What is the question that baffles HR managers when it comes to selecting the HR Management System (HRMS)? It is a choice between on-premises vs. cloud-based HRMS. As businesses evolve, they need advanced HRMS to manage various HR activities. However, it is necessary to choose the right HRMS to meet the business needs effectively. In this post, we will understand both on-premises and cloud-based HRMS. Let’s start with the introduction of on-premise HRMS.
What is an On-premise HRMS?
As the name suggests, on-premise HRMS is software that the company hosts on its servers. An on-premise HRMS provides businesses with more control and customization, however it requires substantial upfront costs. Moreover, it requires technical expertise to customize various features. Maintaining and upgrading the on-premise HRMS is the company’s responsibility, which is not the case in the cloud-based HRMS.
What is a Cloud-based HRMS?
A cloud-based HRMS is a solution that a third-party provider manages on remote servers. These cloud-powered remote servers enable companies to manage various HR-related tasks including payroll management, employee records, and recruitment. A secure Internet-based platform can offer the necessary flexibility, scalability, security, and cost-efficiency. However, the cloud-based HRMS requires a subscription.
Out of these two choices, companies should choose the HRMS that can address their needs in the best possible way. Let’s delve into the requirements that an on-premise
Which HRMS is Better for Your Business?
It is fair to mention that both types of HRMS serve different objectives. They have their merits and demerits. In such a scenario, it is beneficial to go through their characteristics to find out which one will remain in line with your business model and requirements.
Cloud-based HRMS
Cloud-based HRMS can handle HR activities for businesses of all sizes. As it is accessible using the Internet, authorized users can get the HR data from anywhere. In a way, cloud-based HRMS promotes remote working. Moreover, this type of solution offers a subscription-based pricing model, eliminating the need for a large upfront investment in infrastructure. This can be particularly cost-effective for SMBs.
Furthermore, the cloud-based system reduces the IT burden on your organization as the service provider handles system updates, maintenance, and security. As a result, your IT team can focus on other crucial tasks. Cloud-based HRMS Software also boasts scalability as it can easily grow alongside your HR needs. However, you need to consider data security. While cloud providers often have robust security measures, it is advisable to discuss this aspect.
On-premise HRMS
On-premise HRMS offers a high degree of control over your data but it has some drawbacks. Since the system resides on your company’s servers, scalability and accessibility remain limited. Only on-site employees or those connected through a VPN can access it. This can hinder remote work capabilities. These days, many businesses switch to remote model and if remote working is in your mind, on-premise HRMS is not sufficient.
Furthermore, you can avoid subscription fees in on-premise HRMS but you need to pay a significant upfront cost for hardware and software. Ongoing maintenance and updates can also require some amount over the period. Organizations have more control over system updates and security measures, allowing for customization to specific needs. However, this benefit comes at the cost of needing a robust internal IT team to maintain the system.
On-premise vs. cloud-based HRMS comparison can give you the necessary information for making a decision. Still, if you have any doubts, here are some tips to consider for choosing the right software from cloud-based and on-premise HRMS.
How to Choose Between Cloud-Based & On-Premise HRMS Software?
Choosing between cloud-based and on-premise HRMS depends on your organization’s specific needs. You need to consider other factors like the pros and cons of these solutions and even the budget. Here we give a breakdown of key factors you can keep in mind for selecting the right solution-
Cost
Cloud-based HRMS has lower upfront costs, but it comes with a subscription model (pay-as-you-go) and your company has to pay monthly fees. On the other hand, on-premise HRMS requires a significant investment initially in hardware and software. Also, some amount is necessary for ongoing maintenance.
IT Resources
On-premise systems require your IT team to handle updates and maintenance. In a way, the on-premise solution is resource-intensive. When it comes to cloud-based HRMS, a provider takes care of maintenance and updates regularly. It can help you get rid of keeping some amount aside for periodic maintenance.
Scalability
Cloud-based HRMS easily scales up or down as your company grows. As this solution works on the Internet and third-party servers, it is easy to increase its capability. On-premise systems may require infrastructure upgrades for scalability. You need to invest more in infrastructure to get more scalability over the period.
Data Security
Both options offer robust security measures. Cloud providers manage data security, while on-premise gives you direct control over your data’s physical location. However, it is advisable to ask about this aspect before purchasing the right HRM solution for your company.
Ease of Use
Cloud-based HRMS is generally easier to set up and use, The solution provider updates it regularly. On-premise systems require in-house IT expertise for setup, modification, maintenance, and updates.
Compliance
Both systems comply with data regulations. Cloud providers often have dedicated compliance teams for ongoing adherence. They can address such issues more rapidly as compared to on-premise HRMS solutions.
Ultimately, cloud-based HRMS is a good fit for
- Businesses on a budget or with limited IT resources.
- Companies with a need for scalability and easy access.
- Organizations comfortable with a subscription model.
On-premise HRMS might be better for
- Companies with strict data security concerns prefer physical control.
- Businesses with significant IT resources and expertise for system management.
- Organizations with specific customization needs.
You can choose the HRMS solution that suits your organization’s business model by considering these factors.
Conclusion on Cloud vs On Premises HRMS
Both cloud-based and on-premise HRMS software have their pros and cons. It is essential to consider your business requirements and other factors of comparison between cloud-based vs. on-premise HRMS to select the right solution. Hope this concise guide will help you make the right decision that will best align with the priorities and objectives of your company.
PowerHR360 is an all-in-one HRMS solution based on cloud technology to streamline your HR processes and simplify complexities. Your HR department can manage onboarding, payroll, and other crucial tasks efficiently with our dynamic HRM solution designed for global SMBs. Want to know more or schedule a FREE demo? Just drop us a line at demo@powerhr360.com and we will get back to you in a short time.
