Web 2.0 and HR: On-demand Applications

I wish I could say I’ve spent the time gap since my last blog doing thorough research on this blog, or some other such admirable excuse, but the fact of the matter is that I’ve been busy working and creating other content.  The only excuse I can proffer is this: I’m sure each of you has committed to doing something and then about halfway through it realized it was about 10 times more work than you realized.  This was the case with our “Explore.Emerald” portal, a unique invitation-only portal for our potential customers to have a single location for all the information they would need to decide to do business with us.  It’s a really cool concept and we’re getting great response so far.  But it commanded a huge amount of my time since my last post.

All excuses behind us, let’s complete our series of blogs on Web 2.0 and what it means to HR by talking about on-demand applications, probably the most controversial of the 3 aspects I’ve been discussing (#1: social media, #2:rich internet apps, #3: on-demand applications).  By on-demand applications I mean hosted, Software-as-a-Service applications that are rented and run via the Internet as opposed to purchasing a license and installing and running the system in your own data center.  The Internet obviously provides the media through which on-demand applications are deployed, and truth be told on-demand applications have been around almost as long as the Web itself (Monster.com and all the other job boards fit the definition of on-demand applications, don’t they?)  What’s new is the proliferation of business applications–the apps that are transactional and used on a daily basis for fundamental and core business processes.

By controversial I mean not every pundit might agree with me that on-demand applications should be associated with Web 2.0.  But you’ll recall that I’ve defined Web 2.0 not so much as a technology, but more as an era, and as there’s an explosion of on-demand applications coinciding with the Web 2.0 era, one might easily hypothesize that the two are in fact connected; more on this in a second, a little credit acknowledgement first.

While much of the business world might look at SaaS (Software as a Service) and on-demand service applications as a recent technology development, the fact of the matter is that it’s only an evolution in the process.  We love to invent new buzzwords, and as far as I’m concerned SaaS is only the current generation, with an ancesty that includes Application Service Providing (ASP) in the ’90s and time-sharing in the ’70s and earlier.  The concept of outsourcing the management of business processes that run as software is nothing new, particularly to those of us working in HR, and we can credit payroll service providers–most notably ADP and Ceridian–with effectively inventing the concept; Salesforce.com and NetSuite are infants compared to these guys.

So what are the Web 2.0 drivers that are fueling on-demand applications?  We can find some reasons in both of the other aspects of Web 2.0.  Social media sites like Facebook and Myspace are bringing users to their computer to utilize applications instead of just surfing and looking stuff up, plus they’re fueling use of RIAs as they make it more efficient for people to share knowledge (and use) of these applications with one another.  Also, RIA technology–particularly Ajax–makes the user experience more effective and more enjoyable for Interent applications, whether they’re free or rented as SaaS.

In Human Resources it’s not hard to spot the proliferation of on-demand apps.  There are literally 120+ viable recruiting systems on the market, practically none of them available for conventional licensing.  This shouldn’t be surprising, considering how complex the HR world is.  A principle driving factor for on-demand applications (call it “Chuck’s Law for SaaS Proliferation”) is that where there is need for deep specialization, the value of on-demand applications is higher.  Said a little more academically, the degree of specialization of knowledge in a discipline and the proliferation of on-demand applications in that discipline are directly proportional.  It simply makes sense (i.e. value) to outsource functions that require high specialization.

For example, a good transactional onboarding system in the U.S. should help you uniformly enforce the business rules that are required of each of the 50 states’ withholding tax forms.  This is obviously a pretty substantial task for someone to maintain internally, but if you outsource your onboarding system to Emerald Software, I’m proud to say we have the depth of specialization in onboarding to do this (if you’re evaluating onboarding systems, pay careful attention to how your candidate partners enforce state withholding rules and regulations).

So what is the future in on-demand applications in HR?  An obvious answer is that more and more applications will become available as SaaS apps, though if they don’t meet the value equation (Chuck’s Law) they will ultimately fail in the market.  Another obvious answer is that they will become more and more capable, and they will become more and more integrated with one another as interface standards are adopted.  But a prediction I’d like to make that is not as obvious is that pricing for on-demand applications will migrate away from fixed rent rates toward more purely consumption rates: recruiting systems that are not charged per recruiter-user or employee count, but are instead charged by the number of positions created or filled, or even by the number of applicants received; onboarding systems that are charged by the number of hires (shameless plug for our onboarding goes here, as we do this already).

I hope this series on Web 2.0 and HR has been useful to you, and I hope that I’ll be able to return to a more regular blogging schedule.  I recently wrote a “brief” on onboarding best practices, which can provide fodder for a series of blogs, but if you have another topic you’d like me to discuss, drop me a line and let me know.

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