cloud computing or software as a service—which makes the most sense for hr?

Cloud Computing or Software as a Service—Which Makesthe Most Sense for HR?

Siamak Farah

© 2010 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ert.20271

Some time ago, and on separate occasions,two friends of mine told me that humans

never make mistakes. Given the knowledgethey have at the time, people will alwaysmake the right decision.

I have been pondering this philosophy fora while and have bought into it more andmore. I now firmly believe that the biggestmistake when making a decision is to nothave enough knowledge to select the app-roach that can withstand future changes and still deliver the desired outcome. Inother words, since you know your needsbest, once you have the right know-how andbackground information, you will nevermake a mistake.

This philosophy also puts the status quodirectly under the spotlight, since arguablythose who are comfortable with what theyhave and what works today do not have theinclination to research new ways to takeadvantage of or even keep up with thechanging environment. In fact, in most cases,being content with the status quo and avoid-ing the decision is the ultimate mistake.

The most common excuse for not examin-ing new approaches is lack of time. In thisarticle, we aim to offer a concise descriptionof software as a service (SaaS) solutions andcloud computing. Once you have the facts,you can then decide which is the mistake:adopting these technologies or shying awayfrom them.

WHAT IS CLOUD COMPUTING?

Many people use the terms cloud computingand software as a service interchangeably.Although the software systems the termsrefer to are related, they also have somesalient differences.

In cloud computing, you are using aprovider’s ready-made hardware (servers) ina data center complete with ample band-width to handle your volume of data andredundant power to protect against powerinterruptions and the risk of data loss. Thishardware can be used for a variety of rea-sons, but, in almost all cases, you install yourown software and manage its interaction ona day-to-day basis. In effect, cloud computingcan be dubbed “hardware as a service.” Theterm cloud computing came about becausemany people refer to the Internet as the“cloud,” and those who use SaaS and cloud-computing services use the Internet to con-nect to servers not physically on theirpremises and reached via the Internet.

The target audience of cloud-computingproviders is often the IT staff within an orga-nization who must offer and install the appro-priate software solutions to meet the needs ofemployees and/or clients. Because the IT staffmust customize the system for the employees/end-users, cloud-computing implementationsare not instantaneous and require some plan-ning. However, cloud-computing solutions are

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Employment Relations Today

still by far better than clients procuring theirown hardware, data center, bandwidth, andadditional staff to roll out a Web-based offering.

By contrast, software as a service providesa complete solution of servers, bandwidth,power, and software. In addition, because thisis a soup-to-nuts solution, it is offered as fullymanaged. With SaaS, the organization doesn’tneed to worry about which server to chooseor how many services to provide to ensurethat all employees are amply catered to. Theorganization selects a provider that has thesolution it needs—one that is already tailoredto its employees—and the provider will ensurethe service is simply always there.

If one is to use an analogy with automo-bile use, the various categories of softwaresolutions could be described as follows:

1. Those who purchase their own servers, pro-cure their own bandwidth, and manage thesystem and its security are analogous to peo-ple who buy kit cars, go through the pain ofputting the car together, and are always hav-ing to be concerned with its maintenance.

2. Those who use cloud computing (hard-ware as a service) are analogous to thosewho rent cars. They don’t have to worrymuch about the car maintenance but stillneed to drive, get directions, and knowhow to park the car.

3. Those who use SaaS are analogous to thosewho are driven around in limousines—theyenjoy getting to their destination whilefocusing on what they are good at, asopposed to worrying about driving, direc-tions, maintenance, and so on.

Siamak FarahEmployment Relations Today DOI 10.1002/ert

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FACTS ABOUT SAAS

Software as a service defines a whole newparadigm in how software is developed, purchased, and used. Prior to SaaS, an orga-nization would have to go through the follow-ing steps to run IT software:

❏ Buy servers (and pay up front in anticipa-tion of future growth).

❏ Outlay a sizable expense for licenses ofsoftware for as many people as they envi-sioned using it, in advance of the peoplebeing onboard.

❏ Install the software.❏ Hire staff to maintain the system and

the software (and most likely not have 24-hour staff on hand).

❏ Pay additional sums for upgrades or a sup-port contract, yet have the organization’sstaff apply the upgrades.

