Selecting A New Payroll Solution? Be Careful!

The important questions around choosing a new payroll software solution for your organisation - answered.

What should be high on a payroll professional's wish-list when specifying a new system?

In large organisations, the enormity of multiple employee terms and conditions can be eye-watering. Many of these organisations have grown over the years by acquisition, which has often meant the addition of new employees via TUPE, with a new set of terms and conditions each time.

Whilst the target of all forward-thinking organisations is to achieve harmony in the T&Cs jungle, it cannot always be achieved in the short term. It is therefore imperative that any new payroll software system can deal with the complexities of this type of situation whilst offering an easy and achievable path to future harmonisation of T&Cs.

To ensure any new payroll system is flexible enough to achieve this, the payroll team should set some detailed and complex scenarios for potential suppliers. If a new system can cope with the 10 most complex requirements, it’s probably fairly safe to assume it can handle the more straightforward calculations. Once the fundamentals are satisfied, the payroll team can then start on their wish list, which should include:
- Full self-service for all data collection
- Validation at point of entry
- System-driven authorisation steps that Managers can complete ‘on the fly’ via a mobile or tablet  


Who should be involved in acquiring the payroll system?

The most experienced members of the payroll team must be involved, together with their Management team (who may have information regarding the future of the organisation which may be unknown at operational level). Line Managers should be consulted on the self-service aspects of any potential new system as they will be the actual users, along with employees, in the future.


Should payroll be looking at the new system from a strategic perspective as well as an operational one – for instance, how can the new system bring broader business benefits?

The complex world of payroll forces huge amounts of attention to detail, which can make it difficult to simultaneously look at the bigger business picture. We regularly come across organisations with outmoded payroll technology creaking at the seams and forcing the continuation of outdated procedures and operating practices. Incapable of embracing efficient methodologies, it is often the cause of outdated practices, as procedures were initially built around the limitations of the old system. With multiple manual processes having been built around its basic functionality, manual processes become endemic and regarded as the only way an organisation can complete a particular task.

The cost of operating outdated payroll systems can be huge, yet is also often invisible as there is no incentive to measure the cost and effort being spent on manual (un-automated) processes without a follow-on replacement project. Often, the annual charges are already budgeted for and there is a perception that they are a fixed cost that cannot be reduced. The spotlight then simply falls on other areas of the business to deliver cost savings instead.

There should therefore always be a strategic Change Manager involved in the payroll software replacement project, who can look at the wider picture and offer the organisation a vision of what a more efficient operation would look like. This is often difficult to see at the operational level as it may look nothing like the current position.


How compelling is the move to the Cloud or SaaS model for those organisations which haven't made the move yet? 

The cloud is fundamentally about cost and security. Organisations have to ask themselves if they will be able to match a specialist provider in terms of security (maintaining the daily growing threat from cyber fraud) and service (delivering the same level of infrastructure to support a user base which expects a seamless performance across all devices) for the same cost. In reality, the vast majority of organisations will be able to reduce costs and be safer in the Cloud environment.


What key questions should we be asking potential suppliers about ease-of-integration with modules/functions such as HR, finance, reward (for pensions auto-enrolment)?

Just one question needs to be asked…can they prove it? Current customers should be available to talk to and can be a good reflection in terms of ease of integration. The rapidly expanding world of data analytics means the best reporting tools can get data out of multiple systems, make sense of it and even make accurate predictions for the future, so it’s important to explore this properly.


When it comes to implementation of a new payroll system, what are the operational issues to be aware of? Should parallel runs of old and new system still be performed? 

A successful payroll system implementation depends primarily upon two key things: detailed project governance from the supplier and internal project resources from the customer. The supplier’s capacity and track record of implementation should be a key factor at evaluation stage. The supplier should have experienced Project Managers and Consultants and a clearly defined implementation methodology. The customer, meanwhile, should never underestimate the internal resource levels required for a project that is ultimately going to affect every single employee in their organisation.


What tips do you offer for a trouble-free implementation?

Plan, plan, plan and plan again. Then stick to your plan.


Do payroll Managers ask enough questions/grill suppliers as much as they could and what do they often overlook?

Most Payroll Managers do ask enough questions although some are not as cautious as others. We have seen large, complex organisations make a decision on a supplier after a two and a half hour presentation which is wholly inadequate. It is essential to set scenarios and work through them diligently. My heart sinks a little every time I hear “We’re assuming all the payroll suppliers can pay people so let’s just look at your fancy bits”. Don’t assume that because it’s a payroll system, it can cope with your organisation’s unique complexities.


When/how often should payroll systems be reviewed/revisited?

Every five years is the norm, although we are now seeing more and more organisations signing 10 and even 15 year contracts. If you can trust your payroll supplier to keep up with technology, and they have a proven track record of this, then a longer term contract can reduce costs.