Unexpected payroll change: burden or opportunity?
Global payroll leaders sometimes decide to review and change their vendors and technology- this typically involves some market research followed by an appropriate procurement process. The company usually studies current market research and reviews available RFP and business case resources produced by relevant thought leaders in the payroll industry.
But what if a technology or vendor change is suddenly forced upon an organization? In such a case, forces outside of their control are driving an unexpected and unplanned change. While this disturbs pre-defined business and resource plans, it also presents an opportunity to carefully examine if the current needs of the business are being met.
An example of a change like this would be, when an outsourcing partner makes a decision to change their core technology or move to a different software platform. In other words, a business is asked to change because a core service provider is making a change to their own internal business model and this is having an impact on its client base. In a payroll department, this could be when an outsourcing partner elects to dispense with a technology platform and introduce a new one. An industry example in the global payroll market in 2020 of this is the sunsetting of the SAP payroll system and the planned transition of ADP clients from Streamline across to the recently acquired Celergo platform.
Such a scenario becomes an immediate challenge for the multi-national employer as the payroll or technology provider is essentially insisting that they align with their new technology choice. They will no doubt declare great new benefits. However, the reality is, a change in global payroll technology, requires time, effort and it also imposes unplanned and unbudgeted cost.
For a technology transition from SAP or ADP Streamline, the multi-national employer has to invest core resources in new mapping, project planning and transition over to the proposed technology. System integration consultants, like Deloitte or Accenture, are engaged in 80% of HCM & ERP transitions, therefore external consultants, may need to be engaged and finances must then be arranged to to cover this unplanned technology transition cost. This also directly affects the legacy Return on Investment calculation of the original tech investment and affects the multi-national employer’s financial policy treatment of capital investment for purposes of amortization and reinvestment planning.
In the market, we see that multi-national employers who are presented with these payroll aggregator or technology vendor disruptions, use the disruption as a trigger to evaluate their current global payroll model and system against the current and future needs of the business.
This can be a good time to examine if the payroll provider solution is as strong as it was when you first went into business with them. Check if it remains in line with any changing business needs or new growth plans that may have come about by acquisition or organic growth. Some key questions you might want to consider are
- Does this new technology they’re introducing meet the current business needs and add value?
- How will the transition process interrupt your organization’s ability to deliver effective payroll services? What core resources are needed? Are they available in-house or do you need external advice and consultants?
- Has the vendor a strong delivery record against their SLAs? Is this disruption a one-off event that you can accommodate or is it a case of one more issue on top of an unsatisfying existing service level?
- Outside of what this vendor positions as benefits of the new platform, what does the business actually need? Do you have parallel cloud migrations for your HCM -for example to Workday or an ERP that you should align with your global payroll technology?
- Will this unplanned change result in added value, better tools, increased productivity?
An unplanned change can prompt leadership teams to examine the market again to see if there are other payroll options that might be more suitable and a closer match to their business objectives. Especially, if the change appears only to add benefit to the provider and not the client.
Go All In
Another key consideration is the temptation to use outsider driven change as a reason to consider what other change is needed in the business. The global payroll leaders can take the view that because change is coming anyway, there is scope to explore going all in and reviewing their global payroll strategy. By this we mean, using an imposed change to look at the global payroll market with a broad lens:
- Review current versus future business needs – business growth by geography and headcount.
- Central governance and reporting – How can global payroll provide useful strategic insight using payroll data?
- What are the other payroll providers offerings in the market? Do they have something new, better?
- What have thought leaders like Gartner and Nelson Hall to say about the market?
- What cloud, digital and data protection strategies exist in your business that you can align with?
Many leadership teams might take the view that if disruption is coming, it should be a level of disruption that serves the best interests of the company instead of the partner who is introducing the disruption. This change may then be a good opportunity to move away from a payroll model that is no longer working for the business.
You’re in control
The news of an impending change not of your choosing and one that will impact your business, is likely to be unwelcome. It is important to not simply default to acceptance as if it is just one of those things that happens in business, leaving you with no other option other than to grit your teeth and get on with it.
The reality is that you do have options, you remain in control and any investment is your money to spend how you see fit. If there is a better alternative out there in the market, you are free to explore it, invest in it and make the decision that if change is happening, it is going to happen on your terms.
If the change is going to impact a critical business function like payroll, then you want to be 100% certain, that the future state is going to be beneficial to your payroll professionals and wider business. If it is a struggle to identify the value of the change, then this is probably the right time to evaluate your options and look at alternative solutions.
A chance to address wider issues
A new payroll platform or software change introduced by an outsource provider is an opportunity to assess if all your payroll needs are being met.
- Is your payroll reporting as consolidated and comprehensive as you need it to be?
- How much time is being spent on manual processes, is there scope in the market for automation and integration that would speed things up?
- Is your control and governance how you’d like it to be?
- Do you have full visibility over your global payroll operations or are some country specific activities a bit of a mystery?
- Do you have flexibility and control over your vendor network or are you restricted to the vendors tied to your outsourcing partner?
- Does your current payroll system integrate and talk to your wider HCM system and help you produce business intelligence of strategic value?
- What are your payroll professionals saying about the current system and processes? Does it help them do their day-to-day jobs or is most of their time dominated by spreadsheet analysis?
The answers to these questions will give you a good insight into your wider global payroll needs and whether or not your current outsource provider has the platform, people, and technology required to meet these needs. If they do not, then it is time to go out into the market and see what alternatives are available. A good place to start is by looking for a technology partner. One with a digital mindset who has expertise in global payroll. Someone who has developed technology to answer all of the above questions.
Blessing in disguise
Could an enforced change become a blessing in disguise? It could if it creates a change in attitude that made a business look at their bigger payroll picture and realize that a new global payroll system is needed to meet growing business needs. If outside forces contribute to a detailed examination of how a department function could be improved, then a business would reflect positively on the enforced change. Those who look upon change as an opportunity to improve a range of functions may find that this attitude serves them well in the long run. This is true in terms of payroll, which is a function that can benefit quickly from the right kind of change, both locally and globally. Change that involves innovative technology and a movement towards a new global payroll model. A change such as this will not only improve day-to-day processes within payroll but will also future proof this crucial department for years to come.
If your payroll department could benefit from a different model and innovative technology, talk to us today and learn more about how our integration and automation software can introduce better practices and efficiencies to your global payroll process.
Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.
Payroll Manager, LogMeIn
With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.
International Payroll Manager, Phorest