Buying a new HRIS: SaaS or in-house?

by 11 Nov 2008

Q. Our company has determined that we need an HRIS and now are deciding whether to go with a hosted, SaaS model or purchase the software that will run in-house. What factors should we consider when making this decision?

A. Any technology closely tied to the financial health of a business always generates heated debate, and HR Information Systems (HRIS) are no exception. One of the most animated debates over the last couple of years has centred on whether to deploy the technologies in-house or rent them.

If your company does not possess the necessary technical expertise in-house to support and configure, then the SaaS model may be your best choice. An in-house model can work well where an organisation has the necessary expertise, however it is critical to realistically evaluate the capacity to support additional servers, application platforms and the application itself.

Security of information is perhaps the strongest argument for in-house solutions. In all scenarios, the security of information is paramount. Because this concern is common to all clients you can safely say that most vendors have invested heavily in the security of their platforms and applications. The consideration here is: does the alternative to the in-house solution offer an equivalent level of security, and does it meet the standard we set as an organisation? It is important that your security specialist discusses their requirements with any vendor when assessing an appropriate implementation model.

Data accessibility and application interaction is virtually a standard requirement for most organisations’evaluation of HRIS. Without doubt, an in-house model should be able to provide a higher level of accessibility than an SaaS model due to the accessibility-versus-security balance. However, in practice, there are a variety of technical options to resolve the data exchange and communications/security requirements. Look at how your organisation wants to use the data in your HRIS – Is it application-based reporting? Is it accessible by your corporate reporting tools? Does it need to interact with other applications?

Implementation time frames are generally shortest for SaaS, because infrastructure and expertise is generally in place and readily available. In-house implementation can take longer, due to the requirement to establish application, hardware and communications infrastructure. Customer engagement in implementation is critical to success, and this is true for in-house and SaaS solutions. However, the capacity to which a client is able to effectively engage in the implementation can be limited by the requirement to be involved with the additional needs of an in-house implementation. Because resources are never unlimited, this additional workload often translates into longer implementation time frames.

In terms of support, the accessibility factor can make a big difference. When it’s hosted within the vendor’s control – as with SaaS models – they have sole control and responsibility for the environment and are able to access the components to resolve any issues. In the in-house scenario, a vendor may have limited or no access and generally the diagnosis and resolution process for issues can take longer and possibly involve client or third-party specialists. This also extends to upgrades. In an SaaS environment, upgrades are generally scheduled as part of the service being provided and involve no additional cost.

The current economic crisis has focused the minds of all decision-makers, but the need for shrewd financial decisions has always been present. How your organisation implements their HRIS will ultimately be a reflection of your circumstances, resources and priorities; however, irrespective of the delivery model, the software needs to provide a return on investment

By Ari Kopoulos national sales & marketing manager, EmployeeConnect. Email: