Benefits Administration

Being Best-in-Class Means Moving HCM to the Cloud

Labor performance and optimization are keys to achieving and maintaining Best-in-Class status. To accomplish this goal, companies need to better understand their workforce. Data plays a critical role in this effort because it enables organizations to set metrics that drive productivity and performance throughout the employee life cycle.

Today, data means more than just collecting statistics through disparate systems. To truly harness its power and effectively manage the issues associated with both labor performance and optimization, HR and management at every level must access and leverage complex data sets across the organization—and be nimble while doing it.

The table below shows the pressures Best-in-Class* companies face with human capital management (HCM) and operations.

While cost reduction is a top operational goal for nearly 40 percent of Best-in-Class companies, the labor organization is focused on managing growth expectations, as they fit longer-term employee potential into the formula for real-time cost management.

To manage these combined pressures, an increasing number of companies are breaking down data silos by centralizing employee data sets, then building out functionality based on compatibility with a central database. Research shows that 38 percent of companies already leverage a fully integrated HCM solution through a single-vendor. Research also predicts that another 25 percent of companies plan to move to this model in the coming year.

Why move to the cloud?

Moving to this model means abandoning on-premise solutions not flexible enough to handle real-time needs. Research shows that 22 percent of companies today find their current solution infrastructure to be too inflexible to handle their real-time needs, while 26 percent find that they face an inexcusable risk of data loss in the event of an infrastructure problem. Many are realizing switching to the cloud from an on-premise deployment increases their data-mining capabilities—and the speed in which they can do it.

Fully integrated cloud-based solutions enable cross-functional and cross-dataset communications. This breakdown of data silos removes roadblocks that HR and department managers need to manage their workforce, and ultimately make faster decisions that are well-informed and align with the goals of the organization.  

The benefits of transitioning to the cloud

Among other benefits, the cloud infrastructure is proving to help management teams—from HR to lower and middle management—react and respond to each other’s requests faster. The chart below shows additional benefits of deploying a cloud-based solution.

This figure shows that the cloud environment benefits the operations team by reducing IT expenses, total cost of solution ownership, and CapEx spending. Cloud infrastructure also improved application control for 23 percent of organizations while improving security for 38 percent of them.

38 percent of organizations find that the top priority for business management is reducing costs.

Evaluating the cloud

When moving to this model, companies evaluate a number of criteria. The table below shows the top criteria companies evaluate when considering the switch from on-premise to cloud-based solutions.

As expected, based on HCM integration priorities, the top functional expectation for the cloud is its ability to integrate with the existing data infrastructure. After that, companies are looking for a more manageable ongoing cost basis and scalability.

Regardless of size or industry, all clients have one common desire: an HR platform that will support their dynamic, strategic, and tactical needs so they, too, can become Best-in-Class.

When looking for an HR technology partner, be sure they offer the following, at minimum:

  • Continuous innovation and biweekly agile development cycles
  • Modular business architecture and non-monolithic technology platform
  • Ability to federate with existing services
  • Highly scalable, reliable, usable, and reportable platform
  • Quality-built, Six Sigma methodology
  • Use of artificial intelligence, machine learning, and voice recognition
  • Decision support tools
  • Unmatched customer support

*Aberdeen tabulates and weights Key Performance Indicators to determine Best-in-Class companies. Best-in-Class companies are those that fall into the top 20% of performers; the remaining 80% make up All Other companies.

**This chart indicates issues that Best-in-Class companies view as most pressing or the ones to which they are more likely than All Others to respond. When looking at a general snapshot of the market, the Best-in-Class are getting things right not just because of the technologies they use, but also because of the strategic pressures they’ve identified as most pressing. Viewed this way, the chart is comparative across the pressures, not per each pressure individually.

Source: Benefits Administration: 21st Century HCM requires the cloud, Aberdeen Group, March 2018