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Mar 02 2026
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Cloud-Based HR Systems for Government Modernization: A $1 Billion Opportunity

The government is eyeing $1 billion in productivity improvements if HR systems can be consolidated.

The government recognizes a shift to cloud-based human resources solutions should be a priority for the resulting efficiencies and cost savings.

That’s why the offices of Personnel Management (OPM) and Management and Budget (OMB) announced a governmentwide effort to consolidate more than 100 federal HR systems into a single, modern platform.

The government could save about $1 billion in productivity improvements by modernizing outdated legacy HR systems across agencies, according to a Workday report from May.

What makes HR ripe for upgrading, and what does that look like for agencies?

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Automating and Modernizing Government HR Systems

“The government has over 119 different HR systems operating today,” says Heather Ely, chief customer officer at SAP National Security Services. “Every system causes a certain amount of complexity.”

HR modernization could tame that complexity, supporting the administration’s goals around improved efficiency and helping agencies to do more with limited resources.

“Automation reduces or eliminates manual administrative processes, saving both time and labor costs,” says Tamara Greenspan, senior vice president of government, defense and intelligence sales at Oracle. “AI-powered analytics tools provide rapid, actionable insights supporting smarter policy and workforce decisions.”

Two types of cloud-based solutions can help government to advance here. There’s the human capital management system, “that core platform that OPM wants to establish,” says Jonathan Alboum, federal CTO at ServiceNow.

Agencies also have workflow systems, which take data from core systems of record and use it in cross-government workflows.

Heather Ely
A successful implementation is all about continuous improvement.”

Heather Ely Chief Customer Officer, SAP National Security Services

How Cloud-Based HR Systems Enable Cross-Agency Integration and Interoperability

HR in the cloud supports greater interoperability across agencies by addressing current challenges related to fragmentation.

“From a cross-agency integration perspective, having common data standards and processes is really key,” Alboum says. “You can get those through cloud.”

Agencies’ cloud solutions will comply with data standards.

“And they’ll establish standard processes that everyone can follow; that’s going to be a big positive,” Alboum says. “Now, you have a way to be very consistent in onboarding or transfers or separations.”

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The solutions also offer standard reporting and analytics, ensuring data looks the same across agencies.

Vendor partners can help to ensure consistent security of cloud-based HR systems by managing day-to-day protocols and controls dictating the most secure way for employees to access information.

Cloud-based solutions often have built-in capabilities to support security clearances, as well as identity and access management. For instance, Oracle Cloud HCM tracks, manages and automates security clearance processes, providing reminders and audit trails for compliance.

“It integrates with external identity management systems for streamlined provisioning and deprovisioning, leveraging encryption and certification to protect identity data,” Greenspan says.

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Change Management for the Government Workforce

To make the most of today’s powerful, cloud-based HR solutions, agencies will need to tend to the human element.

“Change management is critical for HR modernization,” Greenspan says.

A shift here needs to be handled thoughtfully because HR goes to the heart of the employee experience. That requires a change management program that is transparent, communicates goals early and often and demonstrates value to employees, Alboum says.

SAP’s WalkMe offers helpful support here, delivering in-app guidance for effective implementation, Ely says.

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An Implementation Roadmap for Federal Agencies

A number of strategies can help agencies plan for and deliver effective cloud-based HR solutions. They can look first to the government’s own resources.

“The U.S. Tech Force plays a key role in facilitating change by embedding technologists in agencies, modeling agile methods and closing the gap between technical experts and policy leaders,” Greenspan says.

USTF also promotes skills-based hiring and standardizing technology across agencies.

Agency IT leaders can also help to position themselves for success by choosing their initial use cases with care.

“Start with things that show real value,” Alboum says. “Maybe it’s things like onboarding or case management, things that are understood and manageable; then, you can scale from there.”

Agencies should also be looking to ensure their cloud-based system aligns with actual needs.

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“Really think about how the work and the data flow through the organization today. What are those current processes?” Alboum says. “If you don’t understand what they are, you will be hard-pressed to know whether or not this thing you’re getting is going to meet what you need.”

It’s especially important that leaders themselves are in alignment.

“We have to be thinking about: What does that look like? How do we migrate the data? How do we manage the data?” Alboum says.

That being the case, HR and IT teams must be tightly connected and measure the success of their newly implemented cloud HR solutions. Common HR ticket metrics include how often errors are prevented and how many times pay files are not received or time types are incorrectly paid.

“Agencies should plan to take those measures not just once, but repeatedly, to document the positive impacts over time,” Ely says. “A successful implementation is all about continuous improvement.”

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