I’ll admit it, the HR Technology market can be downright confusing. The messaging coming from nearly every vendor sounds very similar, making it very difficult to determine which vendor does what and more importantly how they differentiate from one another. Nearly every vendor offers capabilities that are marketed as “Talent Management” or “Analytics”, ranging from assessment vendors, time-keeping solutions, and organization charting vendors. And, amazingly enough, they are all correct largely because of the lack of a generally accepted definition of what each means.
As confusing as it is to determine what a solution exactly does, its become even more difficult to determine HOW vendors deliver their solutions. Cloud-based, Subscription, Software-as-a-Service (SaaS), premise-based, perpetual, hosted, hybrid, and outsourced are terms that often are used to describe the manner in which a technology is made available. Buyers often are looking for SaaS, but many times don’t know exactly why they want or need SaaS and more importantly what solutions are SaaS versus a hosted solution – and why its important to distinguish between the two.
Software-as-a-Service has been defined by Microsoft as “Software deployed as a hosted service and accessed over the internet”. This definition is as pure and simplistic as possible. based on this definition, SaaS has a few key attributes:
- Software is hosted on servers that the vendor provides and maintains
- Software is accessible via an internet browser
- Access to the software is subscription-based rather than licensed
Based on this definition, there are countless vendors in the space that qualify as SaaS and just about any solution you buy can be made available in a SaaS model.
I would like to offer a more narrow definition of SaaS;
- Hosted and maintained by the vendor
- Delivered over the internet
- Configurable but NOT customizable
- Single code-base deployed across ALL customers
In the definition from Microsoft the author goes on to explain that there are different stages of SaaS, ranging from custom, hosted, single-tenant solutions all the way to scalable multi-tenant solutions. And while the architectural nuances of each model may cause an IT Director to squeal in delight like a schoolgirl, to the typical HR buyer they mean absolutely nothing. In my definition, only the multi-tenant options of the Microsoft definitions qualify as SaaS.
As a buyer I’m less concerned about the technical architectural details provided that they don’t limit me from achieving the outcomes I seek from a solution. I am more concerned about what investment is necessary, how complex will the implementation be, how flexible the solution can be in order to quickly adapt to the changing needs of my business and whether I need to re-skill my IT or HR staff in order to support the solution.
In order to meet MY business needs, SaaS is a must for any business application as I’m always looking to decrease the reliance on IT to support HR solutions. As a CIO I want to devote my limited technical resources to supporting the infrastructure necessary to run the business and support the applications which are most closely aligned with functions that generate revenue – which is most often not HR. As a result, anything that isn’t core to my business I would look to have delivered via an outsourced arrangement – generally provided by SaaS-delivered software.
Given that most CIOs have this objective, HR is a market that has become ripe for SaaS adoption. So given the explosion of SaaS-labeled solutions, its important to understand how to determine whether the software you’re buying is SaaS or something marketed as such but really isn’t. In order to determine what you’re buying, ask your vendor the following questions:
- Is the solution available for installation on my servers internally?
- Do I get to choose when upgrades are deployed?
- Do upgrades require me to do anything other than perform acceptance testing?
- Can I buy licenses for the software rather than pay a subscription?
If your vendor answers yes to any of the above questions, then the solution being proposed is something other than a multi-tenant SaaS solution.
I want to be clear that not every solution used by HR needs to be a multi-tenant SaaS solution. There are plenty of solutions which make sense to deploy on site, but if a vendor ONLY offers a solution through a SaaS-branded offering, be sure you know what you’re getting.