Changing payroll systems – not just for the brave?

Is changing payroll systems just for the brave?

By Kevin Murphy

How scared should you be? High profile payroll implementation failures in the education and health sectors make changing payroll systems seem like high risk projects. It’s therefore often not until a critical incident occurs or significant pressure builds on the people, processes or technology involved that the need for change overcomes the appetite for risk.

Why change?

We would love to believe that people change to Datacom’s payroll software because it is so much better than what they had. Our software is assuredly better, however it seems that nobody changes their payroll software just because they have found something better. They typically change for any or all of the following reasons:

  • Their existing software or software supplier has let them down in a major way or they believe the risk exists for this to happen.
  • They are being forced to undertake a major upgrade of their payroll software.
  • The person that has been running the payroll for seemingly forever has decided it’s time to retire.
  • They are unable to get important business information from their existing system.
  • They recognise that they are doing an unreasonable amount of manual administration that can be automated or eliminated.

Moving to a modern payroll system that is cloud-based and date effective, that does all calculations in real time, that includes mobile and web applications for staff, that automates manual award interpretation, that can be integrated with other systems, and so on… only seems to happen when one of the above conditions exist.

It is unfortunate that many are missing out on the benefits that a modern payroll system can provide, and it is not until an organisation is forced to research alternatives that these benefits are uncovered.

What to look for

Your payroll should be one of those things that runs silently in the background. If you are thinking about payroll at all, this is likely not to be the case. Silent running should be one of your primary objectives.

The number one thing to look for in your new payroll software is a solution to your current dilemma.

If your existing software or supplier has let you down, look for a track record and references. Look for disaster recovery systems and regular DR testing. Nothing drops staff morale faster than failing to pay them on time and correctly so having confidence that the payroll is going to be available when you need it is critical.

If you are being forced to undertake a major upgrade, look for a cloud service that will always be up to date when you connect to it. There really is no need anymore for dedicated infrastructure that you need to maintain, update and renew prior to accepting the latest version of your payroll software. Look for continuous development behind the scenes and a steady stream of new releases. Look for one with the capacity to manage your payroll whatever size you grow to without upgrades.

If you are unable to get the information that you need from your payroll system, look for a comprehensive set of standard reports. You’ll want a custom report writer that does not require specialist report writing skills, and the ability to get data out in .csv format and/or through an API for further manipulation.

If you find your payroll staff are dealing with paper timesheets, paper leave requests, or manual payroll calculations, seek time-saving alternatives in the form of employee mobile and web applications, back pay calculators, and an award interpreter.

But also look for something that is as “future proof” as possible. Look for a cloud application that is supported by a development team of some size who are continually maintaining compliance and adding new features.

How to run the project

Payroll projects can be risky. The newspapers frequently carry stories of disastrous payroll projects and we believe this is the main reason that people are so reluctant to upgrade their software until they really have to. The truth though is that payroll projects do not need to be risky. Datacom currently completes an average of seven significant payroll migration projects every month.

Dealing with an experienced and expert payroll company with a mature project methodology should be your first risk mitigation when planning a payroll project. Secondly, you could consider breaking the project into bite sized chunks. While not always possible, consider making changes in your existing platform first before migrating payroll platforms, so that change happens incrementally.

It is generally a good idea to simplify your payroll as much as possible before migrating (or even choosing) payroll systems. For example, renegotiating remuneration to simplify rate calculations, or cashing up allowances, etc. Adopting common standards for such payments will mean you have a greater choice of systems and will require minimal customisation.

Every payroll project (even the annual upgrade required on legacy client-server systems) should include parallel runs. That is, running both the old and new system in parallel, providing the same data inputs into both and reconciling the outputs. This can be quite a lot of work, but your payroll software supplier should be able to help with this work, and have tools available to simplify the work and reconciliation.

While the payroll supplier will have primary responsibility for the work to be undertaken during the project, there are a number of parts of the project that cannot be done by a supplier. Your payroll supplier should be able to clearly explain what they expect of you as a part of the project. This is likely to include dealing with the legacy system supplier, perhaps providing information from the legacy system in specific formats, participation in various configuration workshops, approving configurations, reviewing findings from parallel run reconciliations, managing communications with staff, and so on.

In general, you should not need to provide a specialist project manager (the supplier should provide one), but you will need to make available the people who have the best understanding of your current payroll system to provide information to the project team. The project team will need to have a clear understanding of how things work today, and how you want them to work.

What next

Modern software these days is generally provided on a Software as a Service (SaaS) basis. That is, you simply connect to it via the Internet and use it, without having to own and manage a lot of IT infrastructure. A benefit of this is that your payroll need no longer be an island on which only a privileged few have access to.

Obviously security and privacy controls need to be strictly maintained, but connectivity in the cloud world means that you can easily connect to your staff via web portals for timesheet input, leave requests, leave approvals, and for payroll data output, like payslips or other notices. The “new world” equivalent of this is mobile apps for smartphones. Smartphones are becoming ubiquitous and connecting employees to your payroll via their smartphone provides convenience that cannot be matched for many non-desk bound employees.

Connectivity in the cloud world also makes it easier to connect applications. For example you might connect your payroll system to specialist HR applications that particularly suit your business, rather than the old world where you had to purchase a single system that did many things but none of them well. APIs (Application Programming Interfaces) are included in most cloud applications and allow you to exchange or synchronise data between applications.

Once you are using modern software, keep in touch with your supplier, be familiar with their roadmap, provide them with your feedback, and take advantage of new features as they become available.

So, how scared should you be?

As long as you are working with a partner who has a dedicated team of experts, using a proven project methodology, not scared at all. In fact you should be excited, and looking forward to positive feedback from staff who are happily using smartphone apps to input and receive data from your new payroll system.

Kevin Murphy is Director of Datacom Payroll for New Zealand. 

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