HR in the cloud is a growing trend, with market forces pushing HR systems and processes to software-as-a-service (SaaS) models. However, SaaS alone does not address the need to outsource routine transaction processing and call center support. While SaaS solutions continue gaining traction, acquisitions by large vendors are also consolidating the market. Considerations for buyers include verifying capabilities for global payroll, integration, mobile access, and reducing customizations versus outsourcing transaction processing and help desk support through an HR business process outsourcing provider.

1. Perfect Storm: HR in the Cloud
Market Trends and Key Considerations
October 30, 2012
Sponsored by: Wall Street Tech Conference & Expo
Produced and Presented by: The Outsourcing Institute

2. Today’s Speakers
Moderator
Dan Goodstein
Vice President
The Outsourcing Institute
Maribeth Sivak Stanton Jones
Principal Consultant Analyst, Emerging Technology
Business Advisory Services ISG
ISG

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5. Agenda
1. Cloud Level Set
2. HR SaaS: Market Trends
3. HR SaaS vs. HR BPO
4. Considerations for Prospective Buyers
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6. Cloud Level Set: NIST
The National Institute of Standards and Technology (NIST) defines Cloud Computing as follows:
• A model for enabling convenient, on-demand network access to a shared
pool of configurable computing resources that can be rapidly provisioned
and released with minimal management effort or service provider
interaction.
• While this definition is hotly debated within the Cloud community, ISG
views it as a broadly accepted industry standard.
Characteristics Service Delivery Models Deployment Models
• On-demand self-service • Business Process as a • Public Cloud
• Broad network access Service • Private Cloud
• Resource pooling • Software as a Service • Hybrid Cloud
• Rapid elasticity • Platform as a Service • Community Cloud
• Measured service • Infrastructure as a Service
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7. Cloud Level Set: Service Delivery Models
A useful way to evaluate Service Models is to define management responsibility.
Infrastructure Platform Software
as a Service (IaaS) as a Service (PaaS) as a Service (SaaS)
Customer
Managed
Customer
Managed
Configuration Configuration Configuration
Customer
Managed
Application Application Application
Middleware Middleware Middleware
Database Database Database
Managed
Provider
Operating System Operating System Operating System
Managed
Provider
Virtualization Virtualization Virtualization
Managed
Provider
Servers Servers Servers
Storage Storage Storage
Network Network Network
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8. Cloud Level Set: Deployment Models
The deployment model, either shared or dedicated, has a significant impact on the maturity of
features, standardization of commercial terms and pricing, and data privacy/security.
Shared Dedicated
“Public Cloud” “Private Cloud”
• Nearly always shared (multi-tenant), with • Typically dedicated to smaller number of
frequent feature updates. customers, or single customer.
• Highly standardized in features, pricing • More easily customized for specific
and commercial terms. customers or requirements.
• Oftentimes fail to meet enterprise IT • Typically more robust, negotiable SLAs
security & service level expectations. that meet enterprise IT expectations.
• Most closely meets NIST definition. • Portions of NIST definitions likely do
not apply.
Provider logos a small sample of available market options; many suppliers have both shared and dedicated offerings.
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9. Market Trends: HR ERP
Given the emergence of ERP offerings in the cloud, clients’ buying decisions over the next few years
will become more complex.
• ERP software vendors are leveraging cloud offerings for both survival and
predatory purposes. Oracle and SAP are expanding cloud offerings via both
organic and acquisition-related growth.
• Offshore service delivery and the tools/methods used by Systems
Integrators (SI) have become commoditized as a cost of entry.
• SIs are competing on their experience with new ERP SaaS offerings and
their library of proprietary best practices/accelerators to add-onto the core
ERP products.
• SI players and ERP vendors are pitching SaaS offerings with promises of
speed and increased time to value.
• SI partner selection criteria increasingly focused on program leadership
teams, vertical knowledge and business processes savvy.
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10. Market Trends: HR SaaS
We expect HR’s movement to Software-as-a-Service to continue.
• SaaS solutions continue to gain traction:
– Workday’s native SaaS platform is rapidly evolving from a US-centric
mid-market core HR technology player into a strong competitor to Oracle and
SAP for large, complex global companies
– SaaS solutions delivered by Ultimate Ultipro, ADP Vantage , Ceridian Latitude
and Sapien address the needs of mid-market U.S. firms
• Acquisition activity:
– December 2011, SAP announces their intent to acquire SuccessFactors [March
2012 close]. Speculation is that SAP went down this path because of a serious
lag in their internal product development of Cloud and SaaS products
– February 2012, Oracle announces their intent to acquire Taleo [mid 2012 close].
Speculation is that this acquisition was driven by the goal to provide a complete
cloud offering via the integration of Oracle Fusion and Taleo
– August 2012, IBM announces their intent to acquire Kenexa
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11. Market Trends: Workday
• Workday is providing a formidable challenge with a number of significant,
recent wins with large multi-national companies:
– Client base has grown from 105 clients at the end of 2010 to 300 clients now;
projecting 600 by the end of 2012
– US and Canadian payroll platforms are “live”; no further geographic expansion
planned
– Modules for Organization Management, Compensation, Absence, and Talent
each with robust business analytics
• HR SaaS technology does not address buyer’s desire to outsource routine
HR, Payroll, and Benefits administration
– Building “services” relationships with Aon Hewitt, Accenture and IBM. These
HRO Providers are furthest along in wrapping their portal, CRM, and services
solutions around Workday to deliver a fully outsourced solution
– Accenture, IBM and the Big 4 firms all have growing implementation groups
focused on Workday
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12. HR SaaS vs HR BPO: What is the Difference?
The HR SaaS delivery model does not address buyer’s desire to outsource routine transaction
processing and call center support.
Software as a Service (SaaS) Business Process Outsourcing (BPO)
Employee Portal Employee Portal
Customer
Managed
Employee Contact Employee Contact
Transactions Transactions
Configuration Configuration
Application Application
Managed
Provider
Middleware Middleware
Managed
Provider
Database Database
Operating System Operating System
Infrastructure Infrastructure
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13. HR SaaS vs. HR BPO: Qualitative Analysis of Alternative Models
If a client has no existing call center technology and portal, an HR BPO SaaS delivery model can get the
client to their desired future state faster, at a lower cost and lower risk than the SaaS only alternative.
Attributes of
HR SaaS HR BPO Comments
Alternative
• HR BPO is designed to scale to business needs by leveraging
Scalability
infrastructure and resources across the provider’s client base
• Both delivery models offer flexibility with HR BPO providing more
Flexibility
rigor in balancing process variations with quality
• HR BPO brings commercial grade call center technology, best practice
Customer Focus
employee portal, knowledgebase and workflow
Complexity to • HR BPO provides time tested implementation methodology, and
Implement established service center delivery environment
Speed to Future • HR BPO implementation experience and contractually committed
State implementation fixed fees drive meeting timelines
Demand on • HR BPO provides PMO and systems integrator resources as well as on
Resources going service center and technology FTEs
Cultural • Both models have risk associated with cultural acceptance. For some,
Acceptance outsourcing may be more controversial
• HR BPO provides HR process expertise and talent. Company may need
Skills & Talent
to build internal talent to support SaaS model
Legend =High Risk =Medium Risk = Low Risk

