Cloud computing is quickly becoming standard business procedure, with 95% of businesses operating in the cloud in some capacity. Perhaps more interesting, however is the fact that HR, usually one of the last sectors to embrace new processes and technology, has also seen a surge in cloud adoption. According to the 2015-2016 Sierra-Cedar HR Systems Survey, more than half of the HCM systems purchased last year were cloud-based.
But not all clouds are created equal.
Who’s Playing in Your Sandbox?
Remember playing in the sand box as a kid? If you had your own sandbox, you got to make the rules. You could choose a plastic turtle sandbox instead of four wooden walls, or you could opt for a different color of sand. You could use any toys you wanted in there, build any kind of sandcastle, mix pebbles in with the sand for increased building options–you could even pour water in to make a moat. It was your sandbox, your rules.
But what if the sandbox was at the park? It’s open to the public, so now someone else is making the rules. No pebbles, no water, you can only use the shovels and buckets provided, and the sand has to stay clean. And forget uniquely shaped boxes. The upside was that the public sandbox was bigger, had toys you didn’t have at home, and you got to benefit from other people’s ideas.
Which one was better? That depended on whether you wanted the size and scope of the public sandbox or the exclusive control of the private one.
Public cloud is like going to the sandbox at the park. It offers increased functionality, greater innovation, and comes pre-configured with the latest features and technology. However, the same rules apply to everyone across the board, and while there may be some flexibility within that environment, you will be limited by the single code that manages the platform.
Private cloud options put you in charge of your environment. Your sandbox, your rules. You can create a system that accommodates your current business processes while outsourcing the daily administration of the technology to the software provider.
What’s the Best Solution for Your Business?
Cloud computing brings HR departments out of the dark ages of cumbersome legacy systems and paper processes to a modern, fluid design that delivers more innovative features, better user experience, frequent upgrades, and flexible configuration. The drawback is that once the system has been set up, it can be challenging to customize processes based on your current business practice.
Let’s take a look at the pros and cons of the three most common cloud options: public, private, and hybrid.
- Public Cloud—As we saw in the sandbox illustration, public cloud solutions are popular because of their enhanced service offerings. They also deliver ease of use and implementation, reduced cost, and outsourced IT administration. Pay-per-use pricing models make them cost effective and easily scalable, without the large initial investment in infrastructure required by old-school HR systems. The primary drawbacks are that they can’t easily accommodate non-standard legacy processes and they may present security concerns (although many IT professionals disagree that the cloud is inherently less secure than other options).
- Private Cloud—In the HR sector, the most common type of private solution we see is the managed private cloud. This option gives companies a greater level of control over their data and processes as well as an added layer of security. Components can be customized to fit the specific needs of the company, but because a third party manages them, they still offer the benefit of outsourced maintenance and administration. Private solutions typically cost more and may require more hands-on attention from your IT department.
- Hybrid—Hybrid models—those using some combination of both public and private elements—have become significantly more common over the past few years, with more than 70% of businesses utilizing some sort of hybrid cloud solution. For example, a company might maintain legacy payroll and core HR on-premise while shifting workforce management and recruiting to the cloud. If your business uses detailed and unique HR processes in some areas that would be difficult to replicate in the cloud environment but you want to benefit from other cloud offerings, hybrid is an attractive option.
As cloud solutions become more widespread, there has been a corresponding sigh of relief in terms of integration. Integration among multiple on-premise and cloud-based pieces of the HCM system was historically cumbersome and expensive. As more businesses move exclusively into the cloud, integration among SaaS providers will become more cost effective and practical.
So which sandbox is right for you? The answer: it depends. Your needs, current business process, and vision for your HR department will determine which software solution can deliver the functionality you need.
Ready to purchase new HR software? Our software selection tool gives you an unbiased look at a range of HCM solutions based on your criteria.