Taking the risk out of new payroll adoption and implementation

The right payroll system plays an important part in running a healthy organisation. It can help eliminate errors and solve payroll problems, improve productivity and engagement of employees, and ensure your business remains compliant with the latest rules and regulations.

But while businesses might be quick to grasp the many benefits of a great payroll solution... the actual task of transitioning and implementing a new system might not be so swift.

Because, when broken down, changing payroll looks like a daunting task. From the process of choosing the right system and payroll partner to the physical undertaking of the transition through to the implementation and beyond… picking up a new system easily sounds like a strain on business resources. Sticking with your old system is much less risky, right?

Wrong. By using an outdated payroll system, the risks are the same, if not worse. To de-risk a payroll software transition and implementation, you need to first equip yourself with the information that will make it successful.

Here’s what you need to know about mitigating the risks of a payroll software transition and find a payroll system and vendor that will help your business grow even stronger.

The risk and pain of payroll software implementation

Many organisations understand the importance of having a payroll that runs smoothly. It's a basic expectation of employees that they be paid correctly and on time so it's understandable that you need to carefully consider any project that has the potential to undermine this.

Unfortunately, past high profile payroll project failures at organisations such as Novopay and Queensland Health only serve to highlight the potential risk involved. As a result, many organisations shy away from adopting a new payroll system even though it will help optimise their processes and improve growth. Instead, they continue to use a payroll system that no longer meets their needs. Unfortunately, these organisations don't realise that they can adopt a new system successfully with the right support and resources in place.

When considering transitioning to a new payroll solution, organisations need to understand the potential risks involved, as well as how these can be best managed. A well-formulated plan will give an organisation's decision-makers the confidence to select the right software solution and expertise from a range of options in the market.

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What are the fundamental risks in changing payrolls?

1. Not being able to pay your people on payday

The new system may not be operational before a component of the old system fails. This leads to a premature transition to the new system before all integrations are fully tested, or before all groups of employees are fully identified, resulting in staff being inadvertently missed. Staff may not have been sufficiently trained on how to use the system which can result in missed entries and non-payments.

2. Paying people incorrectly

People or payments may have been incorrectly configured in the new system, or data may have been incorrectly imported. Additionally, insufficient training could lead to staff entering inaccurate information. Should this happen, you could be facing wrong payments and unhappy, disengaged employees.

3. Not meeting legislative or compliance requirements

It’s critical that the new payroll system can perform up-to-date calculations of tax and leave, social policy deductions and superannuation contributions. The system should also be able to provide accurate reports to the relevant statutory agencies in the right formats. These vary according to countries and state jurisdiction. Not meeting these requirements leaves a business in danger of serious fines.

4. Not fixing the problem driving the change in the system

Understand the key drivers for the change before you shop around for your new payroll system. There are many solutions out there and it's easy to lose sight of what your organisation really needs. Whether it's a specific functionality that's missing, an upcoming compliance deadline, the risk of equipment failure or the inability to extract the data you need, don't forget why you're looking to make the change.

How to mitigate the risk of payroll transition

We've listed some guidelines to help you mitigate the risk of a payroll transition.

Simplify payroll requirements

First off, simplify your payroll requirements before you start the change process. There’s no point in replicating complicated or unnecessary processes when moving to a new system. Fewer components will make the transition easier to manage as well. Review payments, allowances, deductions and benefits to see if they're still being used. Components that haven't been used in the last year should be assessed.

Now is a good time to scrutinise the number of employees on your payroll. Often, employee records are out of date and can do with a spring clean. This will make the transition of data much easier.

Look over existing data collection processes, and aim to consolidate these. This will simplify interfaces in the new system.

Don’t burn bridges with your current supplier

While it may seem obvious, maintain a good relationship with your current supplier during the migration of data into the new system. A disagreement could have a negative impact on the migration process as you may need their assistance to extract payroll data from the existing system and you will need them to keep supporting the legacy system until the migration is completed.

Communicate the changes to relevant stakeholders

Keep the wider organisation up to date with the transition and the reasons why you’re moving systems. This includes everyone that will be using the new system. Inform them what you're doing and why. Senior management should be clear on the reasons for the change, and how the system's success will be measured.

To do this, highlight the benefits of the change. Because, while it's important to share information around functional changes like the new way to submit a timesheet, you should also focus on selling the new system and its benefits to employees. For the adoption to be a real success, employees need to know how the system will benefit them and encourage them to use it positively. For example, a new payroll system may mean that you can offer employees mobile apps that provide access to their payroll data in useful ways. This is a crucial part of your project so it's recommended that you put a communications plan into place before migration kicks off.

Review the proposed implementation process

Choose a vendor with a proven track record of successful payroll implementations as this is the best indicator of stability and likelihood of a successful transition.

The best vendor or implementation partner should have a mature implementation process and methodology that they can readily share with you. It should describe the various stages of the project, identifying roles and responsibilities, scope and deliverables and timeframes involved.

Before you commit to the new system, give your organisation time to test and verify the results.

The implementation process should extend beyond the planning of the system, data migration, testing, parallel running and the cut over to the live system. It should demonstrate how account management processes will work post cutover, and how ongoing training and updates will be provided.

Review your choice of payroll system

The way in which payroll systems are built and hosted can help mitigate implementation risks.

Multi-tenanted, cloud-based payroll systems, where organisations are set up on shared infrastructure and software, means that there's no need to set up a separate infrastructure for individual users.

This negates the need to set up separate servers (virtual or physical), networking, secure access, server management, backups, patching, installing the payroll software before it can be configured. This is because it's already done and tested by other organisations using the payroll platform successfully.

We expect that within a few years, payroll systems that are not true cloud applications will be rare. On this basis, you should question any choice of a non-cloud system as this may mean that you have to undertake another migration in the near future.

Focus on the reason for change

Keep in mind the underlying reason for changing payroll systems. This helps you establish whether you've ultimately achieved success at the end of the project.

Changes to payroll systems needn't be a risky prospect. As long as you have a clear idea of what you're aiming to achieve and your payroll provider shares your vision, there's no reason why you can't de-risk the implementation of your new payroll software.

To learn more, visit our blog

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