Channel partners are finding a growing line of business in human resources as they help customers transition from aging, on-premises technology to cloud-based applications.
HR, or human capital management (HCM) as the field is sometimes called, has long been an important source of channel revenue. For decades, resellers and integrators installed HR products for customers, often as part of an enterprise resource planning (ERP) system. Today, cloud service providers and cloud-savvy consulting firms are deploying products from vendors such as Workday, Cornerstone OnDemand, Kronos Inc. and ServiceNow, among others.
A couple of factors drive the adoption of those cloud-based offerings. The first factor is cost: Businesses staring down an expensive HR system upgrade now view the cloud as an alternative to in-house technology. The second: Employee demands for a consumer-like user experience have prompted organizations to investigate the newer cloud products.
"Chances are [the organization's] core legacy HR is seven to 10 years old," said Erik Duffield, senior vice president of Consulting Services at Appirio, a cloud consulting firm based in San Francisco. "They need to evaluate something else."
Cloud applications -- their updated user interfaces and self-service aspects, in particular -- promise to transform HR departments. But channel partners working in this field can expect to see a few changes as well. In the legacy ERP world, reaching the go-live date was the key measure of success. But the goal posts have moved with cloud HR: Since consultants can rapidly deploy cloud applications, the important metric becomes post-implementation employee engagement.
Indeed, implementation is just one of a number of services channel companies can wrap around a cloud HR project. The opportunities include strategy consulting, configuration, change management and the integration of HR apps with other back-office systems.
Trends in cloud adoption
Industry executives report widespread interest in cloud-based HR, but the tempo of adoption isn't necessarily uniform. Tom Pierce, HCM practice director at Axsium Group, a workforce management consulting firm, said the level of interest depends on the size of the organization and the vertical markets they serve. As for the size variable, enterprise customers are typically less aggressive in adopting cloud HR than their smaller counterparts.
"Large enterprise clients, for the most part, have a large investment in current applications," Pierce said. "We are finding they are being cautious and methodical in looking at their migration approaches for new HCM solutions because of that investment."
In light of that caution, some large organizations are looking at a partial move to the cloud. Instead of migrating all their HR applications to the cloud, those businesses focus on a particular point product. Pierce pointed to the example of one customer that is pursuing a cloud-based talent management application, as opposed to a comprehensive HR system. Talent management systems handle recruiting and training as well as other employee-development functions.
"Their core HR solution is fitting the bill, and they are not wanting to shift from that," he explained. "Their focus is on the talent area."
That said, a few large companies are looking into full-suite cloud HR products, Pierce said. Those enterprises may approach the cloud as a way to consolidate disparate on-premises HR systems, he added, noting that such companies may be operating separate core HR, benefits and talent management applications.
While the big companies wade into cloud HR, small and mid-sized businesses (SMBs) are faster to take the plunge, according to Pierce.
"[SMBs] realize they can get efficiencies and the latest technology ... at a relatively quick time frame and relatively low cost," he said.
Neil Foxexecutive vice president and CTO, SoftServe Inc.
Jason Wojahn, president of the ServiceNow business unit at Cloud Sherpas, an Atlanta-based cloud advisory company, said he sees interest in cloud-based HR across many different industry segments. Specifically, customers are building products around ServiceNow's HR Service Management offering. HR Service Management lets organizations orchestrate HR tasks and workflows such as employee onboarding.
ServiceNow is already widely deployed as an IT Service Management (ITSM) solutionproduct. In some cases, customers who initially used ServiceNow's cloud for ITSM now plan to leverage the technology's workflow automation in the HR field, Wojahn noted.
"We do see a lot of customers wanting to expand in that space," he said.
A new take on HR
A desire to unplug older and costly-to-maintain on-premises HR systems is one motivation for cloud HR adoption. But that's not the whole story. Companies also aim to take advantage of an entirely different take on HR technology.
"For the first time, enterprise software has been built with the worker experience in mind," Duffield said. "That is such an important shift in how the app is designed."
Duffield noted that HR applications were previously created as enterprise transaction systems geared to HR professionals. cloud HR software, however, emphasizes consumer-oriented user interface designs, which let employees handle tasks such as updating benefits or employee profile data on a self-service basis.
Neil Fox, executive vice president and CTO at SoftServe Inc., an application development and consulting company with U.S. headquarters in Austin, Texas, also noted the importance of the user interface. SoftServe develops applications for enterprises and independent software vendors (ISVs).
"If you talk to enterprises or ISVs, one of the big reasons people are switching from large, monolithic ERPs to more nimble, cloud versions of these applications is really around the interface," Fox said.
Fox said employees accustomed to using apps on smartphones or tablets have a low tolerance for poor interfaces.
"People's expectations ... have changed dramatically," he said.
The channel's value-add when implementing HR systems also changes in the cloud.
Fox said a deployment's go-live date had been the big milestone for software providers and their customers. But switching on a system isn't quite the feat it used to be, now that cloud-based apps can go into production relatively quickly. In addition, customers have begun to look beyond efficiency as the main benefit of a new back-office system.
"In the past, the value you expected from ERP was to be more efficient," Fox said. "The value today is really around quality: How much have we improved our workforce, and how much have we enriched the education of our employees?"
Duffield described the go-live day as a legacy element of the ERP world. With the technology rollout less of an issue, Appirio can address what Duffield described as the "larger concerns" surrounding an HR application deployment.
"Now the standard is the level of adoption and engagement that workers have with the implementation," he said.
Key services for channel partners
Cloud HR requires channel partners to provide a somewhat different twist on services. For example, integrators and consulting firms typically offered change management as part of an ERP deployment. Change management, in the case of traditional back-office applications, often focused on training employees on complex systems.
But HR systems that mimic consumer applications don't require printed manuals or lots of handholding to get users up to speed.
"You learn [the cloud HR system] like LinkedIn: You log in and figure it out," Duffield said.
Accordingly, Appirio's change management service focuses on raising awareness and preparing workers for the HR change to come. Part of process involves defining, early on in the project, the users' experience in terms of how they will engage with the HR application, Duffield said. The training that does occur aims to help workers learn and explore on their own.
In addition to change management, channel companies may offer software configuration services as part of a cloud HR rollout. This too represents a departure from ERP, which often required customization to get the software to meet the customer's specs. Cloud applications allow organizations to configure the features built into the product instead of writing custom code.
Pierce said Axsium offers configuration help, but with an eye toward teaching the HR department to become self-sufficient. He said some customers want to take responsibility for the application as opposed to relying on the IT department. In those cases, Axsium works in tandem with the customer on the initial configuration. The customer "looks over the shoulder" of Axsium personnel to learn the configuration ropes and then gets some hands-on experience with the consultant's support. After that education, power users in the HR department are able to configure the cloud HR system going forward.
"It's critical to ... make sure there is this knowledge transfer," Pierce said.
Another HR-in-the-cloud service: systems integration. Fox said the first integration point is usually recruiting. Customers want to make sure the back-end employee records are closely integrated with the recruiting platform, he said.
Some cloud HR vendors provide that integration within their products, but maturing APIs and emerging data integration standards permit different application to integrate fairly seamlessly, according to Fox.
Find out what HR managers are looking for in new HR systems
Read about talent management systems revolutionizing HR