Human resource professionals are increasingly called upon as leaders and strategists who take companies into cloud (SaaS) HR technology and it’s no wonder: according to Nucleus Research, cloud applications deliver 1.7 higher return on investment than on-premise solutions. Further benefit of the cloud comes from technology leaders Sierra-Cedar in a report that says on-premise installations takes from 9 to 15 months to get up and running in a company.
This all points to the dilemma: in the midst of everything else facing today’s HR departments, how do you gauge actual needs and at the same time understand cloud software and the vendor behind that software? Don’t be caught after-the-fact wishing you had asked the right questions in the beginning. As you wade through marketing, sales collateral and jammed trade show expositions, make these the 7 questions you ask your sales person, or – even better – find out on your own.
- How credible is this vendor in the space? It’s important to work with a vendor with expertise in HR, a vendor that understands the rules you face day-in/day-out. Building SaaS human capital management technology requires subject-matter expertise that aids compliance with current legislation and provides best practices based on understanding workflows and processes. Ask every vendor for third-party research and validation of the assumptions they used in designing the software.
- Do they have a strong focus on services or do they depend on partners? SaaS is service as much as software. Look for a vendor that can provide other HR and compliance-related services in-house (e.g. W2, payroll tax filing, garnishments, benefits). Don’t fall for the buzzwords of ‘partner network’ and ‘cloud ecosystem’. Many HR technology vendors are happy monetizing the technology – often charging for the majority or full value of the contract upfront – and outsourcing HR and payroll services to a partner. In many cases, they avoid implementing the solution themselves and recommend other vendors. The last thing you need are multiple SLAs. You should have one vendor to hold accountable for the product, the implementation and the time line.
- How did the provider add functionality? While vendors claim that they have an integrated or a unified solution, prospective buyers must look under the covers. Often, vendors have added capabilities through acquisitions and partnerships that usually create implementation issues, and support risk. These partnerships are especially true in the areas of workforce management, global payroll, and analytics/dashboards, where a vendor resells acquired or partnered solutions. Often, buyers will see a vendor bringing in different solution consultants or subject matter experts to demonstrate different parts of the application. When this happens, stay away. This is a tell-tale sign that they have added capability through an acquisition or a partnership. The solution might look good on the front-end with some nice lipstick, but the back-end is a Frankenstein pig with multiple codebases and sometimes multiple databases. A single application will reduce the number of errors versus multiple solutions.
- How do they implement? In many cases, vendors will gather your requirements, disappear for a few weeks and come back with only a few days or weeks remaining for testing and final configuration. This is the old ERP approach. Best-in-class vendors should be able to get an environment ready for testing quickly and with adequate time to test and configure while still meeting your schedule. Also ask whether the vendor provides an organizational readiness kit to manage the change.
- Where does the technology rank on usability? The biggest factors affecting ROI in technology is usability: how quickly and how many users are taking advantage of it. Include your key employees, and a variety of devices, into the discussions and testing. Ask the provider for third-party validation about where they rank on usability. This is another area where multiple demo personnel tell the tale of how (un)usable a solution is.
- Does the vendor have its security certifications? This is critical when dealing with HR and employee data. Ensure the vendor is up to date on its security and data storage management. SSAE-16 Types I & II (which replaced SAS 70) is an industry standard. Bring your IT department into the fold to ensure the vendor is compliant. Most reputable providers have policies in place but this may not be true for smaller vendors. Some will even claim that they are in process. In this case, ask to speak with the provider’s CIO.
- How does the vendor provide analytics and reporting? HR needs to be key in the company’s strategic plan, and to do that you need reports and data analytic tools and aid in your ability to analyze and interpret employee data. Self-service solutions will afford you the ability to make real-time decisions and implementation across your business. If a vendor has to partner with other business intelligence providers for analytics, you could find that your information lacks consistency and depth when you look across different processes.
In the end, you will likely find that cloud/SaaS technology makes sense and is the clear direction for the HR industry. Cloud lowers the cost of ownership, since there are no upgrades and significantly lowers the need for consultants. It can provide business agility, accurate reporting, real-time insights and better compliance. Companies are considering these applications because of the low upfront cost and faster time to deployment. But always beware: not all cloud HR technology is created equal and it’s important to know the company, as well as the technology, you are considering. Be a smart shopper and use the criteria above to gauge the companies you are considering.
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