Which is right for your business? On-Premise HRIS solutions vs Cloud-Based HRIS solutions

There has been a drastic change in the way HR works over the past decade. It used to be that HR professionals were responsible mostly for hiring, firing, and processing payroll. That has changed though.

Today, HR professionals carry on the additional mandate of engaging employees, managing talent, and maintaining a corporate culture–in addition, of course, to their traditional responsibilities.

What is HRIS?

Are you familiar with HRIS? The Human Resource Information System (HRIS) is a software solution built to help the HR manage and automate administrative tasks like payroll, accounting, management, benefits, and training. This tool helps the HR free up time so they can focus on tasks that have a direct impact on the company’s bottom line such as keeping employees happy and productive.

HRIS is an effective communication tool providing a centralized location for company policies and announcements. 

HRIS also help automate common employee requests like time-offs with less paperwork and faster approvals.

The main goal of HRIS is to help the HR plan, control, and manage the costs of its day-to-day operations. It helps the HR make better decisions fast. The HRIS also helps improve HR overall–benefitting not only the HR staff–but also those they manage.

How to choose the right HRIS solution

You can’t use a can opener to cut the grass. That is why choosing the right HRIS for your business is important. The HRIS can be a valuable tool but if you can’t customize it to your business’ needs, then that defeats the purpose.

Here are steps you can take to make sure you get the right HRIS in place: 

1. Determine the needs of your business

There are a lot of HRIS venders out there. Without first knowing what you need is organizational suicide. HRIS solutions come with many attractive features but not all of them will work for your needs. It’s a huge waste of money buying a feature-rich HRIS solution only to realize later that more than half of those features don’t matter to your business. Not to mention the time wasted by your HR staff learning each function. The same is also true if you end up buying a cheap HRIS solution with fewer advertised features only to realize that your much-needed features are not there. 

Determine the needs of your business first and then list them according to priority before you look for HRIS solutions in the market.  

2. Let the affected parties know

A new HRIS solution will affect HR and IT (and other departments depending on your company organization). Before selecting an HRIS solution, let the affected parties know and hear them out. Their voice will be a huge help in the selecting process. If affected parties have a part in the decision making, they will most likely accept the new system you’re trying to put in place. 

3. Determine your budget

Choosing an HRIS solution should not depend on cost. But this doesn’t mean you don’t have to have a budget. When establishing your budget, it must include the Total Cost of Ownership (TCO). The TCO may include factors such as the initial cost of the HRIS, labor costs, subscriptions costs, and fees for licenses and support. 

4. Get as much information as you can 

So now you have your needs listed down and budget in place, it’s time to talk to vendors. Learn as much as you can about each vendor and the HRIS solutions they offer. Important things to consider include the vendor reputation, years they are in business, and availability of after sales tech support. 

With software, it’s important to know who manages the data and what security measures are in place. Make sure the vendor protects the privacy of your employees. It’s also important that your business complies with the current GDPR laws.

Establish good relationships with vendors by being friendly and professional throughout the entire process. 

5. Take advantage of demo offers

Most HRIS vendors nowadays have demo offers. Take advantage of these offers to experience the product firsthand before signing a check. When vendors present their demos, make sure that key employees from affected departments (i.e. HR and IT) should be present. Remember, they are the end users. 

These demos will create a perfect environment for your staff to ask the right questions and promote a greater understanding of the organization’s soon-to-be new HRIS.  

On-premise and cloud-based HRIS solutions

If you are in the hunt for a new HRIS solution that will help your company, then you encountered on-premise HRIS solutions and their cloud-based counterparts. Let’s look at the key considerations for each type. 

On-premise HRIS solutions 

On-premise HRIS is a good option until your IT is ready for cloud-based services. They can customize software according to the needs of an organization. Cloud-based solutions don’t offer this much level of customization. 

Key questions to ask:

1. Is your company’s current on-premise software outdated and becoming more expensive to maintain? 

2. Is your current system robust enough to catch up with today’s complex and fast-evolving HRIS needs? 

3. Is there no bureaucracies within your IT department to hinder these upgrades/changes? 

4. Is it part of your company’s long-term goal to keep a big IT department with enough staff to maintain your HRIS infrastructure? 

Cloud-based HRIS solutions

The world is moving to the cloud. IT cloud expenditures worldwide will reach $160 billion dollars this 2018. This is a 23.2% increase from last year. Five-year estimates say public cloud services spending could reach up to $277 billion dollars in 2021. The future is in the cloud. 

Key questions to ask:

1. Is there enough cybersecurity systems in place to protect your employees’ personal information?

2. Can the cloud-based solution you chose provide you with enough space for your data? Is it easy to increase or decrease depending on your requirements?

3. Can the cloud give you flexibility? Can it give you adequate level of control over what’s in your HRIS solution? 

A side by side comparison

Criteria	On-Premise HRIS	Cloud-based HRIS
Number of employees	Best for businesses with over 100 employees.	Ideal for startups and small businesses with less than 100 employees.
Data privacy	Data security is implemented by the IT department. Lesser risks involved.	Cloud provider provides data security. Can be risky if the vendor doesn’t have the toughest cybersecurity system in place.
Costs	High implementation costs which include software license fees and hardware upgrades. Physical space, air conditioning, and regular maintenance also affect the upkeep costs of the system.	Billing is monthly or per user. All maintenance and upgrade costs are shouldered by the cloud provider.
Functionality, flexibility, and customization	Customization depends on the vendor. The IT will do much of the legwork.	Limited customization options. What you see is what you get.
Speed of implementation	Implementation takes time.	Fast implementation.
Hardware	Your organization handles equipment needs like additional hardware, servers, etc. Everything is owned by the organization.	Hardware is not a concern because the cloud vendor will take care of these upgrades.
Control	Your organization has authority over the HRIS solution. Control of your HRIS program will remain on-premise.	Control of the HRIS program resides with the cloud provider — including the safety of your employees’ personal information.
Data centers	Your organization has total control over the location of your data centers.	Data center locations depend on the cloud provider and is out of your control.
IT staff	Servicing of your HRIS program is the responsibility of your IT department. Big and complex HRIS solutions demand more manpower.	Servicing of your HRIS is the responsibility of your cloud provider.
Compliance	Pre-defined capabilities and limited infrastructure require additional configuration as your company grows. Your business will also need to spend more time and resources to meet new compliance requirements.	Cloud-based HRIS is agile. It’s scalable. Any hardware upgrades and corresponding compliance requirements are shouldered by the cloud provider.

Conclusion

There are pros and cons to on-premise HRIS or cloud-based HRIS. While it’s clear that the world is moving towards cloud-based services, on-premise HRIS is still a good option for large companies. Your decision will depend on the current needs of your organization and where your company is heading in the future. 

In summary, don’t forget these tips when choosing the right HRIS solution for your business:

1. Determine the needs of your business

2. Consult with affected parties

3. Establish a clear budget

4. Learn about each vendor and their products as much as you can

5. Take advantage of demo offers to test the product firsthand.