Tech changes impact payroll

Core HRMS replaced more often, SaaS expected to become increasingly dominant: Survey
By Sheila Brawn
|Canadian Payroll Reporter|Last Updated: 05/31/2017

Payroll and HR should get used to using mobile technology and software-as-a-service (SaaS) in their jobs. Findings from a survey show these technologies are continuing to grow in popularity in the workplace.

The 2015 HR Service Delivery and Technology Survey by global professional services firm Towers Watson found 61 per cent of organizations are using or planning to use mobile technologies.

"That was up 15 per cent from last year, which was up something like 10 per cent from the year before," says Mike DiClaudio, global leader of Towers Watson’s HR service delivery practice in Chicago.

In the Americas, the number of organizations using or planning to use mobile technology was even higher, at 78 per cent.

DiClaudio says the trend toward using more mobile platforms is affecting the way payroll departments operate.

"About a third of companies allow you to view your pay slip online. About a third of companies allow you to do some sort of timecard submission or time entry online, either view or submit. More than a third of companies have a mobile application for expense management. We are absolutely seeing growth in (this) sector."

The survey contains responses from 798 organizations in 37 countries. One-half of them are globally based. Thirty of the organizations that participated had headquarters in Canada.

When it comes to payroll systems, the survey found that while three-quarters of global companies use a single system inside their headquarters country, 78 per cent have more than one payroll system or vendor outside of their home country.

"They would have multiple payroll systems outside to deal with different complexities and capabilities (because) the requirements of payroll by country get quite complicated and the technologies are not always equipped to meet all of the country needs," DiClaudio says.

Looking at HR systems, the survey found that 88 per cent of respondents plan to spend the same amount or more on HR technology and systems this year compared to last year. The survey also found organizations are replacing their core human resource management system (HRMS) more frequently.

Historically, companies replaced their systems every five to seven years, but now it’s every three to five years.

When HR systems are replaced, there is an impact on payroll, says DiClaudio. This is especially true when payroll and HR share the same system, which is common for many organizations at their head office.

"The majority of organizations (54 per cent), inside their headquarter country, are using that core HR system as their payroll system," he says.

"If they are swapping out that core HRMS, they will likely need to find a new payroll system as well, which is why you have seen a little bit of traction in the market with something like a Workday that has more payroll technology now than they have in the past or you see things like SAP Employee Central pushing hard on the payroll capabilities that technology has. The same with Oracle PeopleSoft," he says.

Even if the payroll system is not changing, it will have to be integrated with a new HRMS, DiClaudio says.

"The payroll integration is also incredibly vital to the success of not only the payroll technology, but the HR technology as well."

To be successful, he says it is important organizations take a holistic approach that looks beyond merely implementing a new system for HR and brings in other key players, such as payroll.

Results from this year’s survey show that 30 per cent of respondents — what the survey calls an "all-time high" — plan to replace their core HR system in 2015. And many of these organizations — 40 per cent) — are looking to move from an in-house system to SaaS, the survey says.

"SaaS has absolutely emerged as the platform for organizations," says DiClaudio. "Our prediction... is that it is going to be the de facto technology delivery model in the next few years; and in, arguably, five to 10 years, it will have really taken hold, not just in HR, but in payroll and finance and supply chain as well."

When it comes to mobile platforms and SaaS in the workplace, DiClaudio says employees are increasingly expecting "consumer grade" services from their employer.

"I should be able to submit my timesheet the same way I would book a flight, using my mobile device, or the same way I would buy a book on Amazon or I would read an email," he says.

Despite the interest in workplace technology, the survey found a wide gap between the level of satisfaction with HR technology and the extent to which organizations still use paper to carry out certain HR tasks. For instance, although 79 per cent of respondents say the technology they use for core compensation activities is effective, 47 per cent continue to use paper for this task.

"I don’t think you will find many companies that are completely beholden to their paper processes. I think what you will find are companies that feel that they can’t get out from underneath it," says DiClaudio.

"Either they can’t find a technology that meets their financial limitations or constraints or they can’t find a technology they feel comfortable is going to be able to meet their business requirements."

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