❏ Be concerned about how to securely con-nect multiple offices together.

❏ And go through this entire cycle againevery three to four years (or sooner if theorganization grew), since servers, soft-ware, and the amount of connectivitybetween offices become outdated.

With SaaS, organizations just connect tothe Internet, and all offices securely connectto a centralized location without worryingabout maintenance, growth, or obsolescence.Whether in the home office or in locationshalfway across the world, employees alwayssee and use the same familiar environment,which is operational 24 hours a day, 7 days aweek, for every single day of every year.

Software as a service has other features aswell that sets it apart from cloud computing. Inorder for software to be considered true SaaS,it should meet all of the following criteria.

With SaaS, organizations just connect to the Internet, andall offices securely connect to a centralized location withoutworrying about maintenance, growth, or obsolescence.

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❏ Fully managed and hosted. The service “S”in SaaS requires it to be fully managed andhosted. Users must not be concerned withservers and updates and whether the soft-ware will be outdated. The service ensuresthat the software is always there, alwaysup-to-date, and at the organization’s/client’sbeck and call.

❏ Paid for in recurring payments. SaaSshould be charged and paid for in recur-ring payments. This not only gives a com-fort level to clients, knowing that theprovider will work hard to deserve ongo-ing payments, but also reduces the barrierto use by eliminating large up-front hard-ware and software investments.

❏ Multitenant, yet each tenant is completelysecure and independent. Economies of scalereally show their value when the samesolution is provided to multiple users. Inaddition, the collective intelligence that themultitenant solution naturally createsfacilitates frequent and rapid improve-ments. Most SaaS systems are designed ina way that clients feel as if they are on adedicated solution, yet they can takeadvantage of all the benefits of being onmultitenant servers.

❏ Anytime, anywhere access. With SaaS youcan access your software anywhere thereis a browser and an Internet connection.This anytime, anywhere access not onlyprovides you with what you need whenyou need it, but also has tremendousvalue in enabling geographically dispersedgroups to work as if they were under oneroof.

❏ Users don’t need to install any specializedclient-side software. Because SaaS has toallow for anytime, anywhere access, evenat an airport or at an Internet café, itshould work securely with any browser

Cloud Computing or Software as a Service—Which Makes the Most Sense for HR?Employment Relations Today DOI 10.1002/ert

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and should not require any special down-load before it can be used.

❏ Software was designed for SaaS, not as aretrofit. SaaS is a paradigm shift. Themost optimal results come from SaaS com-panies that designed their software frominception as SaaS, not as a rush-to-marketafterthought.

ADVANTAGES OF USING SAAS

In today’s economy, every department inevery organization is looking for a way toreduce costs, increase efficiency, and ulti-mately have a competitive advantage in themarket. Utilizing SaaS is a fast track towardthat goal. It provides the following immediatebenefits:

❏ Less risk, no up-front costs. SaaS reducesthe expenses and complexities of imple-mentations to virtually zero. There is noneed to buy, install, and maintain serverhardware or software.

❏ Controlled, secure, ubiquitous access.Instantly, critical data is made available toall stakeholders, whether physically in theoffice or not. All that is required is a Webbrowser and an Internet connection.

❏ Streamlined operations. Organizations canreduce operating costs and increase effi-ciency.

❏ Automatic and cost-free scalability. Acquisi-tions or new hires do not create a burdenin terms of having to enlarge the organiza-tion’s software system to accommodategrowth; the software solutions simply scale

In today’s economy, every department in every organizationis looking for a way to reduce costs, increase efficiency, andultimately have a competitive advantage in the market.Utilizing SaaS is a fast track toward that goal.


to the size needed for the organization—without the organization incurring addi-tional software-system costs. Similarly,downsizing will not generate a heap ofscrap hardware and software.

In almost any sector of the market, SaaSsolutions help reduce costs, increase effi-ciency, and create a competitive advantage.For instance, let’s consider SaaS companiesthat provide IT and small-business manage-ment software as a service.

IT and business functions are vital to acompany because they are responsible forstreamlining the operations of the companyand increasing communication and collabora-tion among employees. However, traditionallythese functions consumed a significant

amount of the budget and time in any organi-zation. With SaaS, these vital solutions arenow very affordable—leaving budget dollarsfor other mission-critical functions that helpgrowth. This is a competitive advantage.

