Between 1908 and 1925 the price of the touring version of the Model T-Ford fell from $850 to $300, and started a revolution in car ownership. This is often attributed to the introduction of the moving assembly line, which reduced the time it took to build the car from more than 12 hours to just two hours and 30 minutes.

In reality, virtually every part of way that cars were manufactured had changed; new materials, standardised components, mass manufacturing, specialised assembly skills – and a different attitude to ongoing maintenance. The engine was specifically built with a detachable cylinder head for easy access and repair and interchangeable parts simplified assembly and reduced waste.

Something similar has happened in the software industry. A new way of putting business software together, and delivering and supporting it, has dramatically changed how much companies need to pay to acquire and maintain HR software. Powerful, time-saving HR functionality that in older systems can still costs tens of thousands of pounds (and more) to implement, maintain and manage, is now available in newer HR solutions for a fraction of the cost.

This dramatic change has come about not because vendors have moved their HR software “into the cloud” and re-badged as Software as a Service. Like the new assembly line for the model T-Ford, that’s only one part of the picture. It’s because newer systems have been re-thought and re-written to match a new, more cost-effective cloud technology infrastructure and much more agile and repeatable approach to software implementation and maintenance.

There are three key areas where older HR systems can’t match their Cloud-native counterparts when it comes to keeping costs down and future investments protected.

Cloud computing

In order to keep down costs and improve reliability today’s cloud computing environments – where your HR is hosted – are made up of many smaller connected computer servers. These servers work with each other; if one part fails, another one will automatically replace it; if more processing power is needed, the load can be spread over more devices. But only by software that’s designed to work in the same way.

Older HR systems were designed in an era when the software code, and the associated data, was only ever intended to be installed on one or two servers – not spread across many. More processing power, or more data storage, meant bigger and more expensive servers. While server virtualisation has gone some way towards keeping costs down and improving scalability, older-style systems still can’t match newer “cloud-aware” HR solutions that are specifically architected for the new computing environment.

Take as an example, the performance reviews. Like online tax returns, there’s often a last-minute rush to complete their forms before the deadline. With older HR software, temporarily bringing additional computing power online to cope with any surge in demand, can’t just happen automatically. So, suppliers typically play safe; pay in advance for capacity they don’t use and pass the costs on to their customers. Modern cloud systems make use of elastic load-balancing, where additional computing power is automatically called in to play – and paid for – when it’s needed.

Data and document storage is another area where traditional vendors struggle to make best use of resources. Their software has no way of “knowing”, what kind of data needs storing, how often it needs to be backed up, what kind of processing power is needed, so can’t pick the most cost-effective cloud storage device.

Agile architecture

Modern cloud HR systems make use of an application architecture known as multi-tenanted. It’s an approach that’s been adopted by all the leading cloud software companies, from the pioneer Salesforce, to HR software companies such as Workday and Cezanne HR.

Instead of each customer having what is essentially a unique installation of the software, all customers share the same version. With just one code base to develop and maintain, costs are significantly lower, new features can be developed faster and updates applied seamlessly – all of which should be reflected in the fees that customers pay. And, since everyone automatically gets new features as soon as they are released, no-one gets left on an out-of-date solution.

Faster, less expensive implementations

Take a look at the accounts for many of the older-style HR suppliers. You’ll see that a big chunk of their money comes from professional services.

These HR systems were designed for an era when every customer had their own unique ‘instance’ of the software. It didn’t matter if the system was customised or configured for different customers in different ways – in fact, it was positively encouraged as a way of generating revenue.

With multi-tenanted HR software, all customers share the same core code, but have the freedom to flex the system to fit their way of working. That’s led to a re-think in system design. Multi-tenanted HR system are typically more complete, so can be deployed and rolled out across the organisation pretty much ‘as is’ (for example, with pre-configured security roles and approval workflows already in place) but have tools that make them simple to configure by the HR user so they can modify standard security roles or route workflows differently if they want to.

Data is generally easier to upload and most offer open APIs (or application programming interfaces) which make integrations far simpler and more cost effective than in the past.

So, next time you are looking for HR software and you want be sure you’re getting the best value for money, start by asking these three key questions:

• Is your HR system cloud aware?
• Has the system been developed to automatically benefit from the most effective and cost-efficient utilisation of cloud computing resources?
• Is your system multi-tenanted?
• Are updates delivered seamlessly, at no cost and with no disruption, and are all customers always on the latest release?
• How quickly can the system be deployed, what can I configure for myself and are these configurations protected going forward?

Sue Lingard is the marketing director at Cezanne HR.

See also: 5 ways implementing HR software can help streamline your business