Recruitment, payroll and performance reviews in the cloud

Should you put your employees' personal data in the cloud? Ulrika Hedquist investigates

HR software has well and truly made the move to the cloud, with Software as a Service being the most common delivery model. Computerworld talked to users and analysts to get a feel for the risks and benefits.

University of Otago

Recruitment at the University of Otago used to be a manual and paper-based process. The organisation wanted to move to an online model and a more streamlined process, says Shane Sturgeon, HR projects manager at the university. There was also a need to recruit more candidates from around the world, some in highly specialised positions in their particular area, to Dunedin – a place that can seem very far away, he says.

The university went through an RFP process and decided on an enterprise recruitment module from US company Taleo, which was acquired by Oracle in February this year. Parts of the system have been in place since December 2010, with increased online access for managers delivered throughout 2011.

Today, the whole recruitment process is conducted in the web-based system, Sturgeon says. Candidates can register their interest for jobs; complete their profiles; and search for, view and apply for jobs via the online portal. Managers and HR staff can access the information and perform tasks such as approvals – online, wherever in the world they are, he says.

“The solution enables a streamlined process where managers are able to see candidate applications as they come in, and can start vetting,” says Steve Wood, HR information systems manager at the University of Otago.

Previously, applications for a job would have gone into a drawer in a filing cabinet, he says. Once the position closed they would have been pulled out and given to the hiring manager. If the manager wanted an update on the applications, someone would have to physically go to that filing cabinet to have a look and then go back to update the manager, Wood says.

“Now, the managers can do it themselves via the system. Within HR, we are much better able to monitor and improve our service,” he says. “That is not necessarily a benefit of the cloud-based solution – it’s just a benefit of having a streamlined process and a system that supports that.”

While the university wanted an online recruitment solution, it wasn’t a requirement that the system be cloud-based, but all of the responses to the RFP were, he says. The team did a lot of research into going with a cloud vendor – including reading up on the US Patriot Act, says Sturgeon – and decided that as long as the system met the university’s requirements, cloud-based was acceptable.

The university has also seen some benefits in its candidate pool size, he says.

“Candidates can register an interest even if there isn’t a specific role available right now. We are then able to search that candidate pool and send them notifications of jobs when they do arrive. The recruitment team has benefited from that.”

The next step is to be able to generate an offer letter to successful candidates via the system.

The overall HR system at the university is made up of products from a number of vendors. Therefore, integration between systems is top of the list for the organisation, says Wood. The key system, besides Taleo, is the HR payroll system Alesco from Talent2.

“We often see integration as being a challenge but we were really happy with the integration toolset that Oracle Taleo provided – it was one of the reasons we picked that system,” Wood says.

One “rather frustrating” challenge, however, is how the system deals with time zones, says Wood. This turned out to be problem when generating job offers – dependent on what time of the day in New Zealand the offer was raised, the start date could be out by a day, he says.

“If you did an offer in the afternoon it would be the right time zone but if you did the offer in the morning it would appear to be wrong,” he say.

This can be a trap for users new to software as a service, he says. He would advise any other organisations considering a cloud-based solution to check up on how the system handles time zones.

“Something as simple as an audit trail showing the date in a US time zone can make life difficult when you are trying to work out what is going on in the back end of a system.”

Taleo has worked with the university to fix this issue, he adds.

Another challenge has been around deploying the breadth of functionality across the different types of recruitment, he says. Recruiting for academic roles is a different process compared to recruiting support and administration staff. And that is very different again from hiring someone to work as a barrista in the university union, he says.

Spectrum Care

Spectrum Care, an independent charitable trust that provides services for children, young people and adults with intellectual disabilities and autism, went live with a payroll solution from Honey Software in June.

Spectrum Care’s services include 24-hour support for people living in residential homes in Auckland and the Waikato region, respite care for adults in the Waikato and Bay of Plenty, and respite care for children in Auckland.

The organisation has a “very complex payroll with numerous variables”, says strategic project manager and clinical advisor, Judy Garriock. In addition to a strong union presence in the organisation, staff members range from casual employees that work one hour per month through to psychologists. Add to that individual contracts, mileage and sleep-over allowances, she says.

Spectrum Care already had a partnership with Wellington-based consultancy Intergen, which helped roll out a Microsoft-based environment, including SharePoint, four years ago, says Garriock. Payroll was the only component that wasn’t Microsoft, she says – it was a standalone system. The organisation decided it was time to renew the payroll system, and to also look at other components of HR, such as performance management, training, rostering and timesheet management, she says.

Four vendors responded to the RFP, but only Christchurch-based Honey Software proposed a Microsoft product. Spectrum Care began negotiations with two vendors and in the end, Honey Software won the contract.

“The reason we chose Honey was that it future-proofed the organisation,” says Garriock.

