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On Premise is Dead, Long Live Cloud

Heraclitus said 2,500 years ago that, “The only constant thing is change.” In keeping with everything that is happening now, to say that the world is changing is a daunting truth. But from the overall HR perspective and that of information systems in particular, it is worth stopping to analyse these changes, their impact in this area, and how both aspects are affecting HCM solutions.

THE WORLD IS CHANGING

Based on this thinking, companies shape their business models. But what is changing?

  • Political/legal changes. Today’s uncertainty shows how the regulation and implementation of national and international policies impact the manner in which companies change the way they do business, which in turn affects the way professionals work (different policies of different governments, subsidies, tax policies, Cold War II, etc.)
  • Macro- and micro-economic changes. Such changes also have a huge impact on how companies modify their production and value generation models, with the purpose of maximizing profitability in changing high-pressure environments. A few of these changes are interest rates, inflation, taxes, labour costs, etc.
  • Social changes. Social or cultural trends, currently set by new generations entering into the working world, whose priorities and objectives are different from previous generations. These trends are shaping a paradigm shift with few antecedents, to which organizations are still trying to respond. Other aspects may include remote working (teleworking), new business models emerging focused on user experience as a core value, or the "uberization" of business models.
  • Technological changes. Digital transformation of companies, supported by an unprecedented technological evolution, has led to changes through using automation, AI, agile models, and the realistic opportunity of omnichannel models.

All these aspects impacting companies and their workers are determining the policies, actions, and activities that HR must undertake. Changes such as labour market variations, organizational adjustments, new work models, digital transformation, and more, require significant HR efforts for adapting to these situations and for preparing an organization-wise response to the needs of their business units, employees and managers and middle managers.

HR IS CHANGING

Continuing with the same analysis, the role of HR has reached new levels of relevance within the heart of organizations, as we shall see when reviewing each of the factors already mentioned:

  • Political/Legal. These factors force HR to prepare for reacting almost immediately to situations of uncertainty that arise, and which have a clear impact on running the business and managing professionals (new skills that keep changing).
  • These factors require a major focus on cost efficiency in each of the personnel and talent management activities, such that HR “does more with less”.
  • General social trends require an increasingly bigger focus on the workforce in organizations, in terms of both the individual (Employee Centricity) and the ever more ubiquitous work teams, while following the guidelines from agile methodologies that companies are putting into practice (Team Centricity).
  • Managing and piloting the reality of digital transformation is placing technology in the core of organizations as a real generator of value and savings as well as an essential tool for digital transformation and evolution towards new business models.

All these endogenous factors impacting the HR field should also be considered, including factors intrinsic to the actual business circumstances. Assuming that business growth is the quintessential business objective, this growth necessarily occurs through increasing efficiency (by seeking operational excellence) and through business transformation (e.g. seeking access to new markets and heavy use of technology). Both aspects are key for adapting to market conditions.

WHAT'S HAPPENING TO TECHNOLOGY?

We are witnessing the emergence of a large number of technology-based and technology-dependent business companies and models (Spotify, Uber, Amazon, Netflix, Airbnb,....) that respond to society's demands and benefit from unprecedented technological progress in human history. These new models are shaping new human management needs right within the company and the reality of HR departments, such that their technology tools are not always able to respond to these needs. In fact, the "HR Realities 2018 – 2019" study already showed that nearly 70% of organizations felt that their HR systems did not meet the needs of a modern workforce. And in this context...

ARE CLOUD SOLUTIONS THE TECHNOLOGY ANSWER FOR HR?

The fact is, if you have enough internal capabilities to build, maintain, develop and evolve your own solution "in a timely manner", adapted to your business reality and your professionals, then probably an in-house solution is the best answer for the organization. How many companies experience that reality? Well, none really, since for HR the technological needs in this area rarely hold the top spot among the company’s needs. This means that cloud solutions are configured as the first option.

The report by Sierra Cedars, "2019-2020 HR System Survey White Paper", shows that a third of companies plan to migrate to a cloud solution within 12 to 18 months. The investment in cloud solutions has increased by 14% last year as compared to a 15% drop for on-premises solutions. Moreover, the user experience in cloud solutions was rated 3.63 versus 2.92 (25% higher). Furthermore, the above-mentioned report shows that for HCMS, Talent Management, Workforce Management and Payroll solutions, the presence of cloud solutions grows at a rate of 5-10% per year; such solutions, when it comes to talent management issues, are already present in 81% of companies.

Based on the experience of Meta4, A Cegid Company, there are many reasons for this behaviour, but we highlight 7 factors we believe are key to enabling HR to respond to the endogenous and exogenous factors discussed previously:

  • Deployment: your new applications will be available sooner, without a cumbersome deployment process.
  • Quick adaptation: to regulatory and regulatory requirements, improving efficiency and avoiding possible penalties for non-compliance.
  • Maintenance of security, communications, and information integrity: allowing HR to devote their efforts to management and not to the information systems.
  • Technical and functional updates: ensuring the availability of functionality at all times.
  • Access anytime, anywhere and with any device: allowing HR professionals to work remotely and to be available to business and employee needs.
  • Direct employee involvement: in the required processes (absences, highs, casualties, log of day and activity...), keeping the data updated and improving the management options.
  • Clear and limited cost model: right from the onset, since we are talking about a predictable pay-per-service, that is divided into instalments.

A provider who addresses all these factors, enables HR to concentrate on what is actually important, their company and their workers. Consequently, the HR field is experiencing a cloud revolution, in which companies no longer wonder whether it is interesting to migrate, but "how" and "when" they should make the leap over to this SaaS model. Do you want to be part of this HR revolution?

Enrique Sala Pascual

Enrique lleva desde el año 2000 dedicado a la consultoría de RRHH, primero en Accenture y posteriormente en Development Systems. Ingeniero de formación y humanista de vocación, su actividad en múltiples proyectos durante estos 17 años le ha permitido observar la realidad de la gestión de RRHH en múltiples empresas, sectores e iniciativas. Desde su actual posición en Meta4 su objetivo es aunar la visión de Personas, RRHH y Negocios en búsqueda de “la respuesta”: ¿qué debe hacer RRHH para dar respuesta a las necesidades del negocio gestionando la parte “Humanos” de los Recursos?

Enrique has been an HR consultant ever since 2000, first at Accenture, then in Development Systems. An engineer by profession and a humanist by vocation, his work across numerous projects over the last 17 years has allowed him to observe HR management in many companies, sectors and initiatives. In his current post at Meta4, his mission is to fuse people, HR, and business together as well as to seek the answer to: what HR must do to meet business needs through managing the “human” side of “resources”?

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