Cloud technology still more of a fog for HR

by Stephanie Zillman24 May 2012

The latest survey figures have revealed a staggeringly high proportion of HR professionals do not fully understand what cloud technology could do for their business, and perhaps even more worrisome, barely half have any idea what the term means at all.

Put simply, the cloud-based software market is where companies ‘rent’ software over the internet rather than installing it on their own machines. According to the Sage Business Index for 2012, in which more than 500 Australian organisations offered up their opinions, just 53% of businesses had ever heard the term “cloud” prior to the survey. Of those who had heard of it, the main barriers to adoption of cloud computing included:

  • limited perceived benefits
  • confusion about the potential savings or benefits
  • uncertainty as to how to implement a cloud solution; and
  • a belief that their business “isn't the sort that could make use of the cloud”

Despite the finding that a low percentage of organisations are utilising the technology, once the technology was explained, some 48% stated that would be interested in implementing cloud software in their operations.
According to a leading analyst in corporate HR, talent management and leadership, John Bersin, there are currently three major trends happening in the HR technology space.

  1. The HR, payroll and talent management software market, worth $15bn, is being revamped, and more and more companies are now starting to replace their core infrastructure software with new cloud products.
  2. The market for integrated talent management software has matured. No longer is it necessary for companies to purchase a wide variety of tools to help with recruiting, performance management, training management, compensation management, and workforce planning – all these products are now integrated into complete talent management suites, and small to mid-sized companies can gain the benefits of this software as well.
  3. The sheer availability and variety of providers offering cloud-based software means HR customers are now set to replace old systems with competitively priced cloud software. “If you’re a buyer of HR software, the time couldn’t be better to replace your old systems. And if you’re an investor, get into this space now. It’s still early,” Bersin said.

Research by Deloitte recently found that for organisations which have already begun transforming, or plan to transform their HR functions towards cloud computing, the reason couldn’t be more straightforward: cost-cutting.

Organisations that already have, or will be, implementing cloud technologies cited their chief motivators as:

  • No licensing fees
  • No additional infrastructure required
  • Maintenance is automatically carried out by the provider
  • Minimal training, most use a web 2.0 style interface
  • HR can connect to all the facilities online, anywhere in the world
  • Free trial periods. Unlike traditional software licensing models where there are ongoing fees and annual maintenance costs, using a cloud means a company can move on without any strings attached.


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