Building a Custom HR SaaS Solution: Benefits, Key Features, Development Tips

With more and more processes running online, the demand for efficient and performant human resource management (HRM) solutions has reached new heights. When looking for HRM products that can automate routine processes, reduce administrative overhead, and provide great service availability, businesses often settle on cloud-based HR systems.

In this article, we explore the key types of modern HR systems and discuss what features you might include in a custom HR SaaS product. We also offer a set of technical recommendations for building a cloud-based HRM platform. This article will be useful for development teams working on custom SaaS HR software.

HR software and tasks it can solve

Human resource management (HRM) is about managing people in a way that allows your company to ensure better employee performance. To achieve this, many HRM tasks can be automated and enhanced with the help of dedicated software.

Types of HR software

Technically, any business software aimed at HR-related tasks can be considered HR software. However, we can outline common types of dedicated HR software:

Let’s start with general HRM solutions.

• Human resource information systems (HRIS) are basic data management solutions with a focus on human resource management. HRIS software proves especially useful for managing HR data related to applicant tracking, recruiting, payroll management, employee data processing, and other similar HR tasks. Human resource information systems are often integrated with other HR solutions.
• Human resource management systems (HRMS) are more complex than HRIS solutions and usually provide a robust set of tools and capabilities for accomplishing HR-related tasks. Such systems aim to centralize and organize HR efforts and help HR professionals effectively manage data, gather statistics, provide analytics, simplify financial operations, and even provide employees with self-service options.
• Human capital management systems (HCMS) are also based on HRIS solutions, with the focus on talent management tasks like performance management, planning, and employee education. Their goal is to provide a better employee experience and improved collaboration opportunities.

While there’s a slight difference between HRIS, HRMS, and HCMS solutions, these terms are often used interchangeably.

Next, let’s talk about task-specific HR solutions:

• Applicant tracking systems (ATS) are dedicated recruiting solutions used to automate and improve core recruitment processes: creating job postings, filtering resumes, scheduling interviews. Such solutions should be able to quickly process and filter large numbers of applications and enable efficient collaboration between hiring teams.
• Recruitment management systems (RMS) provide a set of tools for automating and managing not only recruiting but also staffing operations. While RMS solutions may include applicant tracking features, they can also offer robust scheduling, email marketing, and candidate management capabilities.
• Workforce management systems (WMS) aim to ensure efficient day-to-day operations of an organization’s workforce and automate key workforce management tasks. Such solutions might include any combination of common HR-focused functionalities like performance and absence management, timesheets, or payroll management. 
• Payroll systems are designed to organize accounting tasks related to all kinds of employee payments. Common tasks tackled by payroll systems include tracking employee attendance, calculating wages, and paying taxes and insurance premiums. Alongside HR software packages, payroll systems can be part of dedicated accounting solutions.

In addition to categorizing them by key functionality, HR systems can be divided into three main categories based on their size:

• Core HR systems are focused on core workforce management functionality such as attendance tracking, schedules, and payroll.
• Strategic HR systems are mostly used for talent acquisition and talent management.
• Integrated HR systems deliver all necessary features for effectively managing human capital.

Integrated HR systems are the largest and most popular type of HR system on the market. Many of these systems present a big set of functional modules and are sold on a modular basis, allowing businesses to purchase only the modules they need.

Later, we discuss the key modules and features that can form a high-quality HRM solution. For now, let’s talk about the core business benefits provided by such solutions.

Main business goals of HR software deployment

Depending on their current tasks and needs, organizations deploy different types of HR software. The list of benefits a company may gain by deploying a fitting HRM solution includes:

• Less paperwork — With all HR-related documents being stored and processed digitally, organizations can significantly reduce the amount of paperwork and administrative overhead. Using dedicated HR software can help organizations speed up the processing of HR-related documents and data while keeping them secure and transparent.
• Improved communication — HR solutions provide management and employees with reliable capabilities for fast data retrieval, comfortable collaboration, and data sharing, thus improving the coordination of all HR processes.
• Deep data analysis — HR software can also be used for assessing and auditing key HR processes, employee performance, and workflows. Data processed by HR solutions can also be used to forecast trends and requirements.
• Enhanced data protection — Modern HR solutions provide robust capabilities to configure different levels of access, manage access permissions for groups and individuals, and safeguard an organization’s sensitive data.
• Transparent HR processes — Centralized management and processing of HR data simplifies performance tracking and assessments, speeds up evaluations, and makes appraisals transparent.
• Faster recruitment — HR solutions can help speed up recruitment by automating processes like resume filtering, candidate screening, interview scheduling, and onboarding.

While companies aim to achieve common goals, they can deploy HR solutions in various ways. Let’s see what the main options are.

HR software deployment options

Unfortunately, not all off-the-shelf solutions can offer organizations the functionality set that perfectly matches their business needs. For those who want a well-performing solution with functionality that meets their unique business requirements, it would be best to consider building a custom HR solution.

