Capital H blog

Cloud-based HCM systems should come without surprises

July 3, 2019

It is important to have a comprehensive and accurate total cost of ownership for cloud HR before your company commits to it, during the implementation, and after it is in place.

“No surprises” should describe your move to the cloud, and the following 5 questions can help you reduce them.

1. What was the overall cost of legacy support?
When companies consider the business case for cloud HR, they often underestimate the costs associated with their current HCM system. This should include the true headcount in IT and HR, and all of the infrastructure devoted to the current system. Often these costs are spread over multiple functions and business units, and thus are easy to overlook.

Also consider the ongoing costs that will be associated with parts of the legacy system that will remain in place. Only 5 percent of the respondents to our Global Human Capital Trends survey have a fully integrated HR cloud platform; 66 percent have some combination of cloud and on-premises software.1

2. How much do legacy system upgrades cost?
Some of the dashed expectations for cloud HR are caused when companies forget to take the substantial cost of legacy system upgrades into their business case. Typically, legacy HCM systems require major upgrades every 3 to 5 years, but their costs tend to be forgotten in the years between them.

3. How much will the upskilling required for cloud HR cost?
Cloud HR doesn’t support itself, and this requires HRIS/IT team members supporting the new cloud HR application to be appropriately upskilled, not only in the technical aspects of the application but also in any business or operational support processes to sustain, optimize, and innovate the cloud HR application.

4. What will it cost to burn-in the new cloud HR system?
As with any new system, there is a period of stabilization and burn-in with cloud HR. There will be a notable increase in costs as users and support teams learn to use the new suite or functional module—they are going to log more questions, have more issues, and make more mistakes than they did on the legacy system.

5. Which functions of the cloud HR system are not yet fully developed and how much will it cost to support their development?
After several decades, legacy HCM systems are fully mature. But cloud HR is young, and there are some elements that are still in development. This means that there will be some workarounds needed until new releases appear. Plus, when new functionality is included in releases, there will be some additional support and burn-in time.

Even though cloud HR still requires ongoing support, that doesn’t mean it won’t deliver benefits to your company. It means that you should take the time to calculate the business case for moving to a cloud-based HCM system, whether you’re looking at a full-suite solution or a functional module. It’s well worth the effort to avoid unrealistic expectations and unpleasant surprises down the road.

Marty Marchetti is a managing director in Deloitte Consulting LLP’s Human Capital Application Management Services (AMS) practice.


Originally published at Capital H blog