Expert Tips for

Compliance and
Managing Employee
Data

Expert Tips for Compliance and

Managing Employee Data

Migrating to a cloud HR system is becoming

Contents
Cloud HR can help
manage global
employee data,
regulatory compliance
Cloud HR software:
Time to rip out that
legacy system?

increasingly attractive as organizations look to cut costs and

meet changing business needs. This e-guide covers the key
drivers behind the move to Software-as-a-service (SaaS) and
cloud-based applications, as well as important considerations
to keep in mind when evaluating your choices. Read on to
learn how to craft a comprehensive request for proposal
(RFP) and overcome ongoing compliance and management
challenges.
Cloud HR can help manage global employee data,
regulatory compliance
By: Liz Garnand, Contributor
Your company is moving to the cloud, and human resources (HR) data is
targeted next for migration. Figuring out how best to make the transition to
cloud HR systems, including Software as a Service (SaaS) HR applications,
is well worth the consideration, especially for multi-location and international
companies. Thats because SaaS HR software is often adaptable, modular
and cost effective. But heres a new reason to consider the cloud: managing
employee data is getting similar to managing supply chain data. For many
companies, employee data covers significant numbers of non-employee
workers, and a companys workforce is constantly changing.
Companies seek applications that are modular and configurable (versus
customizable) and cloud HR applications are often better than on-premises
applications at flexing and growing in response to company
dynamics. Employee data that spans the globe exacerbates such datas
inherent complexity.
Organizational trends are making employee data behave more and more like
the data in complex supply chains:

Page 2 of 9

Sponsored by

Expert Tips for Compliance and

Managing Employee Data

Companies are relying more on external workers from sales and service
partners, individual contractors, and temp agencies. For onboarding,

Contents

these workers often need nondisclosure agreements (NDAs),

background checks, contracts, W-9 tax withholding forms, security

Cloud HR can help

manage global
employee data,
regulatory compliance

access, equipment allocation and drug tests. These external parties may

Cloud HR software:
Time to rip out that
legacy system?

onboarding, to contract work, to termination -- good workflow processes

each have unique contractual relationships with the company in the

same ways that raw material and component suppliers do. Once the
work starts, contractual elements must be tracked. For each step -- from
are needed.
Employee turnover continues. Tenures are now shorter for younger
workers than for older workers, according to the U.S Bureau of Labor
Statistics. HR must shoulder more processing work to keep up with the
revolving door.
Reorganizations, mergers and acquisitions continue to be a normal part
of many companies mode of operation.
Workers easy access to social media adds complexity. New-employee
handbooks should now include social media policies, and the social
media activities should ideally be tracked based on the function and
responsibility level of each employee. Social media increases the need
to govern employee profile information by specifying allowable activities
and access to applications. Social media governance may also be
needed for contract workers.
With so much ebb and flow inside and outside the organization -- possibly
across locations and countries -- it is important to find solutions that can flex
and change. It appears that cloud HR providers are the ones leading the
pack for developing non-customized solutions that are more adaptive to HRspecific changes and workflow expansions.
Paper-based HR systems holding on
Change comes slowly for many HR organizations, especially when the
documents are of great importance and legal in nature. In our consulting
practice, we have often seen a deep reluctance in clients to move toward
paperless environments. However, with paper documents, it only takes

Page 3 of 9

Sponsored by

Expert Tips for Compliance and

Managing Employee Data

someone lifting a file out of a cabinet and not putting it back for it to be gone
forever. If digitizing and archiving are done using a consistent process by

Contents
Cloud HR can help
manage global
employee data,
regulatory compliance
Cloud HR software:
Time to rip out that
legacy system?

providers who have deep technical expertise and use up-to-date legal and
regulatory resources, employee records can have stronger, more lasting
security and be easier to access. And if the company is spread across
regions or countries, having centralized, corporate-wide HR access to
employee records and tying it into workflows can enable stronger
governance of policies and practices across the enterprise.
But how would a cloud HR system be different from the in-house
version? Heres what, at minimum, stays the same or grows in importance:
The need to track local payroll taxes and labor laws
The organizations legal responsibility for employee data
Having clear electronic archiving and retention processes that ensure the
company can prove the authenticity of documents for legal purposes
Knowing how to gather and present data from disparate systems and
repositories -- while increasing scrutiny of such processes
User authentication and access becomes even more important than
before
Whats causing reluctance to move to cloud HR
Moving human capital management (HCM) data to the cloud is a hot topic,
and it appears everyone is doing it. But thats not exactly true, as many CIOs
remain concerned about security, and HR managers in European
companies, especially in places like Germany, express strong reluctance to
outsource to cloud HR providers.
Why the reluctance? HR data is extremely confidential to begin with, and
security issues -- not to mention country-specific regulations -- increase the
need for due caution.
So take the time to assess a cloud HR system providers qualifications in
security, legal compliance across regions and countries, service performance
and longevity. Although the cloud may provide more options to centralize

Page 4 of 9

Sponsored by

Expert Tips for Compliance and

Managing Employee Data

and manage numerous moving targets across multiple locations and entities,
having the corporate crown jewels safeguarded by an outside company

Contents
Cloud HR can help
manage global
employee data,
regulatory compliance
Cloud HR software:
Time to rip out that
legacy system?

certainly calls for due diligence.

Cloud HR software: Time to rip out that legacy system?

