Not too long ago, if you wanted an HR system for your business you'd host it on your own servers in your office. Even for small businesses the set-up fees were hefty, often into the five or six figure range. This caused many smaller businesses to avoid purchasing an HR system all together.
SaaS has changed all that.
With SaaS HR systems there is no hardware for the client to buy or software to download. It’s all hosted online. Because of this the up-front costs are greatly reduced. Instead the client pays a subscription fee to use the system.
For smaller businesses this makes investing in an HR system more manageable.
Without doubt, the SME market is the growth market for online HR software. In the past five years the number of enquiries I receive from companies with fewer than 50 employees has roughly tripled.
This explosion in demand from small businesses has led to an increase in the number of HR systems targeting SMEs. These are typically low cost and light on functionality. If you’re a small business then that’s OK because, as long as it covers the basics it will still be a vast improvement on trying to manage with spreadsheets and documents.
But… not all small businesses stay small. Beyond a certain point, an HR system that’s suitable for a small business is no longer effective.
Below are 4 signs that your business may need to make the transition to an enterprise level HR system.
1. Using Multiple Systems
If you’re using multiple systems to help you do your job then you’re probably duplicating work and losing visibility of useful data. For example, let’s say you use a separate system to track applications for vacancies. When you hire one of those applicants you’ll end up re-entering their details and uploading their documents into the HR system even though you’ve already captured the same information at the recruitment stage. If you’re a small company that hires for a handful of vacancies per year then that’s a minor annoyance. By the time you’ve grown to the point of hiring several hundred people per year however this can quickly become a serious drain on your time.
By keeping the information in separate silos it’s harder to interrogate it. To keep with the recruitment example, you might want to understand how effective the recruits from various channels have been for your business. To determine this you might want to report on absence and appraisal data broken down by recruitment channel. If you’re using three different systems for your HR, appraisals and recruitment, at best, this is going to be difficult and time consuming to do.
2. Some Teams and Departments Can’t (or Refuse) to Use it
For companies who have a workforce split between different countries you might find that they’re not able to use your HR system. For example, last year’s ruling by the European Court of Justice that the Safe Harbour agreement between the US and EU was invalid. This effectively made it a breach of the data protection act to store personal data in the USA about employees based in the EU. If you have employees based in the USA, you’d have to restrict their access to EU employee data on the HR system so there was no possibility of it being downloaded and stored state-side.
Another common example is to make the HR system relevant and user friendly for different languages or specific certain job roles. This level of customisation is not available in many systems targeted at SMEs.
If a chunk of your workforce are not willing or able to use the HR system then you’re going to end up with patchy data or data stored in different systems.
3. It’s Difficult To Get The Data You Need
Whatever the cause, if you’re struggling to get the data you need out of your HR system it may be time to adopt an enterprise system. Without accurate data it’s going to be difficult to make informed decisions and guide your HR strategy.
4. You’re Setting Manual Reminders In Your Outlook Calendar To Check Your HR System
One area where HR systems can add a lot of value is by automating tasks that trigger based on data within the system. If you find yourself setting Outlook reminders to check something like an employee’s Bradford factor then your system is probably adding to, rather than saving your workload.
Some major benefits of using an HR system to manage your workforce data are to capture and store employee information securely, reduce the amount of time the HR department spend on routine administration and to give you greater insight into your employee’s activity.
For small businesses the functionality required to achieve these goals is minimal. However, as companies grow so does the complexity of their requirements.
As a company grows there comes a point when an entry level HR system is no longer effective at capturing information, reducing admin and providing useful data. As a general rule this is when a business should consider using enterprise level HR software.