The Israeli market was slow to adopt SaaS solutions. Slowly but surely, there are several hundred organizations now using SaaS solutions in areas such as CRM, Web 2.0 (Wikis, blogs), and ERP.
So what's the next solution organizations will be willing to consider in SaaS delivery model? I think HR-related processes are a good candidate. The (slow) adoption process taking place in Israel is actually quite similar to the U.S market just a couple of years ago.
Looking at the worldwide market, SaaS or on-demand HR solutions were typically implemented in Small-medium sized organizations (in the past these were more of an ASP model) but are also starting to make an impact in large organizations.
HR functions are often "outsourced" functions, sometimes even used in a BPO model. This is one of the reasons the SaaS delivery model for HR software is appealing even for larger organizations.
At the moment it seems that certain HR functions in particular are being used in the SaaS model (for example, e-recruitement, payroll, employees performance management, e-Learning) as opposed to outsourcing the full set of HR functions.
Traditional HCM vendors are moving more and more into the on-demand space and offering a choice between on and off premise models.
Cutter Consortium's recent SaaS survey clearly shows that organizations of all sizes are taking advantage of a wide array of horizontal (i.e., functional) and vertical (i.e., industry-specific) SaaS applications. The growing interest and adoption of SaaS by corporate users is encouraging SaaS alternatives to traditional packaged applications to emerge in virtually every software category. In this survey, most organizations that were asked what type of horizontal apps they're considering using or already using in the SaaS delivery model, HR functions were quite common (right after CRM, Content Management & collaboration).
Here are some examples of several prominent worldwide SaaS HR vendors (or vendors that most of their income comes from the saas model):
Workday - a relatively new provider of ERP-like on demand solutions, centered around HR, payroll and financials. It's founder was Peoplesoft's leader so this created a "buzz" in the HR space...
Kenexa - e-recruitement and employee performance management
Ultimate Software - is doing well in the large organizations' space, offers both on and off premise models.
Salary.com - for talent management, compensation, payroll
Cornerstone - on demand HCM and Talent management, compliance is considered a strong point in this solution.
Learn.com - mainly SaaS. Learning management and HCM.
Nuview - Not a pure Saas solution but now about half the revenues come from the saas model, mainly aimed at midsized companies
Skillroad - recruitement and skills management, mainlly targeted at midsized organizations
Successfacors - employee performance management in SaaS, have some presence in Israel.
Taleo - erecruitement and talent management, have some presence in Israel.
Authoria - erecruitement, assessment and performance management.
How will these solutions be accepted in Israel? What will be the adoption level? my guess is that the same type of clients that adopted CRM Saas solutions - technological/ global companies and also SMBs will be the more natural candidates. Most companies have "some sort of HR system" in place but the implementation is usually very basic, and doesn't include things like recruitement, incentives management, performance, skills and talent management. So there is a lot of potential for this type of solutions in Israel. Many other factors will affect the Israeli's CIO decision: Hebrew support, localization, price, local support (viable integrators that can support the product for the long run) are just a few of these factors.
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