Why Cloud-Sourcing is Better thanOutsourcing for HR and Finance

A OneSource Virtual White Paperby Wesley Bryan

Once upon a time, traditional outsourcing provided solutions to real business problems faced by human resources and finance departments. When faced with need to supplement staff, provide expertise or counter the impact of shrinking budgets, companies looked to outsource providers for help. In the modern era, however, this solution may fall short of its goal.

The needs of modern businesses have fundamentally changed. To remain competitive, contempo-rary enterprises must be agile – poses the ability to respond to acquisitions, divestitures and downsiz-ing strategies more effectively. They also depend on -- business intelligence – to make evidence-based decisions. Leaders of HR and Finance organizations require real-time access to comprehen-sive information that provides a insight into their department’s operations.

The old approach to outsourcing has simply not kept up with the rapidly evolving business landscape. The traditional model, for the most part, has matured out -- unable to deliver the flexibility, transparency and accelerated levels of efficiency companies now require just to stay in the game.

New business demands supported the foundation of a new way for companies to behave. With requirements for a more nimble approach, progressive businesses are turning from outsourcing to cloud-sourcing – a newer model that has emerged to fill in the gaps created by the old style.

Cloud-sourcing enables companies to access complete solutions to run their businesses from the public cloud utilizing a safe and secure Software as a Service (SaaS) model. It is traditional outsourc-ing updated with today’s technology to provide customers with a unified, flexible view of their information; a more cohesive platform and greater control.

This paper explores the difference between the traditional outsourcing and cloud-sourcing delivered through SaaS, and what users can expect from each option.

Transitioning from the Traditional to a New Paradigm

In a traditional outsourcing model, the client company decides to off load a part or all of its transactional functions to an outsourcing provider. The client uses one system; the outsourcer uses another system to perform the same functions, like payroll.

Managing data in two systems to satisfy a business process like payroll processing is difficult. For outsourcing to work, the files from the client’s system have to be transferred to and read by the provider’s system. There’s a migration process where a transition team creates a point of integration that allows the two systems to “talk” to each other. Ultimately, the client sends files; the outsourcer reads and processes the files. The completed documentation is sent back to the client, and the process begins again.

It’s like sending clothes to the dry cleaner. You drop them off, you don’t quite know what happens while the clothes are away, and you pick up the clothes, hoping that everything was done correctly.

When business conditions and requirements change, and an outsourcing client company decides to start processing payroll in-house, the company has to go through another lengthy migration process just to get its own data back. Many times, it’s as painful moving off of an outsourcing contract as it is migrating to it.

In contrast, a cloud-sourcing model combines cloud computing with outsourcing to keep everything transparent and consistent. In this model, both client company and cloud-sourcing partner use the same software platform (in our case, Workday), delivered as Software as a Service. Both the Workday software and each client company’s secure data are centrally hosted in a cloud, and accessible by both internal company personnel and the cloud-sourcing partner.

Because everyone is using a single software platform, there’s no need for lengthy migrations, integrations or configurations to get two different systems to talk to each other. The cloudsourcer processes transactions on the same software, in the same way, as the client company would. If business needs change, companies don’t need a full migration just to get their data back. A few security roles are changed – and the transition is done. The cloudsourcer is not just a service provider. The firm behaves like a partner and becomes an extension of the client’s in-house team. If an employee calls with a question regarding the benefits or payroll results, the cloudsourcer is looking at the same screen, and can answer the question quicker and more accurately. There’s one platform, whether the function is done within or outside of the company, for a more streamlined operation, fewer errors and total visibility into the operation.

Cloud-sourcing is the smarter, less cumbersome choice for the way companies operate today.

Greater Visibility and Control

Cloud-sourcing eliminates one of the biggest outsourcing fears – namely, loss of control. In the traditional outsourcing model, when a company sends files to the outsourcer for processing, those transactions are not visible until after all the processing is completed. This “black hole” of processing prevents the client company from catching and correcting a mistake in progress. No one can see the error until the transactions are done and files are returned. With cloud-sourcing, business transaction processing occurs in one system – there is no movement of data, no mystery, no “black hole.” Both the cloudsourcer and the client can see all transactions as they occur and can validate results immediately and simultaneously.

For example, let’s say that Company X is running a payroll with its outsourcing provider. Company personnel send the file; the provider processes payroll. However, for some reason, one or two employees get processed under an incorrect cost center. Because the client company has no visibility into what’s happening on the outsourcer side, it can’t identify the error until after the payroll is processed. Once discovered, the provider has to correct the cost center issue retroactively, typically, for an additional transaction fee. Everything can be corrected but at additional costs due to an inefficient model.

