Integrated data systems or legacy retrofits? Here's a cost-benefit analysis of potential break-even points.
Integrated data can offer real value for HR. The ability to quickly search and compare information from corporate sources across the globe, all under a single HCM framework is something many HR managers see as the next logical step in evolution of their department. The problem? Integrated data systems aren't free, or cheap. So how do finance leaders find the break-even point when it comes to overhauling legacy systems and deploying new HCM solutions?
Considering a move to integrated HCM tools? Finance leaders need to be prepared for upfront expenditures. In addition to software itself, these include ongoing maintenance and support, training for HR staff, customization of any components to meet business needs and any additional software linkages to try to ensure reliable performance. If you're overhauling legacy systems, meanwhile, be prepared for hardware spending and the addition of third-party solutions and software to empower existing solutions.
The Price of Privacy
Privacy is now a critical component of any HR software solution. For example, data privacy regulations in Europe now require businesses to fully disclose any personal data use and do not permit the collection of personal data on the basis of a job offer or acceptance, as noted by the European Commission. Instead, data must have a specific purpose and all use must come with direct approval.
If you're refurbishing legacy systems this means spending to update HR templates and processes to address new privacy requirements. Choosing a cloud-based HCM solution, meanwhile, may come with higher initial costs but offers the benefit of automatic updates to reflect emerging compliance law.
HR data within your organization is now a high-value commodity. The right HCM tools can help streamline hiring processes, predict employee satisfaction and longevity and inform global corporate strategy. Moving from a disparate set of legacy systems to a uniform HCM tool naturally comes with costs — among them the time cost associated with onboarding staff and then training them to use a shared data platform. But despite a large initial layout of capital, there's a bigger picture here: incompatible, fractured HR data across your organization generates no measurable value and limits your ability to make strategic decisions. The takeaway? By reframing data as a commodity rather than an inherent quality, spending to streamline delivery and use only makes sense.
As noted by HR Dive, more than half of enterprises will move "all or some" of their existing HR systems to the cloud in the next three years, while 32 percent of businesses expect to be fully cloud-based by 2020. One of the biggest draws in choosing these SaaS-based integrated data systems? Security. While legacy solutions offer the benefit of existing corporate security controls, these in-house offerings simply aren't able to keep up in a cloud-first world. Perimeter defense of fractured data results in multiple attack avenues for hackers, and the loss of HR data can be both a C-suite and PR nightmare. HCM tools in the cloud, meanwhile, offer the benefit of uniform access management and security to increase the overall protection of HR data.
How much will it cost to connect disparate legacy systems across the globe? Beyond the need to build in new functions and implement new software, there's also your network to consider. Can existing connections handle the bandwidth necessary to process, store and send the massive amounts of HR data now generated on a daily basis? Starting over with an integrated HCM system, meanwhile, comes with a significant capital outlay but results in a global HR network designed to both meet current use requirements and deliver long-term data value. Make no mistake: the transition from on-site to in the cloud is no small step, but can help keep costs consistent over time.
What's your break-even point when it comes to legacy HR versus integrated HCM? Spend is required for both alternatives. Legacy retrofits provide short-term gain, while cloud-based solutions offer the potential for sustained ROI.