Adoption of human capital management (HCM) software-as-a-service (SaaS) solutions continues to rapidly expand across all types and sizes of HR organizations as leadership looks for ways to provide more efficient HR and payroll services, engage employees more effectively and replace HR solutions that will soon no longer be supported by system providers.
Enterprises must carefully evaluate available HCM SaaS solutions, studying the various elements of each. Let’s look at key functionality for the current HCM solutions.
General Solution Functionality
Compliance and Localization
Compliance support and country-specific localization functionality in current HCM solutions vary from one provider to another. Some HCM SaaS solution providers take a more proactive approach, using in-house resources or third-party partners located in-country for localization support and input. These providers use a network of legal advisors, government authorities and local officials to translate legislative changes into the solution on a regular basis. Localization support in the solution can include country-specific fields, reports and business rules. Other HCM providers simply provide the framework to enable users to assume compliance ownership.
Both approaches include tools, templates and business processes that support key areas of compliance for HR organizations. While the proactive approach toward compliance provides a greater level of support, HR buyers should be prepared in both scenarios to assume primary ownership and responsibility for compliance with all HR-related requirements. This likely means that most HR organizations will need to either retain existing compliance resources or employ the services of third-party compliance organizations that have expertise in the desired geographic locations. Compliance may become more efficient with a new HCM solution, but the responsibility ultimately resides with the HCM customer.
Social collaboration functionality and tools support user interaction and sharing of content within an HCM solution. If social collaboration is important to an HR organization, it may find some current HCM solutions lacking in full functionality. Some of the market-leading HCM solutions, such as SAP SuccessFactors (JAM) and Oracle HCM (Social Network), provide in-solution social collaboration capabilities. HCM providers that lack full social collaboration functionality often will accommodate this need via standard, pre-built integrations with popular social media platforms such as Twitter, LinkedIn, Slack and Yammer.
Employees in today’s job market have become more mobile than ever and, as a result, expect to have access to important HR-related information, tasks and processes via a mobile device. HR organizations recognize this need and consistently look for HCM solutions that can move HR-related tasks from a PC-based model to a mobile-enabled model. HCM solutions today provide a significant degree of functionality via either a mobile HTML browser or proprietary mobile app specific to their HCM solution. Most mobile apps are accessible via iOS or Android devices. Though the greatest degree of mobility for most HCM solutions still resides in the HTML-browser model and less in the proprietary apps, the gap is closing as HCM organizations realize the importance of having full functionality via the mobile app. Don’t be surprised if this gap continues to close and HCM mobile apps improve across the board. If mobile accessibility is important to HR organizations, careful exploration and demonstration of the mobile functionality via mobile app and HTML models should be conducted prior to selection.
Case Management and File Management
Traditionally, HCM solutions have not included full case management or file management functionality and require the use of external third-party solutions. But many customers are seeking an end-to-end solution, and HCM providers are listening. Recently, Ultimate Software, a leading vendor in the HCM market, announced the acquisition of case/file management provider PeopleDoc. This now provides HR customers with a robust file management solution integrated into their Ultimate Software contract. Oracle also has capability in this space via its Help Desk solution. Other leading HCM solutions include some case/file management functionality – such as the ability to attach and upload documents within the solution – but currently lack robust case and file management functionality. HCM buyers should consider this as a potential additional cost in their new HCM solution environment.
HCM Module-Specific Functionality
Payroll: International Payroll
End-to-end payroll processing in the U.S. is standard with all market leading HCM payroll solutions. Gaps in capabilities arise outside of the U.S., with in-country system payroll processing varying across the leading HCM offerings. HCM solutions like SAP SuccessFactors have deep capabilities around the world, while other HCM solutions have limited capabilities and may require support from a third-party payroll solution. HCM solutions that lack international payroll functionality typically offer standard, prebuilt integrations to well-known third-party vendors. The key is determining which third-party solution works best with the chosen HCM solution, as not all solutions work well together. Each HCM solution will have a network of preferred international payroll partners they can recommend. Current customers of the HCM solution can be excellent sources of information on this front as well. The bottom line is HR organizations need to carefully evaluate both the domestic and international payroll capabilities of current HCM solutions. Incremental third-party costs can add up and should be considered in the overall solution decision.
Payroll: Additional Functionality
The functionality for garnishment processing, tax filing, paycheck distribution and pay cards is universally available in leading HCM provider payroll solutions. What is not included is the full processing and administration of each payroll item. To support these services, HR organizations will need to retain existing in-house support, seek external third-party support, or contract directly with certain HCM providers that offer incremental payroll administration services. Two examples of HCM providers that provide these payroll administration services are Ultimate Software and Ceridian, but the service and fee will be incremental to the HCM payroll annual subscription fee.
Recruiting: Background Check and Video Interviewing
For HR organizations that use video interview functionality in recruiting or have a desire to incorporate video interview functionality in the future, a third-party service will be required. Current market leading HCM solutions do not include video interview functionality. However, the solutions often include standard, pre-built integrations to many popular video-interview vendors to accommodate this need. HR organizations will need to view this third-party cost as incremental to HCM provider annual subscription fees.
Another incremental cost to consider in your HCM decision is background check services. Though current HCM provider solutions do not include background check functionality, they do include a standard, pre-built integration to many of the well-known third-party vendors like First Advantage, Sterling and Hire Right. Therefore, HR organizations will need to include the cost of background check services from a third-party vendor as incremental to the new HCM SaaS annual subscription fees.
Learning: Content, Web Conferencing and Scheduling
Current HCM solutions do not provide learning content. Most HCM learning solutions are agnostic and have standard, pre-built integrations with many popular learning content providers. All HCM solutions also include tools that enable customers to build integrations to desired learning content providers, if a standard integration is not already provided.
Web conferencing for instructor-led learning events is not currently included in the leading HCM solutions. Enabling this functionality requires integration with a third-party service. In-solution scheduling functionality to popular email systems such as Outlook, Outlook 365, and Google Calendar has been expanding over the past 24 months. Most HCM solutions have aligned or are in the process of aligning to a specific email calendar system that will allow direct learning-event scheduling.
There are hundreds of considerations when it comes to evaluating a new HCM SaaS solution. We’ve addressed just a few of them here. In Part 2 of Expectations of Your HCM SaaS Provider, we will address key technical and implementation considerations for current HCM solutions.
As a leading advisory firm in the HCM market, ISG works closely with both HR organizations evaluating and selecting new HCM solutions and with many of the leading HCM providers that are delivering new HCM SaaS solutions to the market today. Contact us to find out how we can help your organization.
About the author
Mark Bray is a Principal Consultant with over ten years of experience in the sourcing industry in the areas of HR, finance and accounting and information technology. Mark is equipped with a comprehensive set of skills including financial modeling, contract review, pricing normalization, ARC/RRC analysis, break-even analysis, NPV/IRR analysis, and statistical trend analysis. He has extensive experience in the development of numerous products including Financial Base Case, Financial Business Case, RFP Pricing analysis, Strategic Assessments, and Mark-to-Market analysis.