HR, benefits tech finds a home in the cloud
HR and benefits technology may be moving to the cloud.
As executives look for ways to pare down the number of tech tools in their HCM systems, they’re searching for more integrated and easy-to-update options — which cloud-based technologies can provide, says Dan Staley, global HR technology leader at PwC.
Employee Benefit Adviser sat down with Staley to discuss why employers are choosing these technologies, the need for more integration in HR tech and the future of automation.
EBA: What are some of the biggest trends you are seeing in HR technology?
Staley: The biggest trend is moving to the cloud. If you look at HR departments in general, they’re already focused on the employee experience and providing more tools to managers, who make decisions and need to get better insights. One of the biggest things clients are doing, is they’re finding that the innovations really aren’t there for a lot of older legacy technology that was made on premise. That’s been the number one reason why organizations move to the cloud. [With cloud-based technologies] they’re getting [product updates] two and three times a year, instead of every three or four years. That’s been a really big trend.
The other trend is a lot of the newer technologies are incorporating AI, data visualization and robotic process automation. [We’re also seeing] digital assistants through the applications like Siri and Alexa, where you can use voice commands. There’s all that advanced technology we’re starting to see now. Organizations are determining how they can use that augmented reality in training. But I think some of that is being introduced more slowly.
EBA: What are some of the advantages of employers moving to the cloud?
Staley: There are a lot of advantages. The top reason is software innovation and quicker releases. About 70% of companies in our HR technology survey said that’s the primary reason why they move to the cloud. When you begin using [cloud-based technologies], you have a subscription to the software, much the way you would when you buy an application on your smartphone. As new releases of that app are available they’re pushed to you. It’s just like updating an app on your smartphone. That’s really beneficial. In the past you would update legacy applications every three or four years. You would have to wait until the next big release.
[Going to the cloud also] lessens dependence on IT. It’s not that IT doesn’t play a role, because there are still integrations and things you have to do to make HR applications work. But you don’t need IT to make these updates. It gives more empowerment to HR practitioners.
It also lowers the cost of ownership. You don’t need the same level of infrastructure because these applications are hosted in the cloud by the software vendors. So the vendors have the data centers and all the hardware. You’re leasing that from them, so it lowers the cost of ownership.
In general, [HR technology] is becoming very well-rounded and very deep in different areas of functionality, it allows organizations to have a smaller portfolio of applications. That means employers are getting more from one vendor and there’s more of a consistent user experience.
EBA: Do you see a need for more integration in HR technology?
Staley: Yes, it's been a long time problem within the HR space. There are so many different elements of managing the people experience within an organization that it lends itself to a spiderweb of applications. Part of that has to do with the degree of outsourcing within the HCM space — you have benefits, payroll, tax reporting, expat processing and leave administration — these are things that are commonly outsourced. It’s compounded by the various tools within HR and an increasing array of applications.
Every year there’s a new application that organizations are rolling out. I think it’s a problem with HCM that there’s all these different vendors and applications you have to tie together. It does make integration one of the top challenges for chief human resource officers. I don’t see it going away completely.
What organizations can do is look at their HR tech portfolio and say “what are all of the applications that we use when we look at what our core HR does,” and “is there a vendor that can accommodate 70 to 80% of the needs that we have?” Really, over time employers can try to consolidate that portfolio by buying more from single vendors. There’s some large HR tech vendors that have 20 or 30 different modules within an HCM system.
EBA: We see a lot of tech companies releasing HR solutions with AI and automation. What do you predict we’ll see moving forward on that front?
Staley: We’ll definitely see more. For example, the use of chatbots in helpdesk applications is increasing. It’s often the first line, when an employee logs into the helpdesk, they can immediately ask a question, maybe a benefits policy question or a question about a paycheck. We are seeing the capabilities already coming out where you can query the application and it’ll interact with you.
We’re also seeing AI and predictive analytics. Based on data that is in an application, you can predict who’s most likely to leave next by looking at geodata, turnover data and seeing what peers are doing. [Employers are] using predictive analytics from that perspective.
I think we’re going to see more blockchain coming. We’ve already seen use cases in the global payroll area. I also think we’ll continue to see that in employment verification and education verification. It’ll cut down on the time it takes to verify someone’s background.
We’ll also see the Internet of Things coming to HR. For instance in time tracking. I could see a situation where someone in the healthcare space, like a nurse entering a certain floor of the hospital and through geotracking [being able to tell] what room they’re in. Just as they enter the room, [the technology could] clock them in and out. Instead of them having to swipe, it just knows when they enter. It will make that an easier, more exact, process.
In the airline industry, if you are a worker out on the tarmac and it is a certain temperature outside, you get paid extra pay based on temperature. Your wearable device would know where you are, when you’re working. I think some of that integration into time tracking systems have a lot of uses within the HCM space.
This Q&A has been edited for length and clarity.