NelsonHall recently published its 2017 Cloud-Based HR Services market analysis study and NEAT vendor assessment, as part of which we interviewed the clients of leading cloud-based HR services vendors to ascertain satisfaction levels across a range of service criteria. And while we found that cloud-based HR services were meeting client expectations in a few areas, those areas were mostly of lower importance to clients. The areas of higher current and future importance to clients identified below should be the focus of attention for cloud-based HR services vendors.

We interviewed cloud-based HR services vendor clients in North America, Europe, and Asia Pacific, looking at ~50 specific service criteria. We ascertained importance and satisfaction levels, plus a measure of future importance. Below is a small selection of potential benefits from cloud-based HR services, showing the levels of importance and satisfaction attached to each one by the clients interviewed.

Three key areas where vendors are underperforming against client expectations that are also of high future importance to clients are:

• Improved standardization and consistency of services
• Enhanced in-house focus on value-adding activities
• Improved employee satisfaction.

Improved standardization and consistency of services is the biggest challenge for cloud-based HR services vendors, as it scored highest in current and future importance and has the highest delta of current satisfaction at -22%. Although client satisfaction for cost savings achieved is +2% greater than current importance, future importance is the same as that for improved employee satisfaction (94%, the second highest future importance rating).

Our market analysis identifies transforming the HR operating model as the top cloud-based HR outsourcing driver, for the following reasons:

• To provide a catalyst for standardization of HR processes across business lines
• To create a single global HCM platform providing access to real-time HR data
• To enhance employee experience and engagement features,

The second highest rated outsourcing client driver is improved cost structure/efficiencies, including lower, more predictable cost to operate, and costs shift to subscription-based (OPEX) vs. large investment (CAPEX).

Comments from vendor clients regarding improved standardization and consistency of services included:

“We already had a system that was not running properly and there was lots of confusion. So, people wanted a solution that created less confusion, that was fit for purpose, and created more understanding”

“It has improved across the entire duration of the contract. The importance is now starting to heighten as it drives cost”

“That was one of our top goals, but we keep having these quality control issues. It is probably going to be even more important”

Comments regarding enhanced in-house focus on value-adding activities included:

“There is room for improvement. My role is continuing to be more strategic and I need this system to do everything it can do – and a part of that is my team maximizing what the system can do”

“That's a big one and will stay so. I would put satisfaction low on this – because of the quality issues, we continue to have to manage the outsource service and really we should be able to 'set it and forget it'…”

“It is really important. At the minute, I am not satisfied – the account management is amazing and I think he is doing everything he can, but the support processes have to change within the vendor”

Comments regarding improved employee satisfaction included:

“Where they could help us more is making it very simple for an employee to use the tool… it’s fine for somebody who is an expert in HR, but my employees aren't expert, and I think we could do something to make it easier to use”

“The more services we move out to the cloud, the more employees are going to benefit from it. By doing that, we are hoping to improve the self-service level even more, so that employees can do more by themselves”

“The importance is really high, but has the vendor improved employee satisfaction? No, not at all”

Vendors are exceeding client expectations by a healthy margin in their ability to deliver cloud HR process change management, however: current importance is only 66% and future importance is 74%, while client satisfaction is 74%. Additional areas where clients gave high satisfaction marks to cloud-based HR services vendors included:

• Strength of partnership: 92%
• Flexibility of approach: 90%
• Vendor service culture: 88%
• Ability to deliver business benefit: 82%.

In summary, client satisfaction with cloud-based HR services is falling short of client importance in several areas. As this is a relatively new service offering, with rapid growth of client adoption, prompt attention by service providers would be prudent to increase client satisfaction.

NelsonHall’s NEAT comparative vendor assessments look in detail at vendors’ ‘ability to deliver immediate benefit’ to their clients, and their ‘ability to meet future client requirements, and assist strategic sourcing managers in assessing vendor capability while cutting the time and cost associated with their sourcing projects.

The Cloud-Based HR Services NEAT shows how vendors are positioned overall in terms of their ability to deliver cloud-based HR services as well as within two distinct market segments (i.e. areas of focus designed to meet specific cloud-based HR services requirements): these are Workday Focus and SAP SuccessFactors Focus. The NEAT online tool also enables buy-side organizations to input their own weightings and tailor the dataset to their specific requirements across over 50 individual vendor evaluation criteria. In this way, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria. Buy-side organizations can register for free access to the NEAT here.