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What to Consider When Choosing Cloud HR Technology

Choosing the right cloud HR service provider for your business takes time, and compiling all this information and knowing what you can and cannot do can help you choose a solution that will not only fit your organisation now, but in the future as well.

Here are a few top considerations to think about when choosing cloud HR technology.

Ask: What’s different about your business?

In making a cloud HR technology choice, the most important thing you need to understand is what is different about your business.

Cloud HR Technology, particularly from the main software vendors, will do all of your 20 or so processes in HR very well.  So before you ask whether they can adopt a multiple approval process or not, or if you can have a specific ‘flavour’ of recruitment–I can tell you now, the answer is yes.  About 80% of functionality in cloud HCM software is the same across different vendors, so don’t waste time on questions you already have answers to.

That said, what you should be focusing on are the other processes of your business that are significant for reasons which drive different outcomes for your organisation.  The processes that are critical to your business could relate to a number of different things–conditions of the market, the way you want to drive responsiveness to your customer, regulatory and compliance issues, etc.  Here in the city, more often than not, businesses specialising in financial services will need to focus on compliance and regulatory requirements which are unavoidable, essential to do business, and affect HR processes significantly.

Identifying the processes that matter to your business and focusing on those during your selection process is the key trick to choosing cloud HR technology which will support you well over the next ten years.

License negotiation (hint: there’s less of it)

When it comes to choosing cloud HR technology, it’s important to understand that you’re not buying software, you’re buying services, and effectively what you’re doing is renting that software, and the space, to keep your data in.  This means that there is less that you can negotiate when dealing with the cloud.

Here’s an example.  In the ‘old world’ of purchasing software, 10 or so years ago, we’d all go out and buy Microsoft Office discs and when we installed the software onto our computers, that software belonged to us.  Now, in the ‘new world,’ Microsoft sell licenses where you don’t get a physical disc, but you’re borrowing the use of Microsoft data, the use of Microsoft software when you need it, plus the place where they store all the information we put there (e.g. emails).

This is just like cloud HR.  You’re buying a service, not the software, and this changes the balance of license negotiation in many ways which are important to know before any talk of implementation begins.

In this ‘new world’ of cloud HR, there are some areas of the license which cannot be negotiated like they were in the past.  Continuing our Microsoft example, if you purchase MS Office 365, there’s not much you can change about that.  Even if you phoned up Microsoft and asked for different, specific functionalities, they won’t do it–they’d think you’re ridiculous!  They will provide the same service to everybody, therefore, very little is negotiable.

When it comes to cloud HR technology, the degree of which you can negotiate your license is similarly limited.  For example, most ‘old world’ HR solution contracts would state that the availability, or how much and how often the software is available to you, is going to be 99.9 per cent.  If someone wanted more availability, for example 99.999 per cent or higher, they would go to the software vendor and request that, and the provider would tell them how much that would cost.

In cloud HR, you can’t do that.  The same rules apply to everyone.  If the availability is contracted at 98 per cent, that is non-negotiable.

Knowing what is and what is not possible at the start can prevent difficult situations in the future.  If there is something in the contract that you know key stakeholders will not accept, you might as well find out what is possible today rather than waste six months negotiating something that cannot be changed.  This means early stakeholder involvement.

Driving stakeholder engagement

Working closely with stakeholders in selecting the right technology choice for your business needs to be done early with the new balance of negotiation.  Building on the software availability example, you will not be able to negotiate the 98 per cent as you could in the past, rather, you are now persuading key stakeholders that are used to 99.9 per cent, that 98 per cent is okay!

How do you do that?  A good way is looking around and seeing what your competitors are doing.  If you are a financial services company and just down the road is another FS institution, the classic response to getting buy-in is by saying “well if it’s good enough for xx Bank down the road, it should be okay for us.”  It’s understanding how to persuade your IT or security guy that the best contract will still say 98 per cent availability and anything beyond that is simply unfeasible.

Determining your key processes and working out license negotiations does not only help you focus during your selection process, it drives engagement from stakeholders.  Although you may think that your stakeholders have no interest in looking at specific processes, they actually do!  Stakeholders like looking at the processes that matter, they like talking about their business, and they like being listened to.  Covering these processes and requirements in detail can keep stakeholders engaged during the project and helps to quantify the business case.

Length of contract (hint: the longer, the better)

When it comes to licensing contracts in HR cloud, longer contracts are more desirable.  In the past, the thinking was “let’s aim for a short contract where we can escape if necessary.”  Now the more preferable route is to look for contracts that can provide you a service for a very long time.

Why?  If you’re buying a service from someone, your business functions become reliant on that service.  If the contract with your provider is only a year long and it takes two years to get off that service, at the end of year one that provider can charge you whatever they want for you to keep it going.  No one wants to be trapped by the supplier.

On that note, what direction a potential supplier is going also matters when discussing the length of a contract.

When you buy a service, you know that service will improve and change over time.  Therefore, your ‘fit’ with the supplier is important.  For example, if you are large manufacturing company, it’s a bit absurd for you to implement software that isn’t used by many other manufacturing companies.  There will be trouble if you find out that the HR service you’ve bought caters more to financial services companies, because that provider is not likely to develop their product in a way that fits your business.  In that situation, you don’t want to end up with an FS system in a manufacturing business.

Good luck choosing cloud HR technology!


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