn’t leave much up for debate.

HR cloud computing’s ongoing costs include a subscription fee.

Other expenses may include implementation, customization, and training.

But with many companies offering no-risk free trials and pay as you go subscriptions that you can cancel anytime, HR software is often free to implement.

Improved and easy-to-navigate user interfaces also reduce training costs significantly when compared to complicated and technical-driven on-premise software.

Many companies offering no-risk free trials

Training and implementation are just a couple of costs that come with on-premises software.

Additional on-going costs include rewriting integrations as well as maintaining and upgrading hardware, networks, security, databases.

So if you were wondering which model costs the most, you have your answer.

7. Offering Employee Self Service

When it comes to the cloud, there’s more time and space to focus on implementing effective HR management techniques and strategies.

Today, employees live off their smartphones.

They offer convenience, time management, and they’re compatible with cloud computing features like employee self-service.

Employees live off their smartphones

For entrepreneurs, cloud computing not only makes it easier to deliver the latest news, updates, and information to employees within seconds.

It makes it simpler and faster to communicate and manage employees through employee self-service features.

With self-service capabilities, employees can do anything from requesting time off to reporting expenses and updating personal documents from their smartphones or tablets.

With these features, you get the added benefit of less paperwork which means more time and money is available to improve other important avenues of your business.

7. Securing Data in the Cloud

While businesses may deem SaaS too risky because it is accessible via Internet — the idea being that on-sight premises software is more secure because of its on-site location — the truth of the matter is that on-premise software is not any safer than cloud-based HR software.

Security experts like, Bruce Schneier, agree that our data is just as safe on the cloud as it is with software vendors.

Schneier explains that, with cloud-based SaaS, we are storing our data on someone else’s hard drive.

And on-premises software is no different. At any point in the last few decades, software vendors storing our data could have decided to “screw our security, make bad decisions” and “lie to us.”

In other words, security has less to do with where we store our data.

And more to do with the technical and contractual agreements a vendor establishes for their clients’ safety and privacy.

Creating a request for proposal (RFP) to establish specific criteria for cloud services isn’t a bad idea if you’re particularly wary of cloud security.

RFPs usually contain service level agreements (SLAs); requirements for safety, data encryption, intrusion detection and data separation between SaaS customers within the same cloud, third-party assessments.

Security has less to do with where we store our data

When it comes to security concerns with SaaS solutions, entrepreneurs have to take a step back and look at the big picture, which is that the benefits of SaaS outweigh the risks for HR.

And given that large corporations are transitioning to SaaS solutions, cloud security features can only get better.

As a result, entrepreneurs will have to follow suit or face uncertain, but certainly worse, consequences.

What Will You Do?

In my opinion, the debate between SaaS and on-premises software boils down to whether entrepreneurs come to this forward-thinking realization:

Entrepreneurs avoiding the switch to SaaS solutions are vulnerable to the hidden costs of legacy systems, outdated technology as well as revenue-consuming HR processes, which leads to fewer opportunities for progress.

Entrepreneurs avoiding the switch to SaaS solutions are vulnerable

One thing I can promise will prevent your business from losing relevance in the on-premises software ridden future is CakeHR’s cloud-based software, which you can start with a no-risk free trial.



Matt Wuerch is a freelance writer and contributor on CakeHR, where he discovers trends in HR. His eclectic tastes fuel his passion for innovation in academia, e-commerce, and B2B endeavors. He strives to inform and entertain through a mixture of personal and professional knowledge in his writing.

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