Outsourcing certain administrative human resource (HR) functions often makes good business sense, especially in today’s hard economic times. However, along with outsourcing’s “pros” come a number of “cons,” including loss of control, limited flexibility and higher costs. But what if companies could combine the conveniences of outsourcing with minimal drawbacks?

Enter software-as-a-service (SaaS) for human capital management (HCM). Many analyst studies and recent industry surveys have shown that SaaS for HR management is gaining in popularity by leaps and bounds—now among the top three most popular business services available through SaaS.


What Is Software-as-a-Service and How Can You Benefit from It?

Software-as-a-service is a method of providing comprehensive software applications through a secure Internet browser, with no requirement to maintain the software, hardware, or data on-premise. Rather than buying the software and installing it at your company’s facility, which requires up-front capital, in-house IT resources, ongoing maintenance, and periodic upgrades, with SaaS, a company generally pays a monthly subscription fee for rapid access to the solution and no software maintenance concerns. The applications and customer data are stored and protected at a vendor’s secure, remote data center, eliminating the need for on-site servers and IT maintenance.

There are many different SaaS application in use today that companies rely upon to drive mission-critical functions, such as customer relationship management (CRM), customer ordering, accounting/finance, supply chain management and the focus of this article, HR management. Human resource management systems (HRMS) can include employee data management, payroll processing, benefits administration, recruitment and onboarding, performance management, time and attendance, strategic workforce reporting, career planning, and more.

Prior to SaaS, companies essentially had two options for HR and payroll: in-house software from an enterprise software provider or outsourced payroll through a payroll service bureau. Both methods had significant limitations.

Today, companies that previously used traditional in-house methods or external service bureaus for their HR functions cite a host of benefits in moving to SaaS including:
• Convenience and 24/7 Web access from anywhere

• Expert system maintenance, management, and upgrades without dedicated in-house IT resources

• Rapid deployment of enhanced functionality

• Greater control in managing employee data and processes

• Freedom from service bureau schedules

• Instant workforce data analysis and reports – anywhere, anytime

• Cost-savings and measurable return on investment (ROI)

• Enhanced efficiency, leaving more time to focus on a company’s core business objectives

• Proven security and confidentiality of employee data

• Ability to leverage latest technologies without having to support them internally



For Every Company, Large and Small

Regardless of industry type, company size, whether employees are in one central location or dispersed geographically, SaaS can deliver a more comprehensive, convenient, and efficient way to manage every aspect of HR.

A company’s IT department is freed from managing large, cumbersome in-house solutions that reside on a company’s in-house server and require in-house hardware, maintenance, and support.

Because most SaaS solutions for HCM are priced on a per-employee-per-month basis, small companies can afford the same sophisticated HR tools as FORTUNE 1000 companies.

From a finance perspective, SaaS makes good business sense. There’s no large, up-front capital expenditure, and the payback in time, money, and resources far outweighs the monthly subscription fees.

And the ROI can be dramatic. SaaS customer Genmar Holding Company, for example, reported an annual cost savings in excess of $500,000 just by eliminating payroll service bureau fees and moving to a SaaS solution.


Real-World Benefits of SaaS for HR and Payroll – One Company’s Success Story

CORT Business Services is another company reporting benefits when it migrated from a traditional payroll service bureau to a SaaS solution for HR and payroll.

Previously, the residential rental furniture provider had used an enterprise resource planning (ERP) vendor for HR, a service bureau for outsourcing payroll, and an in-house manual process for time and attendance. The company’s HR and payroll processes were unwieldy until CORT abandoned its multi-application approach in favor of Ultimate Software’s UltiPro solution, delivered through SaaS.

As a result, the 2,500-employee company now has one comprehensive system to handle its core HR processes, including payroll, benefits administration, online benefits enrollment, and time and labor management. The broad scope of HR feature-sets combined with the convenient and cost-effective SaaS delivery model has resulted in even greater gains than expected.

Since moving to SaaS, CORT’s IT team has redirected its time and resources to key business projects because Ultimate oversees hardware, software, and ongoing system maintenance.

“When we were considering potential HR solutions, we wanted to ensure that our IT team would not have to support our new HRMS and could focus on our core business applications,” said Debbie Lansford, CFO for CORT.

“With my financial background and understanding of the rental industry, I see the value in leasing software. Selecting a SaaS solution meant we did not have to make a large capital investment in a software license. It really makes good business sense to let a SaaS provider handle the software upgrades, hardware, and maintenance.”

Streamlining benefits open enrollment is a detail-intensive challenge many companies must tackle. Before using UltiPro, CORT’s HR team members traveled to each location during benefits enrollment, distributed information, answered employee questions, collected the hand-written forms and brought them back to the main office. Field staff would then fly in to the Fairfax, VA, headquarters to input benefits changes and complete the cumbersome project.

“Benefits enrollment is much more efficient and easier with UltiPro,” said Buckley. “Employees log in and can choose or update their benefits information on their own. Since they are responsible for entering their personal selections through self-service, there are fewer opportunities for error. There is no need for anyone to travel anywhere or to interpret hand-written forms. UltiPro has made open enrollment so much better. It’s like night and day when we compare it to our old approach.”

By migrating to a SaaS solution, CORT has seen efficiencies in its IT department and has redirected the HR team’s efforts to other HR projects. Streamlined benefits enrollment and employee self-service have drastically reduced paper use and data entry costs. Plus, UltiPro has given CORT consolidated data for better reporting.


SaaS: Making the Right Choice

In today’s economy, staying ahead of the competition requires businesses to be more nimble and cost-conscious than ever. A SaaS HCM solution fits the bill. SaaS HCM enables companies of all sizes to focus their financial, IT, and human resources in the right places with a ‘pay-as-you-go’ model that’s right for the times. By moving to a SaaS solution for HCM, companies can keep administrative costs in check with convenient Web access to a low-maintenance solution that includes recruitment-through-retirement functionality and 360 degree workforce reporting to help businesses remain competitive in the short and long term.