Why cloud-based HR software is taking the world by storm

By Thushara
4 minute read ● April 24, 2017
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Why cloud-based HR software is taking the world by storm

57% of companies plan to make a major new HR software purchase in the next 18 months. A whopping 57% - and we kid you not; these are results from a recent study conducted by Deloitte on behalf of Bersin.

Here’s a closer look at what is driving such widespread adoption of cloud based HR software

  • Enterprise software becoming obsolete
    The first decade of the 21st century saw a number of software companies build enterprise-class tools to automate human resource management practices. A significant proportion of companies bought into this category of software around this time. The result? The average human resource management system in large companies today is over five years old. More than half of these, in fact, are over seven years old. And guess how many years it takes for enterprise software to become obsolete? That’s right - seven. The time, then, is naturally ripe for companies to shop around for alternate HR solutions.
  • Easy access to cloud-based solutions
    Today, cloud software presents an affordable yet effective solution to the HR problem. This means nirvana from the cycle of having to upgrade human resource management systems every couple of years. The vendor takes care of this for you. Being on the cloud also has several other benefits - anytime, anywhere access, no upfront investments, near-zero downtime, world-class data security and more.
  • More user-friendly UI
    What with the intuitiveness, appeal and ease of use that websites offer today, the need for an engaging user interface has arisen. This requirement is being fulfilled by cloud software. Today, cloud-based HR solutions are also seen to offer mobile app-based features that enable employees. These include the facility to view and apply for leaves, view one’s attendance and payslips, and to manage one’s income tax plans.
  • Need for an integrated solution
    Long story short, companies today have several applications in place to deal with the different aspects of HR such as performance, recruitment and expenses, and feel the need for an integrated, streamlined solution. This will ensure that all information is stored in one location and that it flows seamlessly from one module into another, thus eliminating redundant work. To add to the mix, HR software vendors have acquired others in large numbers. As a result, many of the applications available today are capable of handling close to all the HR needs of an organization. A little help from the numbers here: close to half the Free HR software buyers surveyed indicated a willingness to sacrifice features, if it meant a single-vendor solution for all of the company’s HR needs.
  • Integrated analytics
    The analytics that HR solutions offer vary from one vendor to the next. This has given rise, in an era of commodification of most aspects of software, to competition over the depth and effectiveness of analytics provided. Integrated analytics is seeing much demand these days, with its ability to add insight and value at every turn and is seeing heavy investment into it.
  • Low switching costs
    Enterprise software is highly customized by IT and is difficult to opt out of. Cloud-based software, on the other hand, eases switching costs when moving from one vendor to another.
  • War for talent makes HR critical
    The talent they have access to is the most critical competitive advantage that companies enjoy today. By allowing more strategic decision-making around the various HR functions, such as recruitment and performance, cloud HR software is well suited to the need of the hour.

Impact of automated software on different HR functions

  • Easy recruitment process Today, cloud based HR software has eliminated the need to manually sort CVs. They can check for the necessary keywords on job portals and other databases and sort candidates automatically. Various HR software solutions also aid in tracking candidates, posting job descriptions and openings, executing promotions and much more.
  • Effective employee evaluation To ensure that employees are performing at the desired level, it is important to put in place some metrics to evaluate performance. An HRMS system can capture data around this quickly and present them to stakeholders in the required format so as to help identify areas of improvement and take whatever action is needed.
  • Automation of daily workflows A detailed workflow that an HR software system is capable of creating and supervising ensures that fewer resources are used and that employee hours are put to better use. Further, automation results in the elimination of human error, missed out information, etc.
  • Faster payroll processing Payroll processing without the use of an HR management system means multiple sheets of data to go through and even the slightest of errors to be picked up manually. Negligence in doing this can result in major cost implications and loss of trust for the company.
  • Easy access to information Take leave and attendance data, for instance. Spread out and multiple data sources in this regard can result in much redundant work that can add to the effort required, not to mention unhappy employees in case of errors. An HR management system that captures and stores all important information in a single, centralized location ensures that these problems are resolved.
  • Accurate statutory reports
    Rolling out accurate statutory reports for compliance purposes can mean a lot in terms of investment of time and effort. Moreover, these have to be created and submitted in a timely manner, if the company is to not face fines from the concerned authorities. Cloud based HR software is capable of creating these reports accurately and in the required format.
  • Aids in the appraisal process HR and CXO dashboards are capable of capturing and showing information graphically regarding the efficiency, productivity and other metrics of employees. This helps to ensure that the appraisal process is one that is data-backed and serves to remove ambiguity from the process.
  • Eliminates redundant processes Manual data entry for human resource management functions brings in the need for multiple verifications and loss of associated man-hours. These can be eliminated without any loss of information through automation. For example, leave, attendance and employee information management eliminates direct HR intervention and automates many HR and payroll processes via an HRMS portal.
  • Reduced cost
    Apart from benefits such as improved efficiency and productivity of employees, HRMS portals can also bring cost benefits to the company. The typical HR to employee ratio is around 1:100. An HRM software can lower this need to around 1:140, resulting in significant cost savings.

The other key benefits of using an HR management system include better decision-making, improved employee satisfaction and the establishment of uniform practices across the organization.

Switch to online HR software today to transform your human resource management department into a key business resource.

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