HR managers are buying into the cloud

Headhunters are heading for the cloud.

Over half of human resource managers polledin a new global survey are using orplan to adopt software as a service (SaaS) this year, according to astudy by Towers Watson, an international HR and benefits consultingfirm based in New York. The company polled 444 HR managers in Canada,the U.S., Europe, Africa and Asia-Pacific.

The figure suggests more companies are moving to a cloud-based model tomanage HR functions such as recruiting, benefits, scheduling, vacationtime and pay. Among companies using or planning to use SaaS for HR, topreasons listed are lower and more predictable outgoing and upfrontcosts, and no need to continually upgrade.

Definition: Cloud computingThe practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or personal computer.

“The new technology is cloud computing. Organizations realize ‘Why arewe wasting money on servicing our own IT and HR (technology) when wecan easily just lease it, so to speak?’” says Ash Patel, whoteaches courses in the HR Strategy and Technology program at Toronto’s Seneca College.

That march to the cloud is part of anoverall trend in the study that sees HR managers dipping back intocompany coffers to invest in new HR technologies now that thebelt-tightening of the recession has faded. Cutting costs, ranked asthe top priority in the 2009 survey, is now named as one of the topthree concerns by only 11 per cent of companies this year.

“I think cost isn’t being (completely) removed as a barrier. Butthere’s a strong interest in having HR support business growth. Andtech spending is on the rise or holding steady for some organizationsbecause they’re seeing that technology does have a key role to play inmeeting business strategies,” says Tracey Malcolm, senior consultantwith Towers Watson in Toronto.

Corporate purse strings appear to be loosening: along with the move toadopt cloud services, one in five HR managers polled has alreadyimplemented a new HR management system (HRMS) in the last 18 months.Another 10 per cent list upgrading their existing HRMS as a top servicedelivery goal this year. The top three vendors listed by HR managersplanning to adopt a new HRMS are SAP AG, Workday Inc. and Oracle Corp.
“The last round of (recession) cutbacks was a real eye opener. It made large organizations especially realize that we can’t take human capital for granted anymore. So why not invest in the tools that are going to make it easier to manage those people?” says Patel.

Thirty-four per cent of companies say they spent more money on HRtechnology this year, up from 29 per cent last year. Fifty-two per centspent the same, down from 54 per cent in 2010. The biggest change wasin companies reporting less spending, which fell from 36 per cent in2009 to just 14 per cent this year.

The cloud still has its doubters, however. Among firms who are notusing SaaS for HR and don’t plan to in future, top reasons cited were security concerns, lack of dataownership and lack of ability to customize a cloud solution enough fortheir organization.

“HR information is the most sensitive information in an organization,”Patel says. “Resistance to go to cloud computing is because of theprivacy issue or breach of security issue and also the availabilityissue. I need my HR data now, (but) if my (Internet) is down, then Ihave (access) issues.”

As for customization in the cloud, Patel says that will probablyincrease as time goes on.

“The vendors aren’t prepared to modify (SaaS) on demand, unlikein-house software or ERP (enterprise resource planning) systems,” Patelsays. “But as the market for these solutions gets bigger, vendors willbe more open to customization.”

One of the most surprising – and cheapest – technology tools rankinghighly in the study is the business social networking site LinkedIn. Recruiters in the pollnamed it their top Web-based source for finding quality talent, ratingit two to six times better than traditional online job boards.

“If you’re looking for a job (at a specific company), you have toapply. But if you’re already on LinkedIn with a profile, you’reautomatically out there as a candidate to apply for my job whether youwant it or not,” Patel says.

Christine WongChristineWong is a Staff Writer at Follow her on Twitter,and join in the conversation on the IT BusinessFacebook Page.

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Christine Wong
Christine Wong
Christine Wong has been an on-air reporter for a national daily show on Rogers TV and at High Tech TV, a weekly news magazine on CTV's Ottawa affiliate. She was also an associate producer at Report On Business Television (now called BNN) and CBC's The Hour With George Stroumboulopoulos. As an associate producer at Slice TV, she helped launch two national daily talk shows, The Mom Show and Three Takes. Recently, she was a Staff Writer at and is now a freelance contributor.

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