ERP-based Legacy HR Technology is So Yesterday

"ERP vendors will be there forever," says Mark McMillan, co-founder of Talent Function Group. "Inertia sets in, especially with investments." So it seems. Purchased and implemented long ago for lots of money, the typical ERP-based HR system has since seeped into countless nooks and crannies of the afflicted organization's IT infrastructure, entrenching and wedging itself in ways that keep the bravest yet of change champions away.

But even the deadest of the dead weight must meet its maker, so to speak, and word from the field suggests that antiquated HR systems may finally have worn out their welcome: Findings from strategic human capital management solutions provider SumTotal® Systems' recently completed global HR technology survey point to significant cracks in the old foundation of original, legacy HR systems. …and the cloud is to blame. The Siren's song of cloud-based alternatives is persuading organizations to strongly consider dropping their unnecessarily complex and costly ERP-based HR systems, whose inability to adapt confounds efforts to innovate. Objective observation demonstrates that cloud-based solutions are the opposite, and HR leaders recognize this.

Furthermore, organizations want a single, best-in-class provider, not a hodgepodge of solutions cobbled together into a not-so-stellar legacy. In its survey, whose participants came from a variety of market segments and spanned 27 countries, SumTotal found that global organizations favor moving toward a single best-in-class solution provider nearly 3-to-1 over adopting the basic functionality of their legacy ERP provider. Put differently, 34 percent of all HR system buyers now want a single vendor for their HR technology.

"Managing a mix of point systems -- whether legacy, custom-built, or niche deployments -- has become untenable from a cost and administration perspective," says John Borgerding, CEO of SumTotal Systems.

Mature cloud-based systems can meet the complex requirements of large global organizations. Customer processes and the supporting technology are evolving rapidly, and whereas systems with a high cost to upgrade and keep current are incapable of keeping pace, cloud-based options can alleviate shortcomings of ERP-based delivery. This brings significant benefits, such as rapid implementation and options for advanced configuration.

Despite all this, Talent Function Group's McMillan remains right: ERP-based HR systems will probably always be with us, in some shape or form. But logic justifies SumTotal's findings, and companies are justifiably optimistic about and persuaded to evaluate cloud-based solutions' ability. After all, they want and need to adopt and deploy improved capabilities as their organizations' HR aspirations advance and evolve beyond the severely limited potential of their legacy HR technology.