Payroll software implementation
01 April 2019
This article was featured in the April 2019 issue of the magazine.
Jerome Smail, freelance journalist, asked industry luminaries to give their expert opinions to key questions
Organisations rely on payroll to do its job effectively and accurately. But payroll can’t fulfil that brief if it’s not given the right tools to work with. Essential to the task is payroll software that’s fit for purpose. In a function where errors are not tolerated, software that’s reliable and fit for purpose is a non-negotiable requirement for payroll, regardless of the size of the organisation and whether the process is in-house or outsourced.
However, the payroll market is both large and varied. Not only is it difficult to know where to start when making your choice of software, but it’s also hard to keep up with the latest innovations and functions on offer. There are other essential questions too, such as when you should think about switching your payroll software, as well as how to go about it if you do.
To get to grips with the state of play in the market and to get answers to the key questions, I spoke to two of the foremost experts in the arena: Stuart Hall, non-executive director at the CIPP, and Chris Deeson, UK country lead for KeyPay. Here’s what they had to say.
When choosing payroll software, what are the key factors to look for?
Stuart Hall (SH): It might sound fairly basic, but you need the software to do all the calculations correctly, as required by HM Revenue & Customs. You might think that’s fairly standard, but if you look at the UK market, there are a number of payroll solutions out there that don’t actually do the calculations correctly.
So, if you’re choosing a payroll software, it’s got to do what it says on the tin. But it also has to be adaptable to your needs, not only for today but also for tomorrow.
Chris Deeson (CD): The three key factors to look for in payroll software are efficiency, efficiency and efficiency.
Efficient processes mean either fewer people or the same number of people working in more profitable areas. Efficiency means not needing to have additional processes to get four separate systems working together. Efficiency means payroll saves time, and other parts of the internal business or external clients also save time on dull administrative tasks.
The right way to look at potential new software is not whether it does what you currently do in the same way, but whether it allows you to meet your needs in a new way that creates opportunities for you and makes your business better. Investing the time and money in new software should also mean a review of existing practices and processes – the chance to be truly transformative.
Too often, people start looking at software based on price, forgetting that by choosing a cheap, desktop solution they are effectively increasing their internal staffing costs, paying for additional software solutions to make up the shortfall and, for outsourcers, leaving revenues and opportunities on the table. Price matters, but only in the context of time saved, other software foregone, and opportunities gained. If two software products provide all of these identically, then price becomes part of the discussion. Start with price and you end up boxing yourself into an old-fashioned business structure.
How often should organisations review their payroll software?
SH: In the past I probably would have said every five to eight years. But I’d suggest it needs to be shorter than that nowadays. The reason is that technology is changing all the time, and changes are now happening so quickly that within three years you could be completely out of date. With payroll now, once you’ve made a decision and you’ve chosen the software, I’d say you should review it every three to five years to make sure that what you’re getting is still right for your environment and your requirements.
You can have a perfectly serviceable product but there might be something out there that’s going to work better, faster or more efficiently, saving you time and increasing productivity. People think they have a routine and process that they’re running with and it works, but for some reason that particular process might take half a day, and there may be a better solution. It might not be payroll, but something that’s available alongside payroll, such as timesheets. And immediately, you might cut down your half a day to five or ten minutes. Unless you’re out there looking, you’re not going to realise that.
What surprises me in the payroll market is there are people who have been using the same product for the last fifteen years and they won’t look anywhere else. To use the analogy of a car, fifteen years ago it would have had a cassette player. Nowadays you can’t even get a car with a CD player. If you’re using a product that’s ten or fifteen years old, it would have been built at a time when all software was bought in a box, and you loaded it from CDs onto your computer. So, for you to have some more modern-day applications in your product, whether it be the ability to do faster Bacs, or timesheet calculations, or linking with human resources (HR) systems, they’ve been built onto a platform that wasn’t intended to have those facilities in the first place.
So it’s like having a ten- or fifteen-year-old car and taking out the cassette player and replacing it with a DAB radio, and taking out the old speakers and fitting new ones, but they’re not going to look or sound as good as those in new cars that have just come off the production floor, because they would have been built purposely to have those facilities.
CD: Ideally, organisations should be undertaking an annual check of the market, even when locked into longer term deals with their existing provider. The software market is going through a period of unprecedented change, with increasing numbers of suppliers launching fully cloud-based solutions with additional features.
However, moving software is always a challenge for an organisation, with implementation, training and internal culture considerations, so a full market review every three years seems reasonable, even if the end result is to stay with the existing software. Any longer than that and an organisation risks being left behind.
