Nine Ways The Human Resources Department Should Be Connected to a Cloud IT Strategy

Cross posted from my blog at SAP Community Network…

hr.jpgA brief twitter chat session with Jarret Pazahanick, an HCM consultant and SAP Mentor with an interest in better HR processes, had me pondering how an HR department’s business strategy would relate to a comprehensive IT cloud strategy.  Developing a cloud-centered IT strategy is the subject of an ASUG pre-conference event that I’m helping organize the day before the ASUG 2012 / SAPPHIRE NOW conference on May 13.  Seats are still available if you are interested in signing up.

SaaS offerings have proliferated in the HR domain. Payroll and employee tax administration, such as ADP, is one of the largest and most venerable examples of a software as a service, or outsourced business process, take your pick how you want to classify them. There are also services for benefits administration, performance managementtravel and expense management, new employee recruiting, etc.  When you talk about shadow IT operations, its alive and well in probably any company’s HR department.

flying_people.jpgSo maybe this just proves that HR is not well served by centralized IT. So should the HR deparment should just go on its own? Let’s consider how the typical areas that centralized IT is concerned with might relate to HR cloud tactics:

1.       Compliance

Employees are one of the most highly regulated, and consequently the most highly localized aspects of a global companies operations.  There’s tax reporting to be done, compliance with country and sub jurisdictional rules for everything from vacation administration to hiring and firing processes.  Granted, compliance is also the central reason for an HR team’s existence as well. You would think this would be the basis of a tight partnership with central IT by itself.

 There are other company-wide compliance considerations such as: what documentation of business operations and controls is available? How do you enforce separation of concerns?

Moving to the cloud also brings up questions about employee data privacy, which quickly puts us into the realm of:

2.       Security

In the cloud model, access control takes on a new dimension, especially in the case of departmentally subscribed software as a service.  Who has administration rights to a service? What happens when they leave the company? Does the service need to be integrated with a company’s Single Sign On? Can it even be integrated? How good is their data center security? How secure is their data protection?  What’s the risk to the business in case of hacker penetration, service blackout, or data loss?

3.       Employee productivity

Employee happiness is one central mission of most HR minded companies, and employee productivity is a central purpose for IT operations. Here’s another area of overlap where you’d think there would be a happy marriage between IT and the HR department.

At the very least, providing self service access to many HR services makes the HR department far more productive as well as individual employees.  This self service access needs to be easy to find. If the HR technology solution is actually a series of disparate web services, then some portal strategy has to be employed to make it easier for employees to find the services.

4.       Business process efficiency, effectiveness, and quality

Some HR oriented processes are cross cutting.  On boarding and off boarding processes are the classic ones, with many process steps occurring in IT and facilities, in addition to HR. And these processes are often notoriously bad in fast growing midsize companies that don’t have good HR systems or processes in place with new employees waiting days or weeks for a work area, computer equipment, and proper access controls in place.

Who’s mapping HR processes serviced by different cloud applications and their intersections with other company business processes?

5.       Information

Employee data is important master data in the company, in addition to being subject to compliance concerns. How does the company develop a single reporting view of employee data as needed, related by organization, ensuring for compatibility and integration when duplication cannot be avoided?  This is complex enough between disparate on premise systems, but when scattered across cloud silos that have different capabilities of information integration, this can turn into an impossible problem.


6.       Innovation

Any forward thinking IT group worth its salt is working to help facilitate business innovation.  This doesn’t mean innovation comes from the IT team.  In fact, it’s probably some creative HR folks that come up with the idea that the IT team then helps them implement.  Facilitating this kind of innovation by leveraging capabilities such as putting systems in the cloud for quick deployment, or leveraging platform as a service to develop unique custom applications is how IT in cooperation with the HR team can help a company develop competitive advantages related to HR.

And what about the additional areas cloud-centered IT should be concerned with?  Many IT departments aren’t equipped to handle these kinds of considerations today, but they should be gearing up to manage:

7.       Service procurement & business case development

What should a company be paying for an HR service? Is an HR manager likely to research the costs of competitive services with a comparison to the scope of functionality provided?  When does it become more economically advantageous to consider a large comprehensive service instead of several small services? What’s the business goal the company wants to achieve and what is the business case for the proposed solution?

8.       Service level agreements

What are minimum performance standards that a company needs to ask from its SaaS providers? Are there multiple levels depending on price point and how critical the supported business process is to the business? Some of this would likely be an IT standard and some would be related to the answers to questions above in the other IT areas of concern.  An experienced cloud-centered IT department will know what SLA’s to ask for, and have the lawyers on hand to help ensure that other aspects of an agreement are appropriate for the service being procured.

9.       Service architecture & migration

Related to this are business requirements analysis, feature prioritization, and project management, which are all traditional services of a well run IT department. They’re also things which shadow IT teams are notoriously bad at. Based on the requirements developed working closely with the HR team, what is the best combination of SaaS services to meet these needs and meet IT standards described above?  How does the company migrate to, and what are the options to migrate away from these services? Is a SaaS offering even the best way, or are there on premise offerings, hosted in a public or private cloud, available that would do a better and/or more cost efficient approach? Or are the requirements sufficiently unique enough that IT can help facilitate custom development in a platform as a service?

I think you can see by now what the benefits of a coordinated HR Cloud IT strategy can bring to a company.  And the good news is, the many different options for cloud computing bring a high degree of flexibility, and an opportunity for a close partnership between HR and central IT.  Maybe the best structure is for the departmental shadow IT team to maintain control of most of the HR services, and cooperate with central IT to meet above standards.  This is a better model for everyone.

Want to learn more? Come join our ASUG preconference session, “How to build a cloud strategy for your SAP Program” If you have additional questions, please feel free to drop me an email at

Photo sources (all licensed through creative commons)

HR Sign:

People on amusement park ride:

Cloudy aisles:

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