14. Sample Considerations for Prospective Buyers
Majority of time spent on SaaS evaluations: feature comparisons, evaluating standard
commercial & security terms, creating business case.
HR SaaS Vision Customers Should Verify
Global payroll capability How many clients are live; is there a global roadmap?
Point solution integration Any pre-built integrations with existing point solutions?
Rapid access to new features Do capabilities exist internally to configure and test?
Mobile support Includes iOS, Android, Blackberry & Windows apps?
Eliminate customizations Can internal organization configure?
Eliminate upgrades Are quarterly/seasonal released turned “off”?
Decrease reliance on internal IT Who will design, build and support interfaces?
Faster to implement Can legacy ERP be decommissioned?
Reduce TCO Is the business case long enough to avoid upgrade?
Pay per user How much of the TCV is required up front?
More secure than current Will IT accept reports over 1st person audits?
Employee data is safe Has Article 29 Working Party been considered?
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15. Questions
Stanton Jones Maribeth Sivak
Analyst, Emerging Technology Principal Consultant, Business Advisory Services
ISG ISG
Tel: 281-795-2636 Tel: 630-659-5017
E-mail: stanton.jones@isg-one.com E-mail: maribeth.sivak@isg-one.com
Url: www.isg-one.com Url: www.isg-one.com
LinkedIn: http://www.linkedin.com/in/stantonjones LinkedIn:
Twitter: https://twitter.com/stantonmjones http://www.linkedin.com/pub/maribeth-
sivak/14/368/418
Dan Goodstein
Vice President
The Outsourcing Institute
Tel: 516-279-6850 x717
E-mail: dgoodstein@outsourcing.com
Url: www.outsourcing.com
LinkedIn:
http://www.linkedin.com/in/danielgoodstein
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19. Thank you for joining
Perfect Storm: HR in the Cloud
Market Trends and Clarifying SaaS Myths
Dan Goodstein Maribeth Sivak Stanton Jones
Vice President Principal Consultant Analyst, Emerging Technology
The Outsourcing Institute Business Advisory Services ISG
ISG
This webinar was sponsored by the Wall Street Tech Conference & Exhibition
in conjunction with The Outsourcing Institute.