One solution is to use software-as-a-service (SaaS) for HR. These are cloud-based human resources information systems (HRIS), so all you need to access these tools is an Internet browser.
Let’s explore HR SaaS in more depth, and learn what you need to know when evaluating HR SaaS products.
The growth of the HR SaaS market
The future of HR lies in subscription-based SaaS platforms, according to research from 260 global companies. In the next four years, 57% of organizations expect to invest in such software – 46% of which are already using it.
This is driven by cloud technology advances and a trend for businesses to adopt cloud-based business models that support hybrid working models.
It’s not just growing – it’s exploding. The size of the global market for human resources software was estimated at $15.59 billion in 2020 and is projected to reach $33.57 billion by 2028.
What benefits does HRIS software offer businesses?
SaaS HR products can automate several processes, allowing HR managers to save time and focus on their core tasks. After all, allocating more time to specialized and strategic
HR tasks are what all HR professionals should strive for. For example, you can handle data and payroll processing, recruitment, training, and employee performance evaluations quickly and efficiently with cloud software.
A Human Resources Information System (HRIS) platform has many benefits. For instance, it:
- Provides a one-stop shop for employee data, making human capital management more efficient
- Can make an HR leader’s job easier and more efficient by storing information in a centralized database, automating tasks, and providing employee self-service
- Makes tracking hours and doing payroll much more straightforward
- Can help make compliance with government regulations and requirements simpler.
- Helps HR teams collect and analyze organizational data to provide insights into headcount, salaries, staff retention figures, employee satisfaction, and more
- Helps set the tone for new hires and contributes to employee success and retention thanks to automated onboarding
- Gives employees the ability to manage their own personal information, such as requesting leave
- Can be used by employees to access training resources and track their progress through assessments so they can monitor their development and set goals for themselves
- Can help improve communication and morale within a company by freeing up time and resources that can be better spent on things like company culture and values
The importance of SaaS products for hybrid businesses
The way we work is changing. With more and more people working remotely, companies must learn how to create dynamic, high-performing teams in a new world.
For HR teams, it’s essential to invest in performance management solutions that employees can access from anywhere and integrate with the productivity solutions people are already using, like Slack.
Types of HR software: HRMS vs HCM vs HRIS
Common examples of HR organizational tools and human resource management products include the following:
HRMS: A human resource management system (HRMS) is software that helps manage employee data, including recruitment, payroll, and personnel management. Leave approval, attendance monitoring, and promotion are just a few tasks an HRMS can help with.
HCM: Human capital management (HCM) software is designed to help organizations strategically manage their workforce. This type of software provides functionality similar to HRMS but focuses on long-term planning and development.
HRIS: An HRIS is a software that stores employee data and provides tools for human resource management. It can streamline processes and make information more readily available. Although HRIS systems vary in features and functions, they all offer the basic benefits of automation, self-service, centralized databases, and talent management.
Learn more about HRMS vs. HCM vs. HRIS.
To help you choose a system, they can typically be divided into four types, each with unique features. Below is an overview of the different types of HRIS systems and who can benefit most from them.
4 types of HRIS systems
There are four major types of HRIS systems. They are:
1. Operational HRIS
Human resources management can be a time-consuming and repetitive process, but there are HRIS systems that can help automate many of these tasks.
HRIS systems keep track of employee records and performance data. This makes it easier for HR managers to identify top performers and make decisions about promotions and hiring.
For organizations that feel their HR department spends too much time on mundane tasks or searching for employee data, an HRIS system may be the perfect solution.
2. Tactical HRIS
Tactical HRIS systems are used to manage data and resources related to processes such as recruiting, training, compensation, and job openings.
They can help organizations make far-reaching decisions about resource allocation, job analysis, and development.
In addition, these systems often include data on unions, competitors, government requirements, etc.
3. Strategic HRIS
Strategic HRIS systems are an important tool for any company looking to make intelligent, data-driven decisions about its future.
By managing key data points such as market information and operating budgets, HR professionals can gain valuable insight into labor resources and adequately plan for future growth.
In addition, these systems can help set goals and raise awareness of key business objectives. A powerful HRIS system is an important piece of the puzzle for any company planning for expansion or growth.
4. Comprehensive HRIS
The term “comprehensive HRIS” refers to an all-in-one platform that streamlines various HR-related tasks and provides easy access to data.
This system is highly beneficial to organizations as it allows for convenience and centralized employee information management.
What solutions should HR software include?
The range of solutions that HR software offers is wide, but the following are the most common solutions that businesses need.
1. Recruiting and onboarding
Applicant Tracking Systems (ATS) automate the hiring process from start to finish. It is used to search and select applicants, submit job postings, and onboard new employees.