As for the deployment model, organizations can choose from on-premises, hybrid, and cloud-based solutions. According to a survey by the Information Services Group, the percentage of organizations using cloud-based HR solutions increased from 20% in 2020 to 46% in 2021, mostly due to the massive shift to remote work caused by the COVID-19 pandemic. By 2023, the ISG expects the number of organizations using cloud-based HR products to reach as high as 57%. 

This trend comes as no surprise considering the range of benefits that come along with the deployment of cloud-based solutions:

In this article, we focus on the specifics of developing a custom SaaS HR solution. Our analysis begins with an exploration of the key features that can form a high-quality SaaS system for human resource management.

Key features of an HRM SaaS solution

Choosing the right set of features is one of the most important stages of HRM SaaS solution development. Below, we briefly describe some of the most common and useful features you may consider adding to your product:

1. Recruiting

Adding a recruiting module to your HRM SaaS solution enables users to:

• Efficiently maintain recruitment lists
• Automate the posting of job listings across multiple job boards and social networks
• Improve application processing

If you’re planning to build an advanced or dedicated solution, you can also add applicant tracking capabilities that can follow all interactions with an employee, from first contact until the last day at the company.

2. Training and education

The purpose of this feature is to manage employee training and education. Training and education functionality should be able to track employees’ performance and qualifications and allow HR managers to create and manage individual employee development plans.

Common capabilities provided by a training and education module include:

• Scheduling training courses
• Composing educational plans
• Designating a training budget

Implementing an eLearning authoring feature will allow your clients to deliver their own educational content within their companies. This is important for organizations with strong in-house training programs.

3. Employee data management

This module enables efficient management of HR data and employee documents:

• Certificates
• Licenses
• Compliance documentation
• Job descriptions
• And more

By enhancing your HR SaaS solutions with an advanced data management module, you can offer your clients improved data transparency, organized data storage, and comfortable document retrieval and sharing.

4. Attendance and performance management

Employee attendance and performance are the core parameters that HR managers and accountants evaluate when calculating:

• Wages
• Bonuses
• Compensation
• Insurance premiums
• And so on

Additionally, HR specialists and organization managers often rely on employee performance data when making decisions about promotion or education.

There are different ways you can enable this feature in your HR SaaS solution, from simple integration with Jira or similar products to the implementation of complex solutions for employee activity monitoring.

5. Payroll and benefit calculations

While often presented as part of accounting solutions, modules for managing payroll and calculating benefits can also be a useful part of an HRM solution. Such a module can automate payment procedures based on time logs of each individual employee.

A payroll and benefits calculation module should enable automatic management, processing, and auditing of:

• Taxes
• Vacations
• Sick leaves
• Deductions
• Insurance premiums
• Retirement compensation

The functionality of this module can be extended to cover all employee transactions. Bonus points for allowing seamless integration with an organization’s main financial system.

6. Scheduling and shift planning

This is a must-have feature for a client whose company works in shifts. An HR manager at a small company may draw up a schedule in a simple Excel spreadsheet. But in a company with 100+ employees, you need an automated tool to:

• Gather and process data on each employee’s work schedule preferences
• Process employee unavailability data
• Create and manage schedules for individual employees
• Create and manage shift plans

A scheduling and shift planning module should also be tied to attendance and payroll functionalities. You’ll get extra credit if your software automatically informs employees about changes in their work hours.

7. Analytics and reporting

This module is responsible for tracking and processing various HR-related statistics and forming detailed reports on common HR metrics, including:

• Employee performance
• Employee attendance
• Time to hire
• Turnover
• Revenue
• And more

Analyzing this data can help an organization identify trends and potential problems, especially when it’s analyzed alongside other organizational data. The minimum requirement is to provide your HRM solution with report templates for the most common types of reports. Advanced solutions, however, require robust report customization and visualization capabilities.

8. Employee engagement

Paying attention to employees’ opinions on anything happening in an organization is considered a mark of a strong corporate culture. Therefore, a powerful HRM solution would benefit from having a module that allows for:

• Conducting polls and surveys
• Delivering corporate news
• Creating space for employee communication (forums, chats, etc.)
• Sharing interesting in-house cases

You may also consider enhancing this module with capabilities for gathering employee feedback.

9. Employee self-service

This feature allows employees to perform HR-related actions without taking the time of an HR specialist. Common capabilities include:

• Checking the calculation of an employee’s work hours
• Maintaining an employee’s schedule
• Requesting payment information
• Updating personal information
• Requesting leaves 

An HRM solution enhanced with employee self-service features can help save time on HR management and, at the same time, improve the employee experience and increase employee engagement.

Creating a comprehensive cutting-edge HR system requires forming the right combination of core modules. For some interesting ideas, take a look at the distinguishing features of the top HR SaaS solutions listed by Gartner, FinancesOnline, and Capterra. For a small startup, it’s best to focus on a few specific modules catering to particular market segments, such as recruitment or analytics.

