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Micah Fairchild The Top 4 Frequently Asked Questions about Talent Management SaaS

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 By Micah Fairchild

Answering the Driving Questions of HR Software-as-a-Service

Software-as-a-Service (or SaaS as it's more commonly called), has been quite the headline maker as of late in the talent management software community; and with nearly all organizations taking a hard look at their HR software and questioning relative efficiency and effectiveness (let alone strategy), there's no reason to wonder why. SaaS has been a leading buzzword in the technology zeitgeist; has been touted as affordable, agile, and scalable; and for those organizations that are unhappy with their current system--SaaS carries with it a promise of brighter days. Indeed, from e-recruitment to m-learning software solutions, software-as-a-service is taking over talent management.

Yet, for all the positive (and largely, warranted) attention that surrounds the HR Software as a Service movement, an unhealthy amount of vendor hype is crowding the space and diluting the message. Couple the vendor self-serving hype with the fact that many HR staff are not typically versed in the finer technical points of business software, and you've got a dangerous cocktail of confusion for talent management software buyers. And since we here at HRLab don't like our HR software buyers to be confused—we crafted this article to remedy the situation. Here are the answers to our top 4 most commonly asked talent management SaaS questions.

1) Does HR Software-as-a-Service Have to be Multi-Tenant?

Yes and No. This is perhaps the most confusing aspect of the talent management software debate; largely because people, companies, and vendors keep framing the "tenancy" argument in whatever light flatters them the most. For the record, tenancy refers to the architecture of the software, and when it comes to SaaS, this architecture can technically be classified in 3 primary models.

  1. Multi-tenancy: Supported by the bastion of SaaS purists and solely-SaaS vendors alike, multi-tenant architecture is simply software constructed to be a) executed singularly while b) served to more than 1 customer or "tenant" from a shared platform. Customers "share" the hardware, software, and operating system (OS), while having their data simply segmented for privacy.

  2. Version-based Multi-tenancy: This type of application construction is the closest thing to a true architecture compromise, taking the general multi-tenancy of traditional SaaS and pairing it with the upgrade options of an on-premises model. This means that even if a new version of the application has been released, customers can choose whether they want to be on it or not. This results in gross inefficiency for the vendor because they have to maintain more than one software version.

  3. Single (Isolated)Tenancy: The farthest from "true" SaaS, single tenancy means that each customer is running their own unique instance of the application software. If version-based multi-tenancy was grossly inefficient, how efficient could an application designed to have only exceptions be?

All that aside, regardless of how it's branded; regardless of how large the vendor is; and regardless of how compelling the argument is; multi-tenancy hosting is the closest to what SaaS is supposed to be. This is because it allows the vendor to focus on developing a single-platform software solution; avoids the issues of multiple product versions having to be maintained; and achieves economies of scale quickly.

2) Does Talent Management SaaS Really Cost Less?

Yes and No. While the Software-as-a-Service model does require less up-front expenditure--this fact does not automatically translate into a lower Total Cost of Ownership (TCO) for talent management software over a long run. In reality, countless other factors are at play, and several reasons exist as to why one delivery model would cost less than the other. For one, in the SaaS model, the total cost of ownership for the platform, the software, and the infrastructure is spread out to all customers—with each "tenant" holding responsibility for only a very small piece of the overall upkeep of the hardware/software package. The trade off is that no software has actually been purchased and a recurring "renter's fee" must be paid for the duration of the subscription contract.

Other examples abound, but the fact is that many times the total cost of ownership depends on situation-specific factors and the life of the application software that cannot be easily summarized in an article such as this. However, organizations can and should avail themselves of a multi-year cost analysis to see which model fits their situation best. Some questions to keep in mind for this analysis are:

  • Is pricing based on utility (i.e. more application usage means more money and vice versa)?
  • How long is the lifecycle based on the initial financial outlay?
  • What is included in your service level agreement (SLA) vs. what are separately-priced add-on services?

3) Must Talent Management SaaS Vendors Force Updates?

Yes and No. This question goes back to what we discussed earlier with regard to multi-tenancy. If a vendor isn't forcing all customers to update at the same time, then that means they're running multiple product versions. While functionality of these updates might be turned off to allow for customer configuration and activation, keeping all customers on the same code base is the basic tenant of multi-tenancy (no pun intended).

4) Is There a Difference Between Updates and Upgrades?

Normally yes. One of the more salient differences between talent management software-as-a-service solutions and other deployment options is the speed and frequency of delivering new software functionality—of which both updates and upgrades address. With HR SaaS solutions, updates are typically delivered monthly and consist of bug fixes, optimization or performance enhancements, and some new features. Upgrades are delivered twice a year on average and include more significant new capabilities.

Both updates and upgrades for talent management SaaS solutions mean updating the vendor's single software codeset and then rolling them out to the client base in much the same way that computer security software like McAfee or Norton updates. This speed-of-functionality gap may be changing though as non-SaaS vendors innovate to keep up. However, as Gartner's Jim Holincheck says, "Although the ERP vendors have introduced methods to get new functionality faster, they [still] have not been widely adopted."

Non-SaaS options revolve around the "upgrade" formula which means that on-premises system innovations are delivered with new software versions which take place every 2 to 3 years on average, and require significant resources to implement. In many cases, the resource drain of these upgrades is so great that organizations chose to forego newer functionality and remain on older product versions.

Concluding Thoughts on Talent Management SaaS Solutions

There are those that would argue that HR practitioners don't have the inclination or aptitude to understand what makes the Software-as-a-Service model so different than previous software delivery models. Others suggest that customers care little about a given vendor's architecture and/or code as long as the HR application doles out what is needed. Unfortunately, this attitude sets up the argument that delivery methods and underlying technology is only interesting to, or necessary for, IT to understand. Nothing could be further from the truth, and organizations are going to need to get on board with this fact if they hope to understand the business implications stemming from the new choices in technology. SaaS delivery is the fastest-growing segment of the talent management software market and determining whether it's the right solution for your organization is highly dependent on particular business objectives and cost considerations. Well…that and more articles like this that highlight the fact and fiction of the different delivery methods. End

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In the SaaS model, the total cost of ownership for the platform, the software, and the infrastructure is spread out to all customers—with each "tenant" holding responsibility for only a very small piece of the overall upkeep of the hardware/software package."


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