HR departments are usually under constant pressure to streamline the people management processes in their organisations. Implementing HRMS software is one of the efficient ways but selecting one from the countless choices is kind of difficult for many people out there. The very first step is to check whether they need a cloud-based or on – premise HR software. Both have distinct advantages, but the best choice depends on a company’s size, needs, and resources. Let’s dive into the details to help you decide which HRMS is best for your organisation.
Table of Contents
- What is Cloud-Based HRMS Software?
- Advantages of Cloud-Based HRMS Software
- Drawbacks of Cloud-Based HRMS Software
- What is On-Premise HRMS Software?
- Benefits of On-Premise HRMS Software
- Drawbacks of On-Premise HRMS Software
- Comparison Table: Cloud-Based vs. On-Premise HRMS
- How to Choose Between Cloud-Based and On-Premise HRMS?
- Which is the Best HRMS?
What is Cloud-Based HRMS Software?
Cloud-based HR software can be hosted on remote servers that are connected via the internet. This means that the software and its data are managed by a third-party vendor, and companies access the system online. This model allows employees and HR personnel to access HR services from anywhere, at any time, making it an excellent choice for businesses with remote workforces or global operations.
Advantages of Cloud-Based HRMS Software
Cost-Effective
One of the biggest advantages of cloud-based HRMS software is the cost. On-premise systems require organisations to invest huge amount in hardware and IT infrastructure but cloud solutions are subscription-based. A cloud-based HR solution eliminates the need for heavy capital expenditure. Small and medium-sized businesses find the HRMS product are more affordable.
Accessibility
Cloud HRMS is ideal for businesses that employ remote and on-field workers. Internet access allows the employee HRMS dashboard which can access from wherever they are. From leave balance information to payslip and other HR services, employees will be able to access all the information at their convenience.
Scalability
Cloud HRMS systems can easily scale to accommodate company needs when adding new employees or expanding the business. Some companies offer subscription-based plan to fit the current business requirements and gives their customers the ability to purchase a different plan if the team’s sizes increase. By this way, the management can only invest in a subscription plan that suits and also don’t be concerned about the transferring the data to a whole new system if the company expands in size.
Automatic Updates
If a company invests in cloud HR software, the system maintenance, security patches, and updates will be executed automatically. The IT teams doesn’t have to spend their valuable time in managing such work to keep the systems up and running.
Drawbacks of Cloud-Based HRMS Software
- Data Security Concerns
Data security is the primary concerns for people when they think about purchasing cloud-based HR software systems. Most organisations require a trusted vendor with high security measures. If organisations handle sensitive data of employees or functions in a highly regulated industry, it might come as a challenge.
- Dependence on Internet Connectivity
Since cloud HRMS systems require an internet connection, any connectivity issues could disrupt your access to HR services. For businesses operating in areas with unreliable internet, this could be a significant drawback.
- Limited Customization
Cloud-based HRMS solutions may offer some degree of customisation, but they are generally less flexible than on-premise solutions. If your company requires highly specific features or custom workflows, a cloud-based solution might not be able to fully meet your needs.
Also read, How to Choose the Best HR Software?
What is On-Premise HRMS Software?
On-premise HRMS software is installed and hosted on your company’s own servers. This means that the system is managed and maintained by your internal IT team, and all data is stored within the company’s infrastructure. On-premise solutions offer a high level of control and customization, but they also come with significant responsibilities.
Benefits of On-Premise HRMS
- Greater Control With on-premise HRMS, your organization has full control over the system, from the software to the data. This can be important for businesses that need to comply with strict data privacy regulations or those that require highly customized features.
- Data Security On-premise systems keep sensitive data within your company’s own infrastructure, meaning there’s no reliance on third-party providers to manage your data. If your company is in a regulated industry or handles sensitive employee information, having direct control over your data may be more appealing.
- Customization From workflows to user interfaces, on-premise systems are more flexible in terms of customization than cloud-based solutions. This can be a major advantage for larger organizations with complex HR requirements.
Drawbacks of On-Premise HR Software
- Higher Initial Costs
On-premise HRMS software implementation usually costs high. Besides software purchase, the company has to invest in hardware devices, server infrastructure and a dedicated IT professional to maintain workforce management. Small and medium-sized businesses might find it difficult to allocate a magnanimous budget.
- Ongoing Maintenance
IT departments have the huge responsibility of managing software updates, patches and system maintenance. It is better to invest in on-premise software with little to no maintenance rather than a dedicated IT team with heavy workload.
- Limited Accessibility
On-premise HRMS systems are typically only accessible from within the company’s network. If employees are working remotely or across multiple locations, they may struggle to access HR services unless a Virtual Private Network (VPN) is ready. This could create additional hurdles for businesses with a distributed workforce.
Comparison Table: Cloud-Based vs. On-Premise HRMS
| Feature | Cloud-Based HRMS | On-Premise HRMS |
| Cost | Lower initial investment; subscription model. | Higher upfront cost for software and hardware. |
| Accessibility | Accessible from anywhere with internet. | Limited to internal network or VPN access. |
| Control | Less control over data and system management. | Full control over system and data. |
| Security | Dependent on the provider’s security measures. | More control over data security protocols. |
| Scalability | Easily scalable to fit business growth. | Requires additional infrastructure for scaling. |
| Maintenance | Automatic updates and maintenance by the vendor. | Requires in-house IT support for updates. |
How to Choose Between Cloud-Based and On-Premise HRMS?
Choosing the right HRMS for your company depends on several factors:
- Budget: HR professionals with limited budget and prefer to avoid large upfront costs, a cloud-based solution is the better option.
- Control and Security: For businesses that requires more control over its data and security protocols, on-premise are be the best choice. When investing in cloud-based, it is very crucial to research and find a highly-secure HRMS software solution like DigiSME.
- Scalability and Flexibility: Cloud solutions are ideal for growing businesses with fluctuating needs. On-premise systems might be better for larger organizations with specific needs.
- IT Resources: If you have an in-house IT team capable of managing system maintenance, on-premise solutions may be a good fit. If not, cloud-based HRMS is a simpler option.
Which is the Best HRMS Software?
There is no one-size-fits-all answer. The ideal solution depends on your company’s needs, size, budget, and IT resources. Cloud-based HRMS software can be the best choice for organisations that employs workers both at office and on field. On-premise HRMS may be better suitable for organizations that has only staff working at workplace.
DigiSME offers cloud-based software that can be used for both in-office employees and remote workers. The face recognition technology is used for attendance management. For in-house employees, a dedicated tap can be mounted on the office premises while remote or field workers can install dedicated mobile application for marking their attendance.
Wrapping Up
In the end, both cloud-based and on-premise HRMS software offer distinct advantages and potential drawbacks. It’s essential to assess your organization’s needs, resources, and growth plans before making a decision. Whether you choose a cloud-based or on-premise solution, the right HRMS can streamline your HR operations, improve employee satisfaction, and help your company grow.
Contact us for a free consultation to discuss your needs.
