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Micah Fairchild Cloud HCM Applications: Analyzing Trends & Offering Predictions

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 By Micah Fairchild

Human Capital Management in the Cloud: What Does the Future Hold?

In 2011, Gartner’s Hype Cycle Report highlighted that, “SaaS is the preferred model for leading vendors in the HRMS midmarket [because] global functionality and flexibility of solutions continues to improve, and early customer deployments have been successful”. So it may come as a shock to know that in the grand scheme of things we’re still quite early along in the development of cloud Human Capital Management (HCM) computing.

Granted, with events like Workday’s IPO; the staggering amount of press that’s been dedicated to this new HR software deployment model; and the 11th-hour push from software giants like Oracle and SAP to get onto the SaaS bandwagon, you’d assume that the business world had been clamoring for these technologies for many years. But the fact of the matter is that the majority of organizations are just now starting to take their first few tentative steps into the cloud. In fact, as then Gartner associate Jim Holincheck wrote in 2011, “only in the last five years has a comprehensive HRMS [even] been offered through a SaaS model”. And although the cloud may be the clear direction for talent management applications and core systems of record, as CedarCrestone’s 2012-2013 HR Systems Survey reports, “to date there are still more replacements of licensed solutions than new deployments of SaaS”.

As we’ve already witnessed over the span of roughly 20 years though, the evolution of HR software solutions (and myriad other business applications for that matter) has included the seemingly novel jumps from networks to midrange systems, from mainframes to client-server, from client-server to ASP (application service provider), and now to what we view today as the cloud. Along the way it hasn’t always been clear which technologies were the ones that would stand the test of time though. For instance, many small businesses can't imagine their business world without Gmail or Google docs. 10 years ago, these solutions weren’t even a glimmer in their developers’ eyes. So, here at we were wondering what the future holds in store for this latest entrant into the business technology realm, cloud computing. What do you think? Where are we going to see cloud HR technologies evolve over the next 5 years?

Cloud HCM Application Trend #1: More Mobility?

Although, we won’t go back on our argument that certain factors of Mobile HCM are overhyped, the fact of the matter is that it hasn’t been until recently that business leaders have made the leap to consider this functionality as a core part of the HCM software package. In fact, even as early as last year, Gartner had the market for mobile HR applications pegged at only reaching mainstream adoption two to five years from now; in large part thanks to the fact that the world had only been introduced to first generation mobile products. But now, consumerization has come into play; and with the latest tablets and smartphones added to the mix, the sky seems practically the limit for where this trend could take us. As Holincheck writes, “The next generation of mobile HCM applications will leverage capabilities unique to mobile devices, like location awareness, to improve processes”.

And while you may not think of accessing HCM-related data via a mobile device as cloud computing, when you consider the inherent mobile issues of computing power, memory, latency, and bandwidth, it’s clear that web-enabled mobile devices are already leveraging the cloud to achieve required functionalities. And this partnership between the cloud and mobile opens up a whole new realm of application possibilities that can expand how (and more appropriately, where) employees work. In fact, the Pew Research Center’s Internet Project recently highlighted that that “by 2020, most people who use the Internet will work primarily through cyberspace-based applications on remote servers accessed through networked devices”. Indeed, much to the chagrin of work-life balance proponents, there will be constant connection and fewer separation points between workers’ personal and work lives. Is this a good thing? Maybe yes, maybe no. But mobile cloud computing’s front-and-center place in the future is an inescapable truth.

Cloud HCM Application Trend #2: Additional Services?

It’s easy to see cloud-based technologies as a “one trick pony” that only has to do with software (i.e. Software-as-a-Service or SaaS), but the truth is that additional services such as Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) will in all likelihood be gaining significant ground in the near term and on down the line. Even now though the concepts of PaaS (which in a general sense basically simplifies the IT aspects of creating SaaS applications via lower entry costs, scalability, easier maintenance, and fault tolerance) and IaaS (aka Hardware-as-a-Service which revolves around companies outsourcing components such as storage, hardware, servers, and networking components) are coming into vogue. In fact, North Bridge’s 2012 Future of Cloud Computing Survey found that PaaS and IaaS are currently leveraged by 40% and 51% respectively; with 72% and 66% looking at adoption over the next 5 years.

