HR SaaS (Software-as-a-Service) products are not only freeing up IT departments from having to support non-core technologies, but they are designed in such a way that they are forcing HR leaders to rethink what HR software should do and who should be using it. Moreover, the shift from on-premise solutions to cloud-based, SaaS solutions is speeding up the market, prompting CHROs to consider replacing legacy systems with modern HR software solutions.

Mid-size businesses are adopting SaaS HR solutions more readily than enterprise organizations, according to a survey conducted by the Information Services Group (ISG) and reported by HR news resource HR Drive. According to the report, 34 percent of mid-size businesses surveyed are already using SaaS, compared to just 17 percent of enterprise organizations surveyed.

But don't count enterprises out just yet. In an article for CIO, Jason Averbrook, former CEO of Knowledge Infusion, says that up to 90 percent of the Fortune 1000 will replace or re-implement its core HR system in the next four years.

Here are a few broad trends that are prompting this major shift.

The Employee Is the User, Not HR

One of the major trends in HR technology, brought on by the consumerization of IT and the shift to cloud-based, SaaS products, is the concept of who the end user is. In traditional, on-premise HR systems, the end user is HR. For HR SaaS products, the end user is every employee.

Employees can use HR SaaS products to keep their own records updated, make personal time-off (PTO) requests, change bank account information for direct deposit, update tax forms and request feedback from managers. Many HR SaaS products are also accessible via mobile devices, so employees can keep their records up-to-date anytime and from anywhere.

Expanding Features to Focus on the Employee

HR SaaS is expanding the human capital management space to include tools for work-life balance, engagement, feedback, wellness management, social recognition and external career development — all integrated into mobile apps and supported by data. According to an article on LinkedIn, organizations want HR tools that drive employee engagement directly, help improve employment brand, find candidates, help organizations manage performance and develop skills and help employees be healthy and productive.

For example, Target has given fitness trackers to 335,000 employees as a means to put a focus on employee wellness, according to BloombergBusiness. The retail giant is taking a more holistic approach to talent management in order to improve engagement.

In an article in Forbes, Josh Bersin, principal and founder of Bersin by Deloitte, states that organizations must "create a meaningful, humanistic work environment to drive engagement, performance, and a magnetic attraction in the market." He calls it a "simply irresistible organization." In order to create such a place, organizations will need a "People Management Suite" that includes the ability to go beyond the traditional talent management suite and help HR manage those new initiatives.

Access Everywhere Increases Convenience, But Also Risk

Although the shift to SaaS products has many benefits for HR and employees alike, it does not come without risks. It's, of course, convenient for an employee to sit in the break room and check to see whether PTO was approved, but that increased access comes with security risks that organizations must plan for, according to Network World.

One of the major risks is identity and access management. According to the Cloud Security Alliance, "managing identities and access control for enterprise applications remains one of the greatest challenges facing IT today." When considering HR SaaS products, CHROs should enlist the help of the CIO to evaluate how each vendor addresses identity and access management, and how they can integrate with existing authentication processes in the organization.

One way to mitigate security risks of HR SaaS products is to ensure they are compliant with the ISO-27001 family of standards for information security management. According to the International Organization for Standarization (ISO), the ISO-27001 standards will help organizations manage data assets by specifying "the requirements for establishing, implementing, maintaining, and continually improving and information security management system."

Requiring vendors to be compliant with ISO-27001 standards is one reasonable action the C-suite can take to help reduce HR SaaS security risks.

Organizations are starting to realize the enormous benefits of using HR SaaS products, from freeing up IT from supporting non-core, on-premise technologies to empowering employees to manage their own data. Although there are security risks associated with HR SaaS products, the risks can be managed with planning and collaboration between the CHRO and CIO.

Tags: SaaS HR SaaS Cloud HR Consumerization of IT Bersin by Deloitte CHRO