Andrey Shabanov: SaaS system in personnel management will sharply increase the market share

TAdviser: Kind of you characterized a status of the Russian market of HRM systems? What, in your opinion, forecasts of its development? Whether influence of crisis in the market of HRM systems is felt?

Andrey Shabanov: In the conditions of global financial crisis of the company reduce items of expenditure of budgets. As a result, also purchase costs of new information systems including HRM systems are reduced. Within process on cost reduction of the organization can dismiss employees and, in particular, HR personnel. It seems to me, you should not build illusions: demand for the new HRM systems will decrease anyway.

On the other hand, the ultimate goal of implementation of any HRM system consists in cost reduction and optimization of personnel processes of the enterprise. The message personnel office-work and needs still to execute other HR functions, but it is too unprofitable to do it manually, as a rule. Therefore it seems to me that those developers who will manage to prove accurately cost efficiency of the products will get serious competitive advantage during crisis. The UCMS Group company is not engaged in sales of HRM systems, and provides access to them to lease within the concept of SaaS (Software as a Service, the software as service). Distinctive feature of this concept is the transparency and predeterminancy of investments of the customer in the course of lifecycle of use of a system. In the conditions of financial crisis this circumstance is extremely important, and I am sure that SaaS system will sharply increase the market share already in the near future.

TAdviser: According to researches of analytical companies, such as Gartner and Forrester, use of the corporate software in the SaaS model is very popular around the world. Thus SaaS products CRM-and HRM systems are the most popular. In what degree these statements are fair for the Russian market?

Andrey Shabanov: As far as I know, at the domestic market there are about 10 providers different solutions SaaS now. Of course, this scanty quantity for such big country as Russia. On the other hand, about 70% from these providers work for CRM and HRM – the markets so it is possible to tell that these classes of products most often are implemented using the concept of SaaS. In principle, such situation is quite logical. Unlike the same ERP, the HRM and CRM system it is simpler to implement within SaaS as these classes of products do not require serious sharpening under the specific client and easily are implemented using web technologies.

Prior to financial crisis the Russian market really belonged to the SaaS model very watchfully. In UCMS Group company we select several basic reasons of such situation. First, few years ago at many companies (especially regional) technical capabilities to use the software through remote web access were not simple. Secondly, the organizations still are afraid to use SaaS because of the possible problems connected with information security. And, thirdly, the main target audience of SaaS – the companies of medium business – began to show the need for automation of personnel processes rather recently.

But the main reason of low popularity of SaaS is in other plane. The matter is that before crisis the organizations were not faced by a problem of strict economy of resources. Money for automation was selected regularly. They could purchase any information system in the property, without counting such fundamental metrics as total cost of ownership (TCO) or return of investments (ROI). Now the situation will change.

In the conditions of crisis it seems to me essentially important to select one of advantages of the SaaS model, namely – lack of need for large-scale one-time investments on purchase of licenses. Considering today's difficulties with liquidity, receiving the credits and the investment attraction, this factor can become defining in selection process of a HRM system.

TAdviser: The Russian developers of HRM systems come to the SaaS market today too. Whether there are some fundamental differences between domestic and foreign suppliers and the offered products?

Andrey Shabanov: We looked for the competitors in the SaaS market. An only, according to us, HR system which is still offered in Russia according to the SaaS model is the BOSS-personnel officer, but we did not hear about any large implementations of this system on this model.

In Russia UCMS Group company – the pioneer in this area. We the first began to offer similar services in the Russian market in 2005. Our flagman Quinyx WorkForce system has broad functionality and can be applied in the companies of any size.

If to compare the systems of domestic and foreign suppliers, then the domestic systems are well adapted for the Russian accounting. It always was and, probably, will always be. However it should be noted that foreign developers also actively work in this direction.

Advantages of products from global developers, and including Quinyx WorkForce, are located in a functional plane, and in particular, in "advanced" functions on personnel management. We call such Soft HR functions ("myakgy" HR) as they are practically not regulated by the Russian legislation in any way. Such functional areas as talent management, personnel recruitment and training are more qualitatively implemented in the western products and demand for them all the time increases.

I will add that the company UCMS Group is a foreign developer only half. We really work in a number of the European states and we position ourselves as the global company, however our head R&D-офис is located in Moscow. In this sense, we are closer to the Russian customers, than the same SAP or Oracle companies.

TAdviser: Your company renders services, both on lease of a HRM system, and on outsourcing of payroll. What of these two services is more demanded in the market today?

Andrey Shabanov: The UCMS Group company provides services in business process outsourcing (BPO) in the field of personnel office-work and payroll since 1995. Then we worked at the Russian market under other name. At that time we were the first similar company in the markets of Eastern Europe, CIS and Baltic countries. The Quinyx WorkForce system was offered customers as separate service a little later.

Therefore it is absolutely no wonder that the direction of outsourcing of personnel administration and payroll is for us at the moment more developed. Every month specialists of UCMS Group execute personnel administration and payroll for 80 thousand employees working at 450 enterprises worldwide. Before crisis of service in providing went to lease of our HRM system generally in "festive set" with our main BPO services. Actually we gave to clients access to the Quinyx WorkForce system as a certain bonus to outsourcing services.