Examining SaaS for every department willyield similar results, increased benefits, less-ened effort, and reduced costs.

What About Security?

Every decision we make is formed by weigh-ing the benefits against the costs (or threatsagainst comfort level). When the decision isbeing made on a new idea, the “unknownfactor” adds to the threat level, often over-shadowing the benefits. For more conserva-tive organizations, the shadow casts wider,and sometimes it simply stifles the decision.


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For this very reason, people may overlookthe benefits of SaaS. Most view it as a relativelynew phenomenon. The perceived threats nor-mally revolve around security (my data is outthere, not here) and multitenancy (many usersusing the same system).

One simply has to look at examples ofother industries where some of these featuresare matured and are no longer novel to seehow these concerns have been overcome.

For instance, having your data close to youis not necessarily safer. This is akin to havingyour money under your mattress and consid-ering it safer than in the bank. The bank hasprofessional staff working around the clockcharged with protecting your assets andarmed with the latest and greatest technol-ogy. The bank may be centralized and per-ceived as a Mecca for thieves, but chances ofyour money being lost under your mattress isan order of magnitude higher. In the case ofdata banks, the data is backed up in an alter-nate location, adding to your protection. Aphysical catastrophe can always be overcomewith a disaster-recovery system designed forhundreds of thousands of users and kept upby full-time staff. When kept in a data center,customer data is substantially more physi-cally secure than an average server in one’soffice and infinitely more accessible.

In the case of multitenancy, one has tolook at the cellular telephone technology.You have a private handset and your ownprivate number, yet the moment that a callleaves your handset, you are using a multi-tenant infrastructure. Had it not been formany users using the same cell infrastruc-ture, this technology would not have beenaffordable or possible for anyone. Now,thanks to multitenancy, you are reaping thebenefits, yet feel private and secure onevery call.

In almost any sector of the market, SaaS solutions helpreduce costs, increase efficiency, and create a competitiveadvantage.

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The same economies of scale apply toSaaS, and it does not have any data-integritythreats. Users can even log in via SSL (anacronym for secure sockets layer) ensuringthat their interaction with the server isencrypted—usually noted by an address thatbegins with https://. On the back-end servers,each customer’s data is partitioned by aunique identifier made up of the user and thesite the user logs in to. The chance of datacrossover is nil.

All of these point to users taking advan-tage of all the benefits without having to beconcerned with any threats.

CHECKLIST FOR SELECTING AN SAASSOLUTION

When deciding on an SaaS solution andprovider that are right for your organization,make sure that you will get all of the benefitsthat every SaaS should provide:

❏ Performance always available. The very def-inition of SaaS requires it to be availableas a service anytime you wish. Analogousto your telephone or electricity service,SaaS should reliably be available in fullcapacity at all times.

❏ Built-in capacity planning and scalability.One of the major benefits of SaaS is thatyou don’t have to procure extra hardwarein anticipation of staff growth. Nor do youhave to manage a pile of scrap metalshould your organization downsize. TheSaaS solution should be able to instantlyand constantly match your organizationsize.

❏ Recurring payments. No one-time largelicenses are required. Consider the factthat most organizations don’t pay threeyears of rent up front for their office


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space. Why should they do so for theirsoftware? With SaaS, you pay as you go,and the provider must provide service inorder to receive their payments.

❏ Secure anytime, anywhere access. By defini-tion, if the solution does not have any-time, anywhere access, it should not beconsidered SaaS.

❏ Native SaaS design, not an afterthought.This is an important requirement for tak-ing full advantage of SaaS benefits. Wheresolutions are retrofitted to be SaaS, oftentrade-off decisions have been made at thecost of native SaaS benefits.

❏ Solid data backup and disaster-recoveryplan. As mentioned earlier in the sectionon security, you must be able to have ahigh comfort level that your data is moresecure with the SaaS provider than inyour offices.

In addition, look for the following:

❏ Control. You must have absolute control.Administration of SaaS solutions shouldbe Web-based, providing you with theability to configure or adjust your serviceat anytime and from anywhere. In otherwords, the solution should be not onlyuser-friendly, but also administrator-friendly.

