Three Trends To Watch In Managed Cloud And HR

Lori McNally

The rise of cloud technology has created massive opportunities for companies everywhere, and with it, tremendous competition. In an effort to get a leg up, though, it is all too easy to get stuck competing on price.

But how else can one gain an edge? What does it take to stand out in today’s crowded environment?

Many are looking to specialization, focusing their efforts on industry verticals or micro-verticals. By dedicating resources to a target market, it is easier to become an industry leader that best serves the needs of end customers in a specific field.

One model that is being used more frequently to pursue these target markets is managed cloud. IDC says spending on managed cloud services will grow to $74.9 billion by 2022. According to its data, worldwide spending on private cloud services alone will reach $40.5 billion by next year and it is growing at a compound annual growth rate (CAGR) of 31.5%.

This presents a big opening for partners and customers alike. Managed cloud models create the ability to deliver packaged and managed solutions through a hosted cloud to solution providers, simultaneously enabling the creation of integrated solutions for customers that span hardware, software, and services.

Managed cloud can also potentially give partners the flexibility to package, price, and set terms for solutions while offering customers shorter implementation cycles, streamlined sales and marketing, and potential for higher profits.

Research has shown the growth of this model as well as its reliability throughout different facets of the enterprise, as it has been found to reduce organizational complexity and improve operational efficiency.

To break down these gains and what they mean, let’s look at ongoing trends in one rapidly growing market: human resources.

Unstoppable HCM market growth

HR is the largest business process outsourcing segment worldwide; at $12.4 billion, it makes up more than a third of the global market. This growth, according to The Insight Partners, is expected to continue in the coming years to the tune of a 22.5% CAGR.

With cloud services and HR outsourcing growing in unison, it has become clear that the focus of companies is shifting, with many frequently outsourcing talent management, payroll, recruitment processes, and employee benefits processing. Rising privacy concerns and regulations have aided the rise of HR and human capacity management (HCM) services in particular, as solution providers work on whatever it is that makes them unique.

An emphasis on gaining and growing top talent

A managed or business process outsourcing (BPO) solution can also provide efficiency and a higher quality of service for customers compared to them trying to take it on themselves. When working with a good partner – one who specializes in HR and manages an HCM solution – end customers can exert their energy on strategic, value-add activities rather than basic tactical or administrative processes.

Naturally, this can play as a great advantage in attracting, developing, and retaining top talent while serving the mission of standing out through industry specialization. Managed HCM solutions can also give customers more consistent ongoing cost structures, improved interoperability with existing infrastructures, and scalable solutions.

The data shows a company-wide dedication to mission-critical activities can also lead to many transformational improvements.

A push for organizational transformation

Businesses that leverage managed cloud solutions are twice as likely to see reductions in capital expenditure spending, according to Aberdeen. They are 60% more likely to have faster access to data. Forty-six percent of companies have seen reduced complexity in their IT infrastructure through managed cloud solutions, and 54% have gained a more agile infrastructure.

To this point, the data supports the idea of optimizing managed cloud. Done effectively, it can certainly have far-reaching effects for companies throughout the supply chain looking to focus on what they do best.

For partners, customers and other industry leaders interested in learning about the managed cloud model, visit this page for more.


Lori McNally

About Lori McNally

Lori McNally is a 17 year veteran of SuccessFactors with over 25 years of experience in the HCM space. Lori has tremendous passion in helping organizations achieve their business results by closing the gap between execution and strategy through successful HR digital transformation. During this journey, she has been involved through all phases of HRIS from the automation and standardization of manual processes to more strategic projects. Today, Lori manages the global go to market strategy for five key growth areas for SuccessFactors.