Cloud HRMS Vs On-Premise HRMS Know The Key Differences

June 30, 2017

When you plan to automate your HR functions, your first debate would be Cloud HRMS Vs On-Premise HRMS. This is a question which haunts every business man and one you have to finalize definitely before looking at the options available. HRMS software is a sure shot way of saving your time, resources and to cut costs. If you have an automated human resource management system, you can leverage your human assets and productive hours to improve your business and don’t have to concentrate on mundane paperwork, filing and data management.

Human Resource Management System or HRMS in short, is an integrated system which encompasses all the core HR functions in one platform. The modules found in such solutions consist of the following functions:

Payroll Management
Performance and Appraisal Management
Rewards and Benefits
Recruitment, Training and Employee Onboarding
Time and Attendance Management

If you have taken the decision to automate your HR processes but are confused about the kind of deployment that would suit your business needs, let us help you simplify the concepts and help you in the Cloud HRMS Vs On-Premise

Confused? There is no right or wrong in this, and the kind of HRMS solution you go for should primarily depend on the kind of resources you possess, your budget and your business need and size.

While the setup of HRMS on-premise is going to be way higher than the cloud solution, you can definitely consider this as an option if you don’t want to pay huge monthly subscription charges.

image source:http://hrmglobal.asia/

Cloud HRMS Vs On-Premise HRMS

When you are out in to buy HRMS software, you are bound to get confused with Cloud HRMS Vs On-Premise HRMS – which to buy? These are two most popular HRMS deployment available in the market and come with its own set of positives and negatives. To decide between the two, you need to understand both the advantages and disadvantages associated with both the solutions and decide which would be best for your business.

#1. Business Size

While choosing the kind of HRMS software, you must first consider the size of your company. If you are a growing company with more than 100 employees and require a lot of customizations and alterations in the software now and then, cloud-based solution is not the right choice for you. What you require is an in-house solution which gives you scope for your growth and organizational changes.

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#2. Upgrades and Patches

With an on-premise HRMS, you need to actually keep looking for new patches manually and pay extra for new upgrades. This is more difficult as it has to be done during business hours only when there is an IT personnel to manage it. This would definitely decrease productivity and increase workload. On the other hand, HRMS on cloud doesn’t require any manual labour and is mostly free of charge. The bonus is that your SaaS solutions provider will take care of all the installations, updates and maintenance after business hours so that your business productivity doesn’t go down.

#3. Security

On-premise HRMS lets you deal with your data yourself and only you are responsible for any loss in data or breach of security. Though an HRMS cloud solutions provider has a high level of security and contingency measures in place, keeping it with you would mean that your sensitive data doesn’t leave the company and is in your control. If you have a sound security and data backup system available with you, then this can be a good option for you. However, in case you feel that it is difficult for you to manage all the sensitive data and feel that a better option would be to hand it over to a trusted source that can store and secure it on your behalf, then you can go ahead and invest in an HRMS cloud solution. It is worth noting that security level of HRMS on cloud is far superior to the in-house solution and goes through various levels of penetration tests. It is next to impossible to replicate that level of security in an on-premise HRMS solution.

#4. Internet Connectivity

This is a less discussed point but is very important to consider while deciding which one to opt for. Any HRMS cloud solution would require good internet connectivity at all times for it to work effectively. However, if you don’t have a good internet connection or if your company is located in remote locations with limited network connectivity, then on-premise HRMS would be a safe bet for you.

#5 Flexibility and Risk Level

If you have a small and fast growing business, it is essential that your HRMS has some level of flexibility and scaling up feature. If you opt for an HRMS on cloud, you can work on a monthly contract so that you don’t have to pay for it when you don’t need it. Also, this solution can support your business in cases of sudden growth spurts and scaling down. You can just pay for whatever you use. However, in the case of on-premise HRMS, you have to invest in additional hardware and software packages. The installations, preparations, configuration, and implementation of such software would take a lot of your time and resources.

#6 Capitalisation of Investment

This is a very important aspect to consider for any business and while some business chooses to overlook it, some others prefer that over other advantages. In the case of an on-premise HRMS, your investment on it can be capitalized and value depreciated. However, with HRMS on cloud your ability to capitalize on the investment is very limited.

#7 Ownership cost

When we are comparing Cloud HRMS Vs On-Premise HRMS, it is a general assumption that HRMS on cloud is comparatively less expensive and affordable when compared with on-premise HRMS, It is not exactly true. The entry cost might be lesser for the cloud-based solution, but when you look at the ownership cost on a long run say 3-4 years, HRMS on-premise has the lowest cost of ownership when compared to its cloud counterpart.

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HRMS solutions are definitely worth the investment and have become a necessity for businesses both big and small. Let us conclude our Cloud HRMS Vs On-Premise HRMS debate by saying that it is essential that you decide which type of deployment would benefit your business the most and invest accordingly. Don’t just frame your judgement only on the cost factor and explore it further to understand both the options better before investing in it.