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Transforming HR in the Cloud

June 2016

Moving your HR systems to the Cloud transforms HR’s operating efficiency and business impact

The Cloud and Software-as-a-Service (SaaS) deployment models have been popular for specialist HR applications such as recruiting, learning and talent management for a number of years. But now the Cloud is a major force in core HR too. In our research, 78% of organisations are already implementing or planning to implement Cloud-based HR systems. For big and small companies alike, moving HR to the Cloud is a smart move that lowers operating costs and enables better integration with strategic HR processes. But it needs to be about more than that.

Why is this important?

Cloud HR offers an achievable way to unite disparate HR systems

Historically, HR has needed a portfolio of systems to support it operationally. From core HR processes, to payroll, to recruiting, learning and performance, there are many components of an HR systems portfolio. Our research shows that most large companies have historically struggled to unify their core HR processes onto a common system or fully connected ecosystem.

Given the complexity and expensive nature of many on-premise HR systems, moving them to the Cloud should be an easy decision and deliver clear business benefits and a lower total cost of ownership.

Cloud HR is a significant vehicle for transforming HR and your business

Too many Cloud HR projects are driven by an IT agenda alone.

HR leaders should approach Cloud projects as an opportunity to transform HR’s business impact and engagement as well as transforming HR processes.

Cloud HR is a route to more agile HR operations

Whilst there are many IT benefits, the key goal of Cloud HR is not to run HR systems in the Cloud for their own sake. Our view is that the goal should be to increase the relevance and impact HR has in a modern business.

Moving HR to the Cloud should be about transforming HR’s engagement, agility and impact, as well as improving efficiency of operation and lowering total cost of ownership of related systems.

What should you do?

Align your HR Cloud project goals and KPIs to your organisation’s strategic business goals

Define clear business goals for your Cloud HR project that focus both HR and IT on delivering success at a business impact level, not just by achieving cost reduction and simplification. Our research shows that most strategic HR goals relate to strengthening the role and impact of HR in the business, increasing employee engagement or building an effective talent and leadership pipeline to drive performance. How will your Cloud HR project enable HR to achieve these goals?

These business goals should then define your critical priorities and measures of success for your Cloud HR project, as well as the potential scope of the project. Make sure that these align. If the business priorities goals relate to strategic HR processes such as talent, performance and employee engagement, it is critical the resulting Cloud HR project does too.

However good the IT business case sounds, Cloud HR projects driven purely by IT goals are unlikely to deliver transformative business outcomes. Be clear on your business goals and make sure these drive the project strategy and critical decisions.

Ensure your HR technology choices are aligned to strategic goals, not just the needs of core HR or IT

Choose potential suppliers based on their ability to meet your strategic goals, not just on their ability to deliver the core HR system needs. Most HR system vendors sell a suite of applications, but our research shows no vendor has an ‘industry leading’ solution for every application area.

Historically, customers bought an HR system to address their core HR needs, and assumed because it also had modules to manage strategic HR processes, that they would be fit for purpose too. This was rarely the case, and as a result, companies have ended up also implementing ‘best of breed’ applications from specialist vendors for strategic HR processes. There is a significant risk of repeating the same mistake in the Cloud.

Even worse, there is a real risk you may actively damage key strategic HR processes by migrating to suite solutions that lack the functional depth or sophistication to support them effectively. Keep focused on your real business goals and make supplier decisions that align to them.

Take the opportunity to transform your HR operation, not just your HR technology

Whether your project is driven by HR transformation or HR technology change, take the opportunity to transform your HR processes and operating model. Cloud HR solutions will inherently bring faster innovation and greater flexibility to change them in the future.

Also look for opportunities to change your processes today to make it easier to be successful and simpler to implement. Our view is that it is also critical to embrace change within the goals of the project too to ensure the business goals still align with the goals of the organisation.

Make accelerating business value shape your implementation strategy, rather than IT delivery goals

Clearly define measures of success that align to the key business goals and priorities. Make sure you have some good data points before the change in order to assess and prove the success of the project overall.

Keep these measures in mind when finalising implementation strategy. Unfortunately, when it comes to delivery, our research shows that business goals can often get marginalised in decision making as completion of the IT project takes day to day priority. This is a mistake.

Ensure implementation decisions are made based on accelerating business value rather than purely on IT delivery goals. This ensures projects stay focused on their true end goals.

Recommended Fosway Reading

For further Fosway analysis relating to this topic, please see the following papers or resources:

Fosway 9-Grid™ – Cloud HCM
HR Tech World Congress 2016
Fosway 9-Grid™ for Integrated Talent Management
HR Critical Realities Research Series 2015-16
HR Technology in Europe: The Critical Realities 2014 – 15
Fosway Core Insights: SaaS Impact on Talent and Learning Systems
Fosway Core Insights: Talent Market Consolidation

Accelerate and de-risk

To talk to us about our research on learning and talent systems, or to discuss what it might specifically mean for your organisation please contact us directly.

We will use our independent expertise to provide you with the guidance you need to accelerate and de-risk your decisions. We have a wealth of experience, tools, research and profiles at our disposal.

We don’t have any products to sell and we have no vested interest to bias your outcomes. We concentrate on pragmatic, independent advice.

Accuracy of information and warranties

The analysis and recommendations made in this document are based on the information currently available to Fosway and from sources believed to be reliable.

Fosway disclaims all warranties as to the accuracy, completeness or adequacy of such information. Fosway will have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations hereof.

Opinions expressed herein are subject to change without notice. All content is copyright Fosway limited unless otherwise identified. All rights reserved.

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