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HR Systems: Will a SaaS or On-Premise Solution Work Better?

Two men discussing HR system for Saas or On-Premise

HRIS software has revolutionized the way HR professionals work, think, and develop new business processes. New advancements in technology have broadened the spectrum of HR professionals and allowed for a greater degree of specialization.

One example of this can be seen in the recognition of HR professionals as true strategic business partners. This can be seen by the fact that an increasing number of organizations have turned to HCM or human capital management in order to gain a competitive edge over their rivals.

With business leaders and managers now understanding the value brought to the table by HR professionals, a new question has arisen – how can organizations equip and position themselves to make the most of this paradigm shift?

As a rule of thumb, strategic HR management begins with investing in the right kind of infrastructure with most organizations investing in HRIS software. However, HRIS software can be divided into two groups, with the first being a more traditional on-premise, hardware-based system and the second being the more advanced SaaS (Software as a Service) system.


Both these systems have merits of their own and for the uninitiated, it can be difficult and even impossible to decipher. To give you a better understanding of the pros and cons of these systems, we now take a closer look at what they both have to offer.


SaaS Versus On-Premise HR Systems


  1. Cost

Questions of cost and efficiency are quite likely to be at the back of every manager’s mind. Off the line, SaaS-based HR systems are significantly more affordable to run when compared to more traditional on-premise solutions.

This is because of the significantly lower capital investment required. SaaS systems do not make use of an in-house server to function due to their cloud-based format.


Servers are hosted by the service provider meaning that the organization will not have to incur additional expenses from the purchase of hardware and installation of additional infrastructure i.e. wiring and cables.

The only additional costs incurred by a SaaS system will be a monthly subscription fee paid to the service provider – a system similar to that adopted by Microsoft for their Office 365 software.


In the case of an on-premise HR system, business owners will be required to purchase and pay for the installation of hardware whilst also allocating a dedicated space for the server room. Alongside this, a dedicated team of IT personnel will also have to be hired for the upkeep of said server. When compared to a SaaS system, it is clear that in both the short and long term, an on-premise solution will incur significantly higher costs in terms of upkeep and investment.


  1. Scalability

Besides cost, managers should also seriously consider the degree of scalability that a new HRIS system would bring to the table. Scalability examines the ability of the organization’s HR department to adapt to growing demands and shifting conditions.


In the beginning, HR professionals would likely be primarily concerned with hiring and recruiting skilled employees and as the business grows, the role played by HR professionals will naturally begin to evolve.

Eventually, questions of succession, training, employee engagement, and retention will come into play. Thus highlighting the need for a flexible HRM system that offers a wide array of options for a growing organization.


Fortunately, modern on-premise and SaaS HR systems feature a degree of scalability. It should be noted however that on-premise systems while scalable, offer significantly fewer options and can be more costly to make changes to.

On the other hand, SaaS-based HR systems offer seamless integration with new business modules thus ensuring better scalability in the long term which gives such systems the edge over their on-premise counterparts.


  1. Data Protection and Security

The protection of vital information and security is essential to prevent any data breaches and to ensure that the organization remains compliant with government legislation.


As was seen by the SingHealth data breach – a cyberattack which resulted in the medical data of 1.5 million Singaporeans including that of PM Lee even the largest of entities are not safe from hackers.

Sensitive employee data, from tax information to employment history, can be exploited by unscrupulous third parties looking to hurt an organization. This highlights the importance of investing in an HRIS system that offers a comprehensive umbrella of security.


SaaS-based HR systems make use of a variety of security measures and protocols that are regularly updated in order to protect from data breaches. Service providers like IQDynamics have invested heavily in some of the most stringent security measures to keep data safe.

These measures can range from regular penetration testing in order to test for security weaknesses to Web Application Firewalls or WAFs that offer an added layer of protection against hackers.


While an on-premise setup may offer the illusion of physical security i.e. having a server located on-site, it should be noted that it is significantly more difficult to implement advanced security measures for these setups due to their limited software capabilities. Additionally, the time lag between server updates can leave companies vulnerable to new threats.


  1. Mobility

With nearly 50% of the world’s population under lockdown, the COVID-19 pandemic has clearly demonstrated the need for companies to be able to operate remotely during such an uncertain time.


The inability to do so can leave an organization crippled and irrelevant in an increasingly competitive world. During a global emergency such as a pandemic, HR professionals need to retain the ability to function remotely to ensure that key processes such as payroll and CPF deductions are able to continue.

With a SaaS-based HR system, HR professionals are able to work remotely without having to step foot into the office – a feature critical for ensuring business continuity. While a new generation of on-premise HR systems allows for web-based access, IT personnel would still be required to be on-site in order to keep the server functioning.


In the event of a total lockdown i.e. the complete prohibition of movement, an organization with an on-premise HR system would not be able to continue functioning. Hence further showcasing the benefit of utilizing a SaaS-based HR system.


  1. The Best of Both Worlds

Given the cost advantage and flexibility offered by SaaS systems, one would ask the question, why continue with an on-premise setup?


As was mentioned previously, for reasons of security and compliance, some institutions still require servers to be housed on-location under lock and key. This is particularly common, in the finance industry where data collected and stored is closely monitored by the government.


In this situation, managers should opt for an on-premise solution that is truly web-based. A truly web-based HRIS like IQ Dynamics provides direct access to your HR system through the web as compared to other systems that require virtual private networks (VPNs) to enable remote access. This is a “best of both worlds” approach which allows for a server to be housed and protected on-site whilst still allowing for employee remote access.

While on-premise solutions such as this lack the customizability of SaaS offerings, the additional level of security offered is something that makes it worth considering.



Investing in the right HRM system is crucial for an organization to succeed and remain competitive. To do so, business owners and HR professionals alike will need to conduct an in-depth study into their organization’s short and long-term strategies to develop the right course of action.

If you are currently using an on-premise system and would like to get a better understanding of how a SaaS HR System can help you be more effective in HR management and cut down significant costs, contact us here today! 

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