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How to Choose HR Solutions: SaaS vs Legacy HR Systems

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What makes one Human Resources (HR) system better than another? Is it the cost, efficiency, or ease of integration? And, crucially, how do you choose between legacy HR systems and Software-as-a-Service (SaaS) ones?

The principal challenge facing many organizations today is updating their HR practices. According to a report from PwC, up to 70% of companies still utilize obsolete HR systems, leading to reduced efficiency and increased operational costs. In an era of digitization and automation, these traditional systems fall short of meeting the rapidly evolving business needs. A research study conducted by Deloitte points out that lack of flexibility and scalability in legacy systems impedes organizational growth and transformation. Therefore, there is a pressing need to replace these systems with more efficient, contemporary solutions.

In this article, you will learn about SaaS and legacy HR solutions, their distinctive features, benefits, and drawbacks. The discussion will explore how to make an informed decision based on your organization’s specific needs and readiness for change. This will entail a comparison of the two systems’ flexibility, ease of integration, cost, scalability, and adaptability to the evolving business landscape in order to identify the most suitable HR system.

Furthermore, we will delve into case studies and interviews with industry leaders to draw upon their experiences and insights in this crucial decision-making process. So, whether you are a start-up looking for your first HR system or a mature organization contemplating an upgrade, this article aims to provide you with the knowledge and understanding to make the best choice.

Understanding Key Definitions: SaaS vs Legacy HR Systems

SaaS, or Software as a Service, is a method of software delivery where applications are hosted remotely by a service provider and accessed by users over the internet. It’s subscription-based, you only pay for what you use, and updates are automatic.

Legacy HR Systems, on the other hand, are traditional in-house HR systems. They’re typically large-scale, local installations of HR software, usually requiring significant initial investment in hardware and software, as well as ongoing maintenance and update costs.

Reimagining HR Transformation: Selecting Between SaaS and Legacy HR Systems

Evaluating Legacy HR Systems

Legacy HR systems refer to traditional HR software that is installed and run directly on company servers. While these systems tended to dominate the HR space in the past, they have been criticized for their lack of flexibility and adaptability. To start with, Legacy HR Systems can be time-consuming and complex to implement. Often, they require a significant upfront investment, not only in terms of purchasing the software, but also in terms of the IT infrastructure required to run them.

Legacy systems often require a dedicated IT team to manage them and solve any technical problems that may arise. Moreover, they are not ideal for making quick changes or updates, as this usually involves deploying a new version of the software. Yet, they do offer a high degree of control and customization. So, they may be a good choice for larger companies with very specific needs and the resources to effectively manage the system.

Assessing SaaS HR Solutions

SaaS HR solutions, on the other hand, are provided over the internet and are accessed through a web browser. There are several benefits to this model. Crucially, SaaS HR Solutions allow for much easier and quicker implementation. Companies can literally start using them as soon as they sign up. It also means that updates can be rolled out more frequently and without disrupting the user experience.

  • SaaS solutions are highly scalable, which makes them ideal for growing businesses or companies expecting to experience significant changes in the future.
  • Because they are hosted on the cloud, they are accessible from anywhere, at any time, and on any device. This can be particularly beneficial in today’s increasingly mobile and remote working environments.
  • Most SaaS HR solutions come with an intuitive interface and streamlined workflows, which can lead to increased productivity.

Nevertheless, while SaaS HR Solutions offer significant advantages, they may provide less customization options compared to legacy systems. Companies looking for highly specific features or functionalities may find SaaS solutions restrictive.

As we continue to embrace the digital age, every organization must carefully assess its own unique needs and resources before deciding between a SaaS or Legacy HR system. Both models carry their own strengths and weaknesses, and the right choice will depend largely on the specific requirements and constraints of your organization.

The SaaS Revolution: Why Modern HR Solutions are Overthrowing Legacy Systems

The Rise of SaaS in HR

Is it possible that the traditional legacy HR systems we’ve all grown used to are being replaced by something better? The answer is increasingly pointing towards ‘yes’ as the SaaS (Software as a Service) platform revolution takes root in businesses worldwide. The rise of SaaS HR solutions has been precipitated by the undeniable benefits they bring including scalability, flexibility, and cost-effectiveness. Unlike legacy systems, where a company is responsible for managing and maintaining the software, upgrading the system, and resolving technical issues, SaaS automates everything through the cloud. This simplifies process, minimizes overhead costs, and allows for a more seamless workflow.

Downsides of Legacy HR Systems

Legacy HR systems, on the other hand, have become increasingly problematic for businesses. Their rigidity is a primary drawback, as it restricts the adaptability required in ever-evolving business landscapes. They are expensive to license, hard to maintain, and slow to upgrade, making them an inefficient choice for businesses looking for agility and scalability. The inability to access these platforms from remote locations places an additional dent in productivity, a problem that has been profoundly magnified in a Covid-19 world that necessitates remote work.

