The Facts about On-Demand (SaaS) HR Software
When HR software emerged on the scene, companies that elected to use it had no choice but to subscribe in the way that the providers offered it: as a licensed service to be purchased upfront and maintained by the purchaser’s personnel on a dedicated company server. As the new millennium approached, a different model of software deployment began gaining acceptance in the marketplace. That model, known under many different names including “on-demand”, “internet-based”, and “SaaS” (Software-as-a-Service), has grown considerably in recent years, yet its relative merits versus its licensed counterpart are still often misunderstood.
Exactly What is On-Demand HR Software?
Simply put, on-demand HR software is an application that is hosted by the provider and made available to its subscribers via the Internet. Depending on the specific software and provider, on-demand HR software can offer complete HRMS (Human Resource Management System) applications and/or complete HCM (Human Capital Management, a.k.a. Talent Management) applications. The systems can often link directly with payroll providers, and with internal databases for easy transference of information between programs. While functionality is rarely a factor in deciding between an on-demand deployment and an installed one, a host of other variables should enter into the decision, but such a decision can only be made if the benefits of the SaaS platform are understood.
What are the Benefits of SaaS?
If we start with the fact that the SaaS platform can deliver the same HR functionality as its installed counterparts, we can then focus on the true benefits of SaaS. Those benefits can be summarized into a few distinct categories: cost- and time-savings, simplicity and access, growth and evolution, and configurability.
- On-Demand Software Saves Money and Time
Efficiency is a hallmark of on-demand HR software. Unlike installed services which charge steep upfront licensing fees and ongoing maintenance fees, on-demand software is generally charged on a monthly basis according to the number of records and program types (modules). With no upfront purchase requirement, SaaS fees are often easier for corporate budgets to absorb.
Not only does on-demand save money on a “subscription” basis, it also saves on the hardware and personnel costs associated with purchasing and maintaining servers, housing them, installing and maintaining the programs, and providing the necessary back-up systems to insure ongoing proper functioning. While, the upfront costs of an installed system are easy to identify, the downstream and often hidden costs associated with such systems often become an ongoing variable for its users.
From an implementation standpoint, SaaS applications can be up and running in a fraction of the time required for installed systems. This rapid deployment is feasible because SaaS providers use their own systems to host the software, have the security protocols and architecture already established, and are set up to load, manage and maintain data every day. This is appealing to many companies, especially those newly formed through mergers, acquisitions, joint ventures, or other life-changing corporate events. These companies are much more likely to select SaaS applications over installed ones.
- On-Demand is Convenient and Provides Continuous Access
In selecting the right software, the convenience of the product and its availability to users is a key factor. On-demand applications surpass installed applications on these measures and, depending on the provider selected, additional benefits often accrue.
SaaS deployment models have the benefit of being maintained by the hosts on their servers, freeing customers from any installation, maintenance or servicing responsibilities, and freeing staffing at customer IT departments to focus on other corporate initiatives.
From an access standpoint, on-demand software is available continuously; managing the servers and insuring their ongoing performance is a core competency of the provider. In practice, providers are likely to be aware of any system problem long before their clients are, and should be expected to have solutions in place to rectify situations quickly.
- On-Demand Allows for Growth as Companies Grow
SaaS software has the ability to grow with a company as its needs evolve. It is not at all uncommon for a company to begin an HR relationship with an on-demand provider for HRMS data only, and then to add Talent Management modules such as Compensation Management, Succession Planning, etc. as the company grows. On-demand applications make this a very viable process for users, and different providers have the ability to make it even easier, depending on their individual platform set-up.
From a financial standpoint, SaaS allows companies to pay for additional services or records as their own growth makes such payments more affordable. As companies expand and add employees, their proportionate increase in usage fees mirror their ability to pay. Most corporate finance executives find this to be a much more manageable and equitable means of payment.
- SaaS Enables Configurations to Meet Your Needs
Not all on-demand systems have the same structure. Those that operate on a single-tenant architecture (rather than a multi-tenant system), allow for easy configurability of screens and functionality to meet the specific needs of individual organizations. This is due to the fact that, under the single-tenant system, each corporate subscriber occupies its own virtual server so changes made to the program only impact the subscriber for whom the change was made. And, the speed with which configurations can be done is often dramatically better than that which can be done for installed systems whose entire premise is based on a single set of deliverables for every user.
- On-Demand Does Not Force Expensive Upgrades
When an installed software provider decides to improve its system or upgrade its product, the cost of the upgrade is paid by users in the form of new license fees. Over time, those users who elect not to upgrade might find that the services they expected on their system fail to remain available.
In the on-demand world, product upgrades are made at the expense of the provider. While modifications are made and improvements developed, users have the option of remaining with their existing systems or accepting the modified versions but without incurring additional costs. That’s because the system is installed and maintained by the provider, not by the user, so any installation, training, maintenance or other costs are absorbed by the provider.
Are On-Demand Systems Secure?
The growth of on-demand, especially in the highly sensitive area of Human Resources could never have been achieved without the highest level of security. Depending on the provider, security is enhanced beyond what might normally be expected. In selecting a provider, you should make sure to ask questions about security of both data and facilities.
Not only should a company ask prospective providers about online and data security, but they should also ask about user access, filters, controls and the like. Global companies should ask about the security measures in place to meet data integrity and transfer requirements of individual countries. Every potential user should ask about the segregation of data from one company to another so that the separation of information meets the company’s standards.
Whether one is choosing an on-demand deployment or an installed system, security issues must always be reviewed.
This white paper was prepared by Sapien LLC, one of the most progressive and innovative providers of on-demand HRMS and HCM software solutions, and of Human Resources Augmentation™ (HRA) services. Emerging as the leader in the global evolution of HR solutions, Sapien can be reached at www.sapiensoftware.com or at 866-E-SAPIEN.
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