Despite Savings, Realizing Broader Business Value Remains a Challenge for Most
More than 60 percent of companies using cloud-based technology solutions for their human resources systems have achieved significant savings from the technologies, according to a new report from Information Services Group (ISG), a leading global technology research and advisory firm.
The ISG 2019 Industry Trends in HR Technology and Service Delivery report found approximately half of companies leveraging HR Software-as-a-Service (SaaS) platforms have been able to achieve savings between 10 and 30 percent in both IT/technology operations and HR administration, with an additional 15 percent of companies achieving savings of 30 percent or more in both areas.
“Our survey results show that enterprises are realizing the cost benefits they expected from their investment in SaaS,” said Stacey Cadigan, partner, ISG HR Technology, and co-author of the report. “Now that savings are firmly established, the next area of opportunity lies in achieving ongoing business value from these platform technology solutions.”
Only 41 percent of respondents say they have achieved measurable business value, such as increased employee retention and reduced time to fill positions, by adopting SaaS, while 59 percent say they have not added any business value.
“Our survey revealed that while organizations are accelerating HR technology capability, they have not yet made similar advances in process, service delivery and self-service technology,” Cadigan said. “To add true business value and solve HR challenges, organizations must combine the use of SaaS with a clear HR technology strategy, optimized processes, an end-to-end experience and change management designed to ensure technology adoption and drive business outcomes.”
The ISG survey found 20 percent of enterprises rely on cloud-based or hybrid solutions for their human resources systems today, a number that is expected to double by 2020, according to the survey. A similar ISG survey two years ago found some 40 percent of enterprises expected to be on such a platform by now, indicating that organizations aren’t moving as quickly as they had hoped.
Examining respondents’ plans for future investment, the survey found that HR organizations are embracing data and intelligence, with analytics and reporting the top HR IT budget priority for 43 percent of survey respondents. HR-enabling technologies, including portal, case management and knowledgebase also are a top priority.
A significant number of organizations – 68 percent – indicate they are combining or planning to combine HR and enterprise resource planning (ERP) systems into a single vendor solution. Of those, 37 percent say they are currently selecting a platform or deployment partner or intend to begin selection within the next 24 months.
“Some cloud human capital management (HCM)/ERP providers are aggressively building out combined HCM and cloud-based ERP platform capabilities, and the current viability of these solutions for enterprises of all sizes has driven increased market interest,” said Debora Card, partner, ISG HR Technology, and co-author of the report. “Even for organizations that are not looking to make a cloud ERP investment right away, there is an increasing desire to understand current vendor capability as part of their long-term technology strategy.”
ISG’s 2019 Industry Trends in HR Technology and Service Delivery report is an analysis of data derived from surveys of 271 companies on their HR technology and service delivery environment. The companies represent a cross-section of industries operating in key geographic regions around the world and range in size from 1,000 employees to more than 20,000 employees.