SaaS Adoption Best Practices

Companies like Airbnb, Netflix, and Uber have successfully adopted SaaS HR solutions. Airbnb, for instance, uses a SaaS platform for managing and tracking employee performance. The results have been nothing short of impressive, with increased employee efficiency and lowered operating costs. Netflix has also reaped the benefits of moving from a legacy system to SaaS, making it effortless for staff to carry out tasks such as reporting hours, managing benefits, and scheduling work. Uber, too, has harnessed the power of SaaS to manage HR tasks in real time across different countries, thereby increasing efficiency and decreasing costs. It’s clear that these companies represent successful practices in adopting SaaS for HR operations, highlighting the myriad benefits it can bring to any organization seeking to modernize its operations.

Empowering Human Resource: Making the Right Choice between SaaS and Legacy HR Systems

Evolution or Revolution: Why the Mode Matters in HR Management?

Are we ready to embrace the change or should we still rely on the proven? This question brings us to the crossroads where organizations need to make a significant decision. The perennial debate between Software as a Service (SaaS) and legacy Human Resources (HR) systems continues to monopolize discussions in the HR landscape. The key behind making the correct choice lies in understanding the inherent nature and functionality of both systems. SaaS HR solutions are known for their agility, connectivity, and scalability. They offer a wide range of benefits including cost-effective operations, easy updates, and seamless integration with other systems. On the other hand, legacy HR systems deliver stability, robustness, and a deep innate understanding of intricate HR processes.

The Major Hiccups: What’s Holding You Back?

The prime hurdle stems from acknowledging the need for transformation. A legacy HR system, with its years of reliable service, has been like an old faithful horse, trusted, reliable, and comfortable. Nothing seems wrong on the surface until organizations realize the cost of running these systems, in terms of both finances and productivity, are significantly high. They are also rigid in nature, making them unsuitable for the modern workforce’s demands. On the other hand, the transition to SaaS comes with its own set of challenges – apprehensions about data security, privacy issues, and most importantly, the discomfort associated with any kind of change. The task, therefore, is not just about selecting an HR tool, but about taking a strategic decision that can impact the organization’s growth and its employees’ experience.

Illuminating the Path: Learning from the Leaders

To shed light on this conundrum, let’s turn towards organizations that have exhibited impressive levels of foresight and resourcefulness. The top multinational corporation, X-corp, exemplifies this with their transition from a Legacy system to SaaS. They identified the need for an HR solution that was more compatible with their agile work culture. The result was remarkable with improved HR efficiency and measurable cost reductions. Similarly, Y-healthcare, a leading healthcare provider, also shifted to a SaaS HR solution. Their integral need for a unified system that could effortlessly consolidate data from different departments made SaaS the perfect choice. This not only led to heightened efficiency and better decision-making but also ensured seamless functioning amidst the pandemic’s remote working norms. These best practices demonstrate that an organization’s unique needs and its willingness to adapt pave the way in making the right choice between SaaS and legacy HR systems.


Can traditional HR systems truly cater to the evolving needs of modern businesses? As we’ve seen, choosing between SaaS or legacy HR systems relies heavily on various factors. Many organizations are increasingly leaning towards more scalable, flexible, and cost-effective options. The concept of SaaS HR Solutions with its convenient pay-as-you-go model, seamless integration, and updates is enticing. At the same time, the comfort of having full control over on-premise, stand-alone legacy HR systems is hard for some businesses to let go. The key lies in assessing and aligning with your organization’s unique needs, budget, and technical capabilities.

Reminding our loyal readers, we passionately invite you to be part of our vibrant online community by subscribing to our blog. We consistently strive to enlighten you with well-researched, compelling, and practical content, helping you to make the best-suited decisions. Remember, the digital landscape keeps evolving, posing new challenges and opportunities alike. Staying updated is not a luxury, but a necessity in this competitive business environment.

Lastly, we are thrilled to announce that some insightful discussions on trending HR topics will soon be featured on our blog. We would also delve deeper into the world of SaaS solutions, their impact on various business functions, and much more. Ensuring that you are well-equipped to navigate through these changes, we urge you to stay tuned for our upcoming releases. There is much to learn, explore, and transform — let us embark on this enlightening journey together.


1. What are the main differences between SaaS and Legacy HR Systems?
SaaS HR solutions are cloud-based, allowing for real-time updates and flexibility. Legacy HR systems, on the other hand, are usually stationed onsite, may have limited capabilities and might require manual updates and maintenance.

2. What are the advantages of using SaaS HR solutions over Legacy Systems?
SaaS HR solutions typically offer more customization, better scalability and, as they are cloud-based, can be accessed from anywhere. Conversely, Legacy Systems are often constrained by physical hardware and may not support remote access or real-time updates.

3. How cost-effective are SaaS HR solutions in comparison to Legacy HR systems?
In general, SaaS HR solutions tend to be more cost-effective in the long run because they eliminate the need for hardware installation and maintenance. Although the upfront cost may be higher, the total cost of ownership for Legacy HR systems tends to increase over time because of necessary hardware updates and repairs.

4. How is data security handled in SaaS versus Legacy HR systems?
SaaS providers usually ensure high levels of data security as they have to comply with global security standards. On the other hand, Legacy HR systems might face challenges ensuring the same level of security unless they have robust IT infrastructure and dedicated resources for security management.

5. Can SaaS HR solutions integrate with other systems easily compared to Legacy HR systems?
Because SaaS HR solutions are built on modern technology, they can easily integrate with other systems using APIs. Legacy HR systems, on the contrary, might face integration issues due to outdated technology.

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