By Natalie Hoffman

Cloud technology is one of the most valuable resources businesses have in today’s modern economy. In fact, the cloud has completely transformed the way nearly every business operates as it uses the power of the internet to share a wealth of information between individuals and companies, and business to business with just a Wi-Fi connection. The technology has been so embraced that executives and employees now expect to have access to information and data at any time from anywhere in order to support the mobile work environment in which we live today. Nearly every industry has adapted to this at-your-fingertips approach to consumer demands, and the human resource and payroll industry is no different.

Cloud-based human resource management systems (HRMS) are changing the way employers manage their human capital and the way employees engage with their human resource (HR) departments. The ability for an employer and their employees to access their information at the click of a mouse or touch of a screen, is changing the way businesses engage with their workforce as well as improving the management of HR departments in any size business. Even small businesses are seeing benefits as it eliminates significant time and paperwork on the part of the owner or office manager who often has hundreds of other tasks and concerns on their plate beyond their payroll.

Because cloud-based HRMS systems can live entirely online and only require a strong internet connection, they can alleviate workload by automating processes such as payroll calculations, onboarding and open enrollment periods when employees select or make changes to their benefit programs. Additionally, digitizing the HR experience allows businesses to go paperless and eliminate waste and storage space.

The benefits of moving to the cloud are many, yet some businesses are still holding out changing for several reasons. Some are afraid of compromised security; others are leery of change and may not be comfortable with technology. With proper training and security measures, those fears can be overcome.

If you have decided that moving your business to the cloud is right for you, there are first several factors that you should consider to prepare yourself for the transition.

Business’s Capacity

Before switching an HR system to the cloud, businesses must first consider their technological capacity. Upgrading technology can be extremely costly, and as a result many businesses put off the investment until they absolutely need to. If you’re considering implementing cloud technology in your business, you will need a current and up-to-date operating system for optimal performance. If you are afraid your current operating systems are out of date or you know your current internet connection is slow, it may first be pertinent to upgrade technology throughout the business for those who will be using the cloud system, as well as upgrade internet processing speeds in order to accommodate the transfer of information across platforms to the system provider. A cloud-based system is not as valuable as it could be if the right employees cannot access it and use it to its full potential, or if the provider cannot obtain the information in a timely manner.

Provider Capacity

When choosing a provider who offers cloud-based solutions, make sure they can handle the size of the business and the specific needs you may have. Some providers specialize in HRMS for small to mid-sized businesses, while others have the capacity to handle businesses with more than 1,000 employees on their payroll. Do your homework before choosing a provider and be sure to ask specific questions surrounding the needs of your business. The provider should know their system inside and out and be able to convey its capacity and limitations, if any. Additionally, while a provider may offer to support a large business’s payroll functions, if they cannot handle the scope of the operation and do not have adequate staff, significant issues can arise when there are technical or compliance questions. It is important to ensure the provider in consideration invests in customer support for data, HR and technical questions so that you can get the answers you need when you need them.


How a business uses cloud technology is also a crucial factor in determining the right time to take the leap and with what system. Do the executives need to make decisions on the fly or on the road? Do multiple people need access to the information at one time and expect to see real-time data, not delayed or old numbers? Additionally, if a business owner is considering a system, do they have the capacity to learn and understand it? Employers should know what the system offers, how to use it and when and why they may need it in a mobile setting. Ensure the provider under consideration can deliver the information in a way that meets the needs of the business. Additionally, establish the usage and viewing rights for all of the executive information ahead of time to ensure the right people at the company have appropriate access.


Before choosing a cloud-based HRMS provider, demand they provide substantial proof and documentation of their security policies and checkpoints. Security of sensitive executive information is one of the driving factors holding businesses back from taking the leap and investing in cloud HRMS.  Cyber security is an immense issue today, and with the weekly breaches of large companies’ valuable executive information, it is okay to be a little apprehensive about using the cloud for sensitive information like employee data. However, there are many reputable companies who provide significant and appropriate security over your information and can back it up. Review their security disclosures closely and be sure to ask questions if you have them.


Transitioning to the cloud will require significant training on the part of the employer and their staff members to make sure everyone can navigate and use the system. The chosen HRMS provider should offer ample training and follow-up during the implementation process to ensure everyone on the team knows how to use the system properly and efficiently. Additionally, the employer should be ready to invest the time and energy needed to learn the system from the provider. A system does no good if it is difficult to navigate or perform basic functions and if no one knows how to use it to its full potential. This is especially important around open enrollment times and onboarding when there is significant activity in the platform. HR teams should be ready to answer questions and walk their fellow employees through the program who may not be as familiar. This can only be done successfully if there has been proper training.

Moving to the cloud is a game-changer for employers who are looking to better manage their human capital. The investment can be significant in terms of time and resources, but the benefits far outweigh any apprehension around price and change. To recap, remember these key factors: your capacity, your provider’s capacity, your usage, their security, and the training commitments on both sides.

Finding the right provider is key, but also important is how it is used within the company. Ensuring a system can be used to its full potential is important for a business owner’s peace of mind when it comes to receiving an adequate return on investment of time, money and resources. Before you move your HR systems to the cloud, do your homework and hopefully these tips will help you get an HRMS that works for your business.

Natalie Hoffman is the president of leading payroll service company HK Payroll Services, Inc. (HKP) and partner at Honkamp Krueger & Co., P.C. (HK). With over 30 years of experience in her field, Natalie has written for several publications on the topics of business, accounting and payroll technologies. Find her on LinkedIn and @nataliehoff.