It’s Not About the Software: Realizing the ‘Power of the Cloud’ in HR Tech & Payroll

In the business-to-business landscape, moving an organization’s processes “to the cloud” is touted by vendors as a key way to modernize operations and lower the costs of maintaining hardware-bound legacy solutions. But beyond those baseline advantages, what inherent benefits does a shift to cloud-based software provide?

Quite simply, none. Despite the biz-tech hype surrounding the concept of “the cloud,” a move from legacy software to cloud-based software (aka software as a service, or “SaaS”) won’t revolutionize an organization’s business processes in any substantive way – at least, not when taken on its own.

Why? Because a shift to the cloud is not transformational in and of itself, especially when it comes to HR- and Finance-focused solutions. Consider the data: According to the Sierra-Cedar 2016-2017 HR Systems Survey whitepaperjust 27% of organizations that move to cloud-based HR technology believe their Payroll and HRMS solution always meets their current business needs. That leaves 73% of organizations that have moved to the cloud yet still believe their HR solutions still have gaps in meeting their current needs.  

Prioritize more than potential

That said, the cloud does have immense transformation potential in HR: With the right cloud software solutions supporting their workforce-focused business functions, organizations can improve their productivity levels, revolutionize their processes, and empower their organizations with actionable data for strategic decision-making. According to the Sierra-Cedar survey, organizations with cloud-based HR environments “reap greater talent and business outcomes from improved decision making across their organization.” 

Initially, Sierra-Cedar’s findings seem to support the typical SaaS software vendor’s claims about achieving improved efficiency and better data with “the power of the cloud” behind a particular business function. But reading the research more closely, you’ll find that transformational benefits of the cloud aren’t guaranteed – and aren’t created simply by shifting an organization’s software from legacy solutions to SaaS.

Rather, they’re created when an organization invests in using cloud technology to change their processes for the better – ideally with the help of experienced support, end-to-end service, and creation of a culture of change. As the Sierra-Cedar study puts it, “if a new platform does not provide a transformative experience, moving to the Cloud offers little incentive in regards to overall costs or flexibility.”


According to industry experts, though, HR software customers are often unaware of the required internal skills and capabilities necessary to get the most from their new cloud solutions: With an overwhelming amount of contradictory information permeating the vendor landscape, many customers are making buying assumptions based on old system requirements and limited information on future possibilities.

“As organizations move their business functions from on-premise to cloud, they also need to shift their processes from specific and customized to standardized and best-practice,” said Stacey Harris, VP of Research & Analytics for Sierra-Cedar (and author of the aforementioned survey whitepaper) in a recent conversation with CloudPay.

“The improvements start when software customers convince internal divisions to simplify their processes and clean up data entry with their new solutions," said Harris. "Yet many buyers focus on finding cloud HR solutions that can be configured to mirror their current complex organizational requirements, versus taking this opportunity to look for new approaches to HR.  

Unfortunately, awareness of the need for “simplification” seems to be most absent in the most complex and demanding function of HR tech: Global payroll.


Cloud adoption is increasing in global payroll at an impressive pace: 53 percent of organizations were SaaS/cloud payroll deployments in 2016, marking a 12 percent increase over 2015. But as Stacey Harris points out, the increase in cloud adoption –while a positive advancement for the payroll industry at large – doesn’t mean that every Payroll solution hosted in a cloud environment has been rebuilt to take advantage of newer cloud technology.

“Only 8 percent of organizations are planning to invest in business process improvement around the payroll function this year, while 12% are supposedly implementing new cloud-based payroll systems. Without improving the process for getting data into or out of the payroll system, software customers can’t assume they’re going to get better data from the cloud,” said Harris.

“We have a rare opportunity right now to rethink payroll as we know it. My sense is that much of the industry is still hesitant to make dramatic changes to current payroll solutions, but without driving further integration or connection with other operational areas, or improving the end-user experience organizations can’t achieve transformative outcomes from their new Payroll solutions – no matter the technology,” stated Harris.


We feel this phenomena is even worse. By playing up sophisticated 'cloud' feature sets, many vendors make it easy for prospects to look past the obvious flaws and shortcomings in their solutions’ fundamentals. It’s a phenomenon Jason Averbook refers to as the HR tech sector’s “frosting on moldy cake” problem.

“[Buyer] organizations are looking at that shiny penny, that ‘frosting’ – saying ‘I’m going to look at artificial intelligence, or bots, or performance management tools.’ But what all of those things require is a foundation,” Averbook said in a recent video interview. “They require a foundation that has great processes, great governance, and great data – clean, credible data – that can be surfaced up to those tools.”

“One of the things we have a lot of in this space right now is people looking at that top layer – that ‘frosting’ – and not a lot of people realizing that what they have underneath is a little bit of moldy cake,” said Averbook.

Thankfully, however, some cloud-based global payroll providers are baking better cakes – finally giving payroll its moment in the sun of the automation revolution. The most advanced global payroll solutions reimagine the payroll process in an end-to-end way, driving operational improvements for customers by:

  • lessening the manual burdens of uploads & transfers;
  • standardizing payroll processes (and data) across geographies;
  • automating and optimizing payroll workflows; and
  • delivering intelligent insights and analytics to power strategic decision-making. (To learn more, click here.) 

Ultimately, any business technology shift has to engender transformation in order to be valuable – otherwise it’s just a change in software. To realize the real ‘power of the cloud,’ payroll customers should partner with a vendor focused on innovating and improving the payroll ecosystem, at large.