Trend No. 1: Enterprises Embrace SaaS for HR Systems

By Mary Hayes Weier

Software-as-a-service is becoming widely accepted for human resources and is expected to outpace purchases of on-premise HR software within several years. Analysts cite faster innovations and updates, and relief from onsite management and maintenance, as the primary drivers. “SaaS will be the model of choice as organizations choose next-generation HR systems,” says Jason Averbook, CEO at Knowledge Infusion.

R “Ray” Wang, CEO at Constellation Research, says more businesses understand that SaaS users benefit from updated features and functions, delivered through regularly scheduled customer-wide updates, rather than the old way of having to plan and implement a major onsite software upgrade.

“SaaS is an option being used for everybody′s application strategy,” Wang says. “That′s mostly because a lot of innovations are happening in SaaS companies and not necessarily in the legacy providers.”

Since HR isn′t a transaction system dealing with goods and services, it works particularly well as an off-premise application—especially for CIOs still getting comfortable with having core business applications managed off site, says Jason Averbook, CEO at Knowledge Infusion.

In a November 2010 Gartner report, “Predicts 2011: New Delivery Models and Requirements Drive the Evolution of Finance, HCM and Procurement Applications,” (Jim Holincheck et al.), the analysts write that among large companies, “we have found more than 100 clients in 2010 strongly considering SaaS solutions [for HRMS].” Gartner predicts that by “year end 2014, customer sales of SaaS core HR management system (HRMS) purchases will outpace new ERP-based purchases in Global 2,000 organizations.”

In another Gartner report, “Large-Enterprise HRMS Market Begins to Feel the Impact of SaaS,” also published in November, analysts Thomas Otter and Chris Pang report that in 2010, “inquiries from large enterprises considering SaaS for core HRMS have more than doubled.” In addition, Gartner research “finds that more than 75% of customers use SaaS for e-recruitment, illustrating rapid growth in SaaS in the talent management part of the HCM market.”

It′s clear that SaaS is no longer a “fringe” technology, especially in the area of human resources. Companies that make HR deployment decisions in 2011, advise Averbook and Wang, would be wise to consider where the market is moving and why SaaS is such an important consideration.

Suggested Reading:

SaaS: Now Serving Large, Complex Enterprises
The Real SaaS Manifesto
Setting the Enterprise Free
The Truth About SaaS and Security

Additional Resources

Workday 101 Webinar

Discover how software-as-a-service solutions like Workday are revolutionizing enterprise applications.

SaaS: Now Serving Large, Complex Enterprises

Brian Sommer of TechVentive outlines the reasons SaaS is well positioned to grow in large enterprises.

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