By: Liz Garnand, Contributor
Cloud computing and Software as a Service (SaaS) are increasingly popular
with consumers, small and medium-sized businesses (SMBs) and large
companies alike. According to Morgan Stanley and other research
companies, IT decision makers are expected to increase their use of cloud
applications and workloads over the next few years. For human resources, if
the pressure is not yet there for deciding whether to move in-house HR
systems to cloud HR software, expect to know these answers soon.
According to Forrester Research Inc., the leading categories for SaaS
migration this year will be customer relationship management (CRM),
procurement, collaboration and human capital management (HCM)
applications. With other companies touting HCM applications relatively high
cloud appeal, theres little doubt that HR is in the queue for change.
Pressure to outsource to the cloud just to cut IT costs is still present in many
organizations. But migrating anything new can be overwhelming and risky,
especially if the current environment is complex. If an HCM, HRM or ERP
application has multiple connections to databases, supports many
organizations or is dependent on legacy systems, the cloud migration project
will be substantial. Organizations that fail to establish clear requirements and
processes for cloud migration, especially for more complex HR
environments, may find outsourcing very costly, especially if employee or
financial data is not secured.
But the silver lining in this cloud opportunity could be very bright indeed for
HR departments. Not only does cloud HR software hold potential cost
savings but -- even better -- it can be the key to creating that strategic and

Page 5 of 9

Sponsored by

Expert Tips for Compliance and

Managing Employee Data

cultural change that helps organizations become more effective and

competitive.

Contents
Cloud HR can help
manage global
employee data,
regulatory compliance
Cloud HR software:
Time to rip out that
legacy system?

I recommend developing a request for proposals (RFP) before buying cloud

HR software. An RFP can elicit very specific responses from cloud vendors
and help the organization decide whether to go to the cloud at all. Identifying
RFP criteria can help distinguish the merits of the in-house HR software and
a new cloud HR alternative.
General RFP components
Service Level Agreements (SLAs): Cloud HR software can often
outperform a strained, internally supported IT system in terms of speed,
downtime, backup and disaster recovery. But its important to examine
cloud HR software SLAs to know what to expect.
Certification: Find out the degree to which they are certified with SAS70/SSAE 16 Statement on Auditing Standards for performance, quality
processes and security.
Security: Verify that the cloud HR provider has adequate security
measures, such as encryption, intrusion detection and data separation
between multi-tenant SaaS customers. Ask for objective third-party
assessments.
Longevity: Identify migration options in the event of a vendors demise
or at end-of-contract.
Single sign-on (SS0): Many companies are challenged with
implementing SSO capability, where users enter their identity and
password only once and the authentication server connects them to the
appropriate applications and information. Cloud HR applications can add
IDs and passwords, thereby increasing the risk of information leaks and
security breaches. Knowing a vendors ability to connect with
authentication servers is important for supporting current or future SSO
capability.
Cost: Analyze a cloud HR software providers cost model with care.
Although economies of scale from a providers shared infrastructure can
reduce costs, variable fees can add up over time.

Page 6 of 9

Sponsored by

Expert Tips for Compliance and

Managing Employee Data

HR-specific requirements

Contents

HR applications extending to external partners: Give priority to

Cloud HR can help

manage global
employee data,
regulatory compliance

applications that are best suited for cloud computing. SaaS HR software

Cloud HR software:
Time to rip out that
legacy system?

be better than an in-house training system at incorporating partner

that supports the gray edges of an organization may be the best fit;
employees, contractors and partners often need to access similar
information. For example, a SaaS training certification application may
trainee information.
Company legal responsibilities: Due diligence on the cloud HR
software providers contract is a must. With cloud deployment, the
customer is still responsible for legal issues such as employee privacy
and who has access to what information. For example, companies with
employees in Europe face much stricter protections for data than U.S.only companies. Employee information must be placed with cloud HR
software providers who create a U.S. safe harbor and can comply with
specific laws of the European Economic Area.
Data maintenance and integration drain: Check to see what functions
come off the shelf and which require customization for data connections
to existing HR systems. This can help minimize maintenance and
upkeep costs of both incumbent and SaaS HR vendors.
Cloud HR as organizational change agent
Cloud computing presents new opportunities for organizational change, and
cloud HR software in particular can take organizations beyond traditional HR
functions like payroll, performance and benefits management. HR managers
should take the lead in identifying new SaaS applications that can develop
the communications, cooperation, coordination and collaboration necessary
to make their companies more effective and competitive.
I spoke to Shadrach White, CEO of cloudPWR, a Seattle-based vendor that
helps companies make investments in cloud systems. White said, "Adopting
a social business solution is an effective way to incorporate cultural shift and
gain IT familiarity with cloud. Said another IT professional: New HR-related

Page 7 of 9

Sponsored by

Expert Tips for Compliance and

Managing Employee Data

SaaS solutions are giving better and quicker access to resource and contact
information within my company and also information on our partners.

Contents

What are the HR applications that could create organizational change? The

Cloud HR can help

manage global
employee data,
regulatory compliance

list is long, and includes online collaboration on recruitment, training

Cloud HR software:
Time to rip out that
legacy system?

communications and collaboration. Perhaps a new application thats not so

certification, organizational management and charts, distant learning, time

and attendance, repository and workflow of company forms and -- perhaps
most especially -- leading change by using social media for employee
intertwined with existing -- and complex -- HR systems is the best place to
start making the shift to the cloud.
ABOUT THE AUTHOR
Liz Garnand is a principal at Newport Consulting Group (Clarkston, Mich.).
She works in the strategy and operations practice, focusing on marketing and
business growth. Email her at lgarnand@newportconsgroup.com or follow
her on Twitter (LizGarnand).

Page 8 of 9

Sponsored by