cloud-sourcing vs. outsourcing
Post on 17-Jun-2015
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DESCRIPTIONTraditional outsourcing lacks the flexibility and agility todays organizations require to obtain data-driven business intelligence that provides a clear, comprehensive view of their operations. Cloudsourcing is a newer, more nimble model that has emerged to fill the gap. This whitepaper, authored by industry-leading experts at OneSource Virtual, explores opportunities available through cloudsourcing and Software as a Service (SaaS).
- 1. Why Cloud-Sourcing is Better than Outsourcing for HR and Finance A OneSource Virtual White Paperby Wesley Bryan
2. Once upon a time, traditional outsourcing provided solutions to real business problems faced byhuman resources and finance departments. When faced with need to supplement staff, provideexpertise or counter the impact of shrinking budgets, companies looked to outsource providers forhelp. 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 departments operations.The old approach to outsourcing has simply not kept up with the rapidly evolving businesslandscape. The traditional model, for the most part, has matured out -- unable to deliver theflexibility, transparency and accelerated levels of efficiency companies now require just to stay inthe game.New business demands supported the foundation of a new way for companies to behave. Withrequirements for a more nimble approach, progressive businesses are turning from outsourcing tocloud-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 thepublic cloud utilizing a safe and secure Software as a Service (SaaS) model. It is traditional outsourc-ing updated with todays technology to provide customers with a unified, flexible view of theirinformation; a more cohesive platform and greater control.This paper explores the difference between the traditional outsourcing and cloud-sourcing deliveredthrough SaaS, and what users can expect from each option.Transitioning from the Traditional to a New ParadigmIn a traditional outsourcing model, the client company decides to off load a part or all of itstransactional functions to an outsourcing provider. The client uses one system; the outsourcer usesanother system to perform the same functions, like payroll.Managing data in two systems to satisfy a business process like payroll processing is difficult. Foroutsourcing to work, the files from the clients system have to be transferred to and read by theproviders system. Theres a migration process where a transition team creates a point of integrationthat allows the two systems to talk to each other. Ultimately, the client sends files; the outsourcerreads and processes the files. The completed documentation is sent back to the client, and theprocess begins again.Its like sending clothes to the dry cleaner. You drop them off, you dont quite know what happenswhile 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 decidesto start processing payroll in-house, the company has to go through another lengthy migrationprocess just to get its own data back. Many times, its as painful moving off of an outsourcingcontract as it is migrating to it. 3. In contrast, a cloud-sourcing model combines cloud computing with outsourcing to keep everythingtransparent and consistent. In this model, both client company and cloud-sourcing partner use thesame software platform (in our case, Workday), delivered as Software as a Service. Both theWorkday software and each client companys secure data are centrally hosted in a cloud, andaccessible by both internal company personnel and the cloud-sourcing partner.Because everyone is using a single software platform, theres no need for lengthy migrations,integrations or configurations to get two different systems to talk to each other. The cloudsourcerprocesses transactions on the same software, in the same way, as the client company would.If business needs change, companies dont need a full migration just to get their data back. A fewsecurity roles are changed and the transition is done.The cloudsourcer is not just a service provider. The firm behaves like a partner and becomes anextension of the clients in-house team. If an employee calls with a question regarding the benefitsor payroll results, the cloudsourcer is looking at the same screen, and can answer the questionquicker and more accurately. Theres one platform, whether the function is done within or outsideof 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 ControlCloud-sourcing eliminates one of the biggest outsourcing fears namely, loss of control. In thetraditional outsourcing model, when a company sends files to the outsourcer for processing, thosetransactions are not visible until after all the processing is completed. This black hole of processingprevents the client company from catching and correcting a mistake in progress. No one can seethe error until the transactions are done and files are returned. With cloud-sourcing, businesstransaction processing occurs in one system there is no movement of data, no mystery, no blackhole. Both the cloudsourcer and the client can see all transactions as they occur and can validateresults immediately and simultaneously.For example, lets say that Company X is running a payroll with its outsourcing provider. Companypersonnel send the file; the provider processes payroll. However, for some reason, one or twoemployees get processed under an incorrect cost center. Because the client company has novisibility into whats happening on the outsourcer side, it cant identify the error until after the payrollis 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 dueto an inefficient model.In the cloud-sourcing model, transparency is introduced to the process. Because both client andcloudsourcer work on the same software, everything is visible to the client at every point of theprocess. Therefore, using our earlier example where one or two employees were slated to be paidunder 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 andthe 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. 4. An additional benefit of cloud-sourcing is the ability to conduct real-time audits of processes. Clientscan see at a glance precisely who has logged in and touched the data; or run audit reports at anytime in the process. Business leaders always have real-time access to the data thats beingmanaged on their behalf, any time they want it.In short, cloud-sourcing returns granular control of the environment to the client. Everything is out inthe open.One Solution, One Provider, One Unified ViewAlthough outsourcing began as a way to simplify operations, the need to manage multiple providershas become increasingly complex. Typical outsourcing engagements for HR involve specialists oneprovider for benefits, one for payroll and another one for finance each utilizing a different systemto perform their function.Not only does overseeing numerous individual providers require extra time that most resource-constrained operations dont have, but it also makes it nearly impossible to see the big picture. Theonly way to see a unified view of everything thats going across the organization is to manuallyconsolidate all data from disparate systems and providers with internal information. This process ofcollecting and synthesizing information takes a long time which delays decision-making andintroduces more risk into the results. Furthermore, if the data changed after the consolidation wasbegun, the process would have to start all over again.Cloud-sourcing with Workday Matches Modern Technology with Modern Business NeedsUtilizing Workdays software, companies gain a unified platform that handles every part of thehuman resource and financial service matrix payroll, benefits, tax, garnishments, COBRA andexpense checks, as well as accounts receivable and accounts payable. The client company ownsthe software and can configure it to support its own workflow and business processes. All they needis one piece of software and one cloud-sourcing partner. The complexity of managing severalspecialty providers and integrating disparate systems is reduced to a single, unified platform andone partner.Its important to note that unified is not the same as integrated. Integration brings disparatesystems together into a common solution. A unified platform means that the entire system was builtas one unit from the beginning. With a unified approach, there is no need for another layer ofmiddle ware to make things work together.By breaking down the silos of traditional outsourcing, and managing all HR operations internal andexternal -- on a unified platform, HR, Financial and Business management gains real-time insight intothe entire operation and can do so through any web-enabled device. 5. Improved Security and Streamlined MaintenanceBecause Workday is delivered on a SaaS model, it is scalable to each customers needs: providingthe flexibility to ramp up for acquisitions or deconsolidate for divestitures, layoffs or other strategicchanges that impact personnel count. The application is hosted in a secure data center protectedby multiple layers of security. Company data is surrounded by inter