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The Promise of SaaS  [ Human Resource Executive Online ]
September 25, 2009 07:03 PM

For HR leaders who badly need to upgrade their HR systems, yet are under pressure to cut costs, solutions delivered via Software-as-a-Service may be able to meet these seemingly contradictory needs.

By Colin Day


Not too long ago, the software industry was really just dominated by a few players -- enterprise resource planning vendors such as PeopleSoft, SAP, and Oracle. These were, and still are, highly expensive software business platforms geared to help automate a myriad of operations (financial, human resources, logistics and more) within large companies.

Deployments of ERP solutions can take years, with costs reaching well into the seven-figure mark. Needless to say, in light of the current economy, an investment so substantial is daunting.

However, the introduction of the Internet and Software-as-a-Service (SaaS) quickly opened doors for a slew of new vendors to enter the market. Their promise: To do the things that ERPs were supposed to be able to do, only better, cheaper, nimbler and with better customer service ... and all through the Web, with no installations or messy upgrades.

With this introduction came the realization that what consumers were (and are) looking for is what they have ALWAYS been looking for from day one with an ERP solution: One "platform" to take care of all of the pieces. Unfortunately, some SaaS vendors chose to shortcut the external enhancements so companies did not necessarily get the entire story.

Although it was one SaaS vendor to deal with, behind the scenes it was still:

* Multiple platforms with different customer service teams ("I don't support that product line, let me get you someone else on the phone... .");

* Multiple source codes (the no-no of SaaS, leading to painful upgrades);

* Additional costs for every platform (conveniently branded as "modules) that companies wished to add;

* Additional costs for integrating every module; and

* Differing GUIs for each component, requiring different trainings and adoption rates.

The good news? Salvation may be on its way. A number of next-generation SaaS vendors are either entering in the market or have been on the right path since day one, and are now offering single-source code, software-as-a-service business platforms.

These business platforms essentially are highly configurable platforms that, like ERPs, are sophisticated enough and flexible enough to be molded to almost any need. Better still, a few of these SaaS vendors have grown organically in the past decade and can successfully automate the end-to-end talent lifecycle, becoming not only a more efficient and nimble solution, but an option that is dramatically less expensive.

Companies have spent the last 10 years purchasing and leasing software at exorbitantly high costs that have not fully met all of their needs. Essentially wasting money is no longer an option; organizations must now make smarter, more cost-efficient investments. This is where single-source code SaaS platforms come into play.

The beauty of these all-encompassing SaaS business platforms is the boundless flexibility that is enabled, while maintaining cost efficiency. Using the same platform for employee-data management, candidate management, customer-relationship management and more provides enormous benefits to organizations of any size. It saves HR departments valuable time, creates an increased productivity and efficiency of processes, and last, but certainly not least, it is far more economical.

How would a SaaS platform with a single-source code be a fiscally wiser decision? Various ways. Unlike the alternative options, it means a company doesn't have to purchase additional modules as business needs grow.

Information is stored within one central database, so, whereas multiple source code solutions might require complex data integrations, which can become exceedingly costly, the single-source code eliminates that expense.

And spending valuable time and resources training end-users on multiple systems? No need for that either, since the common interface and functionality of the one system leads to increased user adoption rates.

Furthermore, while ERPs or SaaS solutions that have multiple source codes can result in painful and expensive upgrades, once again, this is eliminated with a single-source code SaaS business solution.

In fact, unique savings can be seen depending on the organization's size and needs. So let's break the market down into its three classic categories:

1. Small Businesses (less than 500 Employees)

Leveraging one platform to power all their HR needs creates a substantial potential cost savings for small businesses. Moving away from paper and fully automating HR processes has an immediate and long term cost savings.

Supply costs are immediately cut on such previous essentials as paper products, mailing and postage. Even the elimination of filing cabinets and other storage can save an organization tens of thousands of dollars.

2. Mid-Sized Businesses (500-5,000 Employees)

In many regards, mid-sized organizations have the most to gain from leveraging a single-coded SaaS provider to automate all of their HR initiatives in one, Web-based platform. Rather than training end-users on a variety of different modules, a single platform with consistent interface, design and functionality eliminates the need to purchase further training as well as eradicates the lost productivity that can occur when there is a need to ramp up on multiple systems.

Furthermore, costly data integrations become a thing of the past. While a variety of SaaS models will yield cost efficiencies, the greatest possible savings for mid-sized businesses will be derived from one platform in which the entire talent lifecycle can be managed within a single-source coded system.

Small organizations might not have the need for an entire end-to-end talent platform, while large organizations' needs might exceed its capabilities. The mid-sized organizations are the ones that will see the greatest return on investment by leveraging an end-to-end platform for all of their business needs.

3. Large Enterprises (greater than 5,000 employees)

This segment is the land of ERP solutions. Millions of dollars have been invested into these technologies and, even if HR wanted to dump the HRMS portion of it, no one will actually replace it, as it covers too many other critical functions of the business processes (finance, supply chain, etc.).

The SaaS point solutions acquired along the way had to go through expensive and time-consuming integrations with their ERPs, meaning the thought of replacing even the point solutions is daunting.

However, it is only a matter of time before large enterprises move away from existing ERPs for next generation SaaS business platform, as these business platforms continue to add flexibility, scale, sophistication and cost-efficiencies.

Colin Day founded iCIMS in 1999 and is the company's president and CEO. iCIMS is the third-largest provider of SaaS talent-acquisition solutions. Prior to founding iCIMS, Colin worked at Comrise Technology in sales and new business development, where he was responsible for opening and growing branch offices. Previous to this, Colin spent three years in recruiting and staffing. Colin writes frequently for HR Industry publications, and served as a keynote speaker in ReedLogic's The HR Software Leadership Conference 2005.

September 16, 2009

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