❏ Cost savings and affordability. Do a three-year comparison of SaaS versus a non-SaaS solution. Your costs of SaaS shouldbe below 30 percent of the traditionalsolution, providing you with an instant 70percent-plus savings.

The very definition of SaaS requires it to be available as aservice anytime you wish. Analogous to your telephone orelectricity service, SaaS should reliably be available in fullcapacity at all times.


❏ Instant deployment. Because SaaS does notrequire any installation of software orhardware on your part, it should beinstantly deployable, allowing you to takeadvantage of its benefits immediately.

❏ Free trial. If the concept of SaaS is new toyour organization, it may require buy-infrom users. A free trial enables you toexamine the benefits of SaaS and config-ure it to match your needs perfectly with-out having to pay any sums.

❏ Smooth migration. No organization canafford to cut clean of their old system andstart anew. Therefore, SaaS solutions musthave an easy way to import data and doc-uments to your system.

❏ Low learning curve/ease of use. As busy asstaff members are today, they will nothave the time or the patience to grapplewith a hard-to-use system. Such a systemwill fail before it is fully deployed. Ease ofuse is an absolute requirement for select-ing any SaaS solution to ensure it isadopted within your organization.

Although some of the items in this list aresubjective and dependent on the audience(such as determining ease of use), other crite-ria are rather straightforward in comparingservices.

SOLUTIONS FOR HR

There are a number of SaaS solutions avail-able today, covering almost every segment ofthe human resources market. To name a few,you can find solutions for:


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❏ Benefit management,❏ Payroll management,❏ Time management,❏ Workflow,❏ Online employee directories (no more

printed books with errata), and❏ Educational sites.

Some organizations require a combinationof solutions. The integration effort for thecreation of a complete suite is either pro-hibitive or presents additional challenges.SaaS providers such as InfoStreet provide aplatform that streamlines offerings from vari-ous vendors, presenting them to users on asingle site and with an easy-to-use interface.

Other companies, such as Ascentis, pro-vide their HR solutions both in the SaaSmodel and on a licensed basis, giving yourorganization the option to use an SaaS or cloudsolution or follow the traditional method ofpurchasing expensive hardware and software,and install on the premises.

If your organization does not have a siz-able IT department with availability, it isalmost always safer and most cost-effective toadopt an SaaS solution. However, some organi-zations have a preference to have dedicatedservers managed by their own IT staff. Suchorganizations can put cloud computing towork. However, there must be a very com-pelling reason, such as compliance require-ments, to justify the expenses of the serverand software purchase, and installation.

Even if you are not prepared to deploy anSaaS solution today, you are most likely bene-fiting from SaaS. Solutions that traditionallywere painstakingly performed by staff withinorganizations (such as claims) have been sim-plified, as major providers are providing SaaSsolutions in order to lower costs for themselvesand their clients—a true win-win situation.

Ease of use is an absolute requirement for selecting any SaaSsolution to ensure it is adopted within your organization.

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Siamak Farah is the founder and CEO of InfoStreet (www.InfoStreet.com), a provider ofIT and productivity software as a service (SaaS). Active in its day-to-day management,Farah has assembled and leads a seasoned team of industry professionals at InfoStreet.By employing a business philosophy that focuses first on solving business problems andsecond on applying appropriate technologies to those solutions, he has enabled flourish-ing businesses for both InfoStreet and its clients.

Prior to founding InfoStreet in 1994, Farah worked at NeXT Computer alongsideindustry visionaries such as Steve Jobs. During his six years at NeXT, his responsibilitiesgrew from technical sales and marketing to district sales management. Before joiningNeXT, Farah was the chief operating officer of Microstat Development Corporation. Dur-ing his two years at Microstat, he was responsible for the day-to-day operation of thispublicly listed research and development firm. Farah began his career at Vertigo SystemsInternational. During his time at Vertigo, he was instrumental in its growth from a startupwith just six people to a full-fledged business employing over 70 individuals.

A member of the Society of Industry Leaders, Farah is a frequent speaker at confer-ences that focus on the Internet and SaaS such as ISPCON, INBOX: The MessagingIndustry Event, the Layered Technologies Pact conference, SoftLetter’s marketing andSaaS seminar, and more. He may be reached at [email protected].

cloud computing or software as a service—which makes the most sense for hr?

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