Cloud is Good, ERP is Bad

20130606-210257.jpgThat’s the conclusion you might arrive at if you’ve followed HR Technology publications in the last year or so. Ever since Workday came onto the market, SAP bought Successfactors, Oracle acquired Taleo and SalesForce introduced Work.com, there’s been a lot of emphasis on the fact that HR in the 21st century must be build on cloud – and HR ERP is dead.

It seems that only HR is hit by this “strictly cloud” virus. I haven’t observed it (yet) in other business areas, where ERP still has a lot of klout. So what’s going on, and why is it happening to HR?

I’m a bit old school – where I come from, when we need new functionality, we create an overview of functional requirements first, technology requirements second. And we look closely at what we already have and how to create a solution that adds value. We don’t start with: it must be cloud.

Besides, many companies, subject to complex labour agreements and local regulations, have invested heavily in systems that are tailored to their needs. They are not ready to rip and replace that investment. In parts of the world, like Europe, there are many HR factors that influence payroll on a monthly base which means your HR solution must support all of that. And of course, all those rules and regulations change frequently, so your vendor better have a good support and maintenance system in place that aids in being compliant.

So I am proposing a more balanced view: yes, HR in the cloud can be great, and yes, HR ERP has its benefits too. It all depends on what you need, and on what you already have (invested in). In fact, a hybrid might bring you the best value for money by protecting previous investments while adding new HR services.

After all, this is HR we are talking about – absolutely necessary but certainly not an area where your employees should spend most of their time in awe of the system. Let’s be reasonable: an HR solution must work, it must be reliable and flawless and that’s about it.

Over the next few weeks, I’ll be following up on this theme with several posts on cloud and ERP. If you want to be heard, or would like to add to the discussion, you’re invited to leave a comment or write a guest post – l’d welcome your thoughts!

  7 comments for “Cloud is Good, ERP is Bad

  1. Greg Robinette
    June 7, 2013 at 1:25 AM

    Thank you Anita for the most balanced and practical view I have read about regarding HR and HR tech. I have tremendous respect for some of the leading voices in HR technology and think highly of their analytical approach. however the reality is that at most organizations I work with and consult with HR is still a secondary focus for technology dollars and neither the Hr teams or the business teams are clamoring for anything spectacular or new. the ability to hire smarter better faster is a great read and something to talk about but not a reality as of today. A nicer UI and prettier graphics are great and when the business as a whole adopts the use of enabling self service technologies this helps sell it. My recent spate of engagements have shown a differing view toward new HR technology. the line of business managers perceive it as pushing HR work onto them. The processes of presenting the processes and systems from an enterprise view is the step we are in for a couple of places and until that view is supported by senior management and culturally adopted I have doubts about any new HR tech being funded. the focus will be on keeping the lights on and people paid without any legal issue. Thanks for the point of view and the insight, I look forward to reading more.

  2. June 18, 2013 at 3:38 PM

    Anita –

    Thank you for the discussion on HR ERP and the cloud. If you are looking for thoughts on cloud versus on-premises for ERP, feel free to contact me. I can provide (much like you have here for HR) an unbiased opinion of what buyers are saying about the debate between cloud and on-premises.

    Thanks,
    Doug Johnson

  3. Luke Marson
    July 4, 2013 at 4:28 PM

    Hi Anita,

    An interesting piece and you are absolutely right that no discussion should start with “it is cloud” or even “it is on-premise”. It’s all about what offers the most business value now and going forward.

    It seems that the focus here is more core HR. Since Talent doesn’t revolve around as much regulatory red-tape and the innovation in the Cloud for this growing area far outstrips what is delivered on-premise I think there is much added-value for moving Talent into the Cloud. Existing investment aside, I don’t think there are many reasons to stop organizations going into the Cloud if they have a robust core HR system in place with sound system design. Integration is not – from what I’ve heard from customers that have moved to the Cloud – as big of a deal as has been made out (possibly by on-premise protectionists). This makes the viability of Cloud-nased Talent Management much more attractive and realistic for many organizations.

    Core HR in the Cloud will grow to meet the demands you mentioned, but is still only entering the diaper (nappy for the British readers!) stage. Talent Management is further ahead by some way, but I think core HR is going to catch up quickly and offer real benefits to the type of organizations that you mention. That is the benefit of the Cloud: innovation is fast and will enable core HR to catch up – and overtake – fairly quickly. Still, that might be 3 to 5 years away, but I have no doubt it will happen eventually.

    Anyway, I’ve rambled on enough already. Looking forward to your next post.

    Best regards,

    Luke

  4. July 4, 2013 at 9:04 PM

    Hi Luke,
    Thanks for your comment. You are right: Core HR is much more subject to local flavors than talent. And I can’t help but think that a new technology is quicker to introduce when you concentrate on the “easy” stuff first. Once you have that done, you can slowly fill in the more difficult pieces to complete the puzzle. By then you already “own” the customer.
    So no doubt Core HR will follow Talent, and the timeframe you suggest sounds right. That also gives enterprises time to write off their current systems while making the most of it and then embrace a fully new solution.
    Thanks for sharing your thoughts and looking forward to hearing more from you.

  5. July 12, 2013 at 4:19 PM

    Hi Anita,

    in Germany we have the same discussion about HR in the cloud going on, so I really appreciated your article. We recently put our thoughts about the differences between an ERP system and a specialised recruiting software from the cloud in an e-book. If you are interested just have a look on our website: http://www.softgardenhq.com/resources/whitepapers/hr-suite-vs-recruiting-software/

    Best regards,
    Sibylle

  6. August 19, 2013 at 6:55 AM

    Very good Web page, Carry on the excellent job.
    Many thanks.

Leave a Reply

Your email address will not be published. Required fields are marked *