In late 2013, Boston-based Eastern Bank began moving both its on-premises human resources management system and its payroll system to the cloud. After looking at several cloud platforms that were serving the HR space, Eastern went with an Oracle HCM Cloud implementation.
The driving force behind the transformation process was to enable Eastern to become more analytical internally and across divisions, said Brian O'Neill, assistant vice president of human resources at Eastern Bank. "At the time, we were a longtime ADP customer, which pretty much served as our de facto HR [information system], even though it was a payroll engine," he explained. "We also had several disparate systems for recruiting, for benefits, for [compensation], for learning -- pretty much all over the map. We had about five or six different applications and no true integration point, so you kind of worked offline on spreadsheets. Nothing spoke to each other."
The company realized the setup wasn't very efficient. "So to pull together reports and make sure everything was in sync, it made sense to be all on that one unified platform," O'Neill said. "We were looking to make the full move to the cloud, and Oracle checked all the boxes for each module we wanted to do, including core HR, payroll, benefits, compensation, performance, recruiting, onboarding, learning and talent."
Integrating all the processes needed to manage the employee lifecycle was a key outcome of the Oracle HCM Cloud implementation. "Our goal was not to have any other separate applications," he noted.
An integrated employee lifecycle
Eastern Bank's Oracle HCM Cloud implementation strikes some familiar chords. One of the main reasons companies chose to move their human capital management (HCM) applications to the cloud is because they want to share data about an employee through the entire lifecycle, said Maureen Brosnan, managing director and global lead for HCM at Accenture, a Dublin-based consultancy that's mainly focused on the SAP Cloud. "They also want a common user interface, a common look and feel across the entire solution, especially as the employee experience becomes more important to companies," she said.
There are other advantages to moving HCM to the cloud, said Reese Dunbar, vice president of business transformation services for Paris-based Capgemini. "The cloud platform offers accelerated access to innovation; a richer, simpler user experience; better functionality; and with moving to [a SaaS] architecture, your software and processes are always up-to-date," he said.
On-premises systems, on the other hand, tend to get over-customized and out of compliance after a few years, leading to costly upgrades and the occasional and more complicated "reimplementation," according to Dunbar. "Cloud providers push product updates so customers are up-to-date without the worry of compliance and versioning concerns," he explained. "Finally, most of the cloud HCM products are mobile by design, and users can take advantage of out-of-the-box mobile features and analytics."
Security fears allayed, but other issues remain
There are also downsides to moving HCM to the cloud, including cloud apps being less customizable and flexible than their on-premises predecessors, Dunbar said. Additionally, users tend to worry about security in the cloud, since now the data resides on someone else's hardware and control has been transferred.
"Finally, performance can be a concern since process-execution time is dependent on internet bandwidth and speed," he said. "However, the more significant issue, and what we see time and again with clients, is that they make the technical transition from on premises to cloud, but fail to take advantage of rethinking their HCM processes."
Reese Dunbarvice president of business transformation services, Capgemini
But Brosnan said she's having fewer conversations with clients about the minuses, mainly because most of them have embraced the cloud for talent management and have been using other cloud products for years. "They're used to the cloud, so they don't really bring it up anymore," she added. "But initially, at least, the concern around the cloud for core HR was about putting employee data in the cloud."
So Accenture helps clients understand that because vendors in SaaS environments have many customers, they're able to invest in a high level of security that's better than what corporations could get on their own.
Cloud HCM best route to employee engagement
Dunbar said the move from on premises to the cloud is a great opportunity to transform the workforce and rethink HCM processes with a focus on culture, engagement and digital. "Happy, engaged employees are the best source of strategic advantage. Yet, few companies are able to capture and fully realize this potential," he said. "Firms should use this investment of time and capital during the transition to the cloud to reassess their approach to the overall employee dynamic and its potential for both qualitative and quantitative, bottom-line results."
Robert Grashuis, CIO of OneSpring, a usability and design company based in Alpharetta, Ga., echoed Dunbar's sentiments. Moving HCM to the cloud is often a significant business transformation initiative for many organizations, according to Grashuis. And an HCM Cloud implementation brings many of the same challenges and opportunities as on-premises systems.
"As an example, companies typically focus solely on the features and functionality that are out of the box that many HCM technology platforms provide," he said. "Their intent is to save both time and money by implementing a solution quickly through predefined configuration options." However, this approach often backfires on organizations. They find after implementation that worker productivity and morale suffer because the systems do not meet their needs, are unusable and are difficult to change in a way that best responds to their business process and workflow requirements, Grashuis added.
When developing an HCM strategy to move to the cloud, organizations should not miss the opportunity to drive improvements to both business process and productivity by leading with human-centered design (HCD), he said. "An HCD approach to the transformation will put their workers' experiences at the forefront of their strategies and design of their new programs," he explained. "With that approach, companies can then focus on what capabilities the cloud transformation should include to best align and support an optimal human capital management solution."
Bank opts for phased Oracle HCM
When it comes to determining which particular HCM applications to move to the cloud and which to keep on premises, many companies may opt to make the transition in phases. "Most of the time, it's with the talent management modules first, such as recruitment, learning, succession, performance management, etc.," Dunbar said. "Clients rarely move to cloud completely and all at once. These changes can have a significant organizational impact, so it's important that each client carefully plans out a roadmap that meets their needs."
And it's not a one-size-fits-all decision. Rather, there are options, and no one particular path is best, according to Dunbar. Certain modules and implementation plans tend to make things easier long term, but each organization should figure out what makes the most sense for its circumstances.
Brian O'Neillassistant vice president of human resources, Eastern Bank
In fact, O'Neill said Eastern Bank did its Oracle HCM Cloud implementation in phases, with the first beginning in February 2014. The goal was to implement core HR, benefits, compensation, performance, recruiting, onboarding and learning by October of that year -- a goal the company met.
The company's next goal was to launch payroll in January 2015. "That one we did miss," O'Neill acknowledged. "We spent a lot of time concentrating on all the other modules during that implementation period and didn't put as much focus as was needed on payroll, and that turned out to be the most complicated module to get up and running. So we decided to put that off, and we did that the following year, so we were up and running on payroll as of January 1, 2016."
It's common for organizations to move to the cloud in a phased approached that involves leaving some applications on premises and moving some to the cloud, Gartner research vice president Melanie Lougee said. Most frequently, organizations that decide on a phased approached will move their talent management applications first. "It's an approach almost like front-office HR, with recruiting and learning and performance management that are very visible to an organization or to external candidates," she explained. "And [companies] want to update those and have those have a much more modern look and feel."
Oftentimes, due to the scope and enormity of the project, organizations might leave their back office, payroll and core HR on premises and phase them in later. "Or maybe a company is in a highly competitive job market and really needs some best-of-breed recruiting solutions, and they might decide that it's worth going outside of a suite where they have a very specific need," Lougee surmised. "Or maybe an organization that has a high need to train large numbers of employees might decide it's worth it to go out and buy a best-of-breed learning management system."
Now that Eastern Bank has finished its move to the cloud, the company's full employee "hire-to-retire" lifecycle is contained within one application. The company now has, all in one place, information on its employees from recruiting to onboarding until they retire, O'Neill said. "Another big benefit is that we previously had separate servers that we used that were on premises," he added. "Now, we don't have to have our IT team involved hardly at all anymore. All the maintenance is done by Oracle, we're not patching servers or any of that work, so it's freed up time on our IT side. Now, HR is able to work directly with Oracle to manage the system. That's been a big time cost saver for us."
Understand cloud HCM trends
Prepare a cloud HCM business case for the CFO
Learn about Oracle's plans for HCM Cloud