HR SaaS Trends for 2016 and Beyond

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HR SaaS didn't slink in from the shadows and creep up on HR departments. The concept is actually much older. Software-as-a-Service (SaaS) traces its roots to application service providers in the 90s, which were in turn predecessors to timesharing services in the 70s.

SaaS is now solidly in the IT vernacular. Supported by additional innovation in virtualization and both client-side and server-side encryption, cloud computing is clearly mainstream.

The Cloud HR Niche

Today HR SaaS has a well-established niche. And while large organizations lead the pack in adoption midsized companies aren't far behind, according to Aberdeen Group. Services providers like IBM also provide what they're calling "end-to-end services for cloud-based human capital management platforms." While vendor-sponsored "stores" existed before iTunes was adapted for apps, cloud computing has enabled much greater application interoperability.

Security in the Cloud

In the early days of SaaS, the idea of storing HR data in the cloud was an uncertain prospect for many organizations. What would prevent snooping on personal information? Wouldn't cloud computing accelerate identity theft? Wouldn't organizations be able to spy on each other's information?

Many security concerns have been addressed by standards such as ISO 27002 or the Cloud Control Matrix from the Cloud Security Alliance (CSA). The CSA recommends best practices for cloud providers to protect client data security, privacy and reliability.

To a certain extent, many of the security and privacy risks discussed in connection with SaaS HR are not limited to cloud services. Protecting security and privacy in on-premises systems is not necessarily any easier. It can even be argued that a SaaS vendor can do a better job of protecting security because it can afford cyber security tools and talent that its clients cannot.

HR SaaS Trends

As HR SaaS continues to mature, the following trends are likely to proliferate:

  • HR integration of other SaaS "micro-services" (Slack, Hipchat, IFTTT)
  • AI-enabled software agents for specialized purposes, e.g., position-specific search
  • Mobile-first design, especially where workforce mobility matters most, and native mobile apps
  • More seamless connections to learning management systems for certain work categories
  • Improved work flow for employee-managed benefit administrations, especially health and wellness
  • Increased integration of "people analytics"

Most, if not all venture capital in the HR space is cloud-centric. According to an article on Medium, 24 mobile enterprise apps in the "HR and Recruiting" category have attracted a total of $94M in funding.

Best Practices for Surfing the Cloud Wave

One risk is perhaps less obvious than others: that in the rush to reduce dependency on trained IT professionals, there is a cross-industry trend to rely more on domain experts instead of IT generalists. As Albert Barsocchini of legal services firm Night Owl Discovery told SHRM, "Relying on software provides a false sense of security." In-house talent can learn the ins and outs of SaaS HR applications, but may lack the expertise to manage security and privacy risks properly.

A perceptive comment in the most recent Sierra-Cedar annual HR Systems survey may sound counterintuitive, but hits the nail on the head: "Innovation comes in many formats, the least of which is simply new technology."

Perhaps more than in other disciplines, SaaS HR will be adopted because of its specific benefits to HR, and not as part of a broader wave of cloud migration.