In the cloud-sourcing model, transparency is introduced to the process. Because both client and cloudsourcer work on the same software, everything is visible to the client at every point of the process. Therefore, using our earlier example where one or two employees were slated to be paid under an incorrect cost center, this issue would be visible before the payroll process is completed. The client company would see the discrepancy in a general ledger report, alert the provider and the cost centers would be quickly corrected, eliminating the error before final processing occurs. Improvements in visibility and partnership introduced in the cloud-sourcing model improve perfor-mance and increase efficiency.

An additional benefit of cloud-sourcing is the ability to conduct real-time audits of processes. Clients can see at a glance precisely who has logged in and touched the data; or run audit reports at any time in the process. Business leaders always have real-time access to the data that’s being managed on their behalf, any time they want it.

In short, cloud-sourcing returns granular control of the environment to the client. Everything is out in the open.

One Solution, One Provider, One Unified View

Although outsourcing began as a way to simplify operations, the need to manage multiple providers has become increasingly complex. Typical outsourcing engagements for HR involve specialists –one provider for benefits, one for payroll and another one for finance – each utilizing a different system to perform their function.

Not only does overseeing numerous individual providers require extra time that most resource-constrained operations don’t have, but it also makes it nearly impossible to see the big picture. The only way to see a unified view of everything that’s going across the organization is to manually consolidate all data from disparate systems and providers with internal information. This process of collecting and synthesizing information takes a long time which delays decision-making and introduces more risk into the results. Furthermore, if the data changed after the consolidation was begun, the process would have to start all over again.

Cloud-sourcing with Workday Matches Modern Technology with Modern Business Needs

Utilizing Workday’s software, companies gain a unified platform that handles every part of the human resource and financial service matrix – payroll, benefits, tax, garnishments, COBRA and expense checks, as well as accounts receivable and accounts payable. The client company owns the software and can configure it to support its own workflow and business processes. All they need is one piece of software and one cloud-sourcing partner. The complexity of managing several specialty providers and integrating disparate systems is reduced to a single, unified platform and one partner.

It’s important to note that “unified” is not the same as “integrated.” Integration brings disparate systems together into a common solution. A unified platform means that the entire system was built as one unit from the beginning. With a unified approach, there is no need for another layer of middle ware to make things work together.

By breaking down the silos of traditional outsourcing, and managing all HR operations – internal and external -- on a unified platform, HR, Financial and Business management gains real-time insight into the entire operation – and can do so through any web-enabled device.

Improved Security and Streamlined Maintenance

Because Workday is delivered on a SaaS model, it is scalable to each customer’s needs: providing the flexibility to ramp up for acquisitions or deconsolidate for divestitures, layoffs or other strategic changes that impact personnel count. The application is hosted in a secure data center protected by multiple layers of security. Company data is surrounded by internal barriers intended to reinforce security and privacy.

Because Workday operates in a multi-tenant environment, system upgrades happen simultaneously, not by individual client, so all companies are always operating on the most current version of the software. Even in a hosted environment, where an outsourcer manages the hardware and software for client companies, upgrades are completed one customer at a time, often resulting in long waits and high costs. With Workday’s SaaS model, every client is using the same version of the software, on the same code line. When it’s time for a patch or change, everyone’s software is upgraded at the same time. This process eliminates lengthy downtimes, improves productivity and reduces cost.

Cloud-Sourcing – the Model for Today

It’s a simple fact: challenges that businesses experience with outsourcing today will never be fixed by sticking with this same outsourcing methodology. The old model is outdated. Companies now require more agility and want more control of their information – without having to invest in their own data center to get it.

Through Workday, delivered in a cloud-sourcing model, OneSource Virtual brings our clients the security, transparency and agility they just can’t get from traditional outsourcing. Instead of relying on multiple vendors using disparate platforms for their HR and Finance management, all they need is one unified platform delivered in a SaaS model and an experience partner to support their success.

More control…Fewer migration headaches…Consolidated partners and platforms to manage…The era of cloud-sourcing is upon us – and companies of all sizes will soon start reaping the benefits.

About OneSource VirtualOneSource Virtual is an exclusive Workday partner supporting enter-prises with a game-changing conver-gence of technology and services that was once out of reach. OneSource Virtual is an established, strategic partner dedicated to delivering dynamic solutions to improve our clients’ business through SaaS-based, future-proof technology and efficient processes. Growing and global companies and business leaders partner with OneSource to best manage, analyze and grow their business’ value. Visit us atwww.onesourcevirtual.com.

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