Companies Find All Not Sunny After Migrating to the Cloud

By Dave Zielinski July 10, 2018
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​Few dispute the benefits that cloud technologies bring to HR. Software-as-a-service (SAAS) models deliver more modern, user-friendly interfaces, the latest functionality via regular software updates, and economics that can allow smaller organizations to upgrade from paper- or spreadsheet-based systems to the latest technologies.

But amid these payoffs come challenges in the post-migration environment that can diminish gains achieved from SAAS platforms. Recent research indicates that many HR functions continue to struggle with creating the right internal service-support structures for cloud technologies, that they face ongoing difficulties in managing disruptions caused by frequent software releases, and that there is growing frustration about the lack of customization options available on SAAS platforms.

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Post-Migration Challenges

More than half of respondents to the 2017-2018 Sierra-Cedar HR Systems Survey reported having at least one major HR system in a cloud environment, a landmark number for that survey. Nearly a quarter of companies in the survey have opted for the "rip and replace" method—moving all on-premise systems to the cloud at once rather than in piecemeal fashion—as their path to transforming the HR systems environment.

But that migration hasn't come without challenges. For example, less than 20 percent of respondents to a 2017 HR technology survey conducted by PwC characterized themselves as "very satisfied" with their cloud vendor's service support or the software's ability to meet their business needs. The survey included responses from HR and IT practitioners in 307 companies of various sizes across multiple industries and 40 countries.

The top challenge cited by survey respondents (54 percent) was a reluctance to give up customizations and adapt to what the cloud provider offers. Cloud systems can be configured, but they can't be customized; customization requires tailored coding, while configuration relies on native tools already present in a system to change features. 

For example, users can configure cloud software to hide certain fields or change labels, said Dan Staley, global HR technology leader for PwC. But if they have a scenario like a union pay requirement that involves a complex calculation, a cloud payroll or time collection application couldn't be customized to accommodate that need and would require a manual workaround, he said.

Many HR functions also continue to struggle with creating the right internal support strategies for SAAS technologies. Moving to the cloud means a shift away from relying on the IT department and toward the HRIS function or cloud vendor for service and technical support. One challenge cited in the PwC survey was "the lack of internal resources to assist with the project," noted by 44 percent of respondents.

"When an HR organization moves to the cloud, the common question is, 'Who will we call for help now?' " said Chris Keys, director of HR software for global advisory and solutions company Willis Towers Watson. "That gets you into a whole new dialogue around the structure of your service-support organization."

Experts say HR leaders need to rethink how their function is staffed to support SAAS. "In a cloud scenario, IT is often relegated to things like complex reporting out of a data warehouse, not routine support for cloud systems," said Lisa Massman, a principal in KPMG's advisory services group who specializes in HR and finance technologies. "The majority of core cloud applications should be managed through the HRIS function and business units. That change can be a challenge for many organizations, since they now need strong business analysts and technical expertise to support business users."

HR Staffing Needs

HR research and advisory firm Bersin by Deloitte is conducting research into the sustainability of SAAS models, and one of the early findings is that HR functions often underestimate their support and implementation responsibilities as new systems go live, said Christa Manning, vice president and solution provider research leader at Bersin.

HR is often unprepared to handle the pace of change that new software releases require—typically two to four new vendor releases per year—and often lacks the proper expertise on staff to support cloud systems, Manning said. "Many companies still assume the full administration of the system will reside with the cloud vendor after migration," she added. "But that is wishful thinking because much of the governance and support rest in the hands of the HR function, not the software provider."

Post-migration responsibilities also require a specific type of expertise within HR, Manning said. "There is a need for people who know how to configure software and who understand technical requirements around data privacy and compliance issues," she said. "They don't have to be able to code but rather to understand workflows and integration points. Every time there is a new software release someone needs to do regression testing on it to ensure it interfaces well with other systems."

Managing New Software Releases

HR groups have been accustomed to little change during a typical three-to-five-year contract with on-premise software providers. Now they face the reality of regular disruptions as cloud vendors release updated versions of their software. Some 36 percent of respondents to the PwC survey felt that new cloud software releases "broke functionality" that had been previously working. As a result, 38 percent of survey respondents believed regular patching and maintenance schedules were "somewhat disruptive," and only 50 percent of respondents felt vendors did a good job of communicating about upcoming software releases.

"Organizations using SAAS are constantly in a cycle of having to read new [software] release notes, understand new system modules and decide whether to turn them on, [and] determine how the release will impact existing business processes or service delivery models and how to configure things," Staley said. "And once they actually start to test the software they often find the next new release is already on its way."

New software releases from vendors arrive whether HR is ready or not, Staley said, which could be during open enrollment, while going live with another new system or during a company merger.

Massman said one of the biggest challenges organizations face is installing the proper governance structure to manage new software releases. "Companies are used to operating with on-premise contracts that have minimal disruption with some patches here and there," Massman said. "But with the cloud you need to set up a strong governance structure early in the process to help you get used to going through new releases every six months or less. I have been in situations where we went live with a new release, and within two months there was already a new release to analyze and test."

Experts said that good change management practices can make the difference between cloud migrations that flourish and those that founder. The Sierra-Cedar survey found HR organizations that support a culture of change management—where a formal change management process is executed with every technology change on a continuous basis—are four times more likely to be viewed by all levels of management as contributing strategic value to their organizations. 

Dave Zielinski is a freelance business writer and editor in Minneapolis.

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