They also manage applicant information so that recruiters can compare applicants and select the best fit for the job. With the ATS, HR professionals can post jobs on various websites and automatically schedule interviews with qualified applicants, making the hiring process easier and more efficient.
Onboarding software can help new employees have a smooth transition into the company. It usually comes with features such as electronic signatures, onboarding checklists, and employee questionnaires.
2. Compensation and benefits
Payroll software is an essential tool that helps companies process and record employee compensation accurately and on time.
3. Employee management and performance reviews
Employee assessment tools help organizations track employee skills, goals, and progress over time. They can also provide managers with valuable insights during formal or weekly performance review meetings.
4. Legal compliance
Compliance solutions are essential for businesses to keep up with ever-changing state and federal regulations. Not only do they help companies comply with regulations, but they also automate classified document management workflows and reports. This makes it easier for companies to communicate and enforce corporate policies while staying up to date on legal compliance.
Choosing the right HR software for your business
To select the right HR software for your business, first, determine your specific needs. Consider what processes you want to streamline and what features would be most beneficial to you. This will help you focus your search and narrow down your choices.
For example, if you are interested in software that can manage payroll and HR together, look for programs with these features.
Ideally, they should offer the following:
- A self-service portal that allows employees to access information and submit requests easily
- Seamless integration with other software already in use at your company
- A user-friendly interface that requires minimal training
- Robust data encryption and security measures
- A cloud-based system for streamlined HR management
It is important to understand the difference between the standard features of the software and the additional features you will need to purchase. Be sure to choose software that already includes the HRIS features you need in the basic package. Otherwise, the decision for additional features may far exceed your planned budget.
Check out our comprehensive HRIS software selection & purchase guide.
What about specialized solutions? When choosing HR SaaS products, you’ll need to consider the benefits and drawbacks of buying “best-of-breed” products versus an all-in-one system. Let’s take a look at the difference between the two.
Best-of-breed HR software
There are many software products available that serve a single purpose exceptionally well.
A typical example of such a product is an applicant tracking system (ATS). These systems are used to help post jobs, track job applicants, and ultimately identify the best candidate for the position.
Many companies that develop ATS products do not attempt to build additional tools or features that fall outside the hiring process’s scope. Their focus is simply on making the best ATS possible.
Some will, however, add extra features to support the overall employee lifecycle – but ultimately they are specialists in one area with a layperson’s approach to other elements of the HR tech stack.
All-in-one HR software
Small businesses often cannot afford or justify the expense of best-of-breed software for every category. They may not have the in-house technical support and know-how to integrate separate best-of-breed software applications to form their own system.
A solution here for small businesses is an HR SaaS product that can manage HR tasks in one place but may not be as strong on any single function compared to best-of-breed software.
Think of it as a one-stop shop for human resources, in the same way that Hubspot provides a one-stop shop for marketing.
The price of HR SaaS solutions
When it comes to HR software, there is no one-size-fits-all answer with regard to cost. This is because different vendors have different pricing plans based on various factors, such as the features, number of users, mode of deployment, and integration.
Prices can range from as low as $0 for a free plan all the way up to an annual fee of five or even six digits in price depending on your company’s size and requirements.
1. Quote-based HR plans
Different companies have different needs when it comes to software. A subscription package that customizes the program to meet those needs can be very beneficial.
It allows companies to use the software at a price that is estimated according to their unique needs.
2. Monthly payment plans
Paying for a service on a month-by-month basis is called a “subscription.” This is an attractive payment option for people who want to use premium software services but don’t want to make a long-term commitment.
However, subscriptions can be more expensive than paying for the same service annually.
3. Annual payment plans
Annual plans are often the best option, as most software providers offer a 10-20% discount on these compared to monthly plans.
However, this can limit a company’s flexibility to switch programs should their current software fail to meet their standards or should the company grow beyond a select software’s capabilities.
4. Free plans
Pricing is often a deciding factor and free payment packages can be an excellent option for small businesses that want to improve their operations without breaking the bank.
With this type of pricing plan, you can use certain features of the software at no cost. This can be a great way to get started with advanced software solutions without spending a lot of money upfront. You can usually find these as freemium options in many HR SaaS packages.
It’s important to ask for customer references from vendors and be specific about the type of reference you want. This can give you insights into what the day-to-day partnership will be like, and help you assess turnaround times, the process of setting up integrations, etc. A vendor that is unwilling to connect you with a reference is a red flag.
The bottom line
SaaS for HR creates operational efficiencies, reduces costs, and allows the scalability of efforts for the entire team. With access to the right tools, everyone from leaders to employees can view and collaborate on the same information. This helps to remove communication barriers and fosters working together toward shared goals.
The right software can make a big difference for an overworked human resources administrator or executive. Automating and eliminating many of the day-to-day functions can free up time to focus on what truly matters – the people within the company.