Calculating the ROI of a Hosted Human Capital Management System
In recent years, we’ve seen a significant number of companies transitioning from maintaining in-house, legacy HRMS systems to leveraging more outsourced, automated solutions. However, many organizations are not ready to fully embrace a cloud solution.
Companies who have invested in on-premise solutions are looking for ways to extend the advantages of on-premise while taking advantage of cloud-based solutions. Hosted HCM systems provide the best of both worlds. Rather than committing a significant portion of the annual budget to purchase, implement, manage, maintain, and analyze internal systems, resources can be better allocated by outsourcing to a hosted software provider.
In addition to increasing operational cost-effectiveness, hosted software solutions provide greater specialization and expertise. Although it is very possible to employ in-house experts in network security and database administration, it often comes with a high price tag. With a hosted software solution, organizations are able to outsource key components of their internal systems to subject matter experts, so that they can focus their efforts on maximizing their use of the HCM system without concern for internal “IT” issues.
Moreover, cost savings come through reduced end user hardware and software investments. There is a reduced need for installed workstation software since cloud-hosted software can be made available to any workstation with an internet connection. This lowers costs for workstation software licenses, backup planning and hardware obsolescence.
Budgeting for a hosted infrastructure can also have an impact on a company’s financial statement as well. Hosting on-premises means acquiring hardware and software licenses which are considered capital expenditures and can be expensive. Cloud hosting is considered an operational expenditure because of its subscription or pay-per-use model.
But often, the ROI is not simply measured through “hard” savings in terms of monetary value. An important additional measurement of the ROI of a hosted solution is in its value to the company. Beyond lowering the cost of investing in on-premise hardware and support staff, hosted solutions provide value that require more complex metrics to measure. These “soft” savings can be significant. For example:
- The speed of adaptation and deployment of the HCM system in a hosted environment versus the maintenance and downtimes of an on-premise system. Hosted systems foster collaboration between end users and implementers to access and configure.
- The general ease of use afforded by a hosted system. Hosted systems that are accessible from multiple locations encourage managers and employees to fully utilize the HCM system, making it more cost effective.
- Data is stored securely, off-site. Cloud locations offer safer, more accessible backups of employee data. HCM administrators don’t have to worry about the back end of their systems or reliance on internal IT staff.
- The support and other value-added services offered by the provider. With Net at Work, the host and the software Business Partner are one and the same! This makes services like updates and troubleshooting easier without ‘finger pointing’ between parties.
- Consideration of the environmental impacts of sourcing IT services from the cloud. There is a long- term positive outcome to more and more organizations having co-location of infrastructure. Additionally, there are bottom line savings in terms of utility costs.
To learn more about how Net at Work can host your HCM system, join us on June 6th for an in-depth webinar with staff from our hosting team. We will be discussing a number of topics of interest, including:
- Security of hosted systems
- Technology, our system architecture and user access
- Pricing models
- Disaster recovery and system redundancy models.