Web-based HR Software vs Locally Installed: What to Choose

web-basef HR softwareThe web-based HR software market (today known as cloud software) is expected to grow at
the same rate as all cloud-based technology, increasing by a whopping 23.5% compound annual growth rate. Big companies are partnering up so not to miss out on this opportunity to make a
dent in the new technology space.

Gartner studies consistently show that the market for web-based SaaS and Cloud services
continues to gain wide adoption. Interestingly, the research also confirms that a good percentage of existing HR software delivery remains locally installed, implying a big percentage of overall web-based software growth will come from those transitioning from in-house HR Software to web-based.

Web-based HR software providers are reporting rapid adoption and the companies providing it
are growing more quickly than their non-web-based software competitors. (see
Software’s stock jump
of 5.6%) Granted, some of the growth estimates can be chalked up as
‘wall street’ hype but it is not surprising that the market is on the upswing as the differentiation between the two delivery methods is becoming  increasingly ‘cloudy’.

Going back a few years, the original shift to web-based software started with small businesses (SMBs) and their desire to reduce IT capital expenses.  Today, that shift is in full swing among larger organizations and web-based HR software is one of the benefactors.

Overall, web-based software – which is an umbrella term for a wide range of online services – is an attractive proposition for companies seeking to make the most of today’s technology. The upfront investment is definitely lower than an investment in software and hardware licensing. Also, ongoing costs are kept to a minimum, so that total cost of ownership may be reduced in the short run. Typically, you only pay for what you use - a BIG benefit. Still, many IT departments continue to have concerns about each vendor’s ability to provide the proper security, redundancy and backup. While those are concerns with all web-based software, for some, those concerns are larger due to the sensitive nature of the information.

No matter, the growth is there, the trend will continue and we have identified 5 main reasons for the ever expanding adoption to cloud-based HR software:

  • IT wants out:  CTOs want their IT staff to remain focused on ‘core’ business software and really don’t want anything to do with HR applications. 
  • Security/Performance ‘at par’:  Today, web-based solutions are thought to have terrific security and network monitoring or redundancy at least equal to locally installed applications. 
  • Accessibility:  Web-based HR software allows for easy Internet access. When you have a large number of workers it becomes increasingly important for employees to have the ability to make changes or submit requests from anywhere.  
  • Executives want IT out of HR:  Not only the CTO, but the CEO and other executives do not always see the need for a large team supporting an application that is not adding value to the business. While those of you reading this see the value in HR technology, quite honestly, high level executives only see added expense – reducing that expense makes them feel better.
  • Features & Functions are Configurable:  Web-based HR software limitations and lack of functionality are becoming less and less of a concern. Many providers are offering very configurable options, with a ton of ‘legacy’ like features that have huge advantages over a custom solution. The number one advantage is the ability to upgrade to migrate to the latest releases, changing the business rules within the HR software when business requirements dictate. 

The bottom line is that selecting web-based HR Software versus one that you host and maintain yourself is becoming much more accepted, and even expected in today’s business world. For those that have made the transition and allowed the HR Software provider to host it for them, they may have less internal IT headaches. That means that those headaches have been moved to the HR Software provider, and the HR department has a solution that will provide anytime access to information that will help grow the organization – and a committed other half in the web-based HR software provider ensuring the solution keeps up with organizational changes.