Cloud-based HR systems: challenges and opportunities

“HR departments want more time for their core tasks – and fewer piles of paper”

Currently, fewer than 10 percent of HR departments have fully digitalized their document storage – despite digital HR solutions offering significant enhancements in security and process improvements. Stefan Heins, Managing Director of valantic Enterprise Solutions GmbH, possesses a profound understanding of the challenges and needs associated with digital transformation, gained through years of collaboration with companies across a diverse range of industries.

Stefan, as a provider of digital solutions, you work with companies from multiple sectors and fields. What common needs have you identified, in the HR sector specifically?

Initially, the primary concern for all companies is integrating the HR department into the digital transformation process. Despite digitalization no longer being a new concept, as of 2023, only 9.3 percent of HR departments have completely digitalized their document filing. According to our survey of HR professionals, many still rely on paper files or hybrid systems. Quite frankly, the results surprised us a little, too.

Why do you think this is the case? What feedback do you receive from companies?

Responses vary widely, but the main reasons we hear about include budget constraints and security concerns. The HR department, in particular, deals with highly sensitive personal data – and some still believe that physical security, such as a locked filing cabinet, is more reliable than a digital system.

How do you address these concerns and misconceptions?

We are always happy to explain that digital personnel records adhere to the strictest data protection regulations and the highest security standards. Moreover, compliance with legal requirements, such as the GDPR, can be implemented through automated deletion schedules and well-defined access rights. A common desire across all HR departments: They want to focus more on their core work – engaging with people and managing employees – without the time-consuming tasks associated with file management and storage.

Cloud-based operations continue to be an important topic. What specific needs and requirements do you see in the HR context?

This concern ties back to the hesitations some companies have regarding digital file storage. Indeed, personnel records contain extremely sensitive information – and some organizations perceive local server storage as safer, overlooking the substantial benefits of cloud storage. As a provider of SaaS and cloud solutions for HR departments, we uphold the strictest security standards. When choosing a solution, companies should definitely consider where their data is processed and stored, whether the software complies with data protection laws, and whether the provider helps ensure compliance with all relevant regulations.

Beyond the essential security requirements, what benefits do clients of cloud and SaaS solutions experience in their day-to-day work?

Cloud and SaaS systems offer seamless integration and quicker deployment than traditional on-premise setups. Users can start using the solution immediately without the need for extensive installations or hardware and software updates. However, beyond the technical details and streamlined processes, there’s another crucial aspect to consider in the HR field: employee satisfaction. Companies in search of skilled employees cannot afford to overlook the possible negative consequences of a non-digital application process: Sending printed contracts back and forth can become an exclusion criterion for candidates. That’s why, when considering the positive effect of digitalization, organizations should not only focus on their internal workflows but also on the way the process affects external perceptions, particularly in recruiting.