Why It's Time to Ditch the HR Filing Cabinet for the Cloud

An increasing number of small businesses are adopting cloud computing. In fact, consulting company Compass Intelligence estimates that the small and medium-sized business cloud computing market will grow from $43 billion in 2015 to $55 billion in 2016.

What does this mean for HR? When it comes to small businesses and the latest innovations, HR departments are historically late bloomers—and it turns out cloud computing is no exception. A study from the New Jersey Institute for Technology showed that the three most common cloud apps used by SMBs are e-mail and collaboration software (63 percent), web or e-commerce software (55 percent) and office tools and productivity (56 percent). The least common application for the cloud? HR at 37 percent.

Despite advantages that span time, resources and money, many SMBs are still hesitant to ditch the filing cabinet for the cloud when it comes to people operations. Here, experts chime in on three major benefits of cloud technology for HR, and why small businesses should make the leap.

The hesitation to adopt cloud-based HR software means SMBs are missing out on the latest talent strategies and trends used by bigger companies, says Matt Poepsel, vice president of product at The Predictive Index. Resources like social media and big data analytics are easier to implement with the latest HR software, but many SMBs are unable to take advantage of them due to outdated products.

"HR technology is undergoing a period of rapid advancement," says Poepsel. "One of the biggest benefits of a cloud-based HR system relates to the introduction of new software features and capabilities, ranging from social media integrations to video interviews to advanced people analytics."

With cloud-based tools, SMBs can easily take advantage of social media for recruiting or big data for performance reviews. Without it? You're likely stuck with paper folders, excel spreadsheets or a monolithic on-site HR software platform that's hard to manage or update.

Fran Williams, marketing and strategy director for Moorepay Ltd, a cloud-based payroll and HR solution provider, says one of the biggest advantages of using cloud-based HR software is the ability to simplify your HR processes and reduce the amount of time it takes to complete routine tasks.

"In many cases it helps reduce the burden on HR by distributing basic administrative tasks to line managers and employees," says Williams.

For example, a common feature found in many HR software solutions is the self-service facility; this allows employees to request holidays, edit their personal information and view their pay-stubs online. Imagine how many fewer phone calls and requests your HR team would have to field when PTO or sick time could be instantly approved by management?

Another benefit? Digitizing your HR processes can benefit both the environment and your team's efficiency. The average HR record contains 29 pages of paper, says Williams. In addition to cutting down on storage space, it's much easier to search through digital records than a pile of folders.

While moving to a virtual cloud-based environment is not without its risks, it offers considerably more security that a paper-and filing-cabinet based storage system. An IDG Cloud Computing study found that 94 percent of SMB cloud adopters have experienced security benefits since moving to the cloud.

"Cloud-based systems are often more secure than your own servers because of the dedicated attention and expertise," says HR consultant Max Dubroff at SHRM-SCP.

Of course, the real value of a moving to a cloud-based HR system is a combination of these factors. Taking advantage of the latest talent strategies, increasing HR efficiency and improving the security of employee data leads to more business productivity—and eventually, more profit, too.

Photo: Creative Commons