A challenging, fascinating future

25 December 2018

This article was featured in the February 2019 issue of the magazine.

Peter Van Ostaeyen, blockchain & IoT architect for SD Worx, discusses data usage and the role and impact of blockchain in payroll 

If you’ve been involved in payroll recently, either as an employer or an employee, you’ll have noticed that things have really been moving this last decade. Digitalisation is here transforming our world at an ever-increasing speed. 

If you think about it, it’s not all that long ago that we were working with paper. Paper declarations, paper time registration, printed payslips – and yet, if you look at it today, it’s an almost entirely paperless environment. Or at least it is if you’re up to speed. Declarations are done online, employers are no longer using paper to register, and employees are receiving documentation in a digital format. 

Somewhere along the way software got the upper hand, and a drive for efficiency kicked in. Communication in a payroll environment is going almost entirely digital these days. Employers use payroll software, make online declarations and even communicate with their employees through their human resources (HR) systems. The same goes for communication with the government. 

So where are we going with all this? The first major shift since the digital revolution has been the farming of data. Working in a digital way means that we can collect massive blocks of data. While securing the safety of this data has always been the priority, using it for new business has become the new blue ocean. 

The cool thing about massive data blocks (or big data) is that you can visualise what’s going on. Whether you are measuring wages, average age, absenteeism or diversity, it’s all there to look at. Data comes in handy when you have enough of it to offer benchmarks. Either intra-company, with competitors in your market, or even benchmarking across countries often give surprising differences. 

Harvesting and visualising data isn’t new, but the next step is. 

Collecting massive data blocks has given us the chance to analyse patterns. Using data science, algorithms can be built to help us predict future patterns. 

 

...changes lie ahead and are sure to disrupt the entire payroll industry

 

An example of this would be if data were analysed across several retail stores, which showed a discrepancy in absenteeism in one store when compared to others. Visualising this data, peaks would return each year around the same time; peaks that weren’t found in other stores. By analysing data it’s clear that employee absenteeism peaks during the annual sales period. Knowing this, appropriate action can be made to ensure this trend is rectified and appropriate staffing levels are present during these crucial days. 

These are repetitive patterns that can be predicted by analysing the data. They can be addressed by diving into the detail, and taking suitable actions, thus being a potential cost saver. At the very least, in this example, performance and efficiency will be enhanced by managing the underlying problem. 

It all seems to be a perfect circle, but it isn’t. The biggest changes lie ahead and are sure to disrupt the entire payroll industry. I call it the ‘AI triangle’; a connection between IoT (the Internet of Things) devices, big data and blockchain platforms. These three are regulated by artificial intelligence (AI) or machine learning. In a later stage we might even see deep learning or cognitive learning, where machines aim to read, mimic and copy human behavior and thought patterns.

Blockchain technologies will be the first disruption that will be tackled. This technology offers us the ultimate form of data protection, which will be crucial as data blocks keep growing. Also, higher demands on privacy protection drives the need to get practical with blockchain in payroll. It’s only when we can build in the necessary trust into the system, that we can unleash the power of AI on our data. Data integrity is exactly what a blockchain offers us, since all input on a chain receives a unique hash code and time stamp. Once it’s up there, there is no deleting or altering it, except if you want to destroy your reputation. 

Eventually we will see the rise of hybrid systems, that need little human intervention. Making sure that the human component in HR or payroll departments can shift towards more service oriented and strategic roles. Data input will be collected through embedded sensory systems (IoT) that communicate with each other. The collected data is processed by smart machines with the ability to detect and auto-correct anomalies. The resulting data ends up in a blockchain supported database, trusted by all users – employees, employers and third parties, including government. 

There’s still a long way ahead, but one thing is for sure: disruption is a fact, and things have begun shifting. Ignoring or underestimating blockchain platforms, sensor embedding, and machine learning seems almost reckless at this point.