...review of existing practices and processes – the chance to be truly transformative
What are the important considerations when switching systems?
SH: The first thing would be to have a very good project leader. They don’t necessarily need to know about payroll, but they need to know how to run a project, how to help you ensure you do all the things in the right order to get the task complete. The larger the payroll, the more important the project leader becomes.
I also think it’s important to make a complete list of all the things you do on your payroll. That way, the people implementing the new system can ensure it’s set up correctly according to your requirements.
CD: Before looking to switch systems, organisations should map out their existing requirements and, equally importantly, their short- to medium-term requirements. Regulatory and business considerations are likely to have moved on since they last did a review, with considerations such as the General Data Protection Regulation (GDPR).
Competition is also moving on apace. In the last three years, most accountants have made a significant move to cloud accounting and the early adopters are now moving to solutions where they can provide fully integrated cloud solutions from timesheet entry, through payroll to posting their journals. How does your existing spreadsheet and desktop functionality compete with that? Do you want to compete with that?
Similarly, skilled payroll professionals are at a premium like never before and removing manual data input tasks can reduce burden and help retain and attract staff on more competitive salaries.
Having a defined list of non-negotiable business-critical functions and negotiable ideal requirements means the selection process will be significantly clearer and more focused.
Practically, ask questions like: Does moving to the cloud remove a layer of unnecessary and inefficient internal IT support requirement? Does it improve your GDPR compliance? Can you reduce the number of different software solutions you operate? Can you reduce manual intervention such as transcribing timesheets and manually posting journals? Can your payroll team be liberated to focus on more interesting and profitable tasks?
...important nowadays that solutions have the ability to interlink with other products...
How important is integration with other functions, such as HR?
SH: There are providers out there that claim to have a combined payroll and HR solution, with the whole thing as one. There could be an argument as to which one they are specialists in. Are they specialists in the HR arena or the payroll arena? Or are they really specialists in both?
But I think integration is far more important today than it’s ever been. It’s really important nowadays that solutions have the ability to interlink with other products, no matter what they are.
CD: The proliferation of standalone HR software in the UK for small to medium businesses would be the worst indictment of UK businesses, were it not for the proliferation of businesses managing leave and expenses on Microsoft’s Excel.
Large companies have the resources to minimise the number of systems being used and look to integrate these into one seamless whole.
HR functionality, such as performance and discipline, may well be a leap too far for most businesses, and unnecessary for most, but having separate systems for leave, expenses and timesheet management and yet another for e-payslips is inefficient and an anachronism. Having your core HR requirements in the same cloud system as your payroll is critical to efficiency throughout your organisation.
... they had built an electric car of the payroll world
What is the future for payroll software?
SH: It goes back to what I was saying earlier about products interlinking with each other. And the way that happens is through API (application programming interface). For example, when you order your taxi through Uber, it’s automatically linked to mapping systems and payment systems, and that’s done by API. The new banks, like Monzo, also use the API facilities of the banking network.
So, I feel there are a lot of payroll solutions out there that will eventually die because they don’t have API. They can’t go back and put API in because it needs to be built in from the beginning, like the car in my earlier analogy.
I’ve come across a payroll system in the UK with API and the analogy that struck me for that was that they had built an electric car of the payroll world. Everyone knows it’s the future, everyone knows at some stage they’re all going to be using it, but when they go into the garage to buy a new car, they think, do you know what, I’ll just buy a petrol one again.
CD: The most obvious innovation is the move to genuine cloud solutions. In a world where employees are increasingly less deskbound, why is it so outlandish to think that payroll professionals should be forced into an office, when they could be processing payrolls from their home and at times that are convenient to them?
The use of apps is another innovation enabled by the widespread use of smart phones. An employee who can clock in and out, manage their holidays, sickness, expenses, timesheets and see their payslips, P60 certificates and other docs within a single app is much less frustrated than one who has to log in to multiple systems and remember to ask their manager.
Increasingly we are seeing payroll software differentiating their offerings on time savings for the end user. In a cloud world, it doesn’t make sense to have skilled payroll professionals flogging outdated processes to death, when they could and should be focusing on managing complex tasks, resolving issues and advising clients on the best processes.
End-to-end solutions which push timesheet and expenses tasks down to the employee and the manager reap efficiencies through and across organisations and reduce input errors.
Simple things, like employee self-onboarding, reduce data entry risks and save time for payroll administrators and managers.