Why the future of HR software is PaaS

Our HR Tech Consulting lead partner Jeremy Lief shares his insight into the future of HR Software in our latest blog

Over the past decade, software as a service (SaaS) has increasingly become part of the DNA of HR functions – and I think what we’re seeing is just the beginning.  Our recent global HR technology survey showed how rapidly organisations are migrating their HR processes to the cloud; 63% of organisations taking part had at least one HR process in the cloud two years ago while in 2017, that proportion has risen to 73%. Of those that still had in-house HR tech solutions, a third said they were actively planning their migration to the cloud within the next 18 months.

But that’s not the end of the story. I’m convinced we’re speeding towards a world where PaaS – Platform as a Service – becomes far more prevalent. PaaS is, in its simplest sense, a platform onto which extensions can be built and run that act seamlessly with the core SaaS system, allowing organisations to evolve their HR technology to more precisely meet their needs.

PaaS in the Enterprise has strong parallels with the way in which smartphone technology has developed – the manufacturer produces the core platform such as iOs or Android and around that tech a huge, open-source market opens up for the myriad of functions that users want to add to their phones.

Why would HR software follow the same route? Well, one of the perceived limitations of most SaaS applications is that they tend to be standard, out-of-the-box solutions. While they are comprehensive, it’s inevitable that they can’t be all things to all people. They’ll manage the important, high-volume tasks that all organisations need them to do, but it’s impossible for them to do absolutely everything that each and every organisations want – that just wouldn’t be economically practical for SaaS solution providers.

The result is that some low-volume HR tasks don’t form part of the core SaaS package and still need a manual work-around. But low volume doesn’t mean they’re unimportant – these tasks include critical (and highly emotive) subjects such as the management of international assignees.

As a result, organisations are tinkering with applications and processes adjacent to their core SaaS software, adapting it to work for their own sector, geographies, workforce and individual quirks. That can be expensive and time-consuming. PaaS is a relatively easy and cost-effective way of filling in the SaaS gaps; it will take SaaS to the next level.

Global mobility is a prime example of an area of HR that’s ripe for a PaaS application – in fact we at PwC, as a Workday implementation partner, have already invested in developing our own global mobility add-on – but there are many others. Until now, customers have relied on the SaaS vendors for HR software innovation but that’s about to become an open market, to everyone’s benefit. Just as millions of apps have been developed for smartphones and tablets, innovators will see a need or a gap in the market, develop an app, and make it available on the vendors’ platforms.

A new ecosystem is developing and a market is beginning to build. Our tech survey found that 16% of HR cloud customers are taking advantage of PaaS today; if that percentage rockets in the next couple of years, no-one should be surprised.

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