Web-based Human Resources (HR) Software

Managing records, benefits, and paperwork through your employees’ lifecycle can be challenging. Traditionally, human resources (HR) management systems required an investment that only large-scale businesses could afford. But with the emergence of online HR systems, however, small and mid-sized businesses can now access powerful HR solutions at a fraction of the cost of traditional systems. There are now over 100 online HR software solutions on the market. But what makes one system better for your company over another? We’ve put together this guide to help you find the web-based HR software that’s right for you.

Here's what we'll cover:

What Is Online HR Software?
What Type of Buyer Are You?

Market Trends You Should Understand Benefits & Potential Issues

What is Online HR Software?

Online, or web-based, HR software offers much of the same functionality as traditional, on-premise human resources software system. These online systems, which are also referred to as software as a service (Saas), serve as the backbone of your HR department and help automate the core functions, such as employee tracking, benefits administration, payroll management, etc. Some online HR systems also offer performance management, workforce management, and applicant tracking add-ons for enhanced functionality.

Unlike a traditional software system, which is installed on-site, online HR software is hosted and managed by the vendor and can be accessed anywhere there’s an Internet connection. And rather than paying an upfront fee for a license, online HR software is offered in a pay-as-you-go subscription - typically on a monthly per-user or per-employee basis.

What Type of Buyer Are You?

Before evaluating HR software, you'll need to determine what kind of buyer you are. We believe the majority of buyers in this market fall into one of these categories:

• Core HR buyers. These buyers are looking for systems offering a solid solution for streamlining key facets of HR (personnel tracking, benefits and payroll, etc). They may be updating an old system, or they may be trying HR software for the first time. Either way, many systems offer scalable functionality in talent management and workforce management to meet the changing needs of an organization.
• Enterprise buyers. These buyers work for organizations that are currently using an enterprise resource planning (ERP) suite. Because these systems are rolled out across such large organizations, seamless integration is usually more important than the specific features. As such, these buyers usually benefit most from solutions offered by ERP providers.
• Small business buyers. These buyers want an online human resources management solution that is straightforward and easy to use. They are less concerned with frills as much as they are with automating their core processes. Many vendors are rolling out basic editions of their solution specifically for this type of buyer, with the option of adding best-of-breed, or standalone, applications as needed.
• Best-of-breed buyers. These buyers are looking for HR applications to perform specific functions, such as applicant tracking, performance management and workforce management, etc. For that reason, standalone, or best-of-breed, applications are ideal for small and mid-sized businesses.

Market Trends You Should Understand

• Strategic human resources. Beyond core HR processes, the industry has seen a move towards more strategic functions focused on developing talent in an organization. Following this trend, web-based HR systems give more employees within an organization access to be more involved in processes like hiring and performance management.
• Mobile workforce. It’s estimated that 30 percent of the workforce in the United States is mobile. They work on the road, from home, and outside of a traditional 9 to 5 workday. Keeping HR staff connected to your organization is a matter of leveraging the right technologies. Web-based HR systems and applications now provide users essential functionality from all types of devices - smartphones, iPads/tablet PCs, or computers.
• Employee self-service. HR professionals spend much of their time managing employee benefits, records, and payroll. As HR continues to move toward more strategic functions, the demand for employee self-service options has increased. Many web-based HR solutions offer portals where employees can make changes to benefits plans and access pay stubs and personal information profiles.

Benefits & Potential Issues

Online HR software provides an effective solution for organizations looking to better manage and automate their HR processes. Because most online HR systems are offered on a subscription basis, fewer upfront expenditures are required. Furthermore, as these systems are hosted by the vendor, maintenance is the responsibility of the vendor, and updates are easily downloaded and installed without need for tech support.

Despite the benefits, taking HR to the cloud has been met with some speculation as to data security and reliability. Outages or disruptions in Internet service - though rare - are a concern for some users. In addition, some online HR software offers less customization of features than traditional, on-site systems - although this is improving as SaaS solutions mature.

Have an opinion on this guide? Email the authors. We appreciate the feedback.