Unfortunately, while IaaS is a fairly well-accepted concept, PaaS continues to be widely misunderstood in the context of cloud platforms. As it is with PaaS’s larger sibling SaaS, myriad architectural approaches have clouded (all pun intended) the market. As Gartner research purports though, this widening gap between the expectations that businesses have for PaaS and their experiences is “largely attributable to the relatively narrow middleware functions delivered and the consolidation of vendors and service providers”. Irrespective of these issues though, the benefits that these services like IaaS and PaaS provide will allow company IT groups to further refocus their energies; and allow functional areas like HR to take greater ownership over how issues like Big Data are handled.

Cloud HCM Application Trend #3: Greater Data Volumes?

Looking at our previous points on mobility and services, it’s inevitable that massive quantities of minable data will be created as HCM cloud computing evolves; from usage patterns down to demographic information. And this “Big Data” (as it has come to be known) will be responsible for delivering transformational-style benefits to businesses within the next 5-year span according to Gartner’s 2012 Hype Cycle report. In large part, these benefits will happen because, as Amazon’s Adam Selipsky puts it, “Cloud enables big data without big servers”. Unfortunately, this relationship between Big Data and cloud HCM can also be rife with issues; not the least of which is that the pattern recognition elements that make analyzing Big Data so fruitful are lagging indicators and can often mistake randomness for trends. As such, it’s important to understand moving forward that greater volumes of data do not necessarily translate into greater business insight if not handled properly. Take heart though if you’re already employing a Big Data strategy; Gartner predicts that by 2015 enterprises adopting this technology will “outperform competitors by 20% in every available financial metric”.

Cloud HCM Application Trend #4: The Death of PCs?

Of course anytime you start talking about the direction technologies are taking, it’s only logical for ideas to turn to how information will actually be consumed in the future. Will we all have avatars that operate in a virtual reality world? Will computer screens be non-existent; replaced by projected retinal displays? Whatever the far-fetched case may be, with the rapidly increasing technology curve being partnered with consumerized mobile business applications, the fact is that a striking number of employees may not be tethered to a desktop computer in the next 5 years. Even more telling than my opinion though is what the Pew Research Center recently uncovered in a joint study with Elon University. Gathering responses from nearly 900 technology stakeholders, the research survey came to a head with one culminating question: do you believe that “by 2020 most people won’t do their work with software running on a general purpose PC”? 71% agreed.

Cloud HCM Application Forecast: Some Final Thoughts

Famously coined by the researcher and scientist Roy Amara, apparently one of the fundamental flaws with the way businesses approach the hardware/software issue is that “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”. Luckily, while we’re still in the throes of the cloud HR revolution, it’s easy to for us to take a predictive approach about what that “long run” looks like. Unfortunately, right now what our near-sightedness doesn’t always allow for is an unobstructed view of the breadth of real issues that cloud HCM could mean for businesses. In all likelihood, the consumerization of IT will continue; and in a similar fashion system of record applications will increasingly be tied to greater and greater talent management capabilities. But is this a good thing? Will organizations in the long-run be better equipped to handle business requirements or market shifts by leveraging cloud HR? Or will a new technology come along to further circumvent what we’ve come to know as the traditional processes? What do you think, are we on-point with our assessment of where the cloud HR market is moving, or are we destined to repeat Amara’s Law? End

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Although the cloud may be the clear direction for talent management applications and core systems of record, as CedarCrestone’s 2012-2013 HR Systems Survey reports, “to date there are still more replacements of licensed solutions than new deployments of SaaS.”


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