Software as a Service vs Outsourcing and Commercial Software for Payroll System - Essay Example

PROS AND CONS OF CHOOSING A PAYROLL AND HR SYSTEM by Student’s name Code+ course name Professor’s name University name City, State Date Introduction Since the introduction of computers in the early 1980s software development has always been at the center of every invention (Craig 2001). Software basically is a term used to describe the various program types that operate the hardware components of a computer that broadly can be categorized into application and system software. Application software’s ride on system software, they directly interact with users to give desired results. Today, considered the information age, computers are part and parcel of every organization having been successfully incorporated in every department. Furthermore with the help of application software’s tailored to users’ specification computers are being used in decision making, HR and fields previously thought as impossible (Armstrong 2006). Application software’s over time became a recurrent expense to organizations in form of purchases, insulations upgrades and maintenance. In an organization, payroll is the sum total of financial expenses, narrowing down to accounts and HR payroll is simply the remuneration to employees for services rendered within a given period of time (Armstrong 2006). Before management information systems payroll was a cumbersome task manually calculated for each salaried employee. With the introduction of payroll systems activities were automated, and data compilation was simplified. Functions of this management system have since been extended to cover a wide range of functionality among them tax, employee data, staff loans and even interest calculation. In essence payroll systems in this current time encompass not only the HR department but also bits of accounting and higher level management reporting. Depending on the specific requirements an organization has, software acquisition deployment and usage follows extremely different trends. In this paper I seek to explore three different forms which are: Software as a Service (SaaS), Software outsourcing and commercially purchased software. In addition the advantages, disadvantages, I will also discuss the various factors to look at when acquiring a good HR and payroll system. Overview of Software as a Service (SaaS) On demand software or SaaS is a model where the end user has access to the application remotely. These models can be broadly categorized into two delivery modes. The hosted applications management where the application software is hosted by the provider and is delivered to the client via a console remotely, and on demand model where a single copy is created specifically to be distributed as a service (George 2009). Basically using software as a service entails a thin client architecture where the required software, users data and the main components of the system reside on a cloud server. The client in this case only has a single pc and is able to access everything using a web browser. Advantages and disadvantages of Software as a Service (SaaS) The thin client architecture has the entire bulk residing on the server side. This is especially very advantageous on the client as costs are greatly reduced in several aspects. The most significant area is in the purchase, installation and maintenance of the hardware components. Most management information systems require very powerful systems to run on. Furthermore technology changes extremely fast and in order to keep abreast the cost implications are seriously high. Installation support and maintenance which should be performed regularly is also another aspect that is directly linked to finances. Another significant point is the fact that software requires constant upgrading so as to handle the dynamism of the work environment. Notably all these requirements involve skills of IT experts that otherwise have to be recruited by the organization. All these now being handled by the software service provider in turn has a significant cost reduction to the organization. This also leave a lean and easily managed organization which is able to focus its energy on its core objectives as the data will be handled by are third party who are experts on that field. Other than cost implication use of cloud services comes with an added advantage of enabling client organizations use the latest software versions and are assured of a continuous full time support from the service providers. Considering the Software as a service platform is fairly new there are numerous challenges that are associated with its usage. For instance data security is always a major challenge especially with sensitive information that touches on accounts and financials and payroll information falls under this category (Yasin 2013). The hosting, manipulation and handling of a client’s data are among the responsibilities adorned to the service provider and it is based on a mutual trust and agreement between the client and provider. In fact in other instances a third party who is neither the provider nor the client is usually brought to play just so as to ensure data integrity. In addition cloud based applications are accessed over the internet. This therefore means that internet service providers act as the link between the user and the system. This makes them play a major role and if not properly checked can greatly contribute to rising cost. Additionally the act that data is stored elsewhere client have no control over their data and can very