The system integrates with all the other systems, creating a streamlined process, she says. Another reason was the ‘non-lock-in’ factor – if Honey Software for some reason fell over, other providers could pick up support for the system very quickly, she says.

The next phase of the project is enabling remote timesheet management, where staff across over 80 sites can go online to report their hours and view rostering. Future plans also include the ability to do balanced scorecarding through a dashboard system, she says.

While the system is still very new, the perceived benefits include resource and time savings, primarily arising from doing timesheets online.

“Payroll will be able to become more proactive rather than reactive,” Garriock says. “Instead of dealing with timesheet issues, they will be able to go out and educate users and spend more time working on solutions rather than putting a Band-aid over the issues.”

The ability to do things like casual pool management and training needs analysis will also help the organisation work smarter, she says.

Among the lessons learned is to get buy-in from key people early – “we didn’t do it early enough”, she says.

“In hindsight, we should have brought payroll and HR into the project from the start.”

If they had been involved from the beginning, spent the time with the provider and communicated just how complex the payroll was, some issues could have been avoided. “Put more money in the upfront scoping part of the project – it will lessen the problems at the end,” she says.

Gartner: SaaS dominates HR

Two major deals have altered the human capital management (HCM) landscape in the past year – SAP’s acquisition of SuccessFactors and Oracle’s acquisition of Taleo – say two Gartner analysts Thomas Otter, research vice president, and Jeff Freyermuth, senior research analyst.

“These acquisitions show that SaaS is becoming the dominant delivery model for much of HCM,” they write in the report ‘Hype Cycle for Human Capital Management Software, 2012’.

Core HR management systems are now facing increased disruption, they say.

“IT leaders should expect their HCM technology landscape to undergo significant additional change through 2015.”

Gartner predicts that many organisations will ponder whether to continue to invest in on-premise core HR management systems or move to SaaS-based offerings over the next 12 months.

Among the trends in HR software are talent management, mobility, workforce analytics and social capabilities, according the Gartner. Most vendors now offer some sort of mobile capability, and some offer tablet support for manager self-service, learning and reporting, the report authors say.

Investment in talent management suites is growing faster than investment in point solutions.

“Some vendors are now combining strong core HRMS capabilities with talent management. We have seen an increase in inquiry from customers seeking a broader suite,” they write.

However, “integration continues to be a challenge for many organisations”.

Gartner research shows a “continued focus on workforce analytics, with many large organisations looking to better mine and understand their employee data”. However, analytics continues to challenge HR departments, say Otter and Freyermuth.

“HR departments battle to get their analytics in order, mainly because of a dire skills shortage among analytically minded HR department employees.”

While social capabilities are now common in most vendor offerings, the “hype is well ahead of adoption”. According to Gartner, social recruitment highlights the shift toward solutions that manage “passive candidate acquisition and relationship building, rather than just an efficient application process”.

“We have seen a number of HCM vendors acquire social collaboration vendors. Interest in integrating HCM solutions with generic collaboration tools is also growing, with several vendors announcing integration to Chatter and Yammer,” the report concludes.

Avoiding SaaS risk

Another piece of Gartner research shows that many HR departments go out and buy SaaS applications from their own budgets, without involving IT procurement.

While the HR department may be happy to buy and get a SaaS solution up and running quickly, key parts of the deal are often missing – such as renewal terms, data security, data privacy, backup and recovery, and SLAs – simply because the HR department doesn’t have the negotiating skills and experience necessary to get the deal right, write Otter and research vice president Alexa Bona.

“On the other hand, IT procurement has often been slow to serve HR department requirements. A new spirit of collaboration is needed,” Otter and Bona say.

“SaaS vendors in HCM have successfully spun the myth that they are kinder and fairer than megavendors when it comes to contract negotiations and terms and conditions. This is a fairy tale,” they say adding that SaaS vendors’ contracts are often nearly as complex as any ERP vendor’s.

IT procurement can also help push the price of the solution down, according to Gartner. Based on hundreds of contract reviews, the research firm estimates that when IT procurement is involved in the deal, pricing of SaaS HCM solutions is typically at least 30 percent lower.

Gartner recommends

When evaluating SaaS HCM vendors

• Check the vendor’s level of cloud infrastructure adoption and be cautious of smaller vendors attempting to build it all themselves.

• Make sure that the vendor has effective SLAs throughout its infrastructure supply chain.

• Understand the vendor’s business model – is it profitable? What impact will cloud-computing have on your business?

When buying SaaS HCM solutions

• Involve IT procurement in all HCM SaaS purchase decisions.

• IT procurement departments should develop governance policies, negotiation guidelines and support for all SaaS deals.

•Price is only one factor – also focus on key terms and conditions, such as SLAs, renewal terms, privacy, security, backup and recovery, exit protections and data ownership.

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