More than 60 percent of companies using HR SaaS have achieved significant savings in their people operations, according to researcher ISG. But when it comes to contributing measurable value to the business, progress lags.
ISG’s 2019 report on HR technology and service delivery trends found that roughly half of organizations using HR SaaS platforms saved between 10 and 30 percent in their IT and HR administration spending. Another 15 percent saved 30 percent or more in both areas.Report: Cloud-based #HRTech saves money, but may not add 'business value.' @ISG_News #HR Click To Tweet
“Enterprises are realizing the cost benefits they expected from their investment in SaaS,” said ISG HR Technology Partner Stacey Cadigan. “Now that savings are firmly established, the next area of opportunity lies in achieving ongoing business value from these platform technology solutions.”
Where Cadigan says “opportunity,” many HR leaders hear “challenge.” After all, contributing measurable value has been a goal of HR’s ever since advanced technology allowed companies to track and analyze data on pretty much everything.
HR SaaS Doesn’t Equal Business Value…
But cloud solutions haven’t been a panacea. Only 41 percent of ISG’s respondents believe adopting them has helped achieve measurable value by, for example, increasing retention or reducing time to fill. Turned around, that means 59 percent haven’t added any business value they can pinpoint.
The issue may not be about technology, Cadigan suggested. While organizations are building their HR tech capabilities, “they have not yet made similar advances in process, service delivery and self-service technology.” Business value, she said, depends on more than technology. Organizations also need a clear HR tech strategy, optimized processes, an end-to-end user experience and a change-management strategy that that ensures new technology is adopted.
All of that additional work may be why organizations aren’t moving forward with their HR SaaS plans as quickly as they’d initially hoped. The survey found that 20 percent of enterprises today rely on cloud-based or hybrid HR solutions. While ISG expects that number to double by 2020, its 2017 survey reported 40 percent had expected to be on cloud platforms by now.
…But Helps Get Things Done
Not surprisingly, analytics and reporting was HR’s top technology budget priority by a large number—43 percent—of the survey’s respondents. Also high on the list: technologies that help HR get its work done, such as portals, case management solutions and knowledgebases.
In terms of decision criteria, respondents said the five most important were security, ease of maintenance/agility, ease of use, depth of functionality and configurability. Interestingly, predictive analytics, mobile access and AI/automation were further down, in the sixth, eighth and tenth spots respectively. Having a modern look and feel was dead last, in the 13th slot.
More than two-thirds—68 percent—of companies are either combining or planning to combine HR and ERP systems into a single-vendor solution. Of those, 37 percent are in the process of selecting a platform or intend to begin the process within the next two years.
Debora Card, also a partner in ISG’s HR Technology group, said the “current viability” of newly developed HR-ERP platforms has caught the eye of HR tech buyers. “Even for organizations that are not looking to make a cloud ERP investment right away, there is an increasing desire to understand current vendor capability as part of their long-term technology strategy,” she said.
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