SaaS: a powerful HR solution for SMBs

Strategic HR Review

ISSN: 1475-4398

Article publication date: 1 January 2013



Peterson, B. (2013), "SaaS: a powerful HR solution for SMBs", Strategic HR Review, Vol. 12 No. 1.



Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

SaaS: a powerful HR solution for SMBs

Article Type: e-HR From: Strategic HR Review, Volume 12, Issue 1

How technology is changing the way HR works

Competition in the world’s markets has intensified, as have the expectations placed on leaders of organizations and those who lead companies’ business functions. In this volatile business environment, leaders in small and medium-sized businesses (SMBs) have felt particularly challenged to make the most of every investment, including technology buys.

Do-more-with-less pressures are keenly felt in human resources. While expected to ensure the best use of human capital, HR leaders also are called on to ramp up their function’s data capabilities. Further, HR wants to be a strategic resource, making evidence-based analysis and decision-making the order of the day. Indeed, cost-effectiveness and competitive capability demand that talent decisions be carefully evaluated and based on solid data.

Data challenges in SMBs

For HR leaders in SMBs, big challenges lie in collecting, accessing, maintaining, analyzing, sharing, and reporting workforce data – and in achieving those ends economically. Recent research from the Institute for Corporate Productivity (i4cp) identifies a number of commonly encountered issues related to workforce data, including “its availability, its reliability, and its capacity to be easily shared.” HR and business leaders also say that a lack of financial and other resources is hampering workforce planning and other HR initiatives (Institute for Corporate Productivity, 2012).

HRIS (human resource information system) software can be an expensive investment, especially for smaller organizations. So can build-your-own solutions. Equipment and information technology (IT) employees cost money. Beyond initial expenses, keeping off-the-shelf or homegrown HRIS systems updated and current may add to the financial burden while also requiring significant investments of staff time for installations, updates, and user training.

Issues of data accessibility, accuracy and compatibility with existing systems (learning management, performance management, payroll, and others) further challenge the capabilities of HR practitioners in SMBs. In many small companies, transactional tasks still require a lot of time, tying HR staff to less-productive and decidedly non-strategic activities. Some sources put the proportion of time HR leaders invest in transactional work at almost two-thirds (BambooHR, 2011).

SaaS offers a solution

However, new advances in technology can help companies overcome the multiple issues associated with workforce data. HR leaders in SMBs are turning to a web-based solution called software as a service, or SaaS, to bypass the costs and upkeep that accompany the use of on-site software. The SaaS delivery model makes software available online (in the cloud), usually through a monthly subscription. End users access the software through their web browsers – no expensive on-site hardware or software is required, making SaaS an attractive option for smaller organizations or those with limited budgets.

Widespread use of SaaS for accounting, customer relationship management, enterprise resource planning, HR management, and other business functions has evolved over the past decade and continues to grow. IT research firm Gartner reports a nearly 21 percent growth in SaaS revenues from 2010 to 2011 alone, and projects a continued upward trajectory for the technology in coming years (Gartner, 2011).

Along with cost savings, SaaS solutions for HR help SMBs address other workforce data issues. Accessibility simply requires a web browser, making data readily available to managers from any internet-connected computer. Because web-based HR data systems are purchased by monthly subscription, organizations that are displeased with the fit of a particular product can easily switch to another. System updates and maintenance are included in the subscription price, handled by the service provider, and appear seamlessly to the end user. Training to use an online HR data system is minimal, and vendors offer technical support at no extra cost. Further, systems are scalable, meaning that the product’s capabilities grow in line with organizational growth.

Enhancing data accuracy, flexibility and accessibility

HR leaders in organizations that choose SaaS solutions for HR data management are likely to enjoy greater accuracy in the workforce data they capture. Single electronic entries of information can replace multiple manual entries to spreadsheets, decreasing the likelihood of errors. Further, self-service capabilities make easy review of data and any necessary corrections possible. Reports can be generated quickly and content customized to give HR leaders the real-time insights they need to make more effective decisions about human capital issues. Customized reports are easily delivered to senior leaders across the organization, arming them with the workforce data they need to shape business strategy and execution.

A most appealing facet of some SaaS systems is their ability to enable HR leaders to integrate data from multiple business information systems. Through the use of application programming interface (API), a technology that allows dissimilar software to communicate, web-based HR systems can share data effectively with payroll, performance management, learning management, and other existing organizational information systems. This capability alone – currently available in products from select vendors – makes SaaS systems for HR a valuable tool to support workforce planning, succession planning, leadership development, and other vital initiatives.

Accessibility of HR data that resides online is a key selling point for HR leaders, but it also raises questions about reliability and security. However, Gartner explains that “concerns about security, response time and service availability have diminished […] as SaaS business and computing models have matured” (Gartner, 2011). In fact, providers of SaaS systems must offer trustworthy products and service if they are to stay in business.

Ben PetersonCEO and founder of BambooHR.

About the author

With an HR background using SaaS delivery and cloud technology services, Ben Peterson has worked HR departments globally to achieve increased HR efficiencies and a deserved role at the strategic table, and still maintain the high touch and personable service HR demands. Ben Peterson can be contacted at:


BambooHR (2011), “Why and when to get out of spreadsheets and into HR Software”, available at: (accessed April 23, 2012)

Gartner (2011), “Gartner says worldwide software as a service revenue is forecast to grow 21 percent in 2011”, 7 July, available at: (accessed April 23, 2012)

Institute for Corporate Productivity (2012), “Strategic workforce planning: practitioner insights”, i4cp, p. 6

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