The pros and cons of integrating your payroll solution
There are several benefits of payroll integration. Not only can you achieve a level of automation that will offer HR and finance huge operational efficiencies, but it also gives senior executives easier access to the fundamental workforce data they need to meet strategic business objectives.
That’s not to say that payroll integration isn’t without its complications. There are a few factors to consider before pushing ahead with these projects. Although none of them should be big enough to deter you – the pros certainly outweigh the cons in this regard.
In this article, we’ll look at some of the hurdles you might face as you move towards integration. But before we focus on the more challenging aspects it’s worth reminding ourselves why integration is not just a nice to have, but a modern-day imperative.
The crucial benefit of payroll integration is the operational efficiencies it enables – and the long-term capabilities this provides your organisation.
By integrating your payroll software with your HR or finance systems, you ensure information is automatically available to relevant people when they need it. This includes teams operating in those departments, along with senior executives and employees, who can access data on a self-serve basis.
The advantages these efficiencies provide are far reaching. Here are five of the most significant:
- Less menial / more meaningful work
When systems are integrated, teams do not need to duplicate data inputting efforts across multiple systems. Information will be automatically available in each integrated system – where it can be viewed, processed and analysed.
This reduces menial and laborious work, freeing up staff to focus their attention on more meaningful tasks. For example, HR teams have more time to pursue strategic objectives such as improving staff welfare, enhancing employee engagement or developing recruitment and employee retention policies.
- Operational speed
When integrated systems are up to date with the latest data, individual departments can move initiatives forward quicker and respond to situations faster.
This could allow a financial director to see, instantly, how an expansion of the current workforce would impact the general ledger, for example. It could equally enable an HR team to show employees the implications of a new bonus scheme on their pay in almost real time.
- Better decision making
Integration provides everyone in the organisation with one single source of truth that they can trust. There will be no delays in different systems being updated, so no conflicting information across departments. And, because there is less data reinputting required, there will also be less chance of human error occurring, and therefore greater data accuracy.
This provides senior executives with access to reliable information which will enable them to take crucial decisions with greater confidence.
By integrating systems, businesses create digital audit trails that automatically record where data is held and how it has been processed.
This helps HR teams to put processes in place that ensure greater governance – which will provide assurances that organisations are complying with regulations, such as GDPR and the UK Data Protection Act.
- Future proofing
The integration of payroll data with key HR and finance systems provides organisations with a stable digital infrastructure that enable further transformative digital projects. This allows organisations to pursue strategic HR goals that can enhance the employee experience and enable more fluid and flexible ways of working.
Without a connected infrastructure, any organisation wanting to enable digital initiatives would need to create their own bespoke integrations. This requires costly technical support and ongoing middleware licensing costs – and could result in an unwieldly digital infrastructure that is difficult to upgrade.
While the benefits of payroll integration provide a strong incentive to push ahead, organisations do need to think through the implications before moving forward with their project.
Here are four things that should be considered:
- The need to standardise processes
When integrating systems, there is a need to standardise data inputting across different departments to ensure all fields are complete and that all information is visible. If the processes governing data inputting are inconsistent across the organisation, the ability to access, process and analyse information will be severely compromised.
To ensure data outputs are optimised, businesses may need the support of an integration partner to develop the right processes. And to ensure their teams follow these new processes, some internal cultural change may be required.
- Data privacy
In addition to the integration benefits mentioned above, we could add ‘improved security’ – because if integration is via an API and payroll no longer needs to send file transfers, the risk of a data breach is reduced. However, data privacy is still a concern – especially if information becomes more accessible across different departments.
Organisations will need to put protocols in place to limit the exposure of an employee’s private data solely to the people who need to see this information. They must also ensure that those individuals are covered by non-disclosure agreements.
As it can be expensive to enlist a systems integrator to connect your payroll, it would be preferable to integrate your system at the point of implementation. This may still incur additional cost, however.
How much will depend on several variables. This includes whether your payroll supplier has its own API and whether they have existing integrations with the leading HR solutions, such as Workday, SAP and Oracle. These integration costs will need to be factored into the total cost of deployment when assessing the return of investment within your business case.
The integration element of an implementation project will impact delivery timelines. This is more likely to be by a few weeks rather than a few days. Exactly how long this will take, however, is again dependent on similar variables affecting the cost, which include the solutions involved and the availability of pre-existing integrations.
It is worth noting that the level of engagement between the organisation and the integration team is crucial here. Engagement with a good integration partner will typically involve a discovery session, an agreement on the course of action and testing phases.