The adoption of cloud technologies is expected to generate about $1 trillion in value by 2030 for US Fortune 500 companies. If we talk about Forbes Global 2000 companies, the number rises to $3 trillion. Close to $900 billion of the value will be unlocked from IT savings, operational cost savings, and digital risk reduction — HR management will also be one of the major beneficiaries of it. This is why cloud adoption has become a priority among HR leaders. In this article, we’ll do a detailed analysis of the role of cloud computing in HR.
What is cloud computing?
Cloud computing is the practice of using a network of remote servers hosted on the internet to store, manage, and process data, rather than relying on a local server or personal computer. It enables businesses and individuals to access computing resources such as servers, storage, databases, software, and more without the need to own or maintain the physical infrastructure. This approach allows for on-demand access to resources, providing flexibility and scalability to adjust to varying workloads and user needs.
Cloud computing operates through virtualization, which allows physical servers in large data centers to be divided into multiple virtual machines. Users interact with these resources through a web interface. With a pay-as-you-go pricing model, businesses save on upfront hardware costs and only pay for the resources they use. This makes cloud computing an efficient, cost-effective solution for hosting applications, managing data, and running HR operations.
Why is cloud computing needed?
Cloud computing is needed because it overcomes the limitations of traditional on-premises IT infrastructure, which is costly, inefficient, and difficult to manage. In the traditional model, businesses must invest heavily in physical servers, networking equipment, and data storage, requiring significant upfront capital and continuous maintenance. This setup demands a dedicated IT team with advanced technical knowledge to manage hardware, update software, and ensure security. As businesses grow, scaling the infrastructure involves purchasing and configuring additional hardware, which can be time-consuming and disrupt operations. This rigidity leads to over-provisioning, where companies invest in resources they rarely use, or under-provisioning, where they struggle to meet peak demand.
Why does HR Management need cloud computing?
Implementing on-premise HR software involves substantial investments in servers, hardware, and software licenses. Additionally, businesses must allocate resources for the ongoing maintenance of this infrastructure. This requires a skilled IT team and creates a dependency on technical expertise.
Moreover, on-premise HR software lacks the scalability and flexibility that cloud-based solutions provide. Adjusting the system to accommodate more users or new features often requires purchasing additional hardware, which can be time-consuming and disruptive. The lack of remote accessibility is another drawback, as employees and HR teams cannot easily access the system outside of the office without complex networking setups. This limitation makes it harder for companies to support remote work or decentralized teams.
If a business skips both cloud-based and on-premise HR software, it is left with manual HR management, in which all the processes are conducted on spreadsheets. It is a highly archaic process with enormous limitations.
The benefits of cloud computing in HR management
Cloud computing has mitigated the shortcomings of on-premise HR software and provided additional capabilities that wouldn’t have been possible without it. Cloud deployment increases efficiency and productivity by 44%, compared to 18% with non-cloud deployment. The employee experience is 2X better with a cloud-based deployment.
Source: The Strategic Pivot: Maximizing Workforce Potential with HCM Tech
Let’s have a look at the other advantages of cloud computing in HR.
- Real-Time HR Management: Cloud-based HR software enables real-time HR management by offering features like instant data synchronization, real-time reporting and analytics, live attendance tracking, and location monitoring. With cloud-based solutions, employee data is updated immediately across various modules, allowing HR teams to access the most current information without manual uploads or delays. Managers can monitor live attendance status and employee locations, which helps in making quick workforce allocation decisions based on actual availability. These capabilities ensure a level of responsiveness and agility that on-premise systems and manual methods cannot match.
- Mobility: HR teams and employees can access HR systems from anywhere, using any device with an internet connection. This mobility enables HR professionals to manage tasks like approving leave requests, tracking attendance, or accessing employee records, even when they are outside the office. Employees can also update their profiles, check their schedules, or submit expenses while on the go. In contrast, on-premise HR software is typically tied to specific company servers and often requires a secure connection through a VPN, making remote access more cumbersome.