However now we aim to make SoD (the software on demand, Software on-Demand, SaaS synonym) the main service, we even put in this abbreviation other sense - Service on Demand. Products of our company are a service. Now some customers see us as the software company as we develop the software product and active we advance solutions on its basis. We consider ourselves the company which provides services. We do not provide access to a specific HRM system, we provide access to the complete solution which includes services in lease of specific tools of a HRM system and services for business process outsourcing. At such approach our customer has a possibility of the choice: first, it can give completely to outsourcing payroll calculation and personnel administration, and then we will undertake all these non-key business processes; secondly, it can independently manage specific processes in the remote mode using our Quinyx WorkForce system, access to which we provide on the terms of SaaS; and in the third to select the complete solution including both options. Today such mixed model provision of services is unique for the Russian market.

TAdviser:   Who, in your opinion, the main consumer of HRM systems according to the SaaS model in Russia now? May you characterize the clients on the scale of business and industry accessory?

Andrey Shabanov: The companies which have more than 10000 employees prefer not to use outsourcing services (both BPO, and SaaS) at the external companies. Often in such holdings there are service centers which provide such service to all companies of holding. Our target audience in Russia consists of the companies from 1 to 10000 person in size though the most standard client is the organization in which from 500 to 1000 employees work.

Most of our customers have the western owners and investors. I will note that among our clients there are local representative offices of the companies from lists of Fortune 500 and even Fortune 100.

I do not see industry specifics at our clients. We service the companies of absolutely different scale, structure and a field of activity. Specifics of HRM such is that to us practically all the same whom to automate. In that case when personnel office-work of the customer has some industry specifics, we carry out necessary completions in functionality of a system. But our practice shows that such cases occur extremely seldom, as a rule, personnel management processes are under construction on universal model according to requirements of the Russian legislation.

TAdviser: What requirements to a HRM system are imposed today by the customer? Whether these requirements for the bought and rented system differ?

Andrey Shabanov: Of course, the defining factor in the conditions of crisis is the cost of ownership of a system. The broad functionality of a system is the second key requirement. Above I already noted that recently customers pay special attention to automation of advanced and unformalized HR areas, such as personnel recruitment, certification or training.

Besides, each specific client can have some specific requirements. For example, if he already had a system which suited it on functionality, but did not arrange on performance, then "similarity" to an old system will be one of important requirements. At the same time it is necessary to remember that any, even the best system automates at most 80% of work, and 20% all the same will remain on manual work.

Additional requirements on security and uninterrupted operation of work are imposed to the system working according to the SaaS model. Upon purchase of an offline HRM system these requirements also arise, however they have considerably smaller weight, and have less impact on the choice of this or that product and often decide by forces of department of IT of the customer

TAdviser: Whether full integration of the rented HRM system with the ERP system used in the company is possible?

Andrey Shabanov: Integration is possible, and we do it. As a rule, clients ask to create accounting entries in a format of that system (for example, SAP, Scala, 1C, etc.) which costs at the customer. It is one of our standard services. More compound integration arises when the customer already has the payroll system, and HR services in outsourcing of this calculation are required for him. But such we do integration too.

TAdviser: How administration of the Quinyx WorkForce system is performed? Whether there were incidents connected with remote use of a system during its work?

Andrey Shabanov: Before directly answering this question, I will afford the small note. Many customers really have concerns for security, however they are extremely seldom acquitted. The matter is that at SaaS provider much more opportunities to ensure safety and fault tolerance of a system as it is on a centralized basis placed in a large data processing center together with installations of other customers. As a result, we have ampler opportunities on security, than the organization customer which places servers with itself. And moreover, even if some incidents will take place, customers have the right to collect damage in compliance with the agreement on the level of service. Actually we assume all risks connected with security and fault tolerance which lay down on the customer in case of independent placement of a system.

All installations of our systems are placed in large data processing centers which are reliably protected programmatically, technically and physically, and even ourselves have to them no free access. Administration of a system is performed in the remote mode. Besides, we implement a quality management system on ISO 9001 in which procedures of data management and information security are registered.

The main problem which can arise is weakness of Internet channels at the customer. Of course, we try to optimize system operation, however it is necessary to understand that we cannot do it infinitely to the detriment of functionality and the interface of a product.

As we use several data processing centers, they partially mirror each other on a case of some emergency situations. Thus, in case of the output of the server out of operation we have "hot" servers for fast system recovery. However so far we had no incidents which would cause irreversible effects.

TAdviser: In what direction do you see development of the Quinyx WorkForce system in the nearest future?

Andrey Shabanov: The most active development is now observed in the directions of "soft" HR. It is continuous and almost infinite process. I will note that the most part of our resources is aimed at development, but not at support of the existing system.

We should do a product very flexible. From the very beginning of development the product Quinyx WorkForce was developed taking into account the SaaS model and was focused on work with legislations of different regions and the states. Our solution profitable differs from competitors in absence of "hereditary diseases" which often limit possibilities of development of a system.

At the heart of logic of Quinyx WorkForce the principles of multiple layers and modularity are located. In a system there is the main core on which program layers with business logic are imposed. In these layers specifics of the country, specifics of the region or specifics of the industry can be put, up to specifics of the specific client. Thus, when the payroll calculation algorithm at the level of the country changes, for example, we simply edit one layer, and all our clients automatically pass to work on a new algorithm. If the client asks us about any completions of a system, we look at once whether it is impossible to make these changes on deeper layer (for example, at the level of the industry or the region, and even whole country). Many global changes in our system appeared thus.