The last year has presented the HR teams with numerous challenges – be it the complete or partial relocation of employees to the home office, the restructuring of internal and external processes or the reassignment of employees due to discontinued or new business areas. One solution here is the path to the cloud, also about payroll.
For a long time, HR professionals, in particular, had concerns about relocating billing and time management to the public cloud. The practical use of cloud applications reduced scepticism, however, and the topic is picking up speed in the HR area. The corona pandemic has additionally fueled the increase in cloud solutions of all kinds: According to the current Bitkom Cloud Monitor 2021, 97 percent of companies in Germany are already using cloud solutions or are planning to do so. In the HR area, usage even increased from 23 percent to 28 percent, while a further 43 percent plan to switch to cloud-based HR systems.
According to the study, trust in data security has increased significantly after switching to cloud systems. The majority of respondents (86 percent) trust the security and compliance of the cloud provider. Three-quarters of companies are aware that unauthorized persons could still gain access to their data. But that does not affect investments even in the 2020 pandemic. According to the Alight Global Payroll Complexity Index, the home office regulations on short-time work and sick days and the tightening of regulatory provisions such as data protection guidelines are causing an increase in the complexity of payroll. These calls for more homogeneity in the processes that cloud solutions for companies can even map worldwide.
The administrative effort of HR departments can be reduced considerably given the agility of cloud solutions. Due to the constant changes in laws, billing and time management administration is very time-consuming. Those who outsource these areas via the cloud no longer worry about updates, maintenance and servicing of software systems.
The cloud provider ensures that the resources are up-to-date and available. The scope of services can be freely expanded at any time and adapted to business development.
Future Driver # 1 – Agility
In the HR report Agile Organizations on the Test Bench of Hays AG for Germany, Austria and Switzerland, published in 2018, more than half of the participants considered the topic of agility to be very relevant. Restructuring a business into a dynamic organization becomes a priority. And 69 percent of those surveyed stated that the importance of adaptability in HR systems would continue to increase over the next three years. 13 percent of the companies already have an agile personnel management system.
Above all, sectors with high fluctuation or a seasonally increased need for employees, such as retailers or temporary employment agencies, which have to reckon with an increasing economy and an enormous need for employees again after the crisis, can support cloud-based solutions. The usually lengthy recruitment process can be shortened to a few minutes, as applicants and managers can handle it independently using the cloud programs. In cloud solutions, the individual salary agreements can be quickly adjusted and prepared for payroll. This leads to considerable time savings and a cost reduction of up to 60 percent due to the leaner process.
Future Driver # 2 – Strengthening The Core Business
Outsourcing non-value-adding activities have long been a proven method of saving resources in the industry, commerce, consumer goods or finance. Payroll accounting and time management are also associated with a high level of effort, and the complexity of wage and time models is constantly increasing. That is why more and more companies are planning to outsource such tasks. HR outsourcing is gaining in importance as a result of digitization. In the 1990s, outsourcing was primarily a cost-saving tool. Today, outsourcing is increasingly used as an enabler for business. Digitization creates new approaches for HR executives to generate added business value and concentrate on their core business.
Future Driver # 3 – People Engagement
Employees and managers can also be more closely involved in the HR process with the help of self-service. HR managers are redefining processes so that they become more efficient. However, the leverage begins where the data is collected, used and processed – by the user himself. Employees apply for their vacation online themselves, the cloud system automatically forwards it according to the stored rules, and the manager approves it. The intermediate steps for the HR department are no longer necessary, which takes the strain off them. On the other hand, employees can act more autonomously, and HR processes are faster thanks to direct communication and decision-making.
Future Driver # 4 – Rejuvenation For HR Systems
The time for technological innovations is ripe. Billing and time management systems previously hosted in the company’s server landscape – so-called on-premise solutions – have passed the peak of their life cycle. The care and maintenance costs increase. In addition, it is almost impossible to keep the software up-to-date, as staff who have the expertise to develop the applications further leave the company due to their age. HR managers should work with the IT department to check which tools are still up-to-date, receive updates or need to be replaced.
Future Driver # 5 – Countermeasures For The Shortage Of Skilled Workers
The fight for the talents paid daily by the HR department doesn’t stop in your team. Payroll tasks, in particular, seem to be unattractive for young professionals. Because of the increasing shortage of personnel, it makes sense to outsource this area of responsibility to an external service provider specializing in payroll accounting. It takes over the entire billing process, including important aspects such as legally compliant time recording, and provides support across national borders. Above all, export-oriented German medium-sized companies can compensate for the lack of payroll know-how in individual countries and confirm that payroll accounting meets compliance requirements worldwide.
According to Bitkom Research in Germany, 82 percent of companies already use cloud computing, and another 15 percent plan to use it. Companies need to move to the cloud – and are ready to do so. Due to the increasing strategic importance for business, the focus is increasingly on the personnel area. Cloud solutions have been used more and more in recruiting, personnel management and talent management in recent years. Now payroll accounting and time management are the following suits.