- Scalability: Cloud-based HR software can quickly add new users, features, or functionalities without needing additional hardware or IT resources. As a business grows, cloud solutions can easily expand to support a larger workforce, manage higher volumes of data, and integrate new HR modules like performance management, learning systems, or advanced analytics. This scalability is possible because cloud providers handling the infrastructure ensure that the system capacity is adjusted to demand without disruptions. Commonly used HR modules are readily available with cloud-based HRMS providers. So they can be added as soon as the need arises.
- Cost-Effectiveness: Cloud-based HR software enhances productivity by streamlining and automating various HR processes, which can significantly reduce manpower requirements. With features like self-service portals, employees can handle tasks such as leave requests, benefits enrollment, and personal information updates independently, freeing HR staff from routine inquiries and administrative duties. This efficiency allows HR teams to accomplish more in less time, enabling them to focus on strategic initiatives that add value to the organization.
Source: The Strategic Pivot: Maximizing Workforce Potential with HCM Tech - Improved Employee Experience: Cloud-based HR software greatly improves the employee experience by providing easy, self-service access to HR tools and resources anytime, anywhere. Employees can view their pay slips, apply for leave, update personal information, or access training materials directly from their mobile devices. This level of convenience reduces the need for time-consuming, back-and-forth communication with HR, empowering employees to manage their own HR needs quickly and efficiently.
- Automation: Automation becomes easy for companies with pre-built workflows and tools that can be easily customized to meet specific business needs. Cloud-based HRMS platforms enable the automation of repetitive tasks such as payroll processing, leave approvals, onboarding procedures, and performance evaluations without requiring extensive programming knowledge or IT intervention. As a result, HR teams can quickly implement automated processes that save time, reduce errors, and enhance overall efficiency.
- AI Implementation:
The implementation of AI in HR becomes effortless with cloud-based HRMS software. These platforms often come equipped with built-in AI capabilities, such as predictive analytics for employee performance, chatbots for answering common HR queries, and algorithms for enhancing recruitment by analyzing candidate data. Since cloud solutions are designed to be flexible and scalable, they can seamlessly incorporate new AI tools without the need for extensive reconfiguration or additional hardware investments. This accessibility allows organizations to harness AI-driven insights to optimize talent management, enhance employee engagement, and streamline operational efficiencies, making it a straightforward process to adapt to evolving technological advancements.
AI integration has become so important that the World Bank predicts that 23% of global jobs will change in the next five years due to industry transformation, including AI. 75% of companies are expected to adopt AI by 2027.
- Collaboration: A centralized platform between the HR team members helps implement a seamlessly collaborative environment where they can access, update, and share information in real-time. Team members can work together on recruitment, performance reviews, or training programs, with all updates immediately reflected across the system. Features like shared dashboards, instant messaging, and task management tools allow HR teams to coordinate efforts, assign tasks, and track progress without needing to rely on lengthy email chains or in-person meetings. This collaborative environment is much harder to maintain with on-premise systems, which can require manual syncing of data and lack the integrated communication tools that cloud-based platforms offer.
- Social HR: Some cloud-based HR software provides enterprise social networks, where employees can communicate, collaborate, and share real-time updates. These platforms foster engagement, teamwork, and knowledge sharing across the organization, mimicking the ease and interactivity of social media. Implementing such interactive platforms with on-premise systems would require heavy software expertise and a significant investment in hiring talent to develop and maintain these features. Such an investment would not make economic sense for most organizations. On the other hand, with manual HR management, creating this level of dynamic, integrated interaction is nearly impossible.
What’s Next?
After seeing the numerous benefits of cloud computing, it is evident that HR departments should leverage this technology, as traditional on-premise and manual methods simply cannot keep up with the demands of modern business. Cloud-based HRMS software provides unmatched efficiency, scalability, and real-time access, making it the ideal solution for managing everything from recruitment to retirement. If you are looking for a cloud-based HR software that can handle every aspect of HR management—from hire to retirement—then you should try our platform. Here is the link to book a demo.