With the introduction of Sage Business Cloud, more and more organizations are seriously considering moving their systems off premises to the Cloud.  Cloud-based or SAAS (software as a service) systems have become an option for midsize and even smaller businesses due to faster connectivity over the Internet and development of feature-rich ERP, CRM and Business Intelligence systems.

HCM is now following other parts of the business with cloud-based offerings like Sage People and Infinity HR.  Human Resource departments now face the same questions others have faced, which model is best for the organization – Cloud or On-Premise?  Here are some common considerations when choosing the platform for an HCM.

Are On-Premise systems cheaper than Cloud?

Typically, a cloud HCM will require only a minimal initial investment, compared to an on-premise solution.  There are not the upfront costs of purchasing and implementing a software package.  On the other hand, cloud solutions are subscription-based with an ongoing fee, typically per employee per month.  Additional functionality, like payroll processing, can add to the per employee cost.

So, in the long term is it cheaper to go with an on-premise solution?  Not always. In addition to the initial higher cost for purchase of the software, on-premise solutions have to factor in the ongoing costs to maintain, upgrade and support the on-premise servers.  IT staff or 3^rd party support is usually required to keep the servers running as well.  On-premise servers require maintenance that may take them offline periodically.  On-premise servers are also vulnerable to disasters and recovery plans such as off premise backup storage require budgeting.  These administrative, licensing and hardware costs for on-premise solutions have to be taken into account when determining the total cost of ownership.

Upcoming Live Webinar:
Topic: Cloud or On-premise Human Capital Management (HCM) System: Which is Right for Your Company?
Register Here | Date: May 22

Is one platform more flexible that the other?

Both cloud and on-premise HCM systems offer solutions that are scalable, configurable and easy to use.  Cloud systems offer the additional flexibility of not requiring any additional technology other than an internet connection.  Cloud systems can be accessed by users on a variety of platforms including work-stations, tablets and phones.

On-premise systems, on the other hand, typically offer greater customization opportunities, don’t rely on an internet connection to operate and often have better tools for integration with other on-premise systems like CRM and ERP. Third-party tools such as BI are often easier to use with an on-premise solution where direct access to the databases is possible.

Is data in the Cloud at greater risk?

There is a common belief that sensitive employee data stored on an on-premise server is safer from exposure to hackers.  However, studies show that on-premise servers are more often the targets of hacking efforts than cloud based systems.  Cloud HCM providers recognize that data security is critical to the success of their business and they are more likely to have deployed stronger countermeasures to prevent hacking or data theft.  Moreover, since cloud systems are on the internet, they typically have greater resources to devote to detecting and foiling malicious software than the average on-premise IT staff.

Comparing cloud and on-premise solutions is an important step in selecting your next HCM system. Want to find out more?  Attend our informational webinar listed below where we will be looking at side-by-side comparisons between popular HCM systems to help you decide which option is best for your organization.