SaaS HR solution development best practices

No matter what features you decide to include in your solution, there are some technical aspects you need to consider when building it. Your specific technical requirements will depend on your business idea and your vision for the particular HR SaaS project. However, we can offer several tips that will make it easier for your team to create an efficient, secure, and reliable HRM product:

1. Build a solid architecture

Early on, you need to decide on a technology stack and an architecture that’s scalable and capable of supporting the required uptime. You should build your software with these things in mind:

• Support for multi-tenancy
• Ability to port to mobile platforms or a mobile app
• Ability to implement APIs
• Ability to customize your software on demand
• Scalability potential for future changes 

2. Define non-functional requirements

SaaS platforms have unique non-functional requirements. For example, they require an infrastructure as a service (IaaS) provider. While choosing one, you should estimate and account for the expected amount of traffic to your SaaS HR management system.

Other critical non-functional requirements for a SaaS solution include availability, performance, and configurability.

Compare offers from various companies and select a cloud provider that will give you the necessary level of service for your budget.

3. Enhance security

Security is a big concern for customers of any SaaS-based HR software. Failing to protect customer data may result not only in high remediation costs but also in loss of business, negative word of mouth, and even potential lawsuits.

Therefore, you need to ensure proper protection for all critical data your HR SaaS solution works with. You can do this by encrypting all application traffic. Another useful practice is to ensure secure storage and processing of sensitive data while limiting access to it.

4. Start testing early

Remembering the shift-left approach, start testing your HR SaaS solution at the first stages of the project to ensure early detection of possible issues and efficiently address them. 

Determine parts of the application that will be used most often and therefore might experience stronger loads, and test their performance more frequently. If your SaaS application requires frequent updates and releases, make sure to automate your test scripts.

5. Plan for support

Your support service should be ready to answer any customer requests. Therefore, you should design and implement a proper 24/7 support system and start training your support staff in advance. Many specific design decisions about support implementation should be made early in development – for example, whether support personnel should have access to customer accounts. Giving access may help them fix issues faster, but it’s not ideal from the security standpoint.

6. Gather statistics

While HR SaaS solutions garner a lot of statistics in and of themselves, you as a software provider should think further. Usage statistics and software logs can be paramount for fixing bugs, identifying and patching security vulnerabilities, and deciding how to improve your solution. 

Therefore, you need to ensure proper storage of your application’s logs and start gathering usage statistics at the early stages of your HR software’s development.

7. Implement third-party components

One of the best ways to save a lot of time and effort is to integrate existing solutions into your system. You can do this by incorporating open-source, ready-to-use third-party solutions.

When choosing possible third-party integrations for a SaaS HR system, keep in mind the specifics of your solution’s design, architecture, and feature set. Some of the most popular and frequently used third-party components include databases and payment processing features.

8. Enable third-party integrations

Support for integrating third-party application programming interfaces (APIs) can help you build your HRM system faster and expand its functionality at a reasonable price. 

At the same time, by releasing an API for your HRM system, you increase its agility and enable customers to swiftly integrate your product into their corporate workflows. In particular, a competitive HRM system should be easily integrated with the most common CRM and ERP systems and allow users to export information to popular data formats. 

9. Ensure compliance

The human resources field has strict requirements when it comes to forms, documentation, payroll, and employees’ personal and financial information. When working on an HR SaaS product, account for the specific requirements of the markets and industries for which you’re creating the platform. Furthermore, if you’re building an international solution, make sure to check that localized versions comply with respective local regulatory requirements.

10. Employ innovations

To provide your customers with advanced capabilities and gain a competitive advantage, consider enhancing your solution with innovation-powered features. Technologies that can benefit today’s HRM systems include:

• Artificial intelligence — deliver AI-powered customer support, chatbots, and enhanced data analytics
• Robotic process automation — standardize common tasks and automate manual processes
• Blockchain — enhance data storage security, increase contract transparency for regular and temporary workers, offer alternative payment options to employees
• Virtual and augmented reality — create better recruitment and onboarding experiences, improve employee training

But before enhancing your product with these innovations, make sure to check if the benefits they deliver justify the costs of their implementation.

Conclusion

Market analysts forecast that businesses will continue moving their HR efforts to the cloud. At the same time, many organizations show demand for unique and robust feature sets. In this case, building a custom HR SaaS solution seems to be the right business decision.

However, creating such a solution is a complex process that requires close collaboration with HR professionals, market and business analysts, cloud developers, and quality assurance experts. You need to build a reliable architecture, pick the right set of features, protect sensitive data, ensure flawless platform performance, and find room for innovations that can bring your customer experience to a new level.

At Apriorit, we have a team of creative cloud developers, attentive quality assurance experts, and pragmatic business analysts who will gladly help you build a reliable and competitive SaaS product. Get in touch with us to start discussing your next SaaS business project.