Using technology to save time and costs is not a new focus for HR teams.
But there is growing interest in how cloud technology can be used to tackle routine, repeatable, transactional tasks and offer efficiencies in more strategic areas such as succession planning, engagement, retention, recruitment and a multi-generational workforce.
But what is cloud technology? And is it safe and reliable enough to entrust with highly sensitive data such as personnel files and payroll information?
Cloud computing is a relatively new name for an established technology. It was previously known, among other things, as software-as-a-service (SAAS) and it describes a model where data is processed away from the physical location of the company that owns it.
Sometimes this is at an offsite facility that is owned and managed by the company itself — known as a “private cloud,” according to the 2011 white paper Fair to Partly Cloudy by software provider Nimsoft.
Where the processing is done on a system owned and hosted by a third party, it’s considered the “public cloud.” Companies outsourcing processing in this way usually pay per use or by subscription.
HR professionals who are concerned about the costs of a private cloud and the potential security risks of a public cloud model may want to consider a “hybrid cloud.”
This is a little-known model that offers the security of a private cloud environment with the cost-savings of a public model.
Peace of mind
The benefit of choosing a cloud-based system is human resources professionals can effectively offload processes they were once doing in-house, such as payroll, without expensive IT resources managing applications or infrastructure.
Cloud computing can evoke images of an unregulated, amorphous “cyberspace” populated by data pirates waiting to pounce on unattended information.
Combined with varied media coverage of cyber-attacks and data leaks, it’s not unreasonable to be skeptical about the whole notion of cloud technology.
But, in reality, cloud computing and security go hand-in-hand. A cloud provider is often more secure than on-premise data storage since it has fewer points of vulnerability, such as unlocked file cabinets, notebook computers that can go missing or less-than-watertight firewalls.
A cloud computing facility managed by an experienced vendor can offer substantially greater security than an in-house data centre, in large part because of the vendor’s ability and obligation to invest continually in the security apparatus that wraps around its service delivery.
Why are companies making the shift?
The primary reason employers are making the shift to the cloud is cost — though it can be difficult to find hard numbers.
The 2012 PricewaterhouseCoopers/ADP study Exposing the Hidden Cost of Payroll and HR Administration: A Total Cost of Ownership Study found that by automating processes with an outside service provider using a cloud-based business model, companies are able to reduce the total cost of ownership (TCO) of payroll and time and attendance by up to 43 per cent.
Beyond basic cost savings, however, cloud computing also enables agility. Deploying applications such as payroll to a cloud environment is generally very quick compared with an internal deployment.
As well, cloud-based solutions are inherently configurable and flexible so companies are able to implement a highly customized, scalable system very quickly and with attendant cost-savings.
How is it being used?
How, then, are companies using cloud computing to better manage HR needs?
Let’s use payroll as an example. Larger payroll providers are noticing an increase in cloud-based clients. ADP, for example, has more than 200,000 cloud clients in North America.
Human resources and financial departments are using cloud computing for everything from running payroll to “punching” time cards on a mobile phone. Demand for cloud-based systems is outpacing traditional in-house software solutions.
By using the cloud’s capabilities, HR can shift from being a transactional provider to a strategic partner.
With the strain on many HR departments to do more with limited resources, organizations can leverage a cloud-based HCM system to manage mission-critical functions such as payroll and time and labour.
This ultimately frees up time for human resources to provide added counsel and metrics that help drive the organization forward.
A cloud-based solution also provides compliance assurances and gives human resources the tools to demonstrate the organization’s return on investment for employees and their roles.
And employees will benefit from a self-serve system that allows them to access and manage their own information, both remotely and in the office — saving time for everyone.
Companies considering a cloud-based solution should begin by benchmarking the costs of current processes, including the time staff spends on lower-value, in-house, often manual tasks.
Comparing these metrics against the cost of services from a reputable supplier should be the basis of a business case for a cloud-based system.
It is recommended that a cross-functional team, including HR, IT and finance are included in the benchmarking and acquisition decision.
David McIninch is the Etobicoke, Ont.-based vice-president of marketing and product management at ADP Canada, a provider of HR, payroll and benefits solutions. Find out more online at www.adp.ca.
Case study: Ariad in the cloud
Ariad Communications, a Toronto-based marketing firm, uses cloud computing to streamline its HR and payroll capabilities.
Human resource manager Kristen Agro recognized that the in-house electronic and paper-based processes of compensation, management information and performance reviews could better serve employees and clients by using cloud computing.
Producing reports for management was time-consuming and employee requests for personal information were creating a bottleneck in the human resources department.
By moving to a hybrid cloud human capital management (HCM) system, Ariad was able to eliminate redundancies, reduce errors, provide accurate reports for management at a moment’s notice and empower employees to access their own employment information.
Before moving to a HCM system, Agro spent at least two days every month, or about 10 per cent of her time, processing HR administration.
Since moving to a cloud-based HCM system, Ariad has seen time and money savings. Agro is now finding she is a proactive and strategic partner. In turn, this allows the organization to continually be more successful and better serve employees and clients.
Ariad has also seen cost savings as employees can now view their statements online, an option the company previously paid for.