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Measuring the Savings of Cloud-based HR Software
By: Net at Work Team
Easier to use, faster to deploy, more frequent upgrades — at this point, the benefits of cloud-based HR /Human Capital Management software are well-known to HR managers. But how does HR turn these perks into savings for a company? To get buy-in for your next HR Technology project, it’s crucial to provide hard evidence of savings.
Cost and Time Saved Through Automation
We all know that automation saves time and money. But how exactly? Automating various human resources tasks via cloud HCM technology targets two main time- and money-consuming aspects. First is eliminating errors. Removing manual entry into multiple systems ensures fewer clerical errors and time saved in data correction. For example, often managers request missing or overtime hours reports and a cloud HCM can provide real-time answers and reduce errors by verifying the hours worked. But the second benefit is saving time. A cloud HCM software can save significant time in generating reports, sending alerts and notifications, and allowing managers and employees to proactively obtain specific benefits, policies and more information without consulting HR.
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An obvious point to begin with from a technology perspective is the lower initial cost of cloud HCM compared to on-premises applications, where investments in servers and consultants’ fees can accumulate quickly. In addition, on-premise systems require ongoing maintenance and patching; utility cost to power and cool servers; and off-premise backup and recovery. On average, on-premise systems required operating system upgrades every five years – and the staff to support them.
Reliable high-speed Internet access is the only critical technology requirement for cloud HCMs. Cloud HCM systems are device and browser ‘agnostic’. This means that current devices and web browsers – Internet Explorer, Chrome, Safari, Edge or Firefox – can all deliver an excellent users experience.
Cloud HCMs Are Easier to Maintain
Cloud HCMs cost is also lower on and ongoing basis due to the ability of users to configure the system themselves. For most cloud systems, set up is about configuration, not customization. Since users are configuring up front, they have lower ongoing costs to manage and support the application, because they can make changes with less expensive resources. I don’t have to bring consultants in every time I need to change a rule.
Cloud HCM’s shorter implementation time – four to five months on average – serves productivity and keeps morale high by reducing the time users spend getting up to speed on HCMs projects on top of performing their regular duties. Faster deployments also have a material impact on company’s bottom line. Faster time to value means faster payback, which means lower risk because the company can then afford to reinvest that money somewhere else
In addition, cloud HCM systems are designed to help companies take advantage of new technologies like social and mobile, and for end users, they offer greater flexibility and accessibility.
Move to Cloud HCM has Tax Benefits
The effect of the accounting change from a capital expense – capex- to operating expense – opex – should not be underestimated. This plays a vital part in assessing the effectiveness of cloud. A company investing in an on-premises server will pay more in taxes than a company investing an equal amount in cloud HCM software, assuming the same corporate tax rate. That this is due to the former investment’s classification as a capital expenditure and the latter as an operational one. CFOs are looking at more and more often as a way to manage Capex vs. Opex and take advantage of the tax benefits of using cloud.
Obstacles to Success
Understanding these important measures of savings, HR professionals need to be aware of potential obstacles and how to overcome them.
Culture – Some obstacles will be within your corporate culture. You must reconceptualize the way the business runs in order to realize the potential of cloud. Understanding your company culture and building change management into your project is crucial for success.
Politics – Often a political problem that arises with cloud is division over the extent to which it should be adopted, with conflict often between the data center chief and whoever is advocating for cloud. Buy-in and cooperation from all stakeholders is critical to the success of a cloud HCMs implementation.
Expectations – Many organizations will start out thinking immediately in terms of complex systems and functionality. Cloud HCM projects are ongoing, building on the success of the previous step. Educating users what to expect – and when- in the project is vital.
Execution – Managing the transition can be tricky. Partnering with organizations like Net at Work to guide and manage the project means a greater chance of success. Rely on the experts.
Technical difficulties – Dedicating yourself to the cloud will avoid technical issues, particularly when you need to integrate with your on-premise system. Selecting all-in-one solutions minimizes the issues that arise when cloud and on-premise elements must be combined. However, HCM systems are only one part of a company’s technology solution. Experience with integration is key to project success.
For more information on how a cloud HCM system can save your company, contact your Net at Work Account Executive or contact us at firstname.lastname@example.org