easily be paralyzed by server failures or when the provider experiences a technical hitch. Overview if Outsourcing software Alternatively a business can utilize professional service providers who fully manage and operate the system. Almost a similar design to Software as a Service, outsourcing payroll functions an organization gives the entire responsibility of data handling and processing to a third party only in this case the client organizations gets to retain its data. Advantages and Disadvantages of Outsourcing Software Other than the obvious cost cuts on architecture and IT staff that are avoided outsourcing software ensures quality and efficient service delivery. Usually the outsourced staff is an experienced body of practitioners who fully understand IT, accounts and the relevant fields involved in processing payroll information using a HR and payroll system. They also have the capacity to apply it appropriately so as to the yield desired results. Perhaps the greatest downfall of outsourcing payroll services is the fact that the entire business is being entrusted with a third party (Yasin 2013). How prepared the organization is to release such information to a third party and the measures put in place to ensure such information is retained within the organizations are angles which must be addressed meticulously. Overview of commercial premise based software This is the traditional and most common means of software acquisition and utilization. Software venders issue the buyer with a license for activating the software and based on the agreement client organizations may be given limited updates and support for a specific period of time. This model requires the organization to heavily invest on infrastructure in form of server systems a well laid out LAN and WAN and a host of client side computers. In addition No matter what the core business and objectives an organization may have a fully functional IT department is required to handle the support and maintenance. Advantages and Disadvantages of commercial premise based software Commercially purchased software’s come with one major advantage which trickles down to supporting the entire concept. The end user license allows a client to fully customize the software down to their specific needs. This means one can fully utilize the system to achieve optimum results. In addition the fact that everything including the software application and data is under full control of the organization. This among other things ensures optimal data security integrity and system reliability. The obvious initial cost implication definitely is a great disadvantage of commercial software’s. Again considering the dynamic environment surrounding all organizations software and hardware needs literally change every day. Software vendors fully understand this concept and are constantly and continuously upgrading and updating their software’s to meet these needs. In order to keep abreast end users have to regularly undergo the inconvenience of changing and setting up their systems to keep up with the changing technology. Conclusion and Recommendation Payroll, HR and management information systems in general entail a lot of detail and process vital data within the organization. To further highlight the importance of HR and payroll data, human capital is considered as the greatest resource within the organization (Armstrong 2006). On a close examination of the three modes of accessing the system cost implication or reduction is not really an advantage or disadvantage to any. A cloud application for example initially great cost reductions in noted at the acquisition and implementation stage. However, the long term support costs, broadband charges, monthly compensation to service provider are all costs that accumulate eventually causing a significant damage. Similarly with outsourced services or commercially purchased software the initial cost almost sum up to an equal figure with the difference being a small almost negligible amount. Furthermore the strengths of one mode seemingly are the weakness of the other so at the end of the day it boils down to the specific requirements of a given organization. My recommendation for a HR payroll system is outsourced software for any organization regardless of its core activities and objectives. Payroll in particular encompasses a lot of details that touch every department in the organization. In addition the highly complex tax legislation and accounts are indeed at the core of this system. An outsourced system ensures that experts are involved in running the system and are fully liable for a credible result thus ensuring quality and integrity. On the other hand this data remains within the organization and can be readily accessed not to mention secure. In this regard cost issues aside an outsourced system ensures best results with minimal inconvenience to the organization which essentially should be a major objective in any organization. References List Armstrong, M 2006, Human resource management practice, Cambridge university press, Craig, M 2001, The commercial software model. Microsoft, http://www.microsoft.com/en-us/news/exec/craig/05-03sharedsource.aspx George, R 2009, Cloud application architectures: Building applications and Infrastructure in the Cloud, O'Reilly Media Love, K 2002, The pros and cons of outsourcing. Entrepreneur, http://www.entrepreneur.com/article/49616 Yasin, R 2013, FedRAMP is proving to be a tough test for cloud providers, GCN, http://gcn.com/articles/2013/02/13/fedramp-tough-test-